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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AMERICAN GROWTH FUND, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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PRELIMINARY COPY
AMERICAN GROWTH FUND, INC
---------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
February 15, 1996
---------------
TO THE SHAREHOLDERS OF AMERICAN GROWTH FUND, INC. (the "FUND"):
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of the Fund will be held at the office of the Fund, 410 17th
Street, Suite 800, Denver, Colorado 80202 on February 15, 1996 at 2:00 p.m.
mountain standard time for the following purposes:
1. To elect 5 Directors of the Fund.
2. To approve or disapprove amendments to the Articles of Incorporation of
the Fund to authorize the designation and redesignation of the Fund's shares
into one or more series and/or classes of shares.
3. To approve or disapprove further amendments to the Articles of
Incorporation of the Fund as described in the accompanying Proxy Statement.
4. To approve or disapprove a proposal to ratify the selection of Smith,
Brock & Gwinn as independent accountants for the 1996 fiscal year.
5. To transact such other business as may properly come before the Meeting
or any adjournment thereof.
Only shareholders of record of the Fund at the close of business on , 1995
are entitled to receive notice of and to vote at the Meeting, and at any and all
adjournments thereof on all matters relating to the Fund.
By order of the Board of Directors,
Robert Brody
Chairman
Denver, Colorado
_____ , 1996
---------------
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YOUR VOTE IS IMPORTANT REGARDLESS OF HOW MANY
SHARES YOU OWNED ON THE RECORD DATE.
---------------
IF YOU CANNOT ATTEND THE MEETING, PLEASE FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS NECESSARY IF
MAILED IN THE UNITED STATES.
ii
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PRELIMINARY COPY
AMERICAN GROWTH FUND, INC.
410 17th Street, Suite 800
Denver, Colorado 80202
(800) 525-2406
---------------
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Fund to be used at a Special Meeting
and any adjournment or adjournments thereof (the "Meeting") of shareholders of
the Fund. The Meeting is scheduled to be held on February 15, 1996 at 2:00 p.m.
mountain standard time at the offices of the Fund, 410 17th Street, Suite 800,
Denver, Colorado 80202. The purpose of the Meeting and the matters to be acted
upon are set forth in the accompanying Notice of Meeting.
The most recent annual report of the Fund has previously been sent to
shareholders and may be obtained without charge by contacting the Fund at 410
17th Street, Suite 800, Denver, Colorado 80202, telephone number (800) 525-2406.
It is expected that the Notice of Meeting, this Proxy Statement and the
accompanying form of Proxy will be first mailed to shareholders on or about
January __, 1996.
The Directors have fixed the close of business on , 1995 as the record date
for the determination of shareholders entitled to notice of and to vote at the
Meeting. As of the record date, ____ shares of capital stock of the Fund, par
value $0.01 per share, were outstanding.
As of the record date, to the knowledge of the Fund, no person owned
beneficially more than 5% of the Fund's shares. The number of shares of the Fund
owned beneficially directly or indirectly by the Fund's directors and officers
as of the record date is set forth in Proposal No. 1.
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TABLE OF CONTENTS
Page
NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS ........................... i
PROXY STATEMENT ........................................................... 1
TABLE OF CONTENTS ......................................................... 2
INTRODUCTION .............................................................. 3
Voting, Quorum ........................................................ 3
Solicitation of Proxies ............................................... 4
Amendment and Restatement of the Articles of Incorporation ............ 4
PROPOSAL NO. 1 ............................................................ 5
PROPOSAL NO. 2 ............................................................ 7
PROPOSAL NO. 3 ............................................................ 11
PROPOSAL NO. 4 ............................................................ 15
OTHER BUSINESS ............................................................ 16
NEXT MEETING OF SHAREHOLDERS .............................................. 16
EXHIBITS Exhibits
Proposed Amended and Restated Articles of Incorporation................ A
2
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INTRODUCTION
Voting, Quorum
Each share of the Fund is entitled to one vote on each matter; no shares
have cumulative voting rights. Shares held by two or more persons (whether as
joint tenants, co-fiduciaries or otherwise) will be voted as follows unless a
written instrument or court order providing to the contrary has been filed with
the Secretary of the Fund: (1) if only one votes, his vote will bind all; (2) if
more than one votes, the vote of the majority will bind all; and (3) if more
than one votes and the vote is evenly divided, the shares will be voted in
accordance with the determination of a majority of such persons together with
any person appointed to act by a court of competent jurisdiction, or, in the
absence of such appointment, the vote will be cast proportionately.
Approval of Proposal No. 1 requires the affirmative vote of a plurality of
the votes cast by shareholders on such Proposal at the Meeting. Approval of
Proposals Nos. 2 and 3 requires the affirmative vote of a majority of the shares
of the Fund outstanding and entitled to vote at the Meeting, present in person
or represented by proxy. Approval of Proposal No. 4 requires the affirmative
vote of a majority of the votes cast by shareholders on such Proposal at the
Meeting.
A quorum for the transaction of business is constituted by the presence in
person or by proxy of the holders of not less than a majority of the outstanding
shares of the Fund entitled to vote at the Meeting. If, by the time scheduled
for the Meeting, a quorum of shareholders of the Fund is not present or if a
quorum is present but sufficient votes in favor of each of the Proposals
described in this proxy statement are not received, the persons named as proxies
may propose one or more adjournments of the Meeting to permit further
solicitation of proxies from shareholders of the Fund. Any such adjournment will
require the affirmative vote of a majority of the shares of the Fund present in
person or represented by proxy at the Meeting. The persons named as proxies will
vote in favor of any such adjournment if they determine that such adjournment
and additional solicitation are reasonable and in the interests of the Fund's
shareholders. If such adjournment is for more than 120 days after the record
date, the Fund will give notice of the adjourned Meeting to shareholders.
In tallying shareholder votes, abstentions and broker non-votes (i.e.,
proxies sent in by brokers and other nominees which cannot be voted on a
Proposal because instructions have not been received from the beneficial owners)
will be counted for purposes of determining whether a quorum is present for
purposes of convening the Meeting. If a Proposal must be approved by a
percentage of "votes cast" on the Proposal (i.e., Proposals Nos. 1 and 4),
abstentions and broker non-votes will not be counted as "votes cast" on the
Proposal and will have no effect on the result of the vote. If a Proposal must
be approved by a majority of the shares issued and outstanding (i.e., Proposals
Nos. 2 and 3), abstentions and broker non-votes will be considered to be both
present and issued and outstanding and, as a result, will have the effect of
being counted as votes against the Proposal.
If the accompanying form of proxy is properly executed and returned in time
to be voted at
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the Meeting, the shares covered thereby will be voted in accordance with the
instructions marked voted FOR each proposal submitted to a vote of the
shareholders. Any proxy may be revoked at any time prior to its exercise by
providing written notice of revocation to the Fund, by delivering a duly
executed proxy bearing a later date, or by attending the Meeting and voting in
person. The Fund will request each bank or broker holding shares for others in
its name or custody, or in the names of one or more nominees, to forward copies
of the proxy materials to the persons for whom it holds such shares and to
request authorization to execute the proxies. Upon request, the Fund will
reimburse such banks and brokers for their out-of-pocket expenses in connection
therewith.
Solicitation of Proxies
One half of the cost of the solicitation (including the cost of the Meeting
and the cost of printing, assembling and mailing of proxy materials) will be
borne by the Fund, with the balance borne in approximately equal amounts by
Investment Research Corporation, the investment adviser to the Funds (the
"Adviser") and American Growth Fund Sponsors, Inc. (the "Distributor").
Directors and officers of the Fund, and officers and employees of the
Adviser and the Distributor may also solicit proxies, without compensation.
Proxies may be solicited by mail, in person or by telephone. Proxies may be
recorded pursuant to telephone or electronically transmitted instructions
obtained pursuant to procedures reasonably designed to verify that such
instructions have been authorized.
Amendment and Restatement of the Articles of Incorporation
In connection with the proposed amendments to the Articles of Incorporation
of the Fund as described in Proposals Nos. 2 and 3, the Fund has prepared a form
of Articles of Amendment and Restatement, a copy of which is attached as Exhibit
A to this Proxy Statement. The form of Articles of Amendment and Restatement
contains all amendments of the Fund's Articles of Incorporation made to date as
well as the amendments now proposed to be made.
If Proposal No. 2 and Proposal No. 3 are approved by shareholders, the Fund
will file Articles of Amendment and Restatement with the Department of
Assessments and Taxation of the State of Maryland in substantially the form of
Exhibit A. If Proposal No. 2 is approved but Proposal No. 3 is not approved, the
Fund will file Articles of Amendment reflecting solely the amendments contained
in Article Fourth of Exhibit A. If Proposal No. 3 is approved but Proposal No. 2
is not approved, the Fund will file Articles of Amendment and Restatement
containing the amendments approved in Proposal No. 3.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
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At a meeting of the Board of Directors held November 22, 1995, the Board of
Directors authorized that the size of the Board be set at five persons, in
accordance with the Fund's Articles of Incorporation and By-Laws. Thereupon, the
Directors who are not interested persons of the Fund (the "Disinterested
Directors") within the meaning of the Investment Company Act of 1940, as amended
(the "1940 Act"), selected and nominated, and the Board unanimously elected, Mr.
Harold Rosen as a Director of the Fund. In addition, the Disinterested Directors
unanimously nominated for reelection as Directors by the Fund's shareholders the
5 persons described below. Each nominee has consented to being named in this
proxy statement and to serve, if elected, from the Meeting until such time as he
resigns or is removed from office by the Directors or shareholders of the Fund.
Should one or more nominees not be able to serve for any reason, the persons
named in the proxy will vote for the substitute or substitutes, if any, selected
and nominated by the Disinterested Directors.
5
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- --------------------------------------------------------------------------------
Number of Shares
Positions and Business Owned Beneficially
Name and Age Experience Directly or Indirectly
- --------------------------------------------------------------------------------
Robert Brody* Age 69 Director of the Fund since 224,979.971 (__%)
1958. President of the
Fund; President and a
Director of the Fund's
Adviser; President and
Director of the Fund's
Distributor.
- --------------------------------------------------------------------------------
Michael J. Baum, Jr. Age 78 Director of the Fund since 149.364 (__%)
1959. Investor in
securities and real
estate; President of
Baum Securities, M & N
Investment Company and
First Avenue
Corporation, all of
which are real estate
investment companies.
- --------------------------------------------------------------------------------
Eddie R. Bush Age 55 Director of the Fund since 13,359.513 (__%)
1987. Certified Public
Accountant
- --------------------------------------------------------------------------------
Don S. Strauss Age 71 Director of the Fund since 4,884.025 (__%)
1986. Previously
President of Majestic
Industries, Inc., a
manufacturer of janitorial
supplies.
- --------------------------------------------------------------------------------
Harold Rosen Age 68 Director of the Fund since --
1995. President and owner
of Bi-Rite Furniture Stores.
- ------------------------
* Mr. Brody is an "interested person" of the Fund within the meaning of the 1940
Act.
Compensation of Directors and Officers
The Fund does not pay any direct remuneration to any officer or Director
who is an interested
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person within the meaning of the 1940 Act. Each Disinterested Director is
currently paid a fee per meeting attended of $400 and reimbursed for all
expenses incurred in connection with any meeting.
During the Fund's most recently completed fiscal year, Messrs. Baum, Bush
and Strauss were each paid $800 by the Fund. None of such persons received any
retirement benefits or other form of deferred compensation from the Fund.
Directors' Meetings
The number of regularly scheduled and special meetings, including telephone
meetings, held by the Board of Directors during the Fund's fiscal year ended
July 31, 1995 was 3. Each of the Directors then serving attended 100% of the
total number of such meetings. The Board of Directors does not have any standing
audit committee or nominating committee.
Officers of the Fund
The following is information concerning the persons who are the executive
officers of the Fund:
================================================================================
Name, Age and Position with the Principal Occupation and Business Experience
Funds
- --------------------------------------------------------------------------------
Robert Brody Age 69 President and Director of the Adviser;
President and Director President and Director of the Distributor.
- --------------------------------------------------------------------------------
Timothy E. Taggart Age 41 Vice President and Director of the Adviser;
Treasurer Secretary and Director of the Distributor.
- --------------------------------------------------------------------------------
D. Leann Baird Age 47 Secretary and Director of the Adviser.
Secretary
================================================================================
The Directors recommend that shareholders vote "FOR" the nominees for
Director in Proposal No. 1.
APPROVAL OF AMENDMENTS TO ARTICLES OF INCORPORATION
TO PERMIT ALTERNATIVE DISTRIBUTION ARRANGEMENTS
(PROPOSAL NO. 2)
The Board of Directors recommends that the shareholders of the Fund approve
amendments to the Fund's Articles of Incorporation which would permit the
Directors, without any further shareholder approval or other action, to issue
one or more additional classes of shares having such preferences or special or
relative rights and privileges as the Directors may determine. In addition,
these amendments would also permit the issuance of Fund shares in different
series, each of which
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series would represent interests in a different investment portfolio of the
Fund. Exhibit A is a form of Articles of Amendment and Restatement for the Fund
containing, in Article Fourth, the proposed amendments discussed in this
Proposal No. 2, and the discussion herein is qualified in its entirety by
reference to Exhibit A. See "Introduction -- Amendment and Restatement of
Articles of Incorporation" above for further information concerning the proposed
filing of Articles of Amendment and Restatement.
The principal purpose of these amendments is to permit the Fund to take
advantage of alternative methods of selling shares through a multiple-class
program. At present, the Fund's shares are sold to investors at a public
offering price equal to the Fund's net asset value per share plus sales charges
(or "sales loads") that are reduced or waived on certain purchases, all as
reflected in the Fund's Prospectus and Statement of Additional Information as in
effect from time to time. Currently, the Fund does not use its assets to pay for
the expenses and costs of distribution, or shareholder services related to
distribution, of its shares (also frequently referred to as "Rule 12b-1 fees").
Subject to the approval of this Proposal No. 2, it is the current intention
of the Directors to designate the existing shares of the Fund as Class D shares
and to establish three additional classes of shares for the Fund in order to
implement a multiple-class distribution program.
The Directors have determined that although distribution-related and
shareholder servicing-related charges may be paid by any new class, the Fund's
current shares (the proposed Class D shares) will not be subject to Rule 12b-1
fees at this time, whether for distribution or shareholder servicing. The Fund
does not currently anticipate proposing any such fees on the Class D shares in
the foreseeable future, and any such proposal for the adoption of Rule 12b-1
fees would require approval by the Class D shareholders. In connection with the
implementation of the multiple-class distribution program, the Fund will limit
the general availability of Class D shares to the existing beneficial holders of
Class D shares at the time of implementation, to the Fund's, the Adviser's and
the Distributor's directors and officers and their spouses and family members,
as well as registered representatives selling shares of the Fund and their
spouses and family members, and to certain institutional investors, including
banks, corporations and accounts managed by specified types of fiduciaries.
The creation of additional separate classes of shares will permit the
Directors to allocate the ongoing costs and expenses associated with the
distribution of shares of a class and distribution-related servicing of
shareholders of the class to the investors who elect to purchase that particular
class of shares. Shareholders who currently own shares of the Fund will not bear
any portion of such costs.
It is currently contemplated that the Fund will redesignate the current
shares as Class D shares and institute three new classes of shares, to be
designated Class A, Class B and Class C shares. These classes are currently
proposed to be offered with the following characteristics:
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1. Class A shares will be sold with (i) a front-end sales charge of 5.75%,
which will be reduced on purchases in excess of $50,000 and (ii) continuing Rule
12b-1 fees at an annual rate of up to .30 of 1% of the average daily net asset
value of the Class A shares. Of the Rule 12b-1 fees, up to .25 of 1% of average
daily net assets would be used to pay for shareholder servicing related to
distribution of shares of the class (a "service fee") and total distribution
fees (including the service fee of .25 of 1%) may not exceed .30 of 1% of the
average daily net assets of the class. The Class A shares have similar
characteristics to the existing shares of the Fund (the proposed Class D shares)
except that the Class D shares will not have the Rule 12b-1 fees.
2. Class B shares will be sold without a front-end sales charge, but will
be subject to (i) a Contingent Deferred Sales Charge ("CDSC") payable with
respect to shares when they are redeemed, which charge would decline to zero
over a seven year period, and (ii) a continuing Rule 12b-1 fee at an annual rate
of up to 1% of the average daily net asset value of the Class B shares, of which
.75 of 1% will be payments in respect of distribution services rendered (a
"distribution fee") and .25 of 1% would be a service fee. It is also proposed
that individual Class B shares will automatically convert (without any charge to
the shareholder) to Class A shares (with their lower Rule 12b-1 fees) shortly
after the eighth anniversary of their purchase.
3. Class C shares will be sold without a front-end sales charge but will be
subject to (i) a 1% CDSC for the first year after sale and (ii) a continuing
Rule 12b-1 fee at an annual rate of up to 1% of the average daily net asset
value of the Class C shares, of which .75 of 1% would be distribution fee and
.25 of 1% would be a service fee. Unlike the Class B shares, the Class C shares
will not convert to any other class.
In addition, the Fund may in the future institute other classes of shares
having other characteristics pertaining to the payment of distribution-related
or shareholder servicing-related costs and expenses. While the final
characteristics of the Class A, Class B and Class C shares (or any future
classes), including the applicable distribution-related and shareholder
servicing-related charges, may vary from those described above, regardless of
the final characteristics of each class no class will bear the
distribution-related or shareholder servicing-related costs and expenses of any
other class, and in the case that the Fund is divided into separate series, no
series will bear the distribution-related or shareholder servicing-related costs
and expenses of any other series.
Other than with respect to distribution-related and shareholder
servicing-related matters, all classes of shares of the Fund (or classes of any
future separate series) would generally participate in all respects on an equal
proportionate basis with all other classes of shares of the Fund (or of such
separate series), including with respect to investment income, realized and
unrealized gains and losses on portfolio investments and all other operating
expenses (except for certain expenses relating solely to a particular class such
as any incremental shareholder servicing fees and the printing of proxy
statements for a meeting of shareholders of a particular class). All classes of
shares of the
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Fund (or separate series) will vote together as a single class at
meetings of shareholders, except that shares of a class (or series) which are
affected by any matter in a materially different manner from shares of other
classes (such as approval of a Rule 12b-1 plan for a class) or other series
(such as investment policies of the series) will vote as a separate class or
series and that holders of shares of a class or series not affected by a matter
will not vote on that matter.
In connection with approving the submission of this Proposal No. 2 to
shareholders of the Fund, the Directors considered that the implementation of
the multiple-class distribution program would provide investors with additional
methods of purchasing the Fund's shares, which could lead to increased sales of
shares. This in turn could possibly minimize or prevent any adverse effects of
redemptions requiring inopportune liquidation of portfolio securities and the
forgoing of favorable investment opportunities, and may improve the ability of
the Fund to deal in larger blocks of securities and obtain more favorable
pricing on portfolio transactions. In addition, the Directors considered that an
increase in asset size could enable the Fund to achieve savings where certain
costs (such as legal and audit expenses and Directors' fees) unrelated to the
size of the Fund are spread over a larger asset base.
Any decision as to whether the alternative distribution program ultimately
will be implemented will be determined in light of then existing business
conditions. However, the Directors recommend that the Fund's Articles of
Incorporation be amended at this time in order to permit the Fund to offer Class
A, Class B and Class C shares, and to enable the Fund to take advantage of such
opportunities that may exist in the future to offer additional classes.
Although there is no current intention to do so, if the Directors in the
future should determine to offer separate series of the Fund (for example, a
Money Market Fund), the Fund could achieve certain economies of scale with
respect to the Fund's fixed costs unrelated to the size of the Fund's assets. No
series would bear the advisory, shareholder servicing-related or
distribution-related expenses or costs of any other series. Notwithstanding the
proposed amendments, the Directors will not be obligated to create any new
series. In addition, there can be no assurance that any economies of scale would
be realized if any new series are created.
In addition to the amendments to Article Fourth to permit the
implementation of the multi-class distribution arrangements, the proposed
amendments also eliminate two currently unnecessary provisions. First, they
eliminate the quorum requirement contained in the Articles of Incorporation
requiring a majority of shares outstanding for a quorum, as this requirement is
already a part of Maryland law and need not be recited as a provision of the
Fund's Articles of Incorporation. Second, the amendments eliminate a now
outdated provision whereby the Fund, for its first six months of operations,
operated as a closed-end investment company.
Finally, in connection with the foregoing amendments, the provisions
governing redemptions contained in Article Fourth are being replaced with
modified redemption provisions to be contained in Article Sixth as paragraph 9,
as are more fully described in Proposal No. 3
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The Directors recommend that shareholders vote "FOR" Proposal No. 2.
APPROVAL OF OTHER AMENDMENTS TO ARTICLES OF INCORPORATION
(PROPOSAL NO. 3)
It is proposed that the shareholders of the Fund approve various additional
amendments to the Fund's Articles of Incorporation which are described in detail
below. Exhibit A contains a form of Articles of Amendment and Restatement for
the Fund containing the proposed amendments discussed in this Proposal No. 3,
and the discussion herein is qualified in its entirety by reference to Exhibit
A. See "Introduction -- Amendment and Restatement of Articles of Incorporation"
above for further information concerning the proposed filing of Articles of
Amendment and Restatement.
As discussed in more detail below, most of the proposed amendments are
intended to bring the Fund's Articles of Incorporation into conformity with
standard terms contained in many Articles of Incorporation of Maryland
corporations organized today. At the time the Fund was organized, over 38 years
ago, mutual funds organized as Maryland corporations included in their Articles
of Incorporation many more provisions than do such funds organized today. As
explained further below, many of these provisions are redundant of restrictions
or regulations otherwise applicable to the Fund pursuant to the 1940 Act or the
rules thereunder or Maryland corporate law, or appear to be intended to prevent
certain potential abuses that may have been a threat to the operations of a
mutual fund in 1958 but generally are no longer viewed as such today due to
subsequent amendments to the 1940 Act or the promulgation of certain of the
rules thereunder.
In addition to the following specified amendments, the Board of Directors
proposes to make certain technical amendments for the purposes of including
conforming provisions to reflect facts existing at the time of the filing of
Articles of Amendment and Restatement or to conform to the specific amendments
contained in this Proposal No. 3. While the specific conforming amendments are
not described herein, the approval by shareholders of this Proposal No. 3 will
be considered to be approval of any technical amendments required to conform the
Articles of Incorporation or Articles of Amendment and Restatement to bring them
up to date and avoid any inconsistencies.
The Directors recommend that shareholders vote "FOR" this Proposal No. 3.
(A) Elimination of Investment Restrictions Contained in Article Second.
The Board of Directors of the Fund recommends that shareholders approve the
elimination of the investment restrictions contained in Paragraph 1 of Article
Second of the Articles of Incorporation. Approval of these proposed amendments
will not change the Fund's current investment restrictions. Such approval will
only give the Fund the ability to make such changes in the future to the extent
permitted by the 1940 Act.
Neither the 1940 Act nor Maryland corporate law requires Articles of
Incorporation to
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contain investment restrictions. The 1940 Act does require all mutual funds to
adopt and disclose, in their prospectus and/or statement of additional
information certain "fundamental" investment restrictions that cannot be changed
without the vote of a "majority of the outstanding voting securities" of the
fund (a "1940 Act majority"). "Majority of outstanding voting securities" is
defined for purposes of the 1940 Act as the lesser of (a) more than 50% of the
outstanding shares of a fund or (b) 67% of the shares represented at a meeting
of shareholders at which more than 50% of the outstanding shares of the fund are
present in person or represented by proxy.
The Fund's current fundamental investment restrictions are substantially
similar to many of those contained in the Fund's existing Articles of
Incorporation. If Fund management were to suggest changes to these fundamental
investment restrictions, an amendment to the Articles of Incorporation would
also be required. This amendment would require approval by more than 50% of the
Fund's outstanding shares, which is a more burdensome requirement than simply
obtaining a 1940 Act majority for a change in a fundamental policy.
The Board understands that few mutual funds organized today include
investment restrictions in their Articles of Incorporation. Moreover, the Board
believes that the requirement of a 1940 Act majority vote to approve any change
to a fundamental policy adequately protects shareholders against unexpected or
undesired future changes in fundamental investment policies and restrictions
while avoiding unnecessarily burdensome additional requirements for any such
change. Accordingly, the Board of Directors believes that the proposed amendment
is in the best interest of shareholders of the Fund.
(B) Elimination of Reporting Requirements in Connection with, and
Restrictions on, Sales of Shares to Certain Persons.
Paragraph 2 of Article Second of the Fund's Articles of Incorporation
prohibits sales of shares by the Fund's Distributor to the Adviser, the
Distributor, or to the Fund's, Adviser's or Distributor's officers, directors
and employees unless (i) the sale is made at a price not less than the public
offering price, and (ii) the purchaser advises that Fund that the purchase is
made for investment purposes and agrees to advise the Fund of any sale of shares
of the Fund within two months of such purchase. The Board of Directors has
determined that in view of developments in the law in the 38 years since the
Fund was organized, these provisions are no longer necessary or appropriate. In
addition, the Board has noted that these types of restrictions are not generally
contained in the charters of newer mutual funds.
In the first instance, the 1940 Act and rules thereunder require that all
sales of the Fund's shares be at the net asset value of the Fund plus any
applicable sales charges. All variations in sales charges or waivers of sales
charges must be disclosed in the Fund's prospectus and statement of additional
information. The Board of Directors believes that these disclosure requirements,
which became law after the Fund was organized, have eliminated the need for the
restriction contained in the Articles of Incorporation that sales to insiders be
made "at a price not less than the price then
12
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available to the public."
In the second instance, the Fund's transfer agent maintains current records
of all shareholder accounts on computer, which permits it to monitor any trading
activity by Fund insiders in shares of the Fund. These records could be
considered to more accurate and reliable than any reporting by the individuals
involved, and should generally serve as the preferred way to monitor any
potential abuses arising from insiders trading in Fund shares. Moreover, if this
Proposal No. 3 is approved, the Board of Directors intends to adopt internal
procedures to replace the reporting requirement contained in the Articles. The
Board believes that internal procedures will provide better protection against a
broader range of potential abuses by insiders in this area as well as other
areas of trading practices. In addition, Fund management has indicated that
during the last 38 years, no instance has been encountered where the existing
procedures have led to the need for action by the Fund.
Based upon the foregoing, the Board of Directors believes that the proposed
amendment is in the best interest of shareholders of the Fund.
(C) Elimination of Provisions Dealing with Transactions with Fund Insiders.
Paragraph 7 of Article Sixth of the Fund's Articles of Incorporation
prohibits securities transactions, loans and Fund brokerage transactions between
the Fund and certain persons affiliated with the Fund (or certain persons
affiliated such persons). In addition, this paragraph imposes certain
restrictions and conditions upon any permitted transactions between the Fund and
its directors, officers or employees or companies in which such persons have any
interest.
The Board of Directors believes that the prohibitions contained in this
paragraph of the Articles of Incorporation are redundant of, and in some case
more restrictive than, prohibitions on related party transactions that are now
contained in the 1940 Act and the rules thereunder and in Maryland law.
Moreover, these types of specific restrictions are generally not found in mutual
fund charters today.
While the Board recognizes that the elimination of these provisions as
proposed might in the future allow the Fund to engage in certain transactions
that otherwise are currently completely prohibited, the Board believes that the
protections of the 1940 Act and the rules thereunder as well as the conditions
imposed by Maryland law will serve as sufficient protection to the Fund against
any potential abuses that could arise in such transactions. Furthermore,
although Fund management has indicated that it does not currently foresee any
instances where the Fund would enter into transactions now prohibited by the
Articles of Incorporation, the Board of Directors believes that the flexibility
gained by eliminating these provisions may be beneficial to the Fund in the
future. Accordingly, the Board believes that this proposed amendment is in the
best interests of the Fund and its shareholders.
(D) Amendment of Provisions Relating to the Determination of the Fund's
Share Price.
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<PAGE>
Paragraph 8 of Article Sixth of the Fund's Articles of Incorporation
contains, in addition to a general authorization to the Board of Directors to
issue shares of the Fund, detailed procedures for determining the Fund's net
asset value.
The Board of Directors notes, however, that the 1940 Act and the rules
thereunder provide the general procedures for the determination of a Fund's
offering price and the valuation of its assets (which includes requirements that
the Board of Directors establish procedures for valuing certain types of
assets). In addition, the Fund must comply with the accounting pronouncements
made from time to time by the Securities and Exchange Commission (the
"Commission").
The proposed language of amended paragraph 8 makes clear that the issuance
of shares will be subject to the 1940 Act and rules thereunder, Maryland law,
and any limitations otherwise contained in the Articles and the Fund's By-Laws.
This provides maximum flexibility for the Fund to conform to any future changes
in the 1940 Act and rules or in Maryland law. Accordingly, the Board of
Directors believes that the proposed amendment is in the best interests of the
Fund and its shareholders.
(E) Amendments to Liability and Indemnification Provisions.
The Board of Directors recommends the amendment of the provisions of
Paragraph 7 of Article Sixth to provide that directors and officers of the Fund
shall not be liable to the Fund or its shareholders for money damages. The
amendments would provide further that no future amendment to the Articles of
Incorporation or repeal of the limitation of liability or indemnification
provisions would limit or eliminate any benefits provided by such provisions
with respect to acts or omissions occurring prior to such future amendments.
However, the amendments would also make explicit that the indemnification and
limitation of liability provisions are subject to the 1940 Act limitations upon
exculpation and indemnification. Accordingly, the Articles will state that no
Director or officer will be protected from any liability to the Fund and its
shareholders that arises from willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his or her
office.
The Fund's Articles of Incorporation currently contain a provision granting
the Fund's directors, officers, agents and employees indemnification to the full
extent permitted by applicable law. While these provisions offer certain comfort
to Directors and potential candidates considering serving as Directors of the
Fund, the Board believes that the proposed amendments are desirable for several
reasons. For example, by making clear that generally the directors and officers
are not liable to the Fund or shareholders for money damages, if a suit were
instituted against one or more of the Fund's Directors on behalf of the Fund or
its shareholders, this provision may enable the earlier dismissal of claims that
are without merit, thus possibly avoiding certain situations where the Fund
would have to provide costly indemnification to the Directors.
Based on the foregoing, the Board of Directors believes that the proposed
amendments to the
14
<PAGE>
limitation of liability and indemnification provisions are in the best interests
of the Fund and its shareholders.
(F) Additional Amendments to Article Sixth.
In addition to the Amendments to Article Sixth discussed in sub-sections
(C), (D), and (E) above, Article Sixth is proposed to be amended to add three
new paragraphs: (i) Paragraph 9, governing redemptions; (ii) Paragraph 10,
regarding the binding effect of certain determination as to the valuation of
Fund assets and liabilities and other financial matters, and (iii) Paragraph 11,
providing that nothing contained in the Fund's Articles of Incorporation will be
effective to require a waiver of compliance with the 1940 Act or Securities Act
of 1933, as amended, or the Commission's rules thereunder.
Proposed Paragraph 9 of Article Sixth replaces and modifies similar
provisions currently contained in Article Fourth of the Fund's current Articles.
The modifications to those provisions are primarily intended to restate and
simplify the conditions regarding redemption of the Fund's shares. However,
Proposed Paragraph 9 also adds a provision allowing the Board of Directors to
order the redemption of all shares of the Fund. This provision provides a
mechanism for the Directors to liquidate the Fund (or any series or class of the
Fund) in the event that they determine that the Fund (or such series or class)
is no longer viable, and its continuation is no longer in the best interests of
its shareholders. In the absence of this provision, a shareholder vote, with its
accompanying expense to the Fund, would be necessary.
Proposed Paragraph 10 of Article Sixth is intended to make clear under the
Fund's charter documents that the determinations as to valuations of assets and
liabilities as well as other financial matters affecting the Fund, made in good
faith, and with respect to accounting matters, in accordance with accepted
accounting practice, by or under the direction of the Board of Directors will be
final, conclusive and binding on the Fund and all of its shareholders. This
provision is intended to protect the Fund and its shareholders from potentially
expensive challenges to good faith decisions regarding these matters.
The Board of Directors believes that the foregoing proposed amendments are
in the best interests of the Fund and its shareholders.
RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 4)
Subject to ratification by the shareholders at the Meeting, the Board of
Directors (including a majority of the Disinterested Directors) has approved the
selection of Smith, Brock & Gwinn as the independent accountants for the Fund
for the fiscal year ending July 31, 1996.
15
<PAGE>
None of Smith, Brock & Gwinn or any of its members have any direct or
indirect material financial interest in or connection with the Fund in any
capacity other than as independent accountants. Management of the Fund will
arrange to have a representative of Smith, Brock & Gwinn available to answer
questions or make a statement at the Meeting if requested to do so by any
shareholder at least three business days prior to the Meeting date.
The Directors recommend that shareholders vote "FOR" Proposal No. 4.
OTHER BUSINESS
The Board of Directors knows of no other business to be brought before the
Meeting, but should any other matters requiring the vote of shareholders arise,
the persons named in the enclosed Proxy will vote thereon according to their
best judgment in the interests of the Fund.
NEXT MEETING OF SHAREHOLDERS
The Fund generally is not required to hold annual meetings of shareholders,
and does not intend to hold periodic or special meetings of shareholders except
as required by the 1940 Act. The next meeting of the shareholders of the Fund
will be held at such time as the Board of Directors may determine or at such
time as may be legally required. Any shareholder proposal intended to be
presented at such meeting must be received by the Fund at its office a
reasonable time prior to the meeting, as determined by the Board of Directors,
to be included in the Fund's proxy statement and form of proxy relating to such
meeting, and must satisfy all other legal requirements.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED STAMPED PRE-ADDRESSED ENVELOPE.
BY ORDER OF THE BOARD OF
DIRECTORS
Dated: January ___, 1996 Robert Brody
Chairman
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<PAGE>
EXHIBIT A
Proposed new text marked with double underscores, text to be deleted marked with
[brackets and strikethrough].
ARTICLES OF [INCORPORATION] AMENDMENT AND RESTATEMENT
OF
AMERICAN GROWTH FUND, INC.
[THIS is to Certify:] AMERICAN GROWTH FUND, INC., a Maryland corporation
(the Corporation"), HEREBY CERTIFIES:
[We, the subscribers, James L. Watson, Thomas J. Bracken and Audrey F.
Tranberg the post office address of all of whom is No. 10 Light Street,
Baltimore, 2, Maryland all being of full legal age, do, under and by virtue of
the General Laws of the State of Maryland authorizing the formation of
corporations, associate ourselves with the intention of forming a corporation.]
1. The name of the Corporation is AMERICAN GROWTH FUND, INC. The Corporation
desires to amend and restate its charter (the "Charter") as currently in effect.
The original Articles of Incorporation were approved and received by the State
Tax Commission of Maryland on July 16, 1958.
2. Pursuant to Section 2-609 of the Maryland Corporations and Associations
Code, these Articles of Amendment and Restatement restate and integrate and
further amend the provisions of the Articles of Incorporation of the
Corporation.
3. The text of the Charter of the Corporation as heretofore amended or
supplemented is hereby restated and further amended to read in its entirety as
follows:
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
AMERICAN GROWTH FUND, INC.
ARTICLE FIRST
The name of the corporation (hereinafter called the Corporation) is
American Growth Fund, Inc.
ARTICLE SECOND
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it, are as
follows:
(1) To hold, invest and reinvest its funds, and in connection
therewith to hold part or all of its funds in cash, and to purchase or
otherwise acquire, hold for investment or otherwise, sell, assign,
negotiate, transfer, exchange or otherwise dispose of or turn to
<PAGE>
account or realize upon, securities (which term "securities" shall for the
purposes of this Article, without limitation of the generality thereof, be
deemed to include any stocks, shares, bonds, debentures, notes, mortgages
or other obligations, and any certificates, receipts, warrants or other
instruments representing rights to receive, purchase or subscribe for the
same, or evidencing or representing any other rights or interests therein,
or in any property or assets) created or issued by any persons, firms,
associations, corporations, syndicates, combinations, organizations,
governments, or subdivisions thereof; and to exercise, as owner or holder
of any securities, all rights, powers and privileges in respect thereof;
and to do any and all acts and things for the preservation, protection,
improvement and enhancement in value of any and all such securities[;
provided, however, that the Corporation shall not
(a) purchase any securities on margin;
(b) participate on a joint or joint and several basis in any trading account in
any securities;
(c) contract to sell any security except to the extent that the same shall be
owned by the Corporation;
(d) purchase the securities of any person, firm, association, corporation,
syndicate, combination, organization, government (other than the United States
of America) or any subdivision thereof, if, upon such purchase, more than 5% of
its total assets, determined in such manner as may be approved by the Board of
Directors of the Corporation and applied on a consistent basis, would consist of
the securities of such person, firm, association, corporation, syndicate,
combination, organization, government or subdivision;
(e) borrow any money, except as a temporary measure for extraordinary or
emergency purposes and then only in amounts not in excess of 10% of its total
assets taken at cost;
(f) mortgage or pledge any of its property, real or personal;
(g) lend any of its funds or other assets other than through the purchase of
bonds, debentures, notes and other evidences of indebtedness as herein
authorized;
(h) purchase the securities of any person, firm, association, corporation,
syndicate, combination, organization, government or any subdivision thereof, if,
upon such purchase, the Corporation would own more than 10% of any class of the
outstanding securities of such person, firm, association, corporation,
syndicate, combination, organization, government or subdivision. For the
purposes of this restriction, all kinds of securities of a company representing
debt shall be deemed to constitute a single class, regardless of relative
priorities, maturities, conversion rights and other differences, and all kinds
of stock of a company preferred over the common stock as to dividends or in
liquidation shall be deemed to constitute a single class regardless of relative
priorities, series designations, conversion rights and other differences;
(i) purchase the securities of any investment company or investment trust (as
such items may reasonably be understood by the Corporation), other than the
Corporation, except by purchase in the open market where no commission or profit
to a sponsor or dealer results from such purchase other than the customary
broker's commission or except when such purchase though not made in the open
market is part of a plan of merger or consolidation;
(j) Purchase the securities of any person, firm, association, corporation,
syndicate, combination or organization, the business of which has been in
continuous operation for less than three years, such period to include the
period of operation of any predecessor if the issuer whose securities are
proposed to be acquired has come into existence as the result of a merger,
consolidation,
2
<PAGE>
reorganization or the purchase of substantially all of the assets of such
predecessor if the purchase by the Corporation of any such securities at the
time thereof would cause more than 5% of the total assets of the Corporation to
be invested in securities of the type described in this paragraph (j); provided
that any purchases of securities of any such person, firm, association,
corporation, syndicate, combination or organization shall be limited to those
the business of which at the time of purchase is that of (1) a public utility
subject to supervision or regulation as to its rates or charges by a commission
or board or officer of the United States or of any state or territory thereof,
or of the Government of Canada or of any province of Canada or (2) operating
pipe or transmission lines for the transmission of oil, gas or electric energy
or like products; (k) underwrite the sale of, or participate in any underwriting
or selling group in connection with the public distribution of, any securities
(other than the capital stock of the Corporation), provided, however, that this
provision shall not be construed to prevent or limit in any manner the right of
the Corporation to purchase securities for investment purposes;].
(2) To issue and sell shares of its own capital stock in such amounts
and on such terms and conditions, for such purposes and for such amount or
kind of consideration (including, without limitation thereto, securities)
now or hereafter permitted by the laws of Maryland and by these Articles of
Incorporation, as its Board of Directors may determine; provided, however,
that the consideration per share to be received by the Corporation upon the
sale of any shares of its capital stock shall not be less than the net
asset value per share of such capital stock outstanding at the time as of
which the computation of such net asset value shall be made[; and further
provided, that the Corporation shall not, and shall not permit any
distributor of the shares of its capital stock to, sell any shares of its
capital stock (i) to any officer, director or employee of the Corporation;
(ii) to any person or organization furnishing managerial, supervisory or
distributing services to the Corporation; or (iii) to any officer,
director, partner, trustee or employee of, or person owning of record any
of the stock of, any person or organization furnishing managerial,
supervisory or distributing services to the Corporation, unless the sale is
made at a price not less than the price then available to the public and
the Corporation is advised that the purchase is being made for investment
and that the purchaser will advise the Corporation of any sale of shares of
the capital stock of the Corporation made by the purchaser less than two
months after the date of any purchase by him or it of shares of the capital
stock of the Corporation].
(3) To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any manner
and to the extent now or hereafter permitted by the laws of [said State]
Maryland and by these Articles of Incorporation.
(4) To conduct its business in all of its branches at one or more
offices in Maryland and elsewhere in any part of the world, without
restriction or limit as to extent.
(5) To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates or, to the extent now or
hereafter permitted by the
3
<PAGE>
laws of Maryland, as a member of, or as the owner or holder of any stock
of, or shares of interest in, any firm, association, corporation, trust or
syndicate; and in connection therewith to make or enter into such deeds or
contracts with any persons, firms, associations, corporations, syndicates,
governments or subdivisions thereof, and to do such acts and things and to
exercise such powers, as a natural person could lawfully make, enter into,
do or exercise.
(6) To do any and all such further acts and things and to exercise any
and all such further powers as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise
expressly provided, 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
these Articles of Incorporation, and shall each be regarded as independent, and
construed as powers as well as objects and purposes, and the enumeration of
specific purposes, objects and powers shall not be construed to limit or
restrict in any manner the meaning of general terms or the general powers of the
Corporation now or hereafter conferred by the laws of the State of Maryland, nor
shall the expression of one thing be deemed to exclude another, though it be of
like nature, not expressed; provided, however, that the Corporation shall not
have the power to carry on within the State of Maryland any business whatsoever
the carrying on to which would preclude it from being classified as an ordinary
business corporation under the laws of said State; nor shall it carry on any
business, or exercise any powers, in any other state, territory, district or
country except to the extent that the same may lawfully be carried on or
exercised under the laws thereof.
ARTICLE THIRD
The post office address of the place at which the principal office of
the Corporation in the State of Maryland will be located is [10 Light] 32 South
Street, Baltimore [2], Maryland 21202.
The Corporation's resident agent is The Corporation Trust
Incorporated, whose post office address is [10 Light] 32 South Street, Baltimore
[2], Maryland 21202. Said resident agent is a corporation of the State of
Maryland.
ARTICLE FOURTH
(1) The total [amount of authorized capital stock of the
Corporation and the number and par value of its shares is $500,000, consisting
of 50,000,000 shares of the par value of one cent each, all of one class.
(2) At all meetings of stockholders each stockholder of the Corporation shall be
entitled to one vote for each share of stock standing in his name on the books
of the Corporation on the date, fixed in accordance with the By-Laws, for
determination of stockholders entitled to vote at such
4
<PAGE>
meeting. Any factional share shall carry proportionately all the rights of a
whole share, including the right to vote and the right to receive dividends. The
presence in person or by proxy of the holders of a majority of the shares of
capital stock of the Corporation outstanding and entitled to vote thereat shall
constitute a quorum at any meeting of the shareholders. If at any meeting of the
shareholders there shall be less than a quorum present, the shareholders present
at such meeting may, without further notice, adjourn the same from time to time
until a quorum shall attend, but no business shall be transacted at any such
adjourned meeting except such as might have been lawfully transacted had the
meeting not been adjourned. Cumulative voting shall not be allowed at any
meeting of the stockholders of this Corporation.
(3) That for a period of six months from and after the public offering of the
stock of this Corporation, this Corporation shall be a closed-end investment
company, and at the expiration of said six-months period shall automatically
become an open-end investment company; however, the Board of Directors of this
Corporation shall have the power to declare this Corporation an open-end
investment company at any time prior thereto by resolution specifying the date
and time when this Corporation shall be an open-end investment company.
(a) Each holder of the capital stock of the Corporation, upon request to the
Corporation accompanied by surrender of the appropriate stock certificate or
certificates in proper form for transfer, shall be entitled to require the
Corporation to redeem all or any part of the shares of capital stock standing in
the name of such holder on the books of the Corporation, at the net asset value
of such shares. The method of such net asset value, the time as of which such
net asset value shall be computed and the time within which the Corporation
shall make payment therefor shall be determined as hereinafter provided in
Article SIXTH of these Articles of Incorporation. Notwithstanding the foregoing,
the Board of Directors of the Corporation may suspend the right of the holders
of the capital stock of the Corporation to require the Corporation to redeem
shares of such capital stock
(i) for any period (A) during which the New York Stock Exchange is closed other
than the customary week-end and holiday closings, or (B) during which trading on
the New York Stock Exchange is restricted;
(ii) for any period during which an emergency, as defined by rules of the
Securities and Exchange Commission or any successor thereto, exists as a result
of which (A) disposal of the Corporation of securities owned by it is not
reasonably practicable, or (B) it is not reasonably practicable for the
Corporation fairly to determine the value of its net assets; or
(iii) for such other periods as the Securities and Exchange Commission or any
successor thereto may by order permit for the protection of security holders of
the Corporation.
(b) On and after such time all shares of the capital stock of the Corporation
now or hereafter authorized shall be subject to redemption and redeemable, in
the sense used in the General Laws of the State of Maryland authorizing the
formation of corporations, at the redemption price for any such shares,
determined in the manner set out in these Articles of Incorporation or in any
amendment thereto. In the absence of any specification as to the purposes for
which shares of the capital stock of the Corporation are redeemed or repurchased
by it, all shares so redeemed or repurchased shall be deemed to be acquired for
retirement in the sense contemplated by the laws of the State of Maryland and
the number of the authorized shares of the capital stock of the Corporation
shall not be reduced by the number of any shares redeemed or repurchased by it.
(4) Notwithstanding any provision of law requiring any action to be taken or
authorized by the
5
<PAGE>
affirmative vote of the holders of a majority or other designated proportion of
the shares, or to be otherwise taken or authorized by a vote of the
stockholders, such action shall be effective and valid if taken or authorized by
the affirmative vote of the holders of a majority of the total number of shares
outstanding and entitled to vote thereon pursuant to the provisions of these
Articles of Incorporation.
(5)] number of shares which the Corporation has authority to issue is fifty
million (50,000,000) shares of capital stock of the par value of one cent
($0.01) each, having an aggregate par value of five hundred thousand dollars
($500,000).
(2) The Board of Directors may classify and reclassify any
unissued shares of capital stock (whether or not such shares have been
previously classified) into one or more additional or other classes or series as
may be established from time to time by setting or changing in any one or more
respects the designations, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of or rights to require redemption of such shares of capital stock
and pursuant to such classification or reclassification to increase or decrease
the number of authorized shares of any existing class or series.
(3) The Board of Directors may change the name or other
designation of any series or class of shares of capital stock whether or not
shares of such series or class are issued and outstanding, provided that such
change in name or other designation does not change the preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of such shares of stock.
(4) Each series of stock of the Corporation shall relate to a
separate portfolio of investments. All shares of stock within each series shall
be identical except that there may be variations among the different series,
including, without limitation, as to the purchase price, determination of net
asset value, designations, preferences, conversion or other rights, voting
powers, restrictions, allocations of expenses, special and relative rights and
limitations as to dividends and on liquidation, qualifications or terms or
conditions of or rights to require redemption of such shares of stock.
(a) Except as the Board of Directors otherwise may provide
when classifying or reclassifying any shares of stock into separate series,
all consideration received by the Corporation for the issue or sale of
shares of stock of a particular series, together with all assets in which
such consideration is invested or reinvested, all income, earnings,
profits, and proceeds received thereon, including any proceeds derived from
the sale, exchange or liquidation of such assets, any funds or payments
derived from any reinvestment of such proceeds, and any assets, income,
earnings, profits, and proceeds thereof, funds or payments that are not
readily identifiable as belonging to any particular series ("General
Assets") allocated to a series, shall constitute assets of that series, in
contrast to other series (subject only to the rights of creditors) and are
herein referred to as assets "belonging to" that series. Except as herein
expressly provided, any General Assets shall be allocated by or under the
supervision of
6
<PAGE>
the Board of Directors to and among any one or more of the series
established and designated from time to time, in such manner and on such
basis as the Board of Directors, in its sole discretion, deems fair and
equitable. Such decisions by the Board of Directors shall be final and
conclusive.
(b) The assets belonging to each series of stock shall be
charged with the liabilities of the Corporation in respect of that series
and with all expenses, costs, charges, and reserves attributable to that
series. Such liabilities, expenses, costs, charges, and reserves, together
with any liabilities, expenses, costs, charges, or reserves of the
Corporation that are not readily identifiable as belonging to any
particular series ("General Liabilities") allocated to that series, shall
constitute the liabilities of that series, in contrast to other series, and
are herein referred to as "belonging to" that series. Except as herein
expressly provided, any General Liabilities shall be allocated by or under
the supervision of the Board of Directors to and among any one or more of
the series established and designated from time to time, in such manner and
on such basis as the Board of Directors, in its sole discretion, deems fair
and equitable. Such decisions by the Board of Directors shall be final and
conclusive.
(5) Expenses related to the distribution of, and other identified
expenses that should properly be allocated to, the shares of a particular class
or series of capital stock may be charged to and borne solely by such class or
series and the bearing of expenses solely by a class or series of capital stock
may be appropriately reflected (in a manner determined by the Board of
Directors) and cause differences in the net asset value attributable to, and the
dividend, redemption and liquidation rights of, the shares of each class or
series of capital stock.
(6) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary thereto, the holders of each
class or series of capital stock shall be entitled to dividends and
distributions in such amounts and at such times as may be determined by the
Board of Directors, and the dividends and distributions paid with respect to the
various classes or series of capital stock may vary among such classes and
series. Dividends and distributions with respect to a series may be declared or
paid only out of the net assets belonging to that series. Dividends on a class
or series may be declared or paid only out of the net assets of that class or
series.
(7) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary thereto, on each matter
submitted to a vote of stockholders, each holder of a share of capital stock of
the Corporation shall be entitled to one vote for each share standing in such
holder's name on the books of the Corporation, irrespective of the class or
series thereof, and all shares of all classes and series shall vote together as
a single class; provided, however, that (a) as to any matter with respect to
which a separate vote of any class or series is required by the Investment
Company Act of 1940, or any rules, regulations or orders issued thereunder, or
by the Maryland General Corporation Law, such requirements as to a separate vote
by that class or series shall apply in lieu of a general vote of all classes and
series
7
<PAGE>
as described above, (b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or more classes or series,
then, subject to clause (c) below, the shares of all other classes and series
not entitled to a separate class vote as a single class, and (c) as to any
matter which does not affect the interests of a particular class or series, such
class or series shall not be entitled to any vote and only the holders of shares
of the affected classes or series, if any, shall be entitled to vote.
(8) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary thereto, subject to compliance
with the requirements of the Investment Company Act, the Board of Directors
shall have the authority to provide that holders of shares of any class or
series shall have the right to convert or exchange said shares into shares of
one or more other classes or series of shares in accordance with such
requirements and procedures as may be established by the Board of Directors.
(9) Notwithstanding any provisions of the Maryland General
Corporation Law requiring a greater proportion than a majority of the votes of
all classes or series of capital stock of the Corporation (or any class or
series entitled to vote thereon as a separate class or series) to take or
authorize any action, the Corporation is hereby authorized (subject to the
requirements of the Investment Company Act of 1940, or any rules, regulations
and orders issued thereunder) to take such action upon the concurrence of a
majority of the aggregate number of shares of capital stock of the Corporation
entitled to vote thereon (or a majority of the aggregate number of shares of a
class or series entitled to vote thereon as a separate class or series).
(10) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, in the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of all classes
and series of capital stock of the Corporation shall be entitled, after payment
or provision for payment of the debts and other liabilities of the Corporation,
to share ratably in the remaining net assets of the Corporation; provided,
however, that in the event the capital stock of the Corporation shall be
classified or reclassified into series, holders of any shares of capital stock
within such series shall be entitled to share ratably (after taking into account
are expenses attributable to any separate clauses of such series) out of the
assets belonging to such series.
(11) No holder of stock of the Corporation shall, as such holder,
have any right to purchase or subscribe for any shares of the capital stock of
the Corporation of any class which it may issue or sell (whether out of the
number of shares authorized by these Articles of Incorporation, or out of any
shares of the capital stock of the Corporation acquired by it after the issue
thereof, or otherwise) other than such right, if any, as the Board of Directors,
in its discretion, may determine. Cumulative voting shall not be allowed at any
meeting of the stockholders of this Corporation.
(12) Any fractional share shall carry proportionately all the
rights of a
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whole share, including the right to vote and the right to receive dividends.
(13)[(6)] All persons who shall acquire stock in the Corporation
shall acquire the same subject to the provisions of these Articles of
Incorporation.
(14) Any reference to "shares," "stock" or "shares of stock" in
these Articles of Incorporation shall be deemed to refer, unless the context
otherwise requires, to the shares of each separate class and/or series. As used
in the charter of the Corporation, the terms "charter" and "Articles of
Incorporation" shall mean and include these Articles of Incorporation as
amended, supplemented and restated from time to time whether by Articles of
Amendment, Articles Supplementary, Articles of Restatement or otherwise.
ARTICLE FIFTH
The number of Directors of the Corporation shall be [three] five, and
the names of those who shall act as such [until the first annual meeting or]
until their successors are duly chosen and qualified are as follows:
Robert D. Brody
[Harry A. Feder] Michael J. Baum, Jr.
[Arnold J. Cohodas] Eddie R. Bush
Don S. Strauss
Harold Rosen
However, the By-Laws of the Corporation may fix the number of
Directors at a number greater or less than that named in these Articles of
Incorporation, provided that in no case shall the number of Directors be less
than three, and may authorize the Board of Directors, by the vote of a majority
of the entire Board of Directors, to increase or decrease the number of
Directors fixed by these Articles of Incorporation or by the By-Laws within a
limit specified in the By-Laws and to fill the vacancies created by any such
increase in the number of Directors. Unless otherwise provided by the By-Laws of
the Corporation, the Directors of the Corporation need not be stockholders
therein.
ARTICLE SIXTH
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.
(1) The By-Laws of the Corporation may divide the Directors of
the Corporation into classes and prescribe the tenure of office of the several
classes, but no class shall be elected for a period shorter than that from the
time of the election following the division into classes until the next annual
meeting and thereafter for a period shorter than the interval between annual
meetings or for a longer period than five years, and the term of office of at
least one class shall expire each year. Notwithstanding the foregoing, no such
division into classes shall be made prior to the first annual meeting of
stockholders of the Corporation.
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(2) The holders of shares of the capital stock of the Corporation
shall have the right to inspect the records, documents, accounts and books of
the Corporation, subject to reasonable regulations of the Board of Directors,
not contrary to Maryland law, as to whether and to what extent, and at what
times and places, and under what conditions and regulations, such right shall be
exercised.
(3) Any Director, or any officer elected or appointed by the
Board of Directors or by any committee of said Board or by the stockholders or
otherwise, may be removed at any time, with or without cause, in such lawful
manner as may be provided in the By-Laws of the Corporation.
(4) If the By-Laws so provide, the Board of Directors of the
Corporation shall have the power to hold their meetings, to have an office or
offices and, subject to the provisions of the laws of Maryland, to keep the
books of the Corporation outside of said State at such places as may from to
time be designated by them.
(5) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the Board of Directors may exercise all
such powers and do all such acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the express provisions of the laws of
Maryland, of these Articles of Incorporation and of the By-Laws of the
Corporation.
(6) Shares of stock in other corporations shall be voted by the
President or a Vice-President, or such officer or officers of the Corporation as
the Board of Directors shall designate for the purpose, or by a proxy or proxies
thereunto duly authorized by the Board of Directors, except as otherwise ordered
by vote of the holders of a majority of the shares of the capital stock of the
Corporation outstanding and entitled to vote in respect thereto.
[7(a) The Corporation shall not purchase from or sell to (i) any
officer, director or employee of the Corporation, (ii) any partnership of which
any officer, director or employee of the Corporation is a member, (iii) any
corporation or association of which any officer, director or employee of the
Corporation is an officer, director or trustee, (iv) any person or organization
furnishing managerial, supervisory or distributing services to the Corporation
(v) any officer, director, partner, trustee or employee of, or person owning or
record any of the stock of, any person or organization furnishing managerial,
supervisory or distributing services, (vi) any partnership of which any officer,
director, partner, trustee or employee of, or person owning of record any of the
stock of, any person or organization furnishing such managerial, supervisory or
distributing services, is a member, or (vii) any corporation or association of
which any officer, director, partner or trustee of, or person owning of record
any of the stock of, any person or organization furnishing such managerial,
supervisory or distributing services, is an officer, director or trustee, as
principals, any securities (other than stock which may be issued by the
Corporation), nor shall the Corporation make any loan to any officer, director
or employee of the Corporation, to any partnership of which any officer,
director or employee of the Corporation is a member, to any corporation or
association of which any officer, director or employee of the
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Corporation is an officer, director or trustee, to any person or organization
furnishing managerial, supervisory or distributing services to the Corporation,
or to any officer, director, partner, trustee or employee of, or person owning
of record any of the stock of, any person or organization furnishing such
managerial, supervisory or distributing services, nor shall any person,
partnership, association or corporation with which the Corporation may have any
management or distributing contract, or any officer, director or employee of the
Corporation, either directly or through a partnership, association or
corporation, be paid any brokerage commissions in the purchase and/or sale of
securities for the account of the Corporation, provided any such person or
entity may act as broker in connection with the sale of securities to or by the
Corporation in accordance with Section 17(e)(2) of the Investment Company Act of
1940 and the rules and regulations promulgated by the Securities and Exchange
Commission thereunder or any successor statute and rules and regulations
promulgated by the Securities and Exchange Commission under such successor
statute and any officer, director, employee or stockholder of the Corporation,
either directly or through a partnership association, or corporation, may act as
distributor or underwriter in connection with the sale of stock which may be
issued by the Corporation.
(b) Subject only to the provisions of subdivision (a) of this paragraph (7) and
the provisions of the Investment Company Act of 1940, any director, officer or
employee individually, or any partnership of which any director, officer or
employee may be a member, or any corporation or association of which any
director, officer or employee may be an officer, director, trustee, employee or
stockholder, may be a party to, or may be pecuniarily or otherwise interested
in, any contract or transaction of the Corporation, and in the absence of fraud
no contract or other transaction shall be thereby affected or invalidated;
provided that in case a director, or a partnership, corporation or association
of which a director is a member, officer, director, trustee, employee or
stockholder is so interested, such fact shall be disclosed or shall have been
known to the Board of Directors or a majority thereof; and any director of the
Corporation who is so interested, or who is also a director, officer, trustee,
employee or stockholder of such other corporation or association or a member of
such partnership which is so interested, may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of the
Corporation which shall authorize any such contract or transaction, and may vote
thereat to authorize any such contract or transaction, with like force and
effect as if he were not such director, officer, trustee, employee or
stockholder of such other corporation or association or not so interested or a
member of a partnership so interested.
(c)](7) Liability and Indemnification.
(a) A director and an officer, agent or employee of the
Corporation shall be indemnified by the Corporation to the fullest extent
allowed by the Maryland General Corporation Law (the "Maryland Law") as it
now exists and to such increased or expanded indemnification as may be
allowed, required or permitted by any future amendment to the Maryland Law;
and each director and officer, agent or employee shall also be entitled to
the fullest indemnification which is now or hereafter permitted under any
applicable law, rule, regulation, contract, bylaw or otherwise; and such
rights to indemnification shall, except as otherwise provided in the
Maryland law, not be deemed exclusive of any other rights to which each
director, officer, agent or employee
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may be entitled apart from Maryland Law. The bylaws may also limit or
restrict the indemnification to which any director, officer, agent or
employee may be entitled.
[(d) Specifically, but without limitation of the foregoing,
the Corporation may enter into a management contract and other contracts,
and may otherwise do business with the firm of Maurice S. Brody Investment
Research Corporation as investment advisors and counselors.
(8) The Board of Directors is hereby empowered to authorize the issuance and
sale, from time to time, of shares of the capital stock of the Corporation,
whether for cash at not less than the par value thereof or for such other
consideration including securities as the Board of Directors may deem advisable,
in the manner and to the extent now or hereafter permitted by the laws of
Maryland; provided, however, that the consideration per share to be received by
the Corporation upon the sale of any shares of its capital stock shall not be
less than the net asset value per share of such capital stock outstanding at the
time as of which the computation of such net asset value shall be made. For
purposes of the computation of net asset value, as in these Articles of
Incorporation referred to, the following rules shall apply:
(a) The net asset value of each share of capital stock of the Corporation
surrendered to the Corporation for redemption pursuant to the provisions of
paragraph (3)(a) of Article Fourth of these Articles of Incorporation shall be
determined as of the close of business on the first full business day on which
the New York Stock Exchange is open next succeeding the date on which such
capital stock is so surrendered.
(b) The net asset value of each share of the capital stock of the Corporation
for the purpose of the issue of such capital stock at its net asset value shall
be determined either as of the close of business on the last business day on
which the New York Stock Exchange was open next preceding the date on which a
subscription to such stock was accepted, or in accordance with any provisions of
the Investment Company Act of 1940, any rule or regulation thereunder, or any
rule or regulation made or adopted by any securities association registered
under the Securities Exchange Act of 1934.
(c) The net asset value of each share of the capital stock of the Corporation,
as of the close of business on any day, shall be the quotient obtained by
dividing the value, as at such close, of the net assets of the Corporation
(i.e., the value of the assets of the Corporation less its liabilities exclusive
of capital stock and surplus) by the total number of shares of capital stock
outstanding at such close, all determined and computed as follows:
(i) The assets of the Corporation shall be deemed to include (A) all cash on
hand, on deposit, or on call, (B) all bills and notes and accounts receivable,
(C) all shares of stock and subscription rights and subscription rights and
other securities owned or contracted for by the Corporation, other its own
capital stock, (D) all interest accrued on any interest bearing securities owned
by the Corporation and (E) all other property of every kind and nature including
prepaid expenses; the value of such assets to be determined as follows:
In determining the value of the assets of the Corporation for the purpose of
obtaining the net asset value, each security listed on the New York Stock
Exchange shall be valued on the basis of the closing sale thereof on the New
York Stock Exchange on the business day as of which such value is being
determined. If there be no sale on such day then the security shall be valued on
the basis of the mean between closing bid and asked prices on such day. If no
bid and asked prices
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are quoted for such day, then the security shall be valued by such method as the
Board of Directors shall deem to reflect its fair market value. Securities not
listed on the New York Stock Exchange shall be valued in like manner on the
basis of quotations on any other stock exchange which the Board of Directors may
from time to time approve for that purpose, or by such other method as the Board
of Directors shall deem to reflect their fair market value, and all other assets
of the Corporation shall be valued by such method as they shall deem to reflect
their fair market value. At such time as the Board of Directors shall determine
that quotations on the New York Stock Exchange or other approved exchanges are
not readily available to management of the Fund, the Board of Directors may
authorize the substitution, for New York Stock Exchange or other exchange
quotations, of recognized composite quotations, from any source approved by the
Board, for purposes of valuation in the manner set forth in this Section. Such
composite quotations shall thereafter substitute for such valuation in lieu of
stock exchange quotations as long as recognized composite quotations are
available for the security to be valued.
(ii) The liabilities of the Corporation shall be deemed to include (A) all bills
and notes and accounts payable, (B) all administrative expenses payable and/or
accrued (including management fees), (C) all contractual obligations for the
payment of money or property, including the amount of any unpaid dividend
declared upon the Corporation's stock and payable to stockholders of record on
or before the day as of which the value of the Corporation's stock is being
determined, (D) all reserves, if any, authorized or approved by the Board of
Directors for taxes, including reserves for taxes at current rates based on any
unrealized appreciation in the value of the assets of the Corporation and (E)
all other liabilities of the Corporation of whatsoever kind and nature except
liabilities represented by outstanding capital stock and surplus of the
Corporation.
(iii) For the purposes hereof
(A) Capital stock subscribed for shall be deemed to be outstanding as of the
time of acceptance of any subscription and the entry thereof on the books of the
Corporation and the net price thereof shall be deemed to be an asset of the
Corporation; and
(B) Capital stock surrendered for redemption by the Corporation pursuant to the
provisions of paragraph (3)(a) of Article FOURTH of these Articles of
Incorporation shall be deemed to be outstanding until the close of business on
the date as of which such value is being determined as provided in paragraph
(8)(a) of this Article SIXTH and thereupon and until paid the price thereof
shall be deemed to be a liability of the Corporation.
(d) The net asset value of each share of the capital stock of the Corporation,
as of any time other than the close of business on any day, may be determined by
applying to the net asset value as of the close of business on the preceding
business day, computed as provided in paragraph (8)(c) of this Article SIXTH
such adjustments as are authorized by or pursuant to the direction of the Board
of Directors and designed reasonably to reflect any material changes in the
market value of securities and other assets held and any other material changes
in the assets or liabilities of the Corporation and in the number of its
outstanding shares which shall have taken place since the close of business on
such preceding business day.
(e) In addition to the foregoing, the Board of Directors is empowered, in its
absolute discretion, to establish other bases or times, or both, for determining
the net asset value of each share of the capital stock of the Corporation.
(f) Payment of the net asset value of capital stock of the Corporation
surrendered to it for
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redemption pursuant to the provisions of paragraph (3)(a) of Article FOURTH of
these Articles of Incorporation shall be made by the Corporation within seven
days after surrender of such stock to the Corporation for such purpose, to the
extent that the Corporation shall have any surplus available for such purpose as
aforesaid, and out of such surplus. Any such payment may be made in portfolio
securities of the Corporation and/or in cash, as the Board of Directors shall
deem advisable, and no shareholder shall have a right, other than as determined
by the Board of Directors, to have his shares redeemed in kind. For the purpose
of determining the amount of any payment to be made, pursuant to paragraph
(3)(a) of said Article FOURTH, in portfolio securities, such securities shall be
valued as provided in subdivision (c)(i) of paragraph (8) of this Article SIXTH.
(g) In the case of shares of stock of the Corporation issued in whole or in part
in exchange for securities, there may, at the discretion of the Board of
Directors of the Corporation, be included in the value of said securities, for
the purpose of determining the number of shares of stock of the Corporation
issuable in exchange therefor, the amount, if any, of brokerage commissions (not
exceeding an amount equal to the rates payable in connection with the purchase
of comparable securities on the New York Stock Exchange) or other similar costs
of acquisition of such securities paid by the holder of said securities in
acquiring the same.](b) Subject to any limitation imposed by the Investment
Company Act, to the maximum extent permitted by the General Laws of the State of
Maryland from time to time in effect, no director or officer of the Corporation
shall be liable to the Corporation or its stockholders for money damages.
(c) Neither the amendment of these Articles of Incorporation
nor the repeal of any provision hereof, shall limit or eliminate the
benefits provided to directors and officers under [the foregoing]
provisions in connection with any act or omission that occurred prior to
such amendment or repeal.
(d) Nothing in these Articles of Incorporation shall be
construed to protect any director or officer of the Corporation against any
liability to the Corporation or its shareholders to which such director or
officer 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.
(8) The Board of Directors of the Corporation is hereby empowered
to authorize, without shareholder approval, the issuance and sale from time to
time of shares of stock of the Corporation of any class or series, whether now
or hereafter authorized, in each case upon such terms and conditions and for
such consideration as such Board of Directors may deem
advisable, subject to such limitations as are contained in these Articles of
Incorporation, the by-laws of the Corporation, the laws of the State of
Maryland, and the Investment Company Act and the rules thereunder.
(9) Redemptions.
(a) Each holder of shares of stock of the Corporation shall
be
14
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entitled to require the Corporation to redeem all or any part of the
shares of stock of the Corporation standing in the name of such holder
on the books of the Corporation, and all shares of stock issued by the
Corporation shall be subject to redemption by the Corporation, at the
redemption price of such shares as in effect from time to time as may
be determined by the Board of Directors of the Corporation in
accordance with the provisions hereof, subject to the right of the
Board of Directors of the Corporation to suspend the right of
redemption of shares of stock of the Corporation or postpone the date
of payment of such redemption price in accordance with the provisions
of applicable law.
(b) All shares of stock of the Corporation shall be
redeemable at the option of the Corporation. The Board of Directors
may by resolution from time to time authorize the Corporation to
require the redemption of all or any part of the outstanding shares of
any class or series upon such terms and conditions as the Board of
Directors, in its discretion, shall deem advisable, and upon the
sending of written notice thereof to each holder whose shares are to
be redeemed.
(c) The redemption price of shares of stock of the
Corporation shall be the net asset value thereof as determined by the
Board of Directors of the Corporation or under its direction from time
to time in accordance with the provisions of applicable law, less such
redemption or other charge, if any, as may be fixed by the Board of
Directors of the Corporation. Payment of the redemption price shall be
made by the Corporation at such time and in such manner as may be
determined from time to time by the Board of Directors of the
Corporation in accordance with the provisions of applicable law.
(10) Any determination made in good faith and, so far as
accounting matters are involved, in accordance with accepted accounting practice
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 (or of any
class or series thereof), as to the amount of net income from dividends and
interest for any period or amounts at any time legally available for the payment
of dividends, as to the amount of any reserves or charges set up and the
propriety thereof, as to the time of or purpose for creating such reserves or
charges, as to the use, alteration or cancellation of any reserves or charges
(whether or not any 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 of any security
or other asset owned or held by the Corporation (or any series thereof), as to
the number of shares of the Corporation (or any class or series thereof)
outstanding, as to the estimated expense to the Corporation (or any class or
series thereof) in connection with purchases of its shares, as to the ability to
liquidate securities in an orderly fashion, or as to any other matters,
including, but not limited to those relating to the issue, sale, purchase and/or
other acquisition or disposition of securities or shares of the Corporation (or
any class or series thereof) 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 (and any class or series thereof) are issued and
sold on the condition and
15
<PAGE>
understanding, evidenced by acceptance of certificates for such shares by, or
confirmation of such shares being held for the account of, any shareholder, that
any and all determinations shall be binding as aforesaid.
(11) No provision of these Articles of Incorporation shall be
effective to require a waiver of compliance with any provision of the Securities
Act of 1933, as amended, or the Investment Company Act, or any valid rule,
regulation or order of the Securities and Exchange Commission thereunder.
ARTICLE SEVENTH
The term of existence of this Corporation shall be perpetual.
ARTICLE EIGHTH
From time to time any of the provisions of these Articles of Incorporation
may be amended, altered or repealed (including amendments altering contract
rights and any amendment which changes the terms of any of the outstanding stock
by classification, reclassification or otherwise), upon the vote of the holders
of a majority of the shares of capital stock of the Corporation at the time
outstanding and entitled to vote, and other provisions which might under the
statutes of the State of Maryland at the time in force be lawfully contained in
articles of incorporation, may be added or inserted upon the vote of the holders
of a majority of the shares of capital stock of the Corporation at the time
outstanding and entitled to vote, and all rights at any time conferred upon the
stockholders of the Corporation by these Articles of Incorporation are granted
subject to the provisions of this Article EIGHTH. The Corporation shall notify
the stockholders in its next subsequent regular report to the stockholders of
any amendment to these Articles of Incorporation.
1. The foregoing Articles of Amendment and Restatement have been effected
in the manner and by the vote required by the Corporation's Charter and the laws
of the State of Maryland. Pursuant to Section 2-604 of the Maryland Corporations
and Associations Code, these Articles of Amendment and Restatement were advised
and approved by a majority of the entire Board of Directors of the Corporation
and approved by the stockholders.
2. The current address of the principal office of the Corporation and the
name and address of the Corporation's current resident agent are as set forth in
Article THIRD of the Corporation's Charter as [The term "these Articles of
Incorporation" as used herein and in the By-Laws of the Corporation shall be
deemed to mean these Articles of Incorporation as from time] amended and
restated by these Articles of Amendment and Restatement.
3. The number of directors of the Corporation and the names of those
currently in office are as set forth in Article FIFTH of the Corporation's
Charter as amended and restated by the Articles of Amendment and Restatement.
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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, [we have signed these ARTICLES OF INCORPORATION
on this day of July, 1958.] the Corporation has caused these Articles to be
signed in its name and on its behalf by its President and attested to by its
Secretary on this ___ day of February, 1996.
[Witness:] ATTEST: AMERICAN GROWTH FUND, INC.
By:
Secretary President
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PRELIMINARY COPY
PROXY
AMERICAN GROWTH FUND, INC.
410 17th Street, Suite 800
Denver, Colorado 80202
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints _____ and ______ as proxies, each with the power
to appoint his substitute, and hereby authorizes each of them acting singly or
jointly to represent and to vote, as designated below, all shares of American
Growth Fund, Inc. (the "Fund") held of record by the undersigned on ______, 1995
at the meeting of shareholders to be held on February 15, 1996, or any
adjournment thereof.
This proxy when properly executed will be voted in the manner directed by the
undersigned Shareholder. If no direction is made, this proxy will be voted for
proposals 2, 3 and 4 and for each of the nominees for Directors named in
proposal 1.
By signing and dating this card you authorize the proxies to vote the proposals
as marked or, if not marked, to vote "FOR" the proposals, and to use their
discretion to vote any other matters as may properly come before the meeting. If
you do not intend to personally attend the meeting, please complete and return
this card at once in the enclosed envelope.
1. Election of Directors
FOR / / WITHHELD / /
Robert Brody
Michael J. Baum, Jr.
Eddie R. Bush
Don S. Strauss
Harold Rosen
FOR, EXCEPT VOTE WITHHELD FOR THE FOLLOWING NOMINEE(S):
<PAGE>
2. To approve or disapprove amendments to the Articles of Incorporation of
the Fund to authorize the designation and redesignation of the Fund's shares
into one or more series and/or classes of shares.
FOR / / AGAINST / / ABSTAIN / /
3. To approve or disapprove further amendments to the Articles
of Incorporation of the Fund, as described in the accompanying Proxy Statement.
FOR / / AGAINST / / ABSTAIN / /
4. To ratify the selection of Smith, Brock & Rosen as independent
auditors.
FOR / / AGAINST / / ABSTAIN / /
PLEASE SIGN EXACTLY AS NAME APPEARS
HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING
AS ATTORNEY OR AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
- --------------------------------------------------------------------------------
SIGNATURE DATE SIGNATURE (IF HELD JOINTLY)
Please mark boxes /X/ in blue or black ink.
