SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
BOULDER GROWTH & INCOME FUND, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transactions
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identity the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[GRAPHIC OMITTED] BOULDER GROWTH & INCOME FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
April 5, 2004
Dear Fellow Stockholder,
You are cordially invited to attend the 2004 Annual Meeting of Stockholders
of Boulder Growth & Income Fund, Inc., which will be held on May 18, 2004 at
9:00 a.m. Mountain Standard Time (local time), at the Doubletree La Posada
Resort, 4949 E. Lincoln Drive, Scottsdale, Arizona. Details of the business to
be presented at the meeting can be found in the accompanying Notice of Annual
Meeting and Proxy Statement.
This is a very important meeting at which a number of corporate governance
initiatives are being proposed. These "Corporate Governance Proposals" are
described in the accompanying Proxy Statement. Your prompt consideration and
participation in voting on the various proposals is strongly encouraged.
The proposals are intended to implement a number of what might be referred
to as "shareholder-friendly" practices in the corporate governance area.
Generally, the proposals eliminate or modify a number of current charter
provisions that are often viewed as limiting accountability and insulating
management from stockholders. In particular, one of the proposals seeks to
"declassify" the Board of Directors so that each Director is elected annually.
The Board of Directors thinks it is important for stockholders to have an
enhanced say in the direction of the Fund and believes that the Corporate
Governance Proposals effectively promote this goal.
As Chairman of the Board, I encourage you to support each of the proposals.
After careful review by the independent directors, the Board of Directors
unanimously approved and has recommended to stockholders that they approve each
of the proposals.
We hope you plan to attend the meeting. Your vote is important. Whether or
not you are able to attend, it is important that your shares be represented at
the Meeting. Accordingly, we ask that you please sign, date and return the
enclosed Proxy Card or vote via telephone or the Internet at your earliest
convenience.
On behalf of the Board of Directors and the management of Boulder Growth &
Income Fund, I extend our appreciation for your continued support.
Sincerely,
/s/ Stephen C. Miller
Stephen C. Miller
Chairman of the Board
[GRAPHIC OMITTED] BOULDER GROWTH & INCOME FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 18, 2004
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Boulder
Growth & Income Fund, Inc. (the "Fund"), a Maryland corporation, will be held at
the Doubletree La Posada Resort, 4949 E. Lincoln Drive, Scottsdale, Arizona at
9:00 a.m. Mountain Standard Time (local time), on May 18, 2004, for the
following purposes:
1. The election of Directors of the Fund (Proposal 1).
2. An amendment to the Fund's charter (the "Charter") to declassify the Board
and provide for annual election of Directors (Proposal 2).
3. An amendment to the Charter providing that Directors shall be elected by a
plurality of votes cast at a meeting at which a quorum is present (Proposal
3).
4. An amendment to the Charter providing that the Secretary of the Fund shall
call a special stockholders meeting upon the written request of the holders
of 25% of outstanding shares entitled to vote at the meeting (Proposal 4).
5. An amendment to the Charter vesting in the stockholders the power to amend
or adopt Bylaws by the affirmative vote of a majority of votes cast at a
meeting at which a quorum is present (Proposal 5).
6. An amendment to the Charter prohibiting the Fund from opting into any
provision of the Maryland Unsolicited Takeovers Act (Proposal 6).
7. An amendment to the Charter repealing Article Seventh, Section 5 and
replacing it with a provision providing that no (a) business combination
(e.g., mergers, consolidation, share exchanges), (b) voluntary liquidation
or dissolution, (c) stockholder proposal regarding specific investment
decisions, (d) proposal to open-end the Fund, or (e) self tender for more
than 25% of the Fund's shares in any twelve-month period, may be effected
without the affirmative vote of the holders of at least two-thirds of
outstanding shares entitled to be cast on the matter (Proposal 7).
8. An amendment to the Charter to establish the maximum number of Directors at
five (5) (Proposal 8).
9. An amendment to the Charter providing that only certain corporate actions
shall be approved by the affirmative vote of the holders of at least a
majority of all the votes entitled to be cast on the matter (Proposal 9).
10. A proposal to amend and restate the Charter, the implementation of which is
contingent on the approval of Proposals 2 through 10 (Proposal 10).
11. To transact such other business as may properly come before the Meeting or
any adjournments and postponements thereof.
The Board of Directors of the Fund has fixed the close of business on April
2, 2004 as the record date for the determination of stockholders of the Fund
entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
/s/ Stephanie Kelley
STEPHANIE KELLEY
Secretary
April 5, 2004
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STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD. THE PROXY CARD SHOULD BE
RETURNED IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON
THE INSIDE COVER.
STOCKHOLDERS WHO HAVE QUESTIONS OR NEED ASSISTANCE IN VOTING MAY CONTACT
MACKENZIE PARTNERS, INC. TOLL FREE AT 1-800-322-2885 OR BY EMAIL AT
PROXY@MACKENZIEPARTNERS.COM
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INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and may avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.
3. All 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., John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith John B. Smith, Jr., Executor
[GRAPHIC OMITTED] BOULDER GROWTH & INCOME FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
QUESTIONS & ANSWERS REGARDING THE MEETING AND PROPOSALS
Question 1: What is the purpose of the Annual Meeting?
Answer: At the Meeting stockholders will be asked to vote on the election of
directors and a number of corporate governance proposals embodied in Proposals 2
through 8 (the "Corporate Governance Proposals"), all of which involve amending
the Charter. In particular, Proposal 2 recommends that stockholders approve an
amendment to the Charter to declassify the Board such that the election of all
Directors will be held annually. If approved, the declassification will apply to
the elections held at this Meeting.
Question 2: Who is being nominated for election at the Meeting?
Answer: On the assumption that Proposal 2 (regarding declassification of the
Board) will be approved at the Meeting, the Board has nominated the following
five Directors, each to serve a one-year term until the annual meeting in 2005
and until their successors are duly elected and qualify: Richard I. Barr, Joel
W. Looney, Alfred G. Aldridge, Jr., John S. Horejsi, and Stephen C. Miller. If
stockholders do not approve Proposal 2, the Board has nominated Richard I. Barr
and Alfred G. Aldridge, Jr. to serve for a three-year term expiring in 2007; and
has nominated John S. Horejsi to fill the vacancy resulting from the resignation
of Susan Ciciora to serve the remainder of Ms. Ciciora's term expiring in 2006.
Question 3: Why is the Board recommending these Corporate Governance Proposals?
Answer: The Board's recommendation to declassify and to effect the other
Corporate Governance Proposals is part of an ongoing corporate governance review
and initiative and in keeping with the Board's goal of ensuring that the Fund's
corporate governance policies maximize Board and management accountability to
stockholders. The Board believes that corporate power in America has subtly
shifted from the hands of owners/stockholders to those of boards and managers.
The Board believes that this power should be rightfully returned to
stockholders. The Corporate Governance Proposals seek to accomplish this
return-of-power by giving back to stockholders the ability to effect or have a
voice in effecting certain fundamental corporate changes. The Fund would support
these same corporate governance initiatives in any company in which it seeks to
invest as they are simply sound policies. Notably, most of the Corporate
Governance Proposals are contained in the Fund's proxy voting guidelines. Thus,
if we are going to "practice what we preach", the Fund should similarly adopt
the governance proposals it expects of other companies. At the end of the day,
the Board believes all stockholders will benefit long-term by returning control
of the Fund back to the owners and that the Fund's value and performance may be
enhanced thereby.
Question 4: What is meant by "Declassify the Board" under Proposal 2?
Answer: A "classified" or "staggered" board is divided into several classes and
directors of only one class are elected each year. Currently, the Board is
classified into three separate classes and staggered such that each Director
stands for election every 3 years rather than annually. Proposal 2 would
"declassify" the Board so that each Director will stand for election every year.
If Proposal 2 is approved by stockholders, the "declassifying" will become
effective at this Meeting such that all of the Directors will stand for election
at this Meeting and annually thereafter. By declassifying the Board, directors
become removable by stockholders without cause under Maryland law.
Question 5: Why is the Board recommending declassification?
Answer: The election of Directors is the primary means for stockholders to
exercise influence over the Fund and its policies. Your Board believes that
classified boards have the effect of reducing the accountability of directors to
a company's stockholders. A classified board prevents stockholders from electing
all directors on an annual basis and may discourage proxy contests in which
stockholders have an opportunity to vote for a competing slate of nominees.
While classified boards are viewed by many companies as increasing the long-term
stability and continuity of a board, the Board believes that long-term stability
and continuity should result from the annual election of Directors, which
provides stockholders with the opportunity to evaluate Director performance,
both individually and collectively, on an annual basis.
Question 6: How do Proposal 2 and other Corporate Governance Proposals benefit
or otherwise affect the Fund's largest stockholder (i.e., the Horejsi
Affiliates)?
Answer: The Horejsi Affiliates (defined below) currently own 20.8% of the Fund's
outstanding shares (see "Security Ownership of Certain Beneficial Owners" in the
accompanying Proxy Statement). Horejsi Affiliates also own the Advisers (defined
below) and Administrator (defined below). Under Proposal 2, if a large-block
stockholder is able to significantly influence elections, and all Board members
are up for election annually (i.e., a declassified board), the Horejsi
Affiliates may be able to effect a change of control with respect to the entire
Board in a single election whereas under the current classified structure, such
a change might take two years or more. Similarly, several of the Corporate
Governance Proposals either grant stockholders voting power or decrease the
voting requirement necessary for stockholders to take certain actions (e.g.,
Proposal 4 would give stockholders the power to compel a special stockholder
meeting with 25% of outstanding shares and Proposal 5 would give stockholders
the power to amend the Fund's Bylaws). Because the Horejsi Affiliates own a
large block of the Fund's shares, if the Corporate Governance Proposals are
approved, the Affiliates will have greater influence over the adoption or
failure of certain corporate actions requiring stockholder vote. In particular,
the Horejsi Affiliates would have a greater influence in compelling a special
meeting with the support of only a small percentage of other non-Horejsi
stockholders. Nonetheless, since most of the other actions under the Corporate
Governance Proposals would require the support of either a majority or
two-thirds of outstanding shares for a future change, although the Horejsi
Affiliates could significantly influence adoption of future proposals, assuming
the Horejsi Affiliates maintain their current holdings, it would remain
difficult to accomplish without first soliciting Board approval and non-Horejsi
support. However, in these instances, where an action requires a majority or
two-thirds voting approval, the Horejsi Affiliates may have an effective veto,
again assuming that they maintain their current shareholdings. It should be
noted that, even in the absence of adopting the Corporate Governance Proposals,
the Horejsi Affiliates already have significant influence over the election of
Board members and the adoption or failure of certain corporate actions requiring
a stockholder vote.
Question 7: How do the Horejsi Affiliates intend to vote on the Corporate
Governance Proposals?
Answer: The Horejsi Affiliates intend to vote in favor of each of the Proposals,
including each Corporate Governance Proposal.
Question 8: What does it mean that Directors are elected by a plurality of votes
cast (Proposal 3)?
Answer: Election by a "plurality of votes cast" simply means that in an election
where there are more candidates than there are vacancies to be filled , so long
as a quorum is present, the person receiving the most votes wins. Most public
office elections are determined by a "plurality".
Question 9: Why is the Board recommending reducing to 25% the percentage of the
Fund's outstanding shares required to compel a special meeting of stockholders
to be held (Proposal 4)?
Answer: Presently, under the Fund's Bylaws, stockholders cannot compel the
Fund's Secretary to call a special meeting unless a written request is submitted
by the holders of a majority of outstanding shares entitled to vote at the
meeting. This ownership threshold restricts a stockholder's right to call a
meeting. Proposal 4 would amend the Charter to reduce the percentage ownership
level from a "majority" to 25% of outstanding shares, thus making the potential
for a stockholder or group of stockholders to call a special meeting more
realistic and useful.
Question 10: Why is the Board recommending that the Charter be amended to permit
stockholders to amend the Fund's Bylaws (Proposal 5)?
Answer: The Board believes that all stockholders benefit if they have better
access and more influence in the Fund's governance. The Fund's Bylaws contain
important policies affecting the day-to-day management of the Fund which the
Board believes stockholders should have a voice in establishing. The
stockholders do not currently have the authority to amend the Fund's Bylaws. If
approved, Proposal 5 would amend the Charter to vest in the stockholders the
power to make, alter, amend or repeal Bylaws and ensure that, if stockholders do
make a change, that the Directors will not be able to override or modify what
the stockholders have decided upon.
Question 11: What is the Maryland Unsolicited Takeovers Act and why does the
Board recommend that the Fund be prohibited from becoming subject to it
(Proposal 6)?
Answer: The Maryland Unsolicited Takeovers Act ("MUTA") is a Maryland statute
pursuant to which the Board, among other things, could effect one or more of the
following actions: classify the Board, place super-majority voting requirements
on removal of Directors and require a request by holders of a majority of
outstanding shares to compel a special stockholders meeting. In 2000, the Fund's
prior Board elected to be subject to certain provisions of MUTA. However, the
current Board has resolved to rescind that prior election and is recommending
that stockholders prohibit future Boards from electing to be subject to MUTA
without prior stockholder approval. The Board believes MUTA only serves to
lessen the stockholders' influence over a board and thus has the potential to
diminish a board's responsiveness and accountability. The Board believes that
amending the Charter to prohibit the Fund from opting into MUTA without prior
approval by stockholders enhances the responsiveness and accountability of the
Board.
Question 12: Why is the Board recommending amending the Charter to alter the
stockholder vote necessary to effect "business combinations" and other
extraordinary corporate actions (Proposal 7)?
Answer: Proposal 7 would amend the Charter to change the stockholder vote
requirement to approve extraordinary corporate actions such as business
combinations (e.g., mergers, consolidations, share exchanges), open-ending the
Fund, liquidation, specific investment decisions, and certain self tenders. The
Board believes that most of the Fund's stockholders seek the long-term stability
and certainty offered by the closed-end investment company structure. The Board
believes that adopting this Proposal will assure that stockholder proposals that
could dramatically change the structure, operations or investments of the Fund
are not implemented except where there is widespread stockholder support. The
actions of arbitrageurs, who often have short-term goals at odds with long-term
stockholders, can increase Fund expenses if the Fund is forced to address
proposals to permit stockholders to effect extraordinary actions. Adopting the
proposed change may avoid such expenses.
Question 13: How does the Board recommend that stockholders vote on the various
proposals?
Answer: If no instructions are indicated on your proxy, the representatives
holding proxies will vote in accordance with the recommendations of the Board.
The Board, including all of the Independent Directors, has unanimously
recommended that stockholders vote FOR all of the Proposals.
Question 14: Are other technical amendments contemplated under the Corporate
Governance Proposals?
Answer: Yes. The Board has recommended Proposal 9 to amend and restate the
Charter. The purpose of this Proposal is to consolidate into one document all of
the provisions of the Charter (including amendments approved at the Meeting) and
to make technical amendments in the event that the other Corporate Governance
Proposals are approved. If Proposals 2 through 9 are approved, the Fund will
file with the State Department of Assessments and Taxation of Maryland ("SDAT")
Articles of Amendment and Restatement attached to this Proxy Statement as
Exhibit A (the "Articles of Amendment and Restatement").
Question 15: What happens if certain Corporate Governance Proposals are approved
by stockholders and others are not?
Answer: If certain of the Corporate Governance Proposals are approved by
stockholders and others are not, the Fund will not implement Proposal 9 and will
not file the Articles of Amendment and Restatement. Instead, the Fund will file
Articles of Amendment with the SDAT that will contain only the amendments of the
Charter approved by stockholders at the Meeting.
Question 16: Who is entitled to vote?
Answer: Stockholders of record at the close of business on April 2, 2004 (the
"Record Date") are entitled to notice of and to vote at the Meeting. Each of the
shares outstanding on the Record Date is entitled to one vote on each of the
Proposals. As explained more fully in the Proxy Statement, if Proposal 2
(Declassification of the Board) is approved at the Meeting, then stockholders
will be entitled to vote for the five Directors standing for election at the
Meeting. If Proposal 2 is not approved at the Meeting, stockholders will be
entitled to vote for the two Directors standing for election.
Question 17: What is the required quorum for the Meeting?
Answer: The holders of at least a majority of the outstanding common shares must
be represented at the Meeting, either in person or by proxy, in order to
constitute a quorum permitting business to be conducted at the Meeting. If you
have completed, executed and returned valid proxy instructions (in writing, by
phone or by Internet) or attend the Meeting and vote in person, your shares will
be counted for purposes of determining whether there is a quorum, even if you
abstain from voting on any or all matters introduced at the Meeting.
Question 18: How do I vote?
Answer: Your vote is very important. Stockholders can vote in person at the
Meeting or authorize proxies to cast their votes ("proxy voting") by proxy. Most
stockholders will have a choice of proxy voting over the Internet at
http://www.proxyvote.com, by using a toll-free telephone number or by completing
a Proxy Card and mailing it in the postage-paid envelope provided. Please refer
to your Proxy Card or the information forwarded by your bank, broker or other
nominee to see which options are available to you. If you proxy vote by Internet
or telephone, you do NOT need to return your Proxy Card. If you vote by proxy,
the individuals named on the Proxy Card as proxy holders will vote your shares
in accordance with your instructions. You may specify whether your shares should
be voted for all, some or none of the nominees for director and whether your
shares should be voted for or against the other proposals. If you execute an
otherwise valid proxy but do not provide voting instructions, the persons named
as proxies will cast your votes FOR all of the Proposals.
Question 19: Can I revoke or change my proxy?
Answer: Yes. You may change or revoke your proxy at any time before the Meeting
by timely delivery of a properly executed, later-dated proxy (including an
Internet or phone vote), by sending a written revocation to the Secretary of the
Fund at the Fund's address listed on the accompanying Notice of Meeting, or by
attending and voting in person at the Meeting. The powers of the proxy holders
will be suspended with respect to your shares if you attend the meeting in
person and so request, but attendance at the Meeting will not by itself revoke a
previously granted proxy.
[GRAPHIC OMITTED] BOULDER GROWTH & INCOME FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
ANNUAL MEETING OF STOCKHOLDERS
May 18, 2004
PROXY STATEMENT
This proxy statement ("Proxy Statement") for Boulder Growth & Income Fund,
Inc., a Maryland corporation ("BIF" or the "Fund"), is furnished in connection
with the solicitation of proxies by the Fund's Board of Directors (collectively,
the "Board" and individually, the "Directors") for use at the Annual Meeting of
Stockholders of the Fund to be held on Tuesday May 18, 2004, at 9:00 a.m.
Mountain Standard Time (local time), at the Doubletree La Posada Resort, 4949 E.
Lincoln Drive, Scottsdale, Arizona, and at any adjournments and postponements
thereof (the "Meeting"). A Notice of Annual Meeting of Stockholders and proxy
card for the Fund accompany this Proxy Statement. Proxy solicitations will be
made, beginning on or about April 5, 2004, primarily by mail, but proxy
solicitations may also be made by telephone, by Internet on the Fund's web site,
telegraph or personal interviews conducted by officers of the Fund and PFPC
Inc., the transfer agent and co-administrator of the Fund, and by MacKenzie
Partners, Inc. ("MacKenzie"), the Fund's proxy solicitor. MacKenzie's fee to
assist in the solicitation of proxies is estimated to be $7,500 plus expenses.
The costs of proxy solicitation and expenses incurred in connection with the
preparation of this Proxy Statement and its enclosures will be paid by the Fund.
The Fund also will reimburse brokerage firms and others for their expenses in
forwarding solicitation material to the beneficial owners of its shares. The
Board has fixed the close of business on April 2, 2004 as the record date (the
"Record Date") for the determination of stockholders entitled to notice of and
to vote at the Meeting.
The Annual Report of the Fund, including audited financial statements for
the fiscal period ended November 30, 2003, has been mailed to stockholders.
Additional copies are available upon request, without charge, by calling
1-800-331-1710. The report is also viewable online at the Fund's website at
www.boulderfunds.net. The report is not to be regarded as proxy solicitation
material.
Boulder Investment Advisers, L.L.C. ("BIA"), 1680 38th Street, Suite 800,
Boulder, Colorado 80301 and Stewart Investment Advisers ("SIA"), Bellerive,
Queen Street, St. Peter, Barbados, currently serve as co-investment advisers to
the Fund. BIA and SIA are collectively referred to herein as the "Advisers".
Fund Administrative Services, L.L.C., serves as co-administrator to the Fund and
is located at 1680 38th Street, Suite 800, Boulder, Colorado 80301. PFPC Inc.
acts as the transfer agent and co-administrator to the Fund and is located at
4400 Computer Drive, Westborough, Massachusetts 01581.
If the enclosed proxy is properly executed and returned by May 18, 2004 in
time to be voted at the Meeting, the Shares (as defined below) represented
thereby will be voted in accordance with the instructions marked thereon. Unless
instructions to the contrary are marked thereon, a proxy will be voted FOR the
election of the nominees for Directors, FOR each of the other Proposals and, in
the discretion of the proxy holders, on any other matters that may properly come
before the Meeting. Any stockholder who has given a proxy has the right to
revoke it at any time prior to its exercise either by attending the Meeting and
casting his or her votes in person or by submitting a letter of revocation or a
later-dated proxy to the Fund's Secretary at the above address prior to the date
of the Meeting.
A quorum of the Fund's stockholders is required for the conduct of business
at the Meeting. Under the Bylaws of the Fund, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the outstanding
shares of the Fund as of the Record Date. In the event that a quorum is not
present at the Meeting, or in the event that a quorum is present but sufficient
votes to approve one or more proposals are not received, the persons named as
proxies may propose and vote for one or more adjournments of the Meeting to
permit further solicitation of proxies with respect to any proposal that did not
receive the votes necessary for its passage. With respect to those proposals for
which there is represented a sufficient number of votes in favor, actions taken
at the Meeting will be approved and implemented irrespective of any adjournments
with respect to any other proposals. Any such adjournment will require the
affirmative vote of a majority of votes cast on the matter at the Meeting. If a
quorum is present, the persons named as proxies will vote those proxies which
they are entitled to vote FOR any proposal in favor of such an adjournment and
will vote those proxies required to be voted AGAINST any proposal against any
such adjournment.
The Fund has one class of capital stock: common stock, par value $0.01 per
share (the "Common Stock" or the "Shares"). On the Record Date, there were
11,327,784 Shares issued and outstanding. Each Share is entitled to one vote at
the Meeting and fractional shares are entitled to proportionate shares of one
vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The following table sets
forth certain information regarding the beneficial ownership of the Shares as of
the Record Date by each person who may be deemed by the Fund to beneficially own
5% or more of the Common Stock.
Name of Owner* Number of Shares Number of Shares Percentage
Directly Owned Beneficially Owned Beneficially Owned
------------------------------------- ------------------ ---------------------- -----------------------
Ernest Horejsi Trust No. 1B 2,354,600 2,354,600 20.79%
Badlands Trust Company --- ---** 20.79%
Stewart R. Horejsi Trust No. 2 --- ---** 20.79%
Aggregate Shares Owned** 2,354,600 2,354,600 20.79%
* The address of each listed owner is c/o Badlands Trust Company, POB 801, 614
Broadway, Yankton, South Dakota 57078.
** Excludes shares owned by the Ernest Horejsi Trust No. 1B (the "EH Trust").
Badlands Trust Company ("Badlands") is one of three trustees of the EH Trust.
Badlands is a trust company organized under the laws of South Dakota and is
wholly owned by the Stewart R. Horejsi Trust No. 2, an irrevocable trust
organized by Stewart R. Horejsi for the benefit of his issue. The directors of
Badlands are Larry Dunlap, Stephen C. Miller, Robert Ciciora, who is the brother
of Mr. Horejsi's son-in-law (John Ciciora), Gail G. Gubbels and Marty Jans.
Badlands and its directors disclaim beneficial ownership of shares owned by the
EH Trust. Together with Larry Dunlap and Badlands, Ms. Ciciora is a trustee of
the EH Trust and also one of the beneficiaries of the EH Trust. Mr. Miller is an
officer and director of Badlands. Because two of the Trust's trustees are
required in order for the Trust to vote or exercise dispositive authority with
respect to shares owned by the Trust, Ms. Ciciora and Mr. Miller each disclaim
beneficial ownership of such shares.
----------------------------
The EH Trust, Badlands and the Stewart R. Horejsi Trust No. 2, as well as other
Horejsi affiliated trusts and entities are collectively referred to herein as
the "Horejsi Affiliates". Information as to beneficial ownership in the previous
paragraph has been obtained from a representative of the beneficial owners; all
other information as to beneficial ownership is based on reports filed with the
Securities and Exchange Commission (the "SEC") by such beneficial owners.
As of the Record Date, Cede & Co., a nominee partnership of the Depository
Trust Company, held of record, but not beneficially, 10,235,192 shares or 90.35%
of Common Stock outstanding of the Fund.
As of the Record Date, the executive officers and directors of the Fund, as
a group, owned 2,509,929 shares of Common Stock (this amount includes the
aggregate shares of Common Stock owned by the Horejsi Affiliates set forth
above), representing 22.16% of Common Stock.
In order that your Shares may be represented at the Meeting, you are
requested to vote on the following matters:
PROPOSAL 1
ELECTION OF DIRECTORS OF THE FUND
The Charter provides that the Board is divided into three classes, each
class having a term of three years. Each year the term of one class expires and
the individuals elected to such class serve for a three-year term until their
successors are duly elected and qualify. The terms of two of the Directors
(Richard I. Barr and Alfred G. Aldridge, Jr., both Class III Directors of the
Fund) expire at the Meeting. In addition, Susan Ciciora, one of the Class II
Directors has submitted her resignation and the Nominating Committee (defined
below) has nominated John S. Horejsi to fill her vacancy. Accordingly, John
Horejsi will stand for election at the Meeting.
As discussed in Proposal 2 below, this Proxy Statement contains a proposal
to amend the Charter to "declassify" the Board and require annual election of
all Directors beginning at this Meeting. If Proposal 2 is approved, the
Directors whose terms would not otherwise expire at the Meeting have agreed to
resign and stand for reelection at this Meeting for one-year terms expiring at
the annual meeting of stockholders in 2005.
IF PROPOSAL 2 IS APPROVED. If stockholders approve Proposal 2 regarding
declassification of the Board, proxy holders will propose and vote to adjourn
the Meeting for a short time in order for the amendments to the Charter to be
filed with the State Department of Assessments and Taxation of Maryland
("SDAT"). Once the proper amending documents are filed, the Meeting will be
reconvened and the following five Director nominees will stand for election,
each for a one-year term and until their successors are duly elected and
qualify: Richard I. Barr, Joel W. Looney, Alfred G. Aldridge, Jr., John S.
Horejsi and Stephen C. Miller. As discussed above, John Horejsi was nominated by
the Nominating Committee to fill the vacancy resulting from the resignation of
Susan Ciciora, whose resignation becomes effective as of the date of the
Meeting. The above nominees have consented to serve as Directors if elected at
the Meeting for the one-year term.
IF PROPOSAL 2 IS NOT APPROVED. If stockholders do not approve Proposal 2
regarding declassification of the Board, the Board has nominated
(i) Alfred G. Aldridge, Jr. and Richard I. Barr, both Class III
Directors, to serve for a three-year term to expire at the Fund's
annual meeting in 2007 and until their successors are duly elected and
qualify; and
(ii) John S. Horejsi, a Class II Director, to serve the remainder
of the Class II term to expire at the Fund's annual meeting in 2006
and until his successor is duly elected and qualifies.
Stephen C. Miller, a Class I Director of the Fund, was elected on October 1,
2002 for a three-year term to expire at the Fund's 2005 annual meeting of
stockholders and until his successor is duly elected and qualifies. Susan L.
Ciciora, who as discussed above has submitted her resignation, and Joel W.
Looney, both Class II Directors of the Fund, were elected on April 22, 2003, for
a three-year term to expire at the Fund's 2006 annual meeting of stockholders
and until their successors are duly elected and qualify.
The above nominees have consented to serve as Directors if elected at the
Meeting either for the three-year term (in the case of Messrs. Aldridge and
Barr) or the remainder of Ms. Ciciora's Class II term expiring in 2006 (in the
case of John Horejsi). If the designated nominees decline or otherwise become
unavailable for election, however, the proxy confers discretionary power on the
persons named therein to vote in favor of a substitute nominee or nominees.
INFORMATION ABOUT DIRECTORS AND OFFICERS. Set forth in the following table
is information about the nominees for election to the Board of Directors, all of
whom, with the exception of Mr. Horejsi, are currently Directors of the Fund:
------------------------------ ------------------------ ---------------------------------------------- ------------------
Name, Address*, Age Position, Length of Principal Occupation(s) and Other Number of Funds
Term Served, and Term Directorships Held During the Past Five Years in Fund Complex
of Office Overseen by
Director
------------------------------ ------------------------ ---------------------------------------------- ------------------
Independent Directors
------------------------------ ------------------------ ---------------------------------------------- ------------------
Alfred G. Aldridge, Jr. Director of the Fund Retired; from 1982-2002, Sales Manager of 2
Brig. Gen. (Retired) since January 2002. Shamrock Foods Company; Director of the
Cal. Air National Guard Current Nominee for a Fiesta Bowl, Tempe, AZ since 1997;
Age: 66 term to expire at the Director, Boulder Total Return Fund, Inc.,
2007 annual meeting, since 1999; Director, Maricopa Youth
unless Proposal 2 is Assistance Foundation, Phoenix, AZ since
approved 2004.
Richard I. Barr Director of the Fund Retired; from 1963-2001, Manager of 3
Age: 65 since January 2002. Advantage Sales and Marketing, Inc;
Current Nominee for a Director, Boulder Total Return Fund, Inc.,
term to expire at the since 1999 and Chairman of the Board since
2007 annual meeting, 2003; Director, First Financial Fund, Inc.,
unless Proposal 2 is since 2001.
approved
Joel W. Looney Director of the Fund Partner, Financial Management Group, LLC 3
Age: 42 since January, 2002. since July 1999; CFO, Bethany College from
Current term expires 1995 -1999; Director, Boulder Total Return
at the 2006 annual Fund, Inc., since January 2001; Director and
meeting, unless Chairman of the Board, First Financial Fund,
Proposal 2 is approved Inc. since August 2003.
Interested Directors**
John S. Horejsi Current nominee for a President of Hojo Records, LLC since 2001; 1
Age: 36 term to expire at the Director of Horejsi Charitable Foundation
2006 annual meeting, since 1997.
unless Proposal 2 is
approved
Stephen C. Miller Director and Chairman President of and General Counsel for Boulder 3
Age: 51 of the Board since Investment Advisers, LLC; Manager, Fund
January 2002. Administrative Services, LLC ("FAS"); Vice
President of the President of Stewart Investment Advisers;
Fund. Current term Director, and President of Boulder Total
expires at the 2005 Return Fund, Inc., since 1999; Director and
annual meeting, unless President, First Financial Fund, Inc. since
Proposal 2 is approved August 2003; President and General Counsel,
Horejsi, Inc. (liquidated in 1999); General
Counsel, Brown Welding Supply, LLC (sold in
1999); officer of various other Horejsi
Affiliates; Of Counsel, Krassa & Miller, LLC
since 1991.
* Unless otherwise specified, the Directors' respective addresses are c/o
Boulder Growth & Income Fund, Inc., 1680 38th Street, Suite 800, Boulder,
Colorado 80301.
** Mr. Miller is an "interested person" because he is an officer of BIA and SIA,
the Fund's investment advisers. Mr. Horejsi is an "interested person" as a
result of the extent of his beneficial ownership of Fund shares and by virtue of
his indirect beneficial ownership of BIA and FAS.
----------------------------
From the late 1980's until January, 2001, Mr. Looney had served, without
compensation, as one of three trustees of the Mildred Horejsi Trust, an
affiliate of the EH Trust.
The names of the executive officers of the Fund (other than Mr. Miller, who
is described above) are listed in the table below. Each officer was elected to
office by the Board at a meeting held on April 22, 2003. This table also shows
certain additional information. Each officer will hold such office until a
successor has been elected by the Board.
------------------------------ -------------------------- ----------------------------------------------------------
Position, Length of
Name, Address, Age Term Served, and Term of Principal Occupation(s) and Other Directorships held
Office During the Past Five Years
------------------------------ -------------------------- ----------------------------------------------------------
Carl D. Johns Chief Financial Officer, Vice President and Treasurer of BIA and Assistant
1680 38th Street, Chief Accounting Manager of FAS, since April, 1999; Vice President, Chief
Suite 800 Officer, Vice President Financial Officer and Chief Accounting Officer, Boulder
Boulder, CO 80301 and Treasurer since Total Return Fund, Inc., since 1999; Vice President,
Age: 41 January 2002. Appointed Chief Financial Officer and Chief Accounting Officer,
annually. First Financial Fund, Inc., since August 2003.
Stephanie Kelley Secretary since January Secretary, Boulder Total Return Fund, Inc., since
1680 38th Street, 2002. Appointed October 27, 2000; Secretary, First Financial Fund, Inc.,
Suite 800 annually. since August 2003; Assistant Secretary and Assistant
Boulder, CO 80301 Treasurer of various Horejsi Affiliates; employee of FAS
Age: 47 since March 1999.
Set forth in the following table are the nominees for election to the
Board, assuming Proposal 2 is approved (all of whom, other than Mr. Horejsi, are
current Directors of the Fund) together with the dollar range of equity
securities beneficially owned by each Director as of the Record Date, as well as
the aggregate dollar range of the Fund's equity securities in all funds overseen
in a family of investment companies (i.e., other funds managed by BIA and SIA
(collectively, the "Advisers")).
OWNERSHIP OF THE FUND BY DIRECTORS
---------------------------------------------------------------------------------------------------------
Independent Directors and Nominees Dollar Range of Equity Aggregate Dollar Range of
Securities in the Fund Equity Securities in All Funds
in the Family of Investment
Companies
Alfred G. Aldridge, Jr. $10,001 to $50,000 $10,001 to $50,000
Richard I. Barr $50,001 to $100,000 Over $100,000
Joel W. Looney $10,001 to $50,000 $50,000 to $100,000
Interested Directors and Nominees
-------------------------------------- -------------------------------- ---------------------------------
John S. Horejsi Over $100,000+ Over $100,000
Stephen C. Miller Over $100,000++ Over $100,000
+ 2,354,600 Shares of the Fund are held by the EH Trust. Accordingly, Mr.
Horejsi may be deemed to have indirect beneficial ownership of such Shares. Mr.
Horejsi disclaims all such beneficial ownership. Mr. Horejsi does not directly
own any shares of the Fund.
++ Mr. Miller indirectly owns and controls 7,600 shares of the Fund through his
membership in Erma Miller, LLC. Mr. Miller is also a director and officer of
Badlands Trust Company. By virtue of such relationships, Mr. Miller may be
deemed to share the indirect power to vote and direct the disposition of the
Shares directly and beneficially held by EH Trust and Badlands Trust Company.
Mr. Miller disclaims beneficial ownership of such Shares.
----------------------------
None of the independent Directors or their family members owned
beneficially or of record any securities of the Advisers or any person directly
or indirectly controlling, controlled by, or under common control with the
Advisers.
DIRECTOR AND OFFICER COMPENSATION. The following table sets forth certain
information regarding the compensation of the Fund's Directors for the fiscal
year ended November 30, 2003. No persons (other than the independent Directors,
as set forth below) currently receive compensation from the Fund for acting as a
Director or officer. Directors and executive officers of the Fund do not receive
pension or retirement benefits from the Fund. Directors receive reimbursement
for travel and other out of pocket expenses incurred in connection with Board
meetings.
Aggregate
Compensation
Name of Person and Position with the from the Fund Total Compensation from
Fund Paid to the Fund and Fund Complex
Directors Paid to Directors
----------------------------------------- ------------------- ----------------------------
Alfred G. Aldridge, Jr., Director $14,530 $ 37,784
(2 funds)
Richard I. Barr, Director $14,530 $ 50,713
(3 funds)
Joel W. Looney, Director $15,530 $ 45,784
(3 funds)
Susan L. Ciciora, Director $0 $0
John S. Horejsi, Director nominee $0 $0
Stephen C. Miller, President of the $0 $0
Fund, Chairman of the Board and Director
Prior to October 15, 2003, each Director of the Fund who is not a director,
officer or employee of one of the Advisers, or any of their affiliates, received
a fee of $3,000 for each in-person meeting, and $500 for each telephone meeting.
As of October 15, 2003, each Director of the Fund who was not a Director,
officer or employee of one of the Advisers, or any of their affiliates, receives
a fee of $8,000 per annum plus $3,000 for each in person meeting, $500 for each
Audit Committee meeting ($1,000 for the independent Chairman of the Audit
Committee) and $500 for each telephonic meeting of the Board. Each Director of
the Fund is reimbursed for travel and out-of-pocket expenses associated with
attending Board and Committee meetings. The Board held six meetings (two of
which were held by telephone conference call) during the fiscal year ended
November 30, 2003. Each Director currently serving in such capacity attended at
least 75% of the meetings of Directors and any Committee of which he is a
member. The aggregate remuneration paid to the Directors of the Fund for acting
as such during the fiscal year ended November 30, 2003 amounted to $44,590.72 .
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE; REPORT OF AUDIT COMMITTEE. The purposes of the Audit
Committee are to assist Board oversight of the integrity of the Fund's financial
statements, the Fund's compliance with legal and regulatory requirements, the
independent auditor's qualifications and independence and the performance of the
Fund's independent auditors. The Audit Committee reviews the scope and results
of the Fund's annual audit with the Fund's independent accountants and
recommends the engagement of such accountants. Management, however, is
responsible for the preparation, presentation and integrity of the Fund's
financial statements, and the independent accountants are responsible for
planning and carrying out proper audits and reviews. The Board of Directors
adopted a written charter for the Audit Committee on January 23, 2002 and most
recently amended the Charter on January 23, 2004. A copy of the Audit Committee
Charter is attached hereto as Exhibit B. The Audit Committee is composed
entirely of the Fund's independent Directors, consisting of Messrs. Aldridge,
Barr and Looney. Each member of the Audit Committee is independent, as that term
is defined by the NYSE Listing Standards. The Audit Committee met two times
during the fiscal year ended November 30, 2003.
In connection with the audited financial statements as of and for the
period ended November 30, 2003 included in the Fund's Annual Report for the
period ended November 30, 2003 (the "Annual Report"), at a meeting held on
January 23, 2004, the Audit Committee considered and discussed the audited
financial statements with management and the independent accountants, and
discussed the audit of such financial statements with the independent
accountants.
The Audit Committee has received the written disclosures and letter from
the independent accountants required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and has discussed with
independent accountants their independence. The Audit Committee discussed with
the independent accountants the accounting principles applied by the Fund and
such other matters brought to the attention of the Audit Committee by the
independent accountants required by Statement of Auditing Standards No. 61,
Communications With Audit Committees, as currently modified or supplemented.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not employed by the Fund for
accounting, financial management or internal control. Moreover, the Audit
Committee relies on and makes no independent verification of the facts presented
to it or representations made by management or the independent accountants.
Accordingly, the Audit Committee's oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting principles and policies, or internal controls and
procedures, designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not provide assurance that
the audit of the Fund's financial statements has been carried out in accordance
with generally accepted accounting standards or that the financial statements
are presented in accordance with generally accepted accounting principles.
Based on its consideration of the audited financial statements and the
discussions referred to above with management and the independent accountants
and subject to the limitation on the responsibilities and role of the Audit
Committee set forth in the Charter and those discussed above, the Audit
Committee of the Fund recommended to the Board that the audited financial
statements be included in the Fund's Annual Report and be mailed to stockholders
and filed with the SEC.
Submitted by the Audit Committee of the Fund's Board of Directors:
Alfred G. Aldridge, Jr.
Richard I. Barr
Joel W. Looney
NOMINATING COMMITTEE. The Board of Directors has a nominating committee
(the "Nominating Committee") consisting of Messrs. Looney, Aldridge and Barr,
which is responsible for considering candidates for election to the Board in the
event a position is vacated or created. Each member of the Nominating Committee
is independent, as that term is defined by the NYSE Listing Standards. The
Nominating Committee did not meet during the fiscal year ended November 30,
2003. The Nominating Committee met on March 17, 2004, to consider the nomination
of John S. Horejsi, the son of Stewart R. Horejsi, the Fund's portfolio manager.
John Horejsi was being considered to fill a vacancy on the Board resulting from
the resignation of Susan Ciciora. At this meeting, the Nominating Committee
considered the qualifications and determined the suitability of John Horejsi to
be Director and resolved to recommend John Horejsi to stockholders for election
at the Meeting. If elected, John Horejsi would be an "interested" Director. The
Board of Directors has adopted a charter for the Nominating Committee that is
available on the Fund's website, www.boulderfunds.net
The Nominating Committee does not have a formal process for identifying
candidates. The Nominating Committee takes into consideration such factors as it
deems appropriate when nominating candidates. These factors may include
judgment, skill, diversity, experience with investment companies and other
organizations of comparable purpose, complexity, size and subject to similar
legal restrictions and oversight, the interplay of the candidate's experience
with the experience of other Board members, and the extent to which the
candidate would be a desirable addition to the Board and any committees thereof.
The Nominating Committee will consider all qualified candidates in the same
manner. The Nominating Committee may modify its policies and procedures for
director nominees and recommendations in response to changes in the Fund's
circumstances, and as applicable legal or listing standards change.
The Nominating Committee would consider director candidates recommended by
stockholders (if a vacancy were to exist) and submitted in accordance with
applicable law and procedures as described in this Proxy Statement (see
"Submission of Stockholder Proposals" below). Such recommendations should be
forwarded to the Secretary of the Fund.
The Fund does not have a compensation committee.
OTHER BOARD-RELATED MATTERS.
Stockholders who wish to send communications to the Board should send them
to the address of the Fund and to the attention of the Board. All such
communications will be directed to the Board's attention.
The Fund does not have a formal policy regarding Board member attendance at
the Annual Meeting of Stockholders; however, all of the Directors of the Fund
attended the April 22, 2003 Annual Meeting of Stockholders.
REQUIRED VOTE.
If Stockholders Approve Proposal 2. If stockholders approve Proposal 2 and thus
declassify the Board, the election of Messrs. Looney, Aldridge, Barr, Horejsi
and Miller as Directors will require the affirmative vote of a plurality of the
votes cast by holders of the Common Stock at the Meeting in person or by proxy
on Proposal 1.
If Stockholders Do Not Approve Proposal 2. If stockholders do not approve
Proposal 2, and thus the Board remains classified, the election of Mr. Aldridge
and Mr. Barr as Class III Directors, and Mr. Horejsi as a Class II Director,
will require the affirmative vote of a plurality of the votes cast by the
holders of the Common Stock at the Meeting in person or by proxy on Proposal 1.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF ALL THE NOMINEES.
PROPOSAL 2
AMENDMENT TO THE CHARTER TO DECLASSIFY THE BOARD AND PROVIDE
FOR ANNUAL ELECTION OF DIRECTORS
The Charter currently provides that the Board is divided into three classes
with each class to be nearly as equal in number as possible. The Charter also
provides that the three classes of Directors have staggered terms, so that the
term of only one class expires at each annual meeting of stockholders and each
class is elected to a three-year term. The Board proposes and unanimously
recommends that stockholders approve an amendment to the Charter to declassify
the Board and provide for the annual election of Directors beginning at this
Meeting (the "Declassification Proposal"). If the Declassification Proposal is
approved by stockholders, because the Charter does not provide otherwise,
Directors may thereafter be removed by the stockholders "without cause".
If the stockholders approve the Declassification Proposal, the Fund will
take action to implement declassification by filing the appropriate charter
documents with the SDAT.
If Proposal 2 is approved, Article Sixth, paragraph 2 of the Charter would
be repealed in its entirety and replaced with the following language:
The directors shall be elected at each annual meeting of the stockholders
commencing in 2004, except as necessary to fill any vacancies, and each
director elected shall hold office until his or her successor is duly
elected and qualifies, or until his or her earlier resignation, death, or
removal.
If Proposal 2 is approved by stockholders, any subsequent proposal to amend the
Charter to classify the Board would require the affirmative vote of a majority
of all the votes entitled to be cast on the matter. In addition, the Fund's
Bylaws contain provisions that are similar to certain of those in the Charter
that are proposed to be changed hereunder. If the Charter is amended, the
corresponding provision in the Bylaws will be amended by the Board in a like
manner. The Board also intends to consider certain additional corporate
governance-related changes to the Bylaws, including modifying the provision
setting forth the prior notice required for stockholders to propose matters to
be considered at a regular or special meeting.
Purpose of the Amendment. The Board is submitting the Declassification Proposal
to stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize management accountability to stockholders. The election of Directors is
the primary means for stockholders to exercise influence over the Fund and its
policies. Your Board believes that classified boards are often viewed as having
the effect of reducing the accountability and responsiveness of directors to a
company's stockholders. A classified board limits the power of stockholders to
elect all directors on an annual basis and may discourage proxy contests in
which stockholders have an opportunity to vote for a competing slate of
nominees. Moreover, accumulations of large stockholder positions are sometimes
followed by proxy contests. Declassifying the Board could therefore make it more
likely that an acquirer may precipitate actions that would result in the Fund's
stockholders receiving a premium over the Fund's then current market price for
their shares. However, if the Declassification Proposal is approved, the entire
Board could be removed in any single year, which could make it more difficult to
discourage persons from engaging in proxy contests or otherwise seeking control
of the Fund on terms that the then-incumbent Board did not believe are in the
best interest of the Fund. In addition, classified boards are viewed by many
companies as increasing the long-term stability and continuity of a board and
the company it serves; however, the Board believes that long-term stability and
continuity should result from the annual election of Directors, which provides
stockholders with the opportunity to evaluate the Directors' performance, both
individually and collectively, on an annual basis.
Effect of the Approval of the Amendment on Election of Directors. As more fully
discussed above, if the Declassification Proposal is approved, the Meeting will
be recessed briefly so that (i) the appropriate charter documents may be filed
with the SDAT, (ii) all of the Directors whose terms would not otherwise expire
at the Meeting may resign and (iii) John Horejsi and the incumbent Directors
other than Mr. Horejsi will stand for re-election.
Board Considerations Regarding Declassification and Other Corporate Governance
Proposals. The Board first considered the Declassification Proposal and other
Corporate Governance Proposals at its regularly scheduled meeting in January
2004. At the January meeting, the Board held informal meetings and a separate
executive session during which the significant aspects of the Corporate
Governance Proposals were discussed in detail. Also at the January meeting, the
Directors who are not "interested persons" of the Fund, as defined in the 1940
Act (the "Independent Directors") met separately with Fund counsel as well as
counsel for the Independent Directors to generally discuss the Corporate
Governance Proposals. At that time, the Board determined that it should defer
any action on the Corporate Governance Proposals pending further analysis and
consideration. Based on questions raised during the January meeting, the Board
directed management to prepare additional materials and analysis to refine the
Corporate Governance Proposals for the Board's subsequent review and
consideration. At a special meeting of the Board held in February 2004, the
Board again met to discuss the Corporate Governance Proposals and to consider
the supplementary analysis and materials prepared by management. The Independent
Directors met separately with Fund counsel, the Fund's Maryland counsel and
counsel for the Independent Directors to discuss the refined proposal and
supplementary materials. Again, at this meeting, the Board determined to defer
any immediate action on the proposals and directed management to prepare
additional materials including specific language for amending the Charter for
each of the Corporate Governance Proposals. On March 17, 2004, management
presented specific language and additional requested materials for each of the
Corporate Governance Proposals. At this meeting, the Board, including the
Independent Directors, unanimously resolved to recommend the Corporate
Governance Proposals, including the Declassification Proposal, for approval by
stockholders.
In considering the Declassification Proposal, the Board recognized that the
Horejsi Affiliates own a substantial and influential interest in the Fund (see
"Security Ownership of Certain Beneficial Owners" above) and a controlling
interest in the Advisers and FAS. The Board recognized that, because a
large-block stockholder is able to significantly influence elections, if all
Board members were elected annually (i.e., a declassified board), the Horejsi
Affiliates may be able to significantly influence a change of the entire Board
in a single election. However, the Board noted that, even under the current
classified structure, such a change would likely only take two years. Moreover,
notwithstanding a classified structure, the Horejsi Affiliates or any other
significant group of stockholders could seek to replace a majority of the
Directors in a single year by soliciting the votes of enough other holders of
Common Stock to remove the Directors as permitted under the Maryland General
Corporation Law (although there is, of course, no assurance that the Horejsi
Affiliates or such other group of stockholders would be successful in any such
effort).
The Board noted that the potential ability to replace a majority of the
Board in a single year may have the effect of increasing the Horejsi Affiliates'
influence over the Board, including with respect to matters on which the
interests of the Horejsi Affiliates, on one hand, and the non-Horejsi
stockholders, on the other, might diverge. For example, if the Declassification
Proposal is approved, the Horejsi Affiliates may be viewed as having
significantly greater influence over the Board with respect to future renewal of
the Fund's investment advisory and administrative contracts, which are presently
with companies owned by the Horejsi Affiliates. The Board also noted that, in
the unlikely event that the Horejsi Affiliates were able to effect repeated
changes in the composition of the Board, the continuity of experience on the
Board could be diminished, the Fund's ability to attract qualified director
candidates to serve on the Board could be lessened, and the Board might find it
more difficult to engage in strategic, long-term planning. Although one of the
effects of the Declassification Proposal would be that the Horejsi Affiliates
would have a greater influence in unseating the entire Board in a single year,
or may be able to initiate repeated attempts to change the Board's composition,
representatives of the Horejsi Affiliates have advised the Fund that they have
no current plan or intention to take any such steps.
In its consideration of the Declassification Proposal, the Board noted that
one perceived benefit of a classified Board is that it lengthens the time
required for a substantial stockholder to gain control of the Board. Thus, a
classified Board may discourage attempts to remove Directors and could serve to
prevent a sudden change of control. Under a classified structure, the Board
would have more time to review any proposed business transaction and consider
all relevant factors, in an open and orderly process, and the Board would have
more negotiating leverage and flexibility to make decisions that are in the best
interests of the Fund. In the case of the Fund, however, the Board concluded
that the Horejsi Affiliates' current ownership of approximately 22% of the
voting power of the outstanding Common Stock may dissuade any acquisition of
control of the Fund by another party, and therefore, for so long as the Horejsi
Affiliates retain an influential ownership in the Fund and act together,
eliminating the classified Board is not likely to increase the Fund's
vulnerability to attempts to remove Directors in any material respect. If
ownership by the Horejsi Affiliates is significantly reduced, the Board believes
that it nonetheless would be able to fulfill its duties to the Fund in the
circumstances described in this paragraph.
Because the Declassification Proposal may give the Horejsi Affiliates
greater influence over the Board, and therefore the interests of the non-Horejsi
stockholders and the Horejsi Affiliates may diverge with respect to certain
aspects of the decision whether to declassify the Board, the Independent
Directors, who comprise a majority of the Board, met separately (without
representatives of management or the interested Directors) at all of the
meetings discussed above, and consulted with Fund counsel, counsel for the
Independent Directors and the Fund's Maryland counsel, as to the advisability of
all of the Corporate Governance Proposals, including the Declassification
Proposal. The Independent Directors observed that the Horejsi Affiliates'
ownership of the Fund has historically provided, and, based on representations
made by a representative of the Horejsi Affiliates, would likely continue to
provide, significant stability and continuity in the governance of the Fund. The
Independent Directors further observed that the Horejsi Affiliates have stated
that they value the contributions made to the Board by the Independent Directors
and noted that the Horejsi Affiliates, by their actions during the recent
history of their stock ownership, have demonstrated their awareness that any
arbitrary exercise of their influence to replace Directors would likely make it
more difficult for the Fund to attract qualified individuals to serve on the
Board in the future.
The Independent Directors determined that, in their judgment, the
elimination of the classified Board would not significantly increase the
influence of the Horejsi Affiliates, because the declassification only shortens
the period for replacement of a majority of directors, and does not change the
relative voting power of the Horejsi Affiliates compared to that of the
non-Horejsi stockholders. In addition, it does not diminish or change in any way
the Directors' duties to the Fund and its stockholders, including minority
non-Horejsi stockholders. The Independent Directors also concluded that having
annual elections of all Directors would give all stockholders a more direct and
effective means to express their evaluation of the Directors' performance than
exists currently with the classified Board system in which Directors, although
always subject to removal by the stockholders, are as a practical matter subject
to stockholder evaluation only once every three years with the three-year
election cycle. The Independent Directors believe that the annual election cycle
thus would provide significant benefits to the Fund's non-Horejsi stockholders
that would outweigh any disadvantage resulting from the potential increased
influence of the Horejsi Affiliates.
In approving the Declassification Proposal and the other Corporate
Governance Proposals, the Board was aware of their impact given the current size
of the Horejsi Affiliates' holdings in the Fund. However, given the Horejsi
Affiliates' current holdings, it would not be possible for the Affiliates to
unilaterally change the Board or to effect other fundamental changes without
first garnering substantial non-Horejsi stockholder support. Nonetheless, in
general, the Corporate Governance Proposals make it harder for both the Board
and other stockholders to effect significant changes to the Fund that the
Horejsi Affiliates might oppose. The Board also noted that there is no
requirement for the Horejsi Affiliates to maintain their current influential
position in the Fund, and that at lower ownership levels, the ability of the
Horejsi Affiliates to influence changes or to effectively block certain changes
is reduced. The Board also believed that, notwithstanding the effect of the
Corporate Governance Proposals in light of current stockholder demographics, the
Proposals are part of a consistent philosophy of Board accountability to Fund
stockholders.
Accordingly, after due consideration of the various arguments in favor of
and against a classified board, and after taking into account the support of the
Horejsi Affiliates and the unanimous support of the Independent Directors, the
full Board has concluded that it is in the best interests of the Fund to
declassify the Board and to implement the Declassification Proposal as well as
the other Corporate Governance Proposals.
Vote Required. Proposal 2 requires the affirmative vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 2.
PROPOSAL 3
AMENDMENT TO THE CHARTER PROVIDING THAT DIRECTORS SHALL BE
ELECTED BY A PLURALITY OF VOTES CAST AT A MEETING AT
WHICH A QUORUM IS PRESENT
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Fund's Charter to provide that the Directors shall be elected
by a "plurality" of votes cast at a meeting at which a quorum is present. A
"plurality of votes cast" simply means that, in an election where there are more
than two nominees for a single position, the person receiving the most votes
wins. Most public office elections are decided by a "plurality" of votes cast.
If Proposal 3 is approved by stockholders, any subsequent proposal to amend the
Charter to amend the plurality vote requirement would require the affirmative
vote of the holders of a majority of all the votes entitled to be cast on the
matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the SDAT
adding the following provision to the Charter:
A plurality of all the votes cast at a meeting at which a quorum is present
shall be sufficient to elect a director.
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize management accountability to stockholders. Under the Maryland General
Corporation Law ("MGCL"), a plurality vote is the vote currently required to
elect directors of the Fund. However, also under the MGCL, the Board may amend
the Fund's Bylaws to increase the vote requirement (e.g., the affirmative vote
of the holders of a majority of the outstanding shares entitled to vote in the
election of directors). Because, generally, bylaws of a Maryland corporation may
not conflict with charter provisions, the effect of Proposal 3, if approved,
would be to preclude the Board from changing the plurality vote through a Bylaw
amendment without a stockholder vote.
Generally, higher-than-plurality requirements to elect directors are viewed
as having the effect of reducing accountability of directors to a company's
stockholders and violating the principle that a simple plurality of voting
shares should be all that is necessary to effect change regarding a board of
directors. Requiring a higher voting standard may permit management to entrench
itself in contested elections. It is the Board's belief that election by a
"plurality" is an essential element of good corporate democracy and is the
fairest means of electing the Directors. Notably, under Maryland law, once
approved, the plurality voting requirement under this Proposal may not be
changed without the affirmative vote of a majority of the votes entitled to be
cast on the matter by the holders of the Fund's Common Stock.
The Board considered this Proposal as well as the other Corporate
Governance Proposals over three meetings held in early 2004 (see "Board
Considerations Regarding Declassification and Other Corporate Governance
Proposals" beginning on Page 12 above). The Board has determined that this
Proposal furthers the goal of ensuring that the Fund's corporate governance
policies maximize Board and management accountability to stockholders.
Vote Required. Approval of Proposal 3 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 3.
PROPOSAL 4
AMENDMENT TO THE CHARTER PROVIDING THAT THE SECRETARY SHALL
CALL A SPECIAL MEETING OF STOCKHOLDERS UPON THE REQUEST
OF HOLDERS OF 25% OF THE FUND'S OUTSTANDING SHARES
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter to provide that the Secretary of the Fund shall call a
special meeting of stockholders at the request of stockholders entitled to cast
at least 25% of all votes entitled to be cast at the meeting. If Proposal 4 is
approved, any subsequent proposal to amend the Charter to increase this
threshold would require the affirmative vote of the holders of a majority of all
votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, the Charter would be amended to add the
following provision:
The Secretary of the Corporation shall call a special meeting of the
stockholders on the written request of stockholders entitled to cast at
least twenty-five percent (25%) of all the votes entitled to be cast at the
meeting.
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize management accountability to stockholders. This Proposal would allow
stockholders holding shares entitled to cast at least 25% of all the votes
entitled to be cast at the meeting to compel the Secretary to call a special
meeting of stockholders. Most state corporation statutes allow stockholders to
compel a special meeting when they want to take action on certain matters that
arise between regularly scheduled annual meetings. Sometimes this right applies
only if a stockholder, or group of stockholders, owns a minimum threshold
percentage of outstanding shares. In terms of day-to-day governance,
stockholders may lose an important right (e.g., the ability to remove directors
or initiate a stockholder resolution without having to wait for the next
scheduled meeting) if they are unable to compel a special meeting. The inability
to compel a special meeting and the resulting insulation of management could
result in suffering corporate performance and stockholder returns. In summary,
excessive ownership requirements for calling meetings constrains the ability of
stockholders to act independently and hold the Board and management accountable.
Presently the Charter is silent on the ownership threshold to compel a
special meeting, although the Fund's Bylaws provide that a special meeting may
be called by the Secretary upon the request of stockholders "owning a majority
of the votes entitled to be cast at the meeting". If approved, Proposal 4 would
reduce the ownership threshold necessary to compel a special meeting to shares
entitled to cast 25% all the votes entitled to be cast at a meeting and would
supersede the corresponding Bylaw provision. Notably, the 25% requirement for
compelling a special meeting is the threshold provided under the MGCL (see MGCL
ss.2-502) in the absence of a contrary Bylaw or charter provision.
The Board considered this Proposal as well as the other Corporate
Governance Proposals over three meetings held in early 2004 (see "Board
Considerations Regarding Declassification and Other Corporate Governance
Proposals" beginning on Page 12 above). The Board noted that, if approved,
because the Horejsi Affiliates own approximately 22% of the Shares, Proposal 4
would give the Horejsi Affiliates significant influence to compel a special
meeting at any time, although they would have to acquire additional Fund shares
or garner the support of other stockholders to reach the requisite 25% of
outstanding shares threshold contemplated by this Proposal to compel a meeting.
The Board also considered the possibility of additional expenses associated with
special meetings and the potential disruption to Fund business and diversion of
the attention of Fund management should special meetings be called.
Notwithstanding, the Board determined that the majority-of-outstanding-shares
threshold is simply too high and only serves to insulate the Board from its
stockholders. The Board also considered the reduction in the number of shares
needed to call a special meeting to be appropriate in light of the proposed
modification or elimination of several of the super-majority voting provisions
in the Charter and Bylaws. When a supermajority vote is required, a higher
threshold for calling a meeting seems reasonable to assure that the associated
expenses are not incurred unless the proposal has a reasonable prospect of
passage. With lower voting requirements on many matters, a lower threshold to
hold a special meeting seems reasonable. The Board has determined that this
Proposal furthers the goal of ensuring that the Fund's corporate governance
policies maximize Board and management accountability to stockholders and would,
if approved, better allow stockholders the opportunity to register their views
on the performance of the Fund and the Board.
Vote Required. Approval of Proposal 4 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 4.
PROPOSAL 5
AMENDMENT TO THE CHARTER VESTING IN THE STOCKHOLDERS THE POWER
TO AMEND OR ADOPT BYLAWS
Under the Fund's Charter, the Board has exclusive power to amend the
Bylaws. The Board proposes and unanimously recommends that stockholders approve
an amendment to the Charter to (i) vest stockholders with the concurrent power
to make, amend, adopt or repeal Bylaws by the affirmative vote of the holders of
a majority of the votes cast on the matter, and (ii) prohibit the Board from
making, amending, adopting or repealing any Bylaw which conflicts with or
otherwise attempts to alter the effect of stockholder-approved Bylaws. If
Proposal 5 is approved, any subsequent proposal to amend the Charter to alter
stockholders' power to amend the Bylaws would require the affirmative vote of
the holders of a majority of all votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, the Charter will be amended to add the
following provisions:
The Bylaws of the Corporation, whether adopted by the Board of Directors or
the stockholders, shall be subject to amendment, alteration or repeal, and
new Bylaws may be made, by either (a) the affirmative vote of a majority of
all the votes cast at a stockholders meeting at which a quorum is present;
or (b) the Board of Directors; provided, however, that the Board of
Directors may not (i) amend or repeal a Bylaw that allocates solely to
stockholders the power to amend or repeal such Bylaw, or (ii) amend or
repeal Bylaws or make new Bylaws that conflict with or otherwise alter in
any material respect the effect of Bylaws previously adopted by the
stockholders.
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize Board and management accountability to stockholders. This Proposal
would vest in the stockholders the power to amend, repeal or adopt Bylaws and
prevent the Board's unilaterally changing Bylaw amendments that are approved by
stockholders. Your Board believes that all stockholders benefit if they have
better access and more influence in the Fund's governance. The Fund's Bylaws
contain important policies affecting the day-to-day management of the Fund which
the Board believes stockholders should have a voice in establishing.
Presently the Charter is silent on who has the authority to make, alter or
repeal the Bylaws of the Corporation. Under the MGCL, this authority resides
with the stockholders unless otherwise provided in the Charter or Bylaws. Under
the Fund's current Bylaws, the power to make, alter or repeal Bylaws is shared
among the Board and stockholders. The Board believes that the authority to make,
alter or repeal Bylaws should continue to be shared authority between the Board
and stockholders. This permits the Board to be responsive to house-keeping as
well as substantive matters regarding Fund operations, while at the same time
giving stockholders the power to effect changes should they choose to do so. The
Board also believes that when stockholders "speak" by adopting a Bylaw, their
action should not be subject to being overturned or altered by unilateral Board
action. The Board believes that this Proposal will accommodate the
practicalities of managing the Fund while at the same time protecting an
important right of stockholders. Proposal 5 codifies in the Charter the shared
authority to make, alter or repeal Bylaws, while at the same time making it
clear that Bylaws that are adopted by stockholders cannot be altered, repealed
or otherwise circumvented without the affirmative approval of stockholders.
The Board considered this Proposal as well as the other Corporate
Governance Proposals over three meetings held in early 2004 (see "Board
Considerations Regarding Declassification and Other Corporate Governance
Proposals" beginning on Page 12 above). The Board has determined that this
Proposal furthers the goal of ensuring that the Fund's corporate governance
policies maximize Board and management accountability to stockholders and allow
stockholders better and consistent access to effect change in the Fund's
governing documents.
Vote Required. Approval of Proposal 5 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 5.
PROPOSAL 6
AMENDMENT TO THE CHARTER PROHIBITING THE FUND FROM OPTING INTO
ANY PROVISION OF THE MARYLAND UNSOLICITED TAKEOVERS ACT
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter that would prohibit the Fund from being subject to the
provisions of the Maryland Unsolicited Takeovers Act, MGCL ss.ss.3-801 through
805 ("MUTA"). In 2000, the Fund's prior Board elected to be subject to certain
provisions of MUTA. However, the current Board has resolved to rescind that
prior election and is recommending that stockholders prohibit the Fund's Board
in the future from electing to be subject to MUTA without prior stockholder
approval.
Under MUTA, a Maryland corporation with three independent directors and a
class of equity securities registered under the 1933 Act may elect to be
subject, by provision in its charter or bylaws or a resolution of its board of
directors and notwithstanding any contrary provision in the charter or bylaws,
to any or all of five statutory provisions: (i) a classified board, (ii) a
two-thirds vote requirement for removing a director, (iii) a requirement that
the number of directors be fixed only by vote of the directors, (iv) a
requirement that a vacancy on the board be filled only by the remaining
directors and for the remainder of the full term of the class of directors in
which the vacancy occurred, and (v) a majority requirement for stockholders to
compel the calling of a special meeting of stockholders. If approved, Proposal 6
would amend the Charter to prohibit the Board from unilaterally electing to be
subject to any of MUTA's provisions without first obtaining stockholder
approval. Such approval, or any subsequent amendment to the Charter to alter or
repeal this prohibition, would require the affirmative vote of a majority of all
the votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, the Charter would be amended to add the
following provision:
The Corporation is prohibited from electing to be subject to any provision
of Title 3, Subtitle 8 of the MGCL, as amended from time to time, or any
successor to such provisions.
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize Board and management accountability to stockholders. Under several of
the Corporate Governance Proposals, the Board is recommending that stockholders
(i) declassify the Board (Proposal 2), (ii) require the Secretary of the Fund to
call special meetings of the stockholders on the written request of the holders
of 25% of outstanding shares (Proposal 4) and (iii) limit the number of
directorships to five (Proposal 8). MUTA conflicts with each of these Proposals
and, if the Board has the authority to elect on behalf of the Fund to be subject
to MUTA, it could circumvent each of these measures which the stockholders have
duly approved.
MUTA may be perceived as having the effect of entrenching management and
diminishing stockholder influence. Where, as here, a fund's stockholders have
expressed an informed decision to maximize stockholder influence, even at the
risk of incurring additional expense or facilitating unwanted stockholder
action, it would be anomalous for the Board at a later date to overturn those
decisions. The Board recognized that although adopting this Proposal would limit
their options in certain circumstances, it is an appropriate step in order to
protect the decision stockholders will have expressed in approving Proposals 2,
4 and 8.
The Board considered this Proposal as well as the other Corporate
Governance Proposals over three meetings held in early 2004 (see "Board
Considerations Regarding Declassification and Other Corporate Governance
Proposals" beginning on Page 12 above and "Purpose of the Amendment" under
Proposals 2, 4 and 8). The Board has determined that Proposal 6 furthers the
goal of ensuring that the Fund's corporate governance policies maximize Board
and management accountability to stockholders.
Vote Required. Proposal 6 requires the affirmative vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 6.
PROPOSAL 7
AMENDMENT TO THE CHARTER TO ALTER THE VOTE REQUIRED TO EFFECT
CERTAIN EXTRAORDINARY CORPORATE TRANSACTIONS
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter that would repeal Article Seventh, Section 5 and
replace it with a new section providing that no (a) business combination (e.g.,
mergers, consolidation, share exchanges), (b) voluntary liquidation or
dissolution, (c) stockholder proposal regarding specific investment decisions,
(d) proposal to open-end the Fund, or (e) self tender for more than 25% of a
Fund's shares in any twelve-month period, may be effected without the vote of
two-thirds of the Fund's outstanding shares, and that such amendment cannot be
amended, altered or repealed without the affirmative vote of at least two-thirds
of the votes entitled to be cast on the matter.
Although the Charter's current Article Seventh, Section 5 provides for
similar increased stockholder voting thresholds for certain extraordinary
actions, the Board believes the amendment contemplated under Proposal 7 covers a
broader range of relevant actions, makes stockholder approval more realistic if
there is substantial stockholder support (e.g., reduces the voting threshold
requirement from 75% to two-thirds), and prevents the provision from being
altered or repealed without the affirmative vote of at least two-thirds of
outstanding shares.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, the Charter would be amended to repeal
Article Seventh, Section 5 and replace it with the following provisions:
(a) In this Section, "Business Combination" means:
(1) a merger or consolidation of the Corporation with or into any
person other than an investment company in a family of investment companies
having the same investment adviser or administrator as the Corporation;
(2) the sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of transactions) to or with any
other person of any assets of the Corporation except (x) for the payment of
dividends or other distributions, (y) for portfolio transactions of the
Corporation effected in the ordinary course of the Corporation's business,
including permitted borrowings, or (z) in connection with a reorganization
of the Corporation with another investment company in a family of
investment companies having the same investment adviser or administrator as
the Corporation; or
(3) the issuance or transfer by the Corporation (in one transaction
or a series of transactions) of any shares of the Corporation to any other
person in exchange for cash, securities or other property of the
Corporation (or a combination thereof), but excluding (v) sales of any
shares of the Corporation in connection with a public offering thereof or,
for shares of preferred stock or debt securities of the Corporation, a
private placement thereof, (w) issuance of any securities of the
Corporation upon the exercise of any stock subscription right issued by the
Corporation, (x) with respect to the Corporation's dividend reinvestment
and/or cash purchase plan, (y) in connection with a dividend or
distribution made pro rata to all holders of stock of the same class, or
(z) a transaction within the scope permitted under (a)(1) or (2) above.
(b) In addition to the approval by the Board of Directors required by
applicable law, the Charter or the Bylaws of the Corporation, the
affirmative vote of the holders of shares entitled to cast at least
two-thirds of all the votes entitled to be cast on the matter shall be
required to approve:
(1) a Business Combination;
(2) a voluntary liquidation or dissolution of the Corporation;
(3) a stockholder proposal as to specific investment decisions made
or to be made with respect to the Corporation's assets;
(4) an amendment to the Charter to convert the Corporation from a
closed-end investment company to an open-end investment company or unit
investment trust (as such terms are defined by the Investment Company Act
of 1940, as amended), whether bymerger or otherwise;
(5) a self tender for, or acquisition by the Corporation of, more
than 25% of the Corporation's outstanding shares of stock, in the
aggregate, during any twelve-month period.
(c) This Section may not be amended, altered or repealed without the
affirmative vote of the holders of at least two-thirds of all the votes
entitled to be cast on the matter.
Purpose of the Amendment. The Board is submitting this Proposal to assure
stockholders that the Fund's closed-end structure and certain other features
cannot be changed without substantial support of stockholders. The Board
believes that a consistent legal and operating structure is essential to the
Fund's long-range planning and investment horizons. The Board believes that all
of the extraordinary actions described in this Proposal ("Extraordinary
Actions") have the potential to be disruptive to the efficient and profitable
operation of the Fund. However, there may be times when Extraordinary Actions
are warranted and may receive substantial support of stockholders. In these
circumstances, if the Board approves such a transaction, and there is
substantial stockholder support, the Board believes that the transaction should
go forward.
Board Considerations. The Board considered Proposal 7 along with, and at the
same meetings at which it considered, the other Corporate Governance Proposals
(see "Board Considerations Regarding Declassification and Other Corporate
Governance Proposals" beginning on Page 12 above). The Board recognized that the
Charter already imposes an 75% super-majority voting requirement on the approval
of certain Extraordinary Actions. Proposal 7 would change that voting standard
to two-thirds such that any Extraordinary Action would require approval of
holders of two-thirds of all outstanding shares.
The Board understands that super-majority provisions are often viewed as
not being stockholder friendly. However, on balance, the Board determined that
the Proposal would result in a net benefit to stockholders. The Board determined
that the Proposal would protect the Fund and stockholders from certain
stockholders or the Fund's own management who may seek to change the Fund's
long-standing closed-end investment structure, or to effect a merger or other
business combination. Because such changes would be disruptive and contrary to
the expectations of many (if not most) stockholders and could result in adverse
economic effects, the Board determined that the special provisions contemplated
by this Proposal are reasonable and justified. The Board recognized that there
may be circumstances where a proposed Extraordinary Action may be warranted and
in the best interest of the Fund and that the voting requirements contemplated
by the Proposal might make such an Extraordinary Action more difficult to
effect. However, if such a proposal was clearly in the best interest of the Fund
and stockholders, the proposal would likely be supported by the Board and would
receive substantial - and thus the necessary - stockholder support for passage.
The Board noted that, because of the Horejsi Affiliates' current influential
position in the Fund's shares, the effect of this Proposal would be to give the
Horejsi Affiliates considerable influence in the passage, or de facto veto power
over any of the Extraordinary Actions contemplated by the Proposal. Nonetheless,
the Board determined that the net benefits to the Fund outweighed any increase
in influence of the Horejsi Affiliates because this Proposal assures all
stockholders of a stable and consistent operating structure and environment
within which they can further their investment goals. In addition, the position
of the Horejsi Affiliates, assuming approval of Proposal 7, is not significantly
different from its position under existing Charter provisions.
Vote Required. Approval of Proposal 7 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 7.
PROPOSAL 8
AMENDMENT TO THE CHARTER TO ESTABLISH THE MAXIMUM NUMBER OF
DIRECTORS AT FIVE
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter providing that the maximum number of Directors shall be
and not exceed five. Any subsequent amendment to this new Charter provision and
the conforming changes described below would require the affirmative vote of the
holders of a majority of all the votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, Article Sixth, Section 1 will be repealed and
replaced in its entirety (subject to the additions contemplated under Proposal
2) by the following provision:
The number of directors shall be five, which number may be decreased by the
Board of the Directors pursuant to the Bylaws but shall never be less than
the minimum required by the MGCL.
In addition, other corresponding changes will be made to the Charter.
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize Board and management accountability to stockholders. Company charters
often contain provisions that set a high upper-limit on the number of board
seats, permitting the company's board to increase or decrease the number of
board seats in their discretion, though subject to this upper limit. Currently
the Fund's Charter sets a lower limit of three on the Board size and the Bylaws
contemplate a Board size of between three and twelve Directors, permitting the
Board to increase or decrease its size subject to the upper limit of twelve.
Often boards use such provisions to quickly increase or decrease their size in
an effort to dilute the voting impact of directors - such as those elected in
proxy contests - with views contrary to those of management. The Board views the
ability to manipulate the number of members on the Board as unnecessary and
ultimately ineffective in thwarting stockholder activism. In addition, it
potentially increases Fund expenses and insulates the Board from stockholders.
Common sense suggests that if the Fund has more Board seats, it (and thus
stockholders) will spend more on Board compensation. The Board believes that,
because of the relatively narrow business focus of an investment company like
the Fund, five Directors can adequately and efficiently fulfill their obligation
to oversee the operations of the Fund and its management and act as "watchdogs"
for stockholders. The Board believes that the best approach is to seek a few
highly qualified individuals to fill directorships and pay them fairly. This
way, stockholders get more "bang for the buck" in their Board and don't pay
unnecessary Board expenses.
Vote Required. Approval of Proposal 8 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 8.
PROPOSAL 9
AMENDMENT TO THE CHARTER PROVIDING THAT ONLY CERTAIN CORPORATE ACTIONS SHALL
BE APPROVED BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST A
MAJORITY OF ALL THE VOTES ENTITLED TO BE CAST ON THE MATTER.
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter to repeal in its entirety Article Seventh, Section 3 of
the Charter, which currently provides:
The corporation reserves the right to take any lawful action and to make
any amendment of these Articles of Incorporation, including the right to
make any amendment which changes the terms of any shares of the capital
stock of the corporation of any class now or hereafter authorized by
classification, reclassification, or otherwise, and to make any amendment
authorizing any sale, lease, exchange or transfer of the property and
assets of the corporation as an entirety, or substantially as an entirety,
with or without its good will and franchise, if a majority of all the
shares of the capital stock of the corporation at the time issued and
outstanding and entitled to vote, vote in favor of any such action or
amendment, or consent thereto in writing, and reserves the right to make
any amendment of these Articles of Incorporation in any form, manner or
substance now or hereafter authorized or permitted by law.
If approved by the stockholders, Article Seventh, Section 3 would be replaced by
the following new provisions which would generally govern voting requirements
for corporate actions and Charter amendments:
Notwithstanding any provision of law requiring any action to be taken or
authorized by the affirmative vote of the holders of a greater proportion
of the votes of all classes or of any class of stock of the Corporation,
such action shall be effective and valid if taken or authorized by the
affirmative vote of a majority of the total number of votes entitled to be
cast thereon, except as otherwise specifically provided in the Charter.
The Corporation reserves the right to make, from time to time, any
amendment to its Charter now or hereafter authorized by law (including any
amendment that alters the contract rights, as expressly set forth in the
Charter, of any class of outstanding stock) and all rights at any time
conferred upon the stockholders of the Corporation by the Charter are
granted subject to the provisions of this Article. Except as otherwise
provided in the Charter, any of the provisions of the Charter may be
amended, altered or repealed upon the affirmative vote of the holders of a
majority of the votes entitled to be cast by stockholders.
If stockholders approve this Proposal, the Fund will take action to implement
the action by filing the appropriate charter documents with the SDAT.
Purpose of the Amendment. This Proposal is being made in order to repeal a
Charter provision that might be read to suggest that all corporate actions be
approved by the holders of a majority of all shares of stock of the Corporation.
For example, current Article Seventh, Section 3 might be read to increase the
vote required for stockholders to approve non-extraordinary actions under
Maryland law from the vote of a majority of votes cast to a majority of the
votes entitled to be cast (e.g., stockholder ratification of the appointment of
independent auditors). Current Article Seventh, Section 3 is unusual for
Maryland corporations and burdensome for obtaining approval of otherwise mundane
corporate actions.
Under Maryland law, a Maryland corporation generally cannot take certain
extraordinary actions (e.g., dissolve, amend its charter, merge, sell all or
substantially all of its assets, engage in a share exchange or engage in similar
transactions outside the ordinary course of business), unless approved by
stockholders holding at least two-thirds of the shares entitled to vote on the
matter. However, under Maryland law, a Maryland corporation may in its charter
reduce the percentage necessary to approve such actions, but never to less than
a majority of all of the votes entitled to be cast on the matter. Current
Article VII, Section 3 utilizes Maryland's "vote-reduction" provision when it
purports to require that all corporate actions be approved by a "majority of
outstanding shares". Proposal 9 does not attempt to change this, but it does
seek to provide more flexibility by permitting the Charter to make exceptions to
the majority-of-outstanding-shares requirement. This exception is necessary to
accommodate the voting requirements under Proposals 5 and 7 (i.e., majority of
votes cast and two-thirds of votes entitled to be cast, respectively). The new
language also permits voting requirements other than a
majority-of-outstanding-shares with respect to approval of certain Charter
amendments (e.g., amending the provisions contemplated by Proposal 7). The
changes under Proposal 9 will conform the Fund's amendment provisions to those
more typical adopted by Maryland corporations.
Vote Required. Proposal 9 requires the affirmative vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 9.
PROPOSAL 10
PROPOSAL TO AMEND AND RESTATE THE FUND'S CHARTER
The Board proposes and unanimously recommends that stockholders approve a
Proposal to amend and restate the Charter as set forth in the Articles of
Amendment and Restatement attached hereto as Exhibit A.
Purpose of the Amendment. There are many Charter amendments proposed for
consideration and approval at this Meeting. Because, if approved, so many
amendments will be made to the Charter all at once, the Meeting presents an
opportunity to consolidate all of the provisions of the Charter (including the
amendments approved at the Meeting). Various conforming and organizational
amendments, as well as the substantive amendments described under each of the
Corporate Governance Proposals above, are reflected in their entirety in the
attached Articles of Amendment and Restatement. Included in the various changes
is the repeal of Article Ninth, which contains obsolete provisions relating to
the Fund's rights with respect to its prior name.
If stockholders approve Proposals 2 through 10, the Fund will file the
Articles of Amendment and Restatement with the SDAT. If certain of the Corporate
Governance Proposals are approved by stockholders and others are not, the Fund
will not implement Proposal 10 and will not file the Articles of Amendment and
Restatement. Instead, the Fund will file with the SDAT Articles of Amendment
reflecting only those Charter amendments approved by stockholders at the Meeting
Vote Required. Proposal 10 requires the affirmative vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 10.
SUBMISSION OF STOCKHOLDER PROPOSALS
All proposals by stockholders of the Fund that are intended to be presented
at the Fund's next Annual Meeting of stockholders to be held in 2005 must be in
writing and received by the Fund for consideration for inclusion in the Fund's
proxy statement relating to the meeting no later than December 6, 2004. Any such
proposal shall set forth as to each matter the stockholder proposes to bring
before the meeting (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
(ii) the name and address, as they appear on the Fund's books, of the
stockholder proposing such business, (iii) the class and number of shares of the
capital stock of the Fund which are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business. Stockholder
proposals, including any accompanying supporting statement, may not exceed 500
words. A stockholder desiring to submit a proposal must be a record or
beneficial owner of Shares with a market value of $2,000 and must have held such
Shares for at least one year. Further, the stockholder must continue to hold
such Shares through the date on which the meeting is held. Documentary support
regarding the foregoing must be provided along with the proposal. There are
additional requirements regarding proposals of stockholders, and a stockholder
contemplating submission of a proposal is referred to Rule 14a-8 promulgated
under the 1934 Act. The timely submission of a proposal does not guarantee its
inclusion in the Fund's proxy materials.
Any submission of a director nomination should include at a minimum the
following information: As to each individual proposed for election or
re-election as director, the name, age, business address, residence address and
principal occupation or employment of such individual, the class, series and
number of shares of stock of the Fund that are beneficially owned by such
individual, the date shares were acquired and the investment intent of such
acquisition, whether such stockholder believes such individual is, or is not, an
"interested person" of the Fund (as defined in the 1940 Act), and information
regarding such individual that is sufficient, in the discretion of the
Nominating Committee, to make such determination, and all other information
relating to such individual that is required to be disclosed in solicitation of
proxies for election of directors in an election contest (even if an election
contest is not involved) or is otherwise required, in each case pursuant to
Regulation 14A (or any successor provision) under the Securities Exchange Act of
1934, as amended, and the rules thereunder (including such individual's written
consent to being named in the proxy statement as a nominee and to serving as a
director (if elected)). In the case of the Fund holding a meeting of
stockholders, any such submission in order to be considered for inclusion in the
Fund's proxy statement, should be submitted by a date not later than the 120th
calendar day before the date the Fund's proxy statement was released to security
holders in connection with the Fund's previous year's annual meeting or, if the
Fund has changed the meeting date by more than 30 days or if no meeting was held
the previous year, within a reasonable time before the Fund begins to print and
mail its proxy statement.
A stockholder may nominate an individual to serve as a director or propose
other business at an annual meeting, even if the stockholder does not submit the
nomination or proposal for inclusion in the Fund's proxy statement. In this
case, the stockholder must provide notice to the Fund, including certain of the
information described above, at least 60 days before the date of the annual
meeting. If less than 70 days' notice or prior public disclosure of the meeting
is given or made to the stockholders, the stockholder's notice to the Fund must
be received by the Fund not later than the close of business on the tenth day
following the day on which the notice of the date of the annual meeting is given
or the public disclosure was made.
ADDITIONAL INFORMATION
INDEPENDENT ACCOUNTANTS. On January 23, 2004, the Audit Committee of the
Board, consisting of those Directors who are not "interested persons" (as
defined in the 1940 Act), selected KPMG LLP ("KPMG"), 99 High Street, Boston,
Massachusetts 02110-2371, as independent accountants for the Fund for the Fund's
fiscal year ending November 30, 2004. The selection of KPMG was ratified by the
entire Board. KPMG also served as independent accountants for the Fund for the
Fund's fiscal year ending November 30, 2003. A representative of KPMG will not
be present at the Meeting but will be available by telephone and will have an
opportunity to make a statement if the representative so desires and will be
available to respond to appropriate questions.
Set forth below are audit fees and non-audit related fees billed to the
Fund for professional services received from KPMG for the Fund's fiscal years
ended November 30, 2002 and 2003, respectively.
Fiscal Year Ended Audit Fees Audit-Related Fees Tax Fees* All Other Fees
11/30/2002** $15,000 $0 $5,750 $ 0
11/30/2003 $22,500 $0 $ 5,750 $ 0
* "Tax Fees" are those fees billed to each Fund by KPMG in connection with
tax consulting services, including primarily the review of each Fund's
income tax returns.
** For the five-months ended 11/30/02. In 2002, the Fund changed its fiscal
year-end from June 30 to November 30.
The Audit Committee Charter requires that the Audit Committee pre-approve
all audit and non-audit services to be provided by the auditors to the Fund, and
all non-audit services to be provided by the auditors to the Fund's investment
adviser and any service providers controlling, controlled by or under common
control with the Funds' investment adviser ("affiliates") that provide on-going
services to each Fund, if the engagement relates directly to the operations and
financial reporting of each Fund, or to establish detailed pre-approval policies
and procedures for such services in accordance with applicable laws. All of the
audit, audit-related and tax services described above for which KPMG billed the
Fund fees for the fiscal years ended November 30, 2002 and November 30, 2003
were pre-approved by the Audit Committee.
KPMG has informed the Fund that it has no direct or indirect financial
interest in the Fund. For the Fund's fiscal year ended November 30, 2003, KPMG
did not provide any non-audit services or bill any fees for such services to the
Funds' investment adviser or any affiliates thereof that provide services to the
Fund. The Horejsi Affiliates have engaged KPMG from time to time in the past to
provide various accounting, auditing and consulting services and currently
engages KPMG as a consultant with respect to ongoing tax related issues.
However, for the twelve months ended November 30, 2003, the Horejsi Affiliates
paid $875 to KPMG for their services. The Audit Committee has considered and
concluded that the provision of non-audit services is compatible with
maintaining the auditors' independence.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the 1934 Act and Section 30(h) of the 1940 Act requires the Fund's Directors and
officers, persons affiliated with the Fund's investment advisers, and persons
who own more than 10% of a registered class of the Fund's securities, to file
reports of ownership and changes of ownership with the SEC and the New York
Stock Exchange. Directors, officers and greater-than-10% stockholders are
required by SEC regulations to furnish the Fund with copies of all Section 16(a)
forms they file. Based solely upon the Fund's review of the copies of such forms
it receives and written representations from such persons, the Fund believes
that through the date hereof all such filing requirements applicable to such
persons were complied with.
Broker Non-Votes and Abstentions. An uninstructed proxy for shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power on a particular matter is a broker
"non-vote". Proxies that reflect abstentions or broker non-votes (collectively
"abstentions") will be counted as shares that are present and entitled to vote
on the matter for purposes of determining the presence of a quorum. In
circumstances where the vote to approve a matter is a percentage of votes cast
(Proposal y1), abstentions have no effect because they are not a vote cast.
Thus, they will be disregarded in determining the "votes cast" on the particular
issue. However, with respect to Proposals 2 through 9, where the vote required
to approve the matter is the affirmative vote of the holders of a percentage of
the total number of votes entitled to be cast, an abstention will have the
effect of a vote "against" the respective proposals.
OTHER MATTERS TO COME BEFORE THE MEETING
The Fund does not intend to present any other business at the Meeting, nor
is it aware that any stockholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with their
discretion.
--------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN ALL PROXY CARDS AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
--------------------------------------------------------------------------------
EXHIBIT A
BOULDER GROWTH & INCOME FUND, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
FIRST: Boulder Growth & Income Fund, Inc., a Maryland corporation (the
"Corporation"), desires to amend and restate its charter as currently in effect
and as hereinafter amended.
SECOND: The following provisions are all the provisions of the charter (the
"Charter") currently in effect and as hereinafter amended:
ARTICLE I
NAME
The name of the corporation (the "Corporation") is:
Boulder Growth & Income Fund, Inc.
ARTICLE II
PURPOSE
The purposes for which the Corporation is formed are:
(1) To purchase or otherwise acquire, invest and reinvest in, own,
hold, sell or otherwise dispose of securities of every kind and nature,
including without limitation, stocks, warrants and rights exercisable for
stock, bonds, debentures, obligations or evidences of indebtedness, bank
acceptances and commercial paper.
(2) To exercise any and all rights, powers or privileges of individual
ownership or interest in respect of securities owned by it or in which it
has any interest.
(3) To engage in any lawful act or activity for which corporations may
be organized under the Maryland General Corporation Law (the "MGCL") or
other applicable corporation law or laws as in effect, from time to time,
in the State of Maryland, and in general, to do any or all such other
things in connection with the objects and purposes of the Corporation
hereinbefore set forth, as are, in the opinion of the Board of Directors of
the Corporation, necessary, incidental, relative or conducive to the
attainment of such objects and purposes; and to do such acts and things,
and to exercise any and all such powers to the same extent as a natural
person might or could lawfully do to the full extent authorized or
permitted to a corporation under any laws that may be now or hereafter
applicable or available to the Corporation.
(4) The foregoing objects and purposes shall, except when otherwise
expressed, be in no way limited or restricted by reference to or inference
from the terms of any other clause of this or any other Article of the
Charter of the Corporation (the "Charter") or any amendment thereto, and
shall each be regarded as independent, and construed as powers as well as
objects and purposes.
(5) Nothing herein contained shall be construed as giving the
Corporation any rights, powers or privileges not permitted to it by law.
ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Incorporated, 300 East Lombard Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
the State of Maryland is the Corporation Trust Incorporated whose post address
is 300 East Lombard Street, Baltimore, Maryland 21202. The resident agent is a
Maryland corporation.
ARTICLE IV
AUTHORIZED STOCK AND PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS
Section 4.1 The total number of shares of stock that the Corporation shall
have authority to issue is 250,000,000 shares of Common Stock, par value $.01
per share. The aggregate par value of all shares of all classes of stock of the
Corporation is $2,500,000. The Board of Directors, with the approval of a
majority of the entire Board, and without action by the stockholders, may amend
the Charter to increase or decrease the aggregate number of shares of stock or
the number of shares of stock of any class or series that the Corporation has
authority to issue. The Board of Directors of the Corporation is also authorized
to classify or to reclassify from time to time any unissued shares of stock of
the Corporation, whether now or hereafter authorized, by setting, changing or
eliminating the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, or terms and
conditions of redemption of the stock.
Section 4.2 The Secretary of the Corporation shall call a special meeting
of the stockholders on the written request of stockholders entitled to cast at
least 25% of all the votes entitled to be cast at the meeting.
Section 4.3 The Bylaws of the Corporation, whether adopted by the Board of
Directors or the stockholders, shall be subject to amendment, alteration or
repeal, and new Bylaws may be made, by either (a) the affirmative vote of a
majority of all the votes cast at a stockholders meeting at which a quorum is
present; or (b) the Board of Directors; provided, however, that the Board of
Directors may not (i) amend or repeal a Bylaw that allocates solely to
stockholders the power to amend or repeal such Bylaw, or (ii) amend or repeal
Bylaws or make new bylaws that conflict with or otherwise alter in any material
respect the effect of Bylaws previously adopted by the stockholders.
Section 4.4 The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
(i) The Board of Directors shall have the general management and
control of the business and property of the Corporation, and may exercise
all the powers of the Corporation, except such as are by law or by the
Charter or by the Bylaws of the Corporation (the "Bylaws") conferred upon
or reserved to the stockholders.
(ii) The Corporation may in its Bylaws confer powers on the Board of
Directors in addition to the powers expressly conferred by statute.
(iii) No holder of shares of stock of the Corporation of any class
shall be entitled as such, as a matter of right, to subscribe for or
purchase any part of any new or additional issue of shares of stock of any
class or of securities convertible into shares of stock of any class,
whether now or hereafter authorized.
(iv) All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of this Charter.
(v) The stockholders and directors may hold their meetings and have an
office or offices outside the State of Maryland, and the books of the
Corporation may be kept (subject to any provision contained in any
applicable statute) outside the State of Maryland at such place or places
as may be from time to time designated by the Board of Directors.
Section 4.5 Any determination made in good faith and, so far as accounting
matters are involved, in accordance with generally accepted accounting
principles by or pursuant to the direction of the Board of Directors, as to the
amount of the assets, debts, obligations, or liabilities of the Corporation, as
to the amount of any reserves or charges set up and propriety thereof, as to the
time of or purposes for creating such reserves or charges, as to the use,
alteration or cancellation of any reserves or charges (whether or not any debt
obligation or liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged), as to the price or closing bid or asked
price of any security owned or held by the Corporation, as to the market value
of any security or fair value of any other asset of the Corporation as to the
number of shares of the Corporation outstanding, as to the estimated expense to
the Corporation in connection with purchases of its shares, as to the ability to
liquidate securities in orderly fashion, as to the extent to which it is
practicable to deliver a cross-section of the portfolio of the Corporation in
payment for such shares, or as to any other matters relating to the issue, sale,
purchase and/or other acquisition or disposition of securities or shares of the
Corporation, shall be final and conclusive, and shall be binding upon the
Corporation and all holders of its shares, past, present and future, and shares
of the Corporation are issued and sold on the condition and understanding,
evidenced by acceptance of certificates for such shares, that any and all such
determinations shall be binding as aforesaid.
ARTICLE V
DIRECTORS
Section 5.1 The number of directors of the Corporation shall be five, which
number may be decreased by the Board of Directors pursuant to the Bylaws, but
shall never be less than the minimum number required by the MGCL. The names of
the directors who shall serve until the next annual meeting of stockholders and
until their successors are duly elected and qualify are: Alfred G. Aldridge,
Jr., Richard I. Barr, Joel W. Looney and Stephen C. Miller.
Section 5.2 The directors shall be elected at each annual meeting of the
stockholders commencing in 2004, except as necessary to fill any vacancies, and
each director elected shall hold office until his or her successor is duly
elected and qualifies, or until his or her earlier resignation, death, or
removal.
Section 5.3 A plurality of all the votes cast at a meeting at which a
quorum is present shall be sufficient to elect a director.
ARTICLE VI
EXTRAORDINARY ACTIONS
Section 6.1 Notwithstanding any provision of law requiring any action to be
taken or authorized by the affirmative vote of the holders of a greater
proportion of the votes of all classes or of any class of stock of the
Corporation, such action shall be effective and valid if taken or authorized by
the affirmative vote of a majority of the total number of votes entitled to be
cast thereon, except as otherwise provided in the Charter.
Section 6.2
(a) In this Section, " Business Combination" means:
(1) a merger or consolidation of the Corporation with or into any
person other than an investment company in a family of investment
companies having the same investment adviser or administrator as the
Corporation;
(2) the sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any other person of any assets of the Corporation except (x)
for the payment of dividends or other distributions, (y) for portfolio
transactions of the Corporation effected in the ordinary course of the
Corporation's business, including permitted borrowings, or (z) in
connection with a reorganization of the Corporation with another
investment company in a family of investment companies having the same
investment adviser or administrator as the Corporation; or
(3) the issuance or transfer by the Corporation (in one
transaction or a series of transactions) of any shares of the
corporation to any other person in exchange for cash, securities or
other property of the Corporation (or a combination thereof), but
excluding (v) sales of any shares of the Corporation in connection
with a public offering thereof or, for shares of preferred stock or
debt securities of the Corporation, a private placement thereof, (w)
issuance of any securities of the Corporation upon the exercise of any
stock subscription right issued by the Corporation, (x) with respect
to the Corporation's dividend reinvestment and/or cash purchase plan,
(y) in connection with a dividend or distribution made pro rata to all
holders of stock of the same class, or (z) a transaction within the
scope permitted under (a)(1) or (2) above.
(b) In addition to the approval by the Board of Directors required by
applicable law, the Charter or the Bylaws of the Corporation, the
affirmative vote of the holders of shares entitled to cast at least
two-thirds of all the votes entitled to be case on the matter shall be
required to approve:
(1) a Business Combination;
(2) a voluntary liquidation or dissolution of the Corporation;
(3) a stockholder proposal as to specific investment decisions
made or to be made with respect to the Corporation's assets;
(4) an amendment to the Charter to convert the Corporation from a
closed-end investment company to an open-end investment company or
unit investment trust (as such terms are defined by the Investment
Company Act of 1940, as amended), whether by merger or otherwise;
(5) a self tender for, or acquisition by the Corporation of, more
than 25% of the Corporation's outstanding shares of stock, in the
aggregate, during any twelve-month period.
(c) This Section may not be amended, altered or repealed without the
affirmative vote of the holders of at least two-thirds of all the votes
entitled to be cast on the matter.
Section 6.3 The Corporation is prohibited from electing to be subject to
any provision of Title 3, Subtitle 8 of the MGCL, as amended from time to time,
or any successor to such provisions.
ARTICLE VII
LIMITATIONS ON LIABILITY; INDEMNIFICATION
Section 7.1 To the fullest extent that limitations on the liability of
directors and officers are permitted by the MGCL, no director or officer of the
Corporation shall have any liability to the Corporation or its stockholders for
damages. This limitation on liability applies to events occurring at the time a
person serves as a director or officer of the Corporation whether or not such
person is a director or officer at the time of any proceeding in which liability
is asserted.
Section 7.2 The Corporation shall indemnify and advance expenses to its
currently acting and its former directors to the fullest extent that
indemnification of directors is permitted by the MGCL. The Corporation shall
indemnify and advance expenses to its officers to the same extent as its
directors and to such further extent as is consistent with law. The Board of
Directors may by by-law, resolution or agreement make further provisions for
indemnification of directors, officer, employees and agents to the fullest
extent permitted by the MGCL.
Section 7.3 No provision of this Article shall be effective to protect or
purport to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
References to the MGCL in this Article are to the law as from time to time
amended. No further amendment to the Charter shall affect any right of any
person under this Article VII based on any event, omission or proceeding prior
to such amendment
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right to make, from time to time, any
amendment to its Charter now or hereafter authorized by law (including any
amendment that alters the contract rights, as expressly set forth in the
Charter, of any class of outstanding stock) and all rights at any time conferred
upon the stockholders of the Corporation by the Charter are granted subject to
the provisions of this Article. Except as otherwise provided in the Charter, any
of the provisions of the Charter may be amended, altered or repealed upon the
affirmative vote of the holders of a majority of the votes entitled to be cast
by stockholders.
ARTICLE IX
DURATION OF CORPORATION
The duration of the Corporation shall be perpetual.
THIRD: The amendment to and restatement of the charter as hereinabove set
forth have been duly advised by the Board of Directors and approved by the
stockholders of the Corporation as required by law.
FOURTH: The current address of the principal office of the Corporation is
as set forth in Article III of the foregoing amendment and restatement of the
charter.
FIFTH: The name and address of the Corporation's current resident agent is
as set forth in Article III of the foregoing amendment and restatement of the
charter.
SIXTH: The number of directors of the Corporation and the names of those
currently in office are as set forth in Article V of the foregoing amendment and
restatement of the charter.
SEVENTH: The undersigned President acknowledges these Articles of Amendment
and Restatement to be the corporate act of the Corporation and as to all matters
or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
and Restatement to be signed in its name and on its behalf by its President and
attested to by its Secretary on this _____ day of ____________, 2004.
ATTEST: BOULDER GROWTH & INCOME FUND, INC.
__________________________ By: _________________________(SEAL)
Stephanie Kelley, Secretary Stephen C. Miller, President
EXHIBIT B
BOULDER GROWTH & INCOME FUND, INC.
AUDIT COMMITTEE CHARTER
1. The Audit Committee shall be composed entirely of directors who are not
"interested persons" of the Fund within the meaning of the Investment Company
Act of 1940 ("independent directors") and who are free of any other relationship
that, in the opinion of the Board of Directors, would interfere with their
exercise of independent judgment as Committee members. The Audit Committee
Chairman shall be selected by the members of the Committee. The Audit Committee
shall have at least three members, all of whom shall be financially literate.
The Chairman of the Committee must have accounting or related financial
management expertise, as determined by the Board in its judgment.
At least annually, the Board of Directors shall determine whether one or
more "audit committee financial experts," as such term is defined by the
Securities and Exchange Commission, are members of the Committee and whether any
such expert is "independent." For purposes of this finding only, in order to be
considered "independent," any such expert may not, other than in his or her
capacity as a member of the Committee, the Board or any other Board committee,
accept directly or indirectly any consulting, advisory or other compensatory fee
from the Fund (other than Board or committee fees). The designation of a person
as an audit committee financial expert ("ACFE") shall not impose any liability
greater than the liability imposed on such person as a member of the Audit
Committee or the Board of Directors in the absence of such designation.
2. The purposes of the Audit Committee are:
(a) to assist Board oversight of
1. the integrity of the Fund's financial statements
2. the Fund's compliance with legal and regulatory requirements
3. the independent auditor's qualifications and independence
4. the performance of the Fund's independent auditors
(b) to prepare an audit committee report if required by the SEC to be
included in the Fund's annual proxy statement;
(c) to oversee the Fund's accounting and financial reporting policies
and practices, its internal controls and, as appropriate, the internal
controls of certain service providers;
(d) to oversee the quality and objectivity of the Fund's financial
statements and the independent audit thereof;
(e) to determine the selection, appointment, retention and termination
of the Fund's independent auditors, as well as approving the compensation
of the auditors;
(f) to pre-approve all audit and non-audit services provided to the
Fund and certain other persons (as described in 4(d) and (e) below) by such
independent auditors; and
(g) to act as a liaison between the Fund's independent auditors and
the full Board of Directors.
The Fund's independent auditors shall report directly to the Committee.
The function of the Committee is oversight. The Fund's management is
responsible for (i) the preparation, presentation and integrity of the Fund's
financial statements, (ii) the maintenance of appropriate accounting and
financial reporting principles and policies and (iii) the maintenance of
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. The auditors are responsible for
planning and carrying out proper audits and reviews in accordance with generally
accepted auditing standards. In fulfilling their responsibilities hereunder, it
is recognized that members of the Committee are not full time employees of the
Fund and are not, and do not represent themselves to be, accountants or auditors
by profession or experts in the fields of accounting or auditing,
notwithstanding the possibility that one or more members may be designated an
ACFE. As such, it is not the duty or responsibility of the Committee or its
members to conduct "field work" or other types of auditing or accounting reviews
or procedures. Each member of the Committee shall be entitled to rely on (i) the
integrity of those persons and organizations within and outside the Fund from
which it receives information, (ii) the accuracy of the financial and other
information, including, for example, the information contemplated by paragraph
4(b), provided to the Committee by such persons and organizations absent actual
knowledge to the contrary (which shall be promptly reported to the Fund's Board)
and (iii) statements made by the officers and employees of the Fund, the Fund's
adviser or other third parties as to any information technology, internal audit
and other non-audit services provided by the independent auditors to the Fund.
In addition, the evaluation of the Fund's financial statements by the Committee
is not of the same scope as, and does not involve the extent of detail as,
audits performed by the auditors, nor does the Committee's evaluation substitute
for the responsibilities of the Fund's management for preparing, or the auditors
for auditing, the financial statements. The designation of a person as an ACFE
is not intended to impose any greater responsibility or liability on that person
than the responsibility and liability imposed on such a person as a member of
the Committee, nor does it decrease the duties and obligations of the other
Committee members or the Board.
The Committee shall have the appropriate resources and authority to discharge
its responsibilities, including the authority to retain special counsel and
other experts or consultants at the expense of the Fund. The Committee shall
also have the authority to seek information, data and services from management
in order to carry out its responsibilities.
3. With respect to any subsequent changes to the composition of the
Committee, and otherwise approximately once each year, the Board of Directors
shall determine:
(a) that each member of the Audit Committee is "independent" pursuant
to the NYSE's governance standards or applicable law or;
(b) that each Audit Committee member is financially literate;
(c) that at least one of the Committee members has accounting or
related financial management expertise; and
(d) the adequacy of the Charter.
4. To carry out its purposes, the Audit Committee shall have the following
duties and powers:
(a) to select, retain, determine the compensation of, or terminate
auditors and to oversee the work of the Fund's independent auditors (or any
other public accounting firm engaged for the purpose of performing other
audit, review or attestation services for the Fund) and, in connection
therewith, to evaluate the independence of the auditors, including whether
the auditors provide any consulting services to any service provider, to
resolve any disagreements between management and the Fund's independent
auditors regarding financial reporting, to receive the auditors' specific
representations as to their independence at least annually and to recommend
the retention of such auditors to the independent directors for their
ratification and approval;
(b) to meet with the Fund's independent auditors, including meetings
apart from management, as necessary (i) to review the arrangements for and
scope of the annual audit and any special audits; (ii) to discuss critical
accounting policies and practices to be used in the annual audit and all
alternative treatments of financial information within generally accepted
accounting principles that have been discussed with management, the
ramifications of the use of such alternative treatments, and the treatments
preferred by the auditor; (iii) to discuss any matters of importance
relating to the Fund's financial statements, including any adjustments to
such statements recommended by the auditors, or other results of said
audit(s); (iv) to consider the auditors' comments with respect to the
acceptability and appropriateness of the Fund's financial reporting
policies, procedures and internal accounting controls, and management's
responses thereto; (v) to review the form of opinion the auditors propose
to render to the Board and shareholders; (vi) to review copies of any
material written communication between the auditor and management, such as
any management letter or schedule of unadjusted differences; (vii) to
review the adequacy and effectiveness of relevant internal controls and
procedures and the quality of the staff implementing those controls and
procedures and to obtain annually in writing from the independent auditors
their letter as to the adequacy of such controls as required by Form N-SAR;
(viii) to receive periodic reports concerning regulatory changes and new
accounting pronouncements that significantly affect the value of the Fund's
assets and its financial reporting; (ix) to discuss any audit problems or
difficulties and management's response, including any restrictions on the
scope of the auditor's activities or on access to requested information,
and any significant disagreements with management; and (x) to receive
disclosure from the auditor regarding all services provided by the auditor
to the Fund, including the fees associated with those services, at least
annually, and if the annual communication is not made within 90 days before
the filing of the Fund's annual report, to receive an update, in the 90 day
period before the filing, of any changes to the previously reported
information.
(c) to consider the effect upon the Fund of any changes in accounting
principles or practices proposed by management or the auditors, and to
consider, in consultation with management and the Fund's independent
auditors, any significant changes to the Fund's tax accounting policies,
including those pertaining to its qualification as a regulated investment
company under the Internal Revenue Code;
(d) to review and pre-approve all auditing services and permissible
non-audit services (e.g., tax services) to be provided to the Fund by the
auditor, including the fees therefore. The Committee may delegate to one or
more of its members the authority to grant pre-approvals. In connection
with such delegation, the Committee shall establish pre-approval policies
and procedures, including the requirement that the decisions of any member
to whom authority is delegated under this sub-section (d) shall be
presented to the full Committee at each of its scheduled meetings.
1) Pre-approval for a permitted non-audit service shall not be
required if: (1) the aggregate amount of all such non-audit services
is not more than 5% of the total revenues paid by the Fund to the
auditor in the fiscal year in which the non-audit services are
provided; (2) such services were not recognized by the Fund at the
time of the engagement to be non-audit services; and (3) such services
are promptly brought to the attention of the Committee and approved
prior to the completion of the audit by the Committee or by one or
more members of the Committee to whom authority to grant such
approvals has been delegated by the Committee.
2) Additionally, the Committee shall pre-approve the auditor's
engagements for non-audit services with the Fund's investment advisers
(each, an "Adviser") and any service providers controlling, controlled
by or under common control with an Adviser ("affiliate") that provides
ongoing services to the Fund in accordance with the foregoing
paragraph, if the engagement relates directly to the operations and
financial reporting of the Fund, unless the aggregate amount of all
services provided constitutes no more than 5% of the total amount of
revenues paid to the auditor by the Fund, an Adviser and any affiliate
of the Adviser that provides ongoing services to the Fund during the
fiscal year in which the services are provided that would have to be
pre-approved by the Committee pursuant to this paragraph (without
regard to this exception).
3) Prohibited Services - The auditor may not perform
contemporaneously any of the following non-audit services for the
Fund: bookkeeping or other services related to the accounting records
or financial statements of the Fund; financial information systems
design and implementation; appraisal or valuation services, fairness
opinions, or contribution-in-kind reports; actuarial services;
internal audit outsourcing services; management functions or human
resources; broker or dealer, investment adviser, or investment banking
services; legal services and expert services unrelated to the audit;
and any other service that the Public Company Accounting Oversight
Board determines, by regulation, is impermissible.
(e) to consider whether the provision by the Fund's auditor of
non-audit services to its investment adviser or adviser affiliate that
provides ongoing services to the Fund, which services were not pre-approved
by the Audit Committee, is compatible with maintaining the auditor's
independence;
(f) to investigate any improprieties or suspected improprieties in
fund operations and to establish procedures for the receipt, retention, and
treatment of complaints received by the Fund with respect to accounting,
internal accounting controls, or auditing matters and the confidential
anonymous submission by employees of the Fund and its service providers of
concerns regarding questionable accounting or auditing matters;
(g) to review the findings made in any regulatory examinations of the
Fund and consult with management on appropriate responses;
(h) to review any material violations of the Code of Ethics for the
Fund and its Advisers and report the Committee's findings to the full Board
with recommendations for appropriate action;
(i) to review with the Fund's principal executive officer and/or
principal financial officer in connection with their certification of Form
N-CSR any significant deficiencies in the design or operation of internal
controls which could adversely affect the Fund's ability to record,
process, summarize and report financial data or material weaknesses therein
and any reported evidence of fraud involving management of other employees
who have a significant role in the Fund's internal controls;
(j) to discuss with management policies and guidelines with respect to
risk assessment and risk management and the system of internal control, and
the steps taken to monitor and control such risks;
(k) to meet periodically with Fund management, apart from the Fund's
independent auditors;
(l) to discuss the types of information to be disclosed in press
releases concerning dividends, as well as financial information provided to
analysts and rating agencies, and the type of presentation to be made;
(m) to establish hiring policies for employees or former employees of
the auditor consistent with government regulations;
(n) at least annually, to obtain and review a report by the Fund's
independent auditors describing: (1) the audit firm's internal quality
control procedures; (2) any material issues raised by the most recent
internal quality control review, or peer review, of the firm, or by any
inquiry or investigation by governmental or professional authorities,
within the preceding five years, respecting one or more independent audits
carried out by the audit firm, and any steps taken to deal with any such
issues; and (3) for the purpose of assessing the auditor's independence,
all relationships between the independent auditors and the Fund;
(o) to review and evaluate the qualifications, performance and
independence of the lead partner of the auditors;
(p) to assure the regular rotation of the lead audit partner and the
reviewing partner, and to consider whether there should be regular rotation
of the audit firm itself;
(q) to review and discuss the Fund's audited and unaudited financials
statements with management and, in the case of the audited financial
statements, the independent auditor, including the Fund's disclosure of
management's discussion of Fund performance, and to recommend to the Board,
as appropriate, the inclusion of the Fund's audited financial statements in
the Fund's annual report;
(r) to cause the preparation of any report or other disclosures
required by the New York Stock Exchange or the Securities and Exchange
Commission;
(s) to oversee the Fund's compliance with 1940 Act asset coverage
tests and coverage tests under applicable rating agency guidelines and the
Fund's Articles Supplementary, as amended or supplemented from time to
time; and
(t) to report regularly to the full Board any issues that arise with
respect to: (1) the quality or integrity of the Fund's financial
statements, (2) the Fund's compliance with legal or regulatory requirements
and (3) the performance and independence of the Fund's independent
auditors, and to make such recommendations with respect to the above and
other matters as the Committee may deem necessary or appropriate.
5. The Fund's independent auditors are ultimately accountable to the Audit
Committee, as representatives of the Board of Directors and the shareholders of
the Fund, and the Audit Committee has the ultimate authority and responsibility
to select, evaluate and, where appropriate, replace the independent auditors (as
well as to nominate the independent auditors to be proposed for shareholder
approval, if necessary), subject to ratification and approval of the independent
directors of the Fund. The Committee will ensure that the Fund's independent
auditors submit to the Audit Committee, on a periodic basis, a formal written
statement delineating all relationships between the independent auditors and the
Fund and its service providers. The Committee will actively engage in a dialogue
with the Fund's independent auditors with respect to any disclosed relationships
or services that may impact the objectivity and independence of the independent
auditors, and will consider recommending that appropriate action be taken by the
Board of Directors to ensure the independence of the independent auditors.
6. The Committee shall meet at least twice annually, which shall include
separate executive sessions as the Committee may deem appropriate, and is
empowered to hold special meetings as circumstances require. The Committee shall
submit the minutes of all of its meetings to, or discuss the matters discussed
at each meeting with, the Board of Directors.
7. The Committee shall regularly meet with the Treasurer of the Fund and
with internal auditors, if any, for the Fund's Advisers and/or administrator to
review and discuss matters relevant to the Committee's duties and
responsibilities.
8. The Committee shall be responsible for reviewing any required
description of the Committee in the Fund's annual reports or proxy statements.
9. The Committee will periodically assess the independence of its members
and will evaluate its performance under the Charter annually.
10. The Committee will also serve as the Qualified Legal Compliance
Committee. The following procedures are designed to implement the Standards of
Professional Conduct for Attorneys pursuant to the Sarbanes-Oxley Act of 2002.
(a) Provision of Information to Outside Counsel and Service Providers.
To assist attorneys employed by law firms retained by the Funds or service
providers engaged by the Funds, the chief executive officer of each Fund
(the "CEO") must send a notice to each such law firm and service provider
providing contact information with respect to each Fund's Legal Compliance
Committee Chairperson. The CEO must send a similar notice to each law firm
and service provider when the information provided in the most recent
notice sent to such law firm or service provider has changed.
(b) Investigations and Responses. Upon receiving a report of evidence
of a material violation from an attorney employed by a law firm or service
provider, the CEO shall (i) record receipt of the report and (ii) report
the matter promptly to the Legal Compliance Committee (the "Committee").
Upon receiving a report of evidence of a material violation from an
attorney employed by a law firm or service provider or from the CEO, the
Committee shall (i) record the Committee's receipt of the report, (ii)
inform the Fund's CEO of the report (other than those received from the and
(iii) determine whether an investigation of a material violation is
necessary or appropriate. In determining whether an investigation is
necessary or appropriate, the Committee shall consider such factors as it
considers appropriate under the circumstances, which may include the
seniority of the alleged wrongdoer, the seriousness of the alleged
violation and the credibility of the allegation. If the Committee
determines that an investigation is necessary, the Committee must (A)
notify the Fund's Audit Committee or the Board of Directors, (B) initiate
an investigation and (C) retain additional expert personnel as it deems
necessary. The Committee shall have the discretion to engage auditors,
counsel or other experts to assist in the investigation of any report and
in the analysis of results.
(1) Investigations. If the Committee deems it necessary, the
Committee may direct outside counsel to conduct a preliminary internal
investigation to determine whether the reported material violation has
occurred, is ongoing or is about to occur. The Committee may direct
employees of the Funds' investment advisers or administrators or any
officer(s) of the Funds to assist outside counsel. If Fund counsel is
the reporting counsel, Fund counsel nonetheless may be engaged to
conduct the preliminary internal investigation. If Fund counsel is the
reporting counsel, Fund counsel may decline to lead the preliminary
internal investigation and may recommend that the Fund seek
alternative counsel for purposes of conducting such investigation. Any
investigation may be conducted by the relevant Fund's CEO or chief
legal officer (or the equivalent thereof) if such officer is not the
reporting attorney and is not the subject of the alleged violation
described in the report.
(2) Responses. At the conclusion of any investigation, the
Committee, by majority vote, shall recommend that the relevant Fund
implement an appropriate response to evidence of a material violation.
What constitutes an appropriate response will depend on whether the
Committee determines, on the basis of the facts and circumstances,
that a material violation has occurred, is ongoing or is about to
occur.
Unless the Committee reasonably believes that no material violation has
occurred, is ongoing or is about to occur, the Committee shall take all
reasonable steps to cause the Funds to adopt an appropriate response. If the
preliminary internal investigation is performed by outside counsel, such counsel
may recommend a proposed response for adoption by the Committee.
Determination: No Violation. The Committee may determine that no material
violation has occurred, is ongoing or is about to occur. That determination
must be made on the basis that the Committee "reasonably believes" that no
material violation has occurred, is ongoing or is about to occur.
"Reasonably believes" means that the Committee "believes the matter in
question and that the circumstances are such that the belief is not
unreasonable."
Determination: Material Violation Has Occurred, Is Ongoing or Is About to
Occur. If the Committee reasonably believes that a material violation has
occurred, is ongoing or is about to occur, the following responses should
be considered:.
(1) A Material Violation Has Occurred If the Committee reasonably believes
that the reported material violation has already occurred, the Committee
should seek to remedy or otherwise address the material violation. The
Committee should explore what steps would be necessary or appropriate to
reduce the likelihood of a recurrence of the material violation. The
Committee should consider recommending that sanctions be imposed in
connection with the violation. Disclosure to the public or to the SEC
should be considered, depending on the nature of the violation and other
relevant factors.
(2) A Material Violation Is Ongoing If the Committee reasonably believes
that the reported material violation is ongoing, the Committee should seek
to take or recommend steps, measures and/or sanctions that are designed to
(i) stop any material violations that are ongoing, (ii) remedy or otherwise
appropriately address the portion of the material violation that has
already occurred, and (iii) reduce the likelihood of a recurrence of the
material violation. Disclosure to the public or to the SEC should be
considered, depending on the nature of the violation and other relevant
factors.
(3) A Material Violation Has Yet to Occur If the Committee reasonably
believes that the reported material violation has not yet occurred, the
Committee should seek to take or recommend steps and/or measures to prevent
the reported material violation from occurring. Depending on the
circumstances of the impending violation, actions to address potential
future violations, including sanctions, should be considered. In unusual
circumstances, disclosure to the SEC may also be appropriate. The Committee
may retain outside counsel, which may be Fund counsel, to undertake a
review of the reported evidence of a material violation in order to assist
the Committee in determining what remedial measures would be appropriate
under the circumstances.
Other Action. The Committee shall have the authority and responsibility,
acting by majority vote, to take all other appropriate action, including
the authority to notify the SEC, in the event a Fund fails in any material
respect to implement a recommendation that the Committee has made within a
reasonable period of time.
(c). Reporting and Recordkeeping. The Committee shall inform the
relevant Fund's CEO and chief legal officer (or the equivalent thereof) and
the Board of Directors of the results of any investigation of a report of a
material violation and any appropriate remedial measures to be adopted. The
Committee or its delegate shall prepare, or cause to be prepared, a
memorandum reflecting (i) the information developed in any internal
investigation, (ii) any remedial recommendation made by the Committee or by
outside counsel retained to review any report of a material violation and
(iii) any remedial actions taken. The Committee should review these records
periodically to determine whether there are any patterns of activity or
violations that have emerged.
(d). Protection of Reporting Attorneys. The Committee shall not
retaliate, and shall not tolerate any retaliation by Fund management or any
other person or group, directly or indirectly, against anyone who, in good
faith, reports evidence of a material violation or provides assistance to
the Committee or any other person or group, including regulatory
authorities, investigating a report. The Committee shall seek to maintain
the confidentiality of any person who submits a report and who asks that
his or her identity remain confidential and shall not make any effort, or
tolerate any effort made by any other person or group, to ascertain the
identity of any person who makes a report anonymously.
(e) Oversight Responsibilities. The Committee will undertake an annual
review of these Procedures and the reporting and investigation systems to
determine whether they are functioning properly. The Boards of Directors of
the Funds have reviewed and adopted these Procedures. The Boards of
Directors will review these Procedures periodically to assure that they
appropriately address then-existing requirements for attorney up-the-ladder
reporting.
11. The Committee shall review this Charter at least annually and recommend
any changes to the full Board of Directors.
12. This Charter may be altered, amended or repealed, or a new Charter may
be adopted, by the Board by the affirmative vote of a majority of all the
members of the Board, including a majority of the "non-interested" Board members
(within the meaning of the Investment Company Act of 1940, as amended).
13. The Chief Executive Officer ("CEO") of the Fund shall certify to the
Audit Committee of the Fund annually that he is not aware of any violation by
the Fund of any corporate governance standards or policies to which the Fund is
subject. In addition, the CEO of the Fund must promptly notify the Audit
Committee in writing after any executive officer of the Fund becomes aware of
any material non-compliance with any applicable corporate governance listing
standard or policy.
14. The Fund shall provide the NYSE, with respect to any subsequent
changes to the composition of the Audit Committee or otherwise approximately
once each year, written confirmation of the determinations required by Section 3
above.
15. The CEO of the Fund shall certify to the NYSE annually that he is not
aware of any violation by the Fund of the NYSE corporate governance listing
standards and such certification shall be included in the Fund's annual report
to shareholders. If the CEO of the Fund provides notice to the NYSE upon receipt
of any report by any executive officer of any material non-compliance with any
applicable provisions of the NYSE corporate governance listing standards, copies
of any such certification or notice shall be provided to the Audit Committee of
the Fund.
Adopted January 23, 2004
PROXY
BOULDER GROWTH & INCOME FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Boulder Growth & Income
Fund, Inc., a Maryland corporation (the "Fund"), hereby appoints Stephen C.
Miller, Carl D. Johns, and Thomas N. Calabria, or any of them as proxies for the
undersigned, with full powers of substitution in each of them, to attend the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the
Doubletree La Posada Resort, 4949 E. Lincoln Drive, Scottsdale, Arizona at 9:00
a.m. Mountain Standard Time (local time), on May 18, 2004, and any adjournments
or postponements thereof, to cast on behalf of the undersigned all votes that
the undersigned is entitled to cast at the Annual Meeting and to otherwise
represent the undersigned at the Annual Meeting with all the powers possessed by
the undersigned if personally present at the Meeting. The votes entitled to be
cast will be cast as instructed below. If this Proxy is executed but no
instruction is given, the votes entitled to be cast by the undersigned will be
cast "FOR" each of the nominees for Director and "FOR" each of the other
proposals described in the Proxy Statement. The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting and Proxy Statement. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting. A majority of the proxies present and acting
at the Annual Meeting in person or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 THROUGH 10.
Please refer to the Proxy Statement for a discussion of the Proposals.
1 Election of Directors: Nominees are Richard I. Barr, Joel W. Looney, Alfred
G. Aldridge, Jr., John S. Horejsi, and Stephen C. Miller.
FOR____ WITHHOLD___ FOR ALL EXCEPT ___
Instruction: If you do not wish your shares voted "for" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted "For" the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" ELECTION OF
ALL THE NOMINEES
-------------------------------------------------------------------------- -----
STOCKHOLDERS MAY VOTE WITH RESEPCT TO ALL OF THE PROPOSALS 2 THROUGH 10 BY
MAKING THE APPROPRIATE OMNIBUS SELECTION TO THE RIGHT
FOR___ AGAINST ___ ABSTAIN___
-------------------------------------------------------------------------- -----
2 An amendment to the Fund's charter (the "Charter") to declassify the Board
and provide for annual election of Directors FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
3 An amendment to the Charter providing that Directors shall be elected by a
plurality of votes cast at a meeting at which a quorum is present
FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
4 An amendment to the Charter providing that the Secretary of the Fund shall
call a special stockholders meeting upon the written request of the holders
of 25% outstanding shares entitled to vote at the meeting.
FOR___ AGAINST___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
5 An amendment to the Charter vesting in the stockholders the power to amend
or adopt Bylaws by the affirmative vote of a majority of votes cast at a
meeting at which a quorum is present FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
6 An amendment to the Charter prohibiting the Fund from opting into any
provision of the Maryland Unsolicited Takeovers Act
FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
7 An amendment to the Charter to alter the vote required to effect certain
extraordinary corporate transactions FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
8 An amendment to the Charter to establish the maximum number of Directors at
five FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
9 An amendment to the Charter providing that only certain corporate actions
shall be approved by the affirmative vote of the holders of at least a
majority of all the votes entitled to be case on the matter.
FOR___ AGAINST___ ABSTAIN___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
10 A proposal to amend and restate the Charter, the implementation of which is
contingent on the approval of Proposals 2 through 10
FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
11 TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON ANY OTHER MATTER THAT
MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF IN THE DISCRETION OF THE PROXY HOLDER
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EACH should sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature: -------------------------
Date: -------------------------
Signature: -------------------------
Date: -------------------------