<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 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):
/ / $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:
/X/ 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:
<PAGE>
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 separate amendments to the
Articles of Incorporation of the Fund (seven separate
subproposals), in each case as described in the accompanying Proxy
Statement.
4. To ratify or reject the selection of KPMG Peat Marwick LLP 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
December 26, 1995 are entitled to receive notice of and to vote at the Meeting,
and at any and all adjournments thereof.
By order of the Board of Directors,
ROBERT BRODY
Chairman
Denver, Colorado
January 8, 1996
------------------------
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.
i
<PAGE>
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 American Growth Fund, Inc. (the 'Fund') to
be used at a Special Meeting of shareholders of the Fund and any adjournment or
adjournments thereof (the 'Meeting'). 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 and described below.
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 12, 1996.
The Directors have fixed the close of business on December 26, 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, 11,562,806 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 each of the Fund's Directors and
executive officers as of the record date is set forth in Proposal No. 1. As of
the record date, the Directors and the officers as a group owned beneficially
directly or indirectly 311,616 or 2.7% of the Fund's outstanding shares.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
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...................................................... 4
Proposal No. 2...................................................... 6
Proposal No. 3...................................................... 9
Proposal No. 4...................................................... 13
Other Business...................................................... 14
Next Meeting Of Shareholders........................................ 14
Exhibits EXHIBITS
Proposed Amended and Restated Articles of Incorporation........... A
</TABLE>
2
<PAGE>
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
Proposal No. 2 and each subproposal of Proposal No. 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., Proposal
No. 2 and each subproposal of Proposal No. 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 the Meeting, the shares covered thereby will be voted in
accordance with the instructions marked thereon by the shareholder. Executed
proxies that are unmarked will be voted FOR each proposal (or subproposal
thereof) 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.
3
<PAGE>
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 Fund (the
'Adviser') and American Growth Fund Sponsors, Inc., the Fund's distributor (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. Although the Fund does not currently intend
to use any outside solicitation services, the Fund reserves the right to use
such a service if Fund management determines it to be appropriate. The cost of
using any such service, which is not expected to exceed $15,000, will be borne
by the Fund, the Adviser and the Distributor in the same proportion as the other
costs of the solicitation.
AMENDMENT AND RESTATEMENT OF THE ARTICLES OF INCORPORATION
In connection with the proposed amendments to the Articles of Incorporation
of the Fund 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 all subproposals contained in 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 all of the subproposals contained in Proposal No. 3 are not approved, the
Fund will file Articles of Amendment reflecting solely the amendments contained
in Article Fourth of Exhibit A and the amendments contained in the subproposals
of Proposal No. 3 that are approved. If any or all of the subproposals contained
in Proposal No. 3 are approved but Proposal No. 2 is not approved, the Fund will
file Articles of Amendment reflecting solely the amendments approved in such
subproposals of Proposal No. 3.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At a meeting of the Board of Directors held November 22, 1995, in
accordance with the Fund's Articles of Incorporation and By-Laws the Board
authorized that the size of the Board be set at five persons, 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.
4
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
OWNED
BENEFICIALLY
DIRECTLY OR
NAME AGE POSITIONS AND BUSINESS EXPERIENCE INDIRECTLY
- ------------------------ --- ------------------------------------------------------------ ----------------
<S> <C> <C> <C>
Robert Brody*........... 70 Director of the Fund since 1958. President of the Fund; 233,157 (2.0%)
President and a Director of the Fund's Adviser; President
and Director of the Fund's Distributor.
Michael J. Baum, Jr..... 78 Director of the Fund since 1959. Investor in securities and 155 (0.1%)
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........... 55 Director of the Fund since 1987. Certified Public 13,742 (0.1%)
Accountant.
Don S. Strauss.......... 71 Director of the Fund since 1986. Previously President of 6,772 (0.1%)
Majestic Industries, Inc., a manufacturer of janitorial
supplies.
Harold Rosen............ 68 Director of the Fund since 1995. President and owner of 13,173 (0.1%)
Bi-Rite Furniture Stores.
</TABLE>
- ------------------
* 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 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, the only Disinterested Directors serving during that year, were
each paid the following compensation by the Fund:
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION
PAID BY THE FUND
DURING THE FISCAL YEAR
NAME OF DIRECTOR ENDED JULY 31, 1995
- ------------------------ ----------------------
<S> <C>
Michael J. Baum, Jr..... $800
Eddie R. Bush........... 800
Don S. Strauss.......... 800
</TABLE>
None of the above named persons received any retirement benefits or other form
of deferred compensation from the Fund. There are no other funds that together
with the Fund constitute a Fund Complex.
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.
5
<PAGE>
OFFICERS OF THE FUND
The following is information concerning the persons who are the executive
officers of the Fund:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OWNED
BENEFICIALLY
NAME AND DIRECTLY OR
POSITION WITH THE FUNDS AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE INDIRECTLY
- ----------------------- --- ----------------------------------------------------- ----------------
<S> <C> <C> <C>
Robert Brody .......... 70 President and Director of the Adviser; President and See above
President and Director Director of the Distributor.
Timothy E. Taggart .... 42 Vice President and Director of the Adviser; Secretary 715 (0.1%)
Treasurer and Director of the Distributor.
D. Leann Baird ........ 47 Secretary and Director of the Adviser. 12,425 (0.1%)
Secretary
</TABLE>
THE DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE 'FOR'
THE NOMINEES FOR DIRECTOR IN PROPOSAL NO. 1.
APPROVAL OF AMENDMENTS TO ARTICLES OF INCORPORATION
TO PERMIT MULTIPLE-CLASS 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 Board,
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 Board may determine. In addition, these amendments
would also permit the issuance of Fund shares in different series, each of which
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
distribution 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 at the time of sale. 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').
In connection with the approval of this Proposal No. 2, the existing shares
of the Fund will be designated as Class D shares. In addition, it is the current
intention of the Directors 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 Rule 12b-1 fees on the Class D
shares in the foreseeable future, and any such proposal for the adoption of such
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
6
<PAGE>
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.
The three proposed new classes of shares of the Fund, Class A shares, Class
B shares and Class C shares, are currently contemplated to be offered with the
following characteristics:
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 Rule 12b-1 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 would have characteristics identical to the
characteristics of 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% would 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 seventh
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 a
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 Board may in the future create 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 or
series such as any incremental shareholder servicing fees and the printing of
proxy statements for a meeting of shareholders of a particular class or series).
All classes of shares of the Fund (or separate series) will vote together as a
single class at meetings of
7
<PAGE>
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 multiple-class 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.
THE DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE 'FOR' PROPOSAL NO. 2.
8
<PAGE>
APPROVAL OF OTHER AMENDMENTS TO ARTICLES OF INCORPORATION
(PROPOSAL NO. 3 CONTAINING SEVEN SUBPROPOSALS)
It is proposed that the shareholders of the Fund approve various additional
amendments to the Fund's Articles of Incorporation which are described in each
subproposal discussed 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 37 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 Proposal No. 2 and 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, as amended, or
Articles of Amendment and Restatement, as the case may be, to the amendments
approved at the Meeting and otherwise to bring the Fund's Articles of
Incorporation, as amended or amended and restated, up to date.
THE DIRECTORS RECOMMEND THAT SHAREHOLDERS VOTE 'FOR'
EACH SUBPROPOSAL CONTAINED IN THIS PROPOSAL NO. 3.
(A) Elimination of Investment Restrictions Contained in Article Second.
It is proposed that shareholders approve the elimination of the investment
restrictions contained in Paragraph 1 of Article Second of the Articles of
Incorporation (the 'charter restrictions'). THE BOARD OF DIRECTORS AND FUND
MANAGEMENT BELIEVE THAT THERE ARE NO MATERIAL DIFFERENCES BETWEEN THE CHARTER
RESTRICTIONS AND THE FUND'S CURRENT FUNDAMENTAL INVESTMENT RESTRICTIONS, WHICH
ARE SET FORTH IN THE FUND'S PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION.
ACCORDINGLY, APPROVAL OF THE ELIMINATION OF THE CHARTER RESTRICTIONS WILL NOT
CHANGE THE FUND'S FUNDAMENTAL INVESTMENT RESTRICTIONS. However, this approval
will enable the Fund to make such changes in the future in the manner and to the
extent permitted by the 1940 Act. The Board of Directors believes that this
added flexibility is in the best interests of the Fund and its shareholders.
While the 1940 Act requires a shareholder vote to approve any such changes, the
vote required by the 1940 Act is smaller than that required for charter
amendments under Maryland law.
The 1940 Act requires 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
9
<PAGE>
outstanding shares of the fund are present in person or represented by proxy. In
contrast, an amendment to the Fund's Articles of Incorporation requires approval
by more than 50% of the Fund's outstanding shares, which is a more burdensome
requirement than simply obtaining a 1940 Act majority.
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.
The charter restrictions proposed to be eliminated are as follows:
[T]he [Fund] 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 [Fund];
(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
[Fund] 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 [Fund] 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
[Fund]), other than the [Fund], 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, reorganization or
the purchase of substantially all of the assets of such predecessor
10
<PAGE>
if the purchase by the [Fund] of any such securities at the time
thereof would cause more than 5% of the total assets of the [Fund] 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 [Fund]), provided,
however, that this provision shall not be construed to prevent or
limit in any manner the right of the [Fund] to purchase securities
for investment purposes.
As stated above, the Board of Directors believes that these restrictions do not
differ materially from the fundamental investment restrictions set forth in the
Fund's prospectus and statement of additional information.
Based on the foregoing, 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 37 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 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 satisfactory protection
against a broad 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 37 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.
11
<PAGE>
(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 with 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 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.
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.
However, 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
12
<PAGE>
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 limitation of liability and indemnification provisions are in
the best interests of the Fund and its shareholders.
(F) Amendments to Redemption Provisions.
Article Sixth of the Fund's Articles of Incorporation is proposed to be
amended to add as Paragraph 9 three new provisions governing redemptions.
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.
The Board of Directors believes that the foregoing proposed amendments are
in the best interests of the Fund and its shareholders.
(G) Amendment Governing Binding Effect of Determinations as to Financial
Matters.
Article Sixth of the Fund's Articles of Incorporation is also proposed to
be amended to add as Paragraph 10 a provision regarding the binding effect of
certain determinations as to the valuation of Fund assets and liabilities and
other financial matters.
Proposed Paragraph 10 is intended to make clear under the Fund's charter
documents that 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 amendment is 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), at a special
meeting of the Board held January 5, 1996, determined to replace Smith, Brock &
Gwinn as the Fund's independent accountants. Thereupon, the Board received and
accepted the resignation of Smith, Brock & Gwinn, and approved the selection of
KPMG Peat Marwick LLP as the Fund's independent accountants for the fiscal year
ending July 31, 1996.
13
<PAGE>
During the past two fiscal years ended July 31, 1995 and 1994, Smith, Brock
& Gwinn served as the Fund's independent accountants. During that period, Smith,
Brock & Gwinn did not render an adverse opinion or disclaimer of opinion on the
financial statements of the Fund, nor was any opinion qualified or modified as
to uncertainty, audit scope, or accounting principles. During such past two
fiscal years and the period from August 1, 1995 through January 5, 1996 (the
acceptance of the resignation of Smith, Brock & Gwinn), there were no
disagreements with Smith, Brock & Gwinn on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure.
None of KPMG Peat Marwick LLP 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 KPMG Peat Marwick LLP 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
ROBERT BRODY
Chairman
Dated: January 8, 1996
14
<PAGE>
EXHIBIT A
PROPOSED NEW TEXT IS MARKED WITH UNDERSCORE; TEXT TO BE DELETED IS 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 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;
<PAGE>
(b) participate on a joint or joint and several basis in any trading
account in any securities;
(c) contract to sell any security 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 secutities 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, 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 these 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
A-2
<PAGE>
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 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.
A-3
<PAGE>
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 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.]
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). Until its name may be changed pursuant to Paragraph 3
of this Article Fourth or any of such shares are reclassified pursuant to
Paragraph 2 hereof, all such shares shall be of one series which shall bear
the same name as that of the Fund. Until the Board of Directors may
reclassify any of such shares pursuant to Paragraph 2 of this Article
Fourth, all shares of the Corporation's common stock shall be of one class,
designated 'Class D Common Stock.'
(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 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
A-4
<PAGE>
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 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) 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.]
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(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 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.]
(9) 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.
(10) 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).
(11) 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.
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(4) Notwithstanding any provision of law requiring any action to be
taken or authorized by the 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.
(12)[(5)] 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.
(13) Any fractional share shall carry proportionately all the rights
of a whole share, including the right to vote and the right to receive
dividends.
(14)[(6)] All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of these Articles of
Incorporation.
(15) 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.
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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.
(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 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,
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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.
(7)[(e)] 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 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
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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 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
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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 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.
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(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
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
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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 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.
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.
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
A-13
<PAGE>
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 Timothy E. Taggart and D. Leann Baird as
proxies, each with the power to appoint his or her substitute, and hereby
authorizes each of them acting singly or jointly to represent and to vote, as
designated on the reverse side hereof, all shares of American Growth Fund, Inc.
(the "Fund") held of record by the undersigned on December 26, 1995 at the
Special 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 Nos. 2, 3 (including each of the sub-proposals thereof) and 4 and for
each of the nominees for Directors named in Proposal No. 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.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
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.
<PAGE>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
1. Election of Directors.
FOR WITHHOLD FOR ALL EXCEPT
Robert Brody, Michael J. Baum, Jr., Eddie R. Bush, Don S. Strauss and Harold
Rosen
INSTRUCTION: To withhold authority for any individual nominee, mark the "For All
Except" box and strike a line through the nominee's name in the list above.
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 follows:
a. Elimination of Investment Restrictions Contained in Article Second.
FOR AGAINST ABSTAIN
b. Elimination of Reporting Requirements in Connection with, and
Restrictions on, Sales of Fund shares to Certain Persons.
FOR AGAINST ABSTAIN
c. Elimination of Provisions Dealing with Transactions with Fund
Insiders.
FOR AGAINST ABSTAIN
d. Elimination of Provisions Relating to the Determination of the
Fund's Share Price.
FOR AGAINST ABSTAIN
e. Amendments to Liability and Indemnification Provisions.
FOR AGAINST ABSTAIN
f. Amendments to Redemption Provisions.
FOR AGAINST ABSTAIN
g. Amendment Governing Binding Effect of Determinations as to Financial
Matters.
FOR AGAINST ABSTAIN
4. To ratify the selection of KPMG Peat Marwick LLP as independent
auditors.
FOR AGAINST ABSTAIN
RECORD DATE SHARES:
Please be sure to sign and date this Proxy. Date _______________________
Shareholder sign here Co-owner sign here
DETACH CARD
