<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ x ]
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 Section 240.14a-11(c) or
Section 240.14a-12
ROCKIES FUND, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Neuman & Cobb, 1507 Pine Street, Boulder, Colorado 80302
---------------------------------------------------------
(Name of Person Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: _____
2) Aggregate number of securities to which transaction applies: ________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined): ______
4) Proposed maximum aggregate value of transaction: ____________________
5) Total fee paid: _____________________________________________________
[ ] Fee Paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ________________________________________
2) Form, Schedule or Registration Statement No.: __________________
3) Filing Party: __________________________________________________
4) Date Filed: ____________________________________________________
<PAGE>
<PAGE>
THE ROCKIES FUND, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 30, 1997
The Annual Meeting of Shareholders of The Rockies Fund, Inc. ("the Fund" or the
"Company") will be held at 4465 Northpark Drive, Colorado Springs, Colorado
80907 on June 30, 1997 at 10:00 o'clock a.m. Mountain Daylight Time for the
purpose of considering and voting upon the following:
1. To elect three (3) Directors to serve until the next Annual Meeting
of Shareholders or until their successors have been duly elected and
qualified.
2. To ratify and approve the selection by the Board of Directors of the
firm of GELFOND HOCHSTADT PANGBURN & CO., a Professional Corporation,
as the independent certified public accountant for the Fund for the
fiscal year ending December 31, 1997.
3. Any other matters properly brought before said meeting or any
adjournment thereof.
Information relating to the above matters is set forth in the accompanying
Proxy Statement. Only holders of outstanding shares of the Company's common
stock of record at the close of business on May 1, 1997 will be entitled to
vote at the meeting or any adjournment thereof.
A copy of the Company's Annual Report to Shareholders, including financial
statements for the year ended December 31, 1996, together with a copy of the
Company's Quarterly Report for the fiscal quarter ended March 31, 1997, will be
mailed to shareholders concurrently with the mailing of the Proxy Statement.
Shareholders are cordially invited to attend the meeting in person.
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, IT WOULD BE
APPRECIATED IF YOU WOULD PROMPTLY FILL IN, SIGN AND DATE THE ENCLOSED PROXY
STATEMENT AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE. Any proxy may be
revoked at any time before it is voted by written notice mailed or delivered to
the Secretary, by receipt or a proxy properly signed and dated subsequent to an
earlier proxy, and by revocation of a written proxy by request in person at the
Annual Meeting of Shareholders. If not so revoked, the shares represented by
the proxy will be voted in accordance with your instruction on the proxy form.
THE ROCKIES FUND, INC.
_______________________________
Windy D. Haddad, Secretary
<PAGE>
<PAGE>
THE ROCKIES FUND, INC.
4465 Northpark Drive
Colorado Springs, Colorado 80907
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished to the Shareholders of THE ROCKIES FUND,
INC. (respectively the "Shareholders" and the "Fund") in connection with the
solicitation by the Fund of proxies to be used at the Annual Meeting of
Shareholders and at any adjournments thereof (the "Meeting"), at the time,
place and for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders and at any adjournment thereof. When the accompanying
proxy is properly executed and returned, the shares of common stock it
represents will be voted at the Meeting and, where a choice has been specified
on a proxy, will be voted in accordance with such specification. If no choice
is specified on a proxy, the shares it represents will be voted FOR the
election of three (3) Directors of the Fund, FOR the ratification of GELFOND
HOCHSTADT PANGBURN & CO., a Professional Corporation, as the Fund's independent
certified public accountant for the fiscal year ending December 31, 1997, and
according to the judgment of the persons named in the enclosed proxies as to
any other action which may properly come before the Meeting or any adjournment
thereof.
In the event the Meeting is, for any reason, adjourned to another time or
place, notice need not be given of the adjourned meeting if the time and place
thereof are announced at the Meeting. At the adjourned meeting, any business
may be transacted which might have been transacted at the original Meeting.
ANY PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED BY WRITTEN NOTICE
MAILED OR DELIVERED TO THE SECRETARY, BY RECEIPT OF A PROXY PROPERLY SIGNED AND
DATED SUBSEQUENT TO AN EARLIER PROXY, AND BY REVOCATION OF A WRITTEN PROXY BY
REQUEST IN PERSON AT THE ANNUAL MEETING OF SHAREHOLDERS. IF NOT SO REVOKED,
THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS ON THE PROXY FORM.
This Statement is being mailed on or about May 15, 1997, to Shareholders
eligible to vote at the Meeting. Concurrently with the mailing of this
Statement, the Fund is furnishing to Shareholders its Annual Report for the
fiscal year ended December 31, 1996, and its Quarterly Report for the fiscal
quarter ended March 31, 1997.
The Fund is bearing all costs of soliciting proxies, and expressly
reserves the right to solicit proxies otherwise than by mail. The solicitation
of proxies by mail may be followed by telephone, telegraph or other personal
solicitations of certain Shareholders and brokers by one or more of the
Directors or by Officers or employees of the Fund. The Fund may request banks
and brokers or other similar agents or fiduciaries for the voting instructions
of beneficial owners and reimburse the expenses incurred by such agents or
fiduciaries in obtaining such instructions. As of the date of this mailing,
however, the Fund has not made any contracts or arrangements for such
solicitations, hence it cannot identify any parties or estimate the cost of
such solicitation.
Only Shareholders of record as of the close of business on May 1, 1997
(the "Record Date"), will be entitled to vote at the Meeting. Representation
of a majority of the Fund's shares of common stock outstanding on such date,
either in person or by proxy, constitutes a quorum for the Meeting. When a
quorum is present, the vote by the holders of a majority of the shares
represented at the Meeting shall decide the proposals to be voted upon at the
Meeting. As of the Record Date, the Fund had outstanding 640,256 shares of
common stock ("Shares"), with each Share being entitled to one vote.
<PAGE>
<PAGE>
1. SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
-----------------------------------------------------------
The following table sets forth as of April 30, 1997, certain
information with respect to the ownership of the Fund's common stock by
(i) each of the Fund's directors individually, (ii) shareholders known by the
Fund to own beneficially more than five percent (5%) of the outstanding common
stock of the Fund, and (iii) all officers and directors as a group. Each
beneficial owner of the Fund's common stock listed below has sole investment
and voting power of the shares that he beneficially owns, except as noted.
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS<F1>
- -------- ------------------- ---------------------- -----------
<S> <C> <C> <C>
Common D.A Davidson & Co. <F1> 229,280 35.8%
Stock 8 Third Street, North
Great Falls, MT 59401
" Stephen G. Calandrella 233,000 36.4%
4465 Northpark Drive
Colorado Springs, CO 80907
" Charles C. Powell -0- 0%
4475 Walnut, Suite 2-D
Boulder, CO 80301
" Clifford C. Thygesen 2,000 0.3%
4893 Idylwild Trail
Boulder, CO 80301
" All Officers and
Directors as a
Group (5 Persons) 238,000 37.1%
- --------------------------------------
<FN>
<F1> Voting and investment power with respect to securities held by D.A.
Davidson & Company is exercised by its Board of Directors.
</FN>
</TABLE>
2. ELECTION OF DIRECTORS
---------------------
The Directors voted to nominate three (3) Directors for election to
hold office until the next Annual Meeting of Shareholders and until their
successors are elected and qualified. Each of the following nominees has
consented to be nominated to serve as a Director of the Fund. All of the
nominees are currently Directors of the Fund.
The Fund's Articles of Incorporation expressly prohibit cumulative
voting. Therefore, the holders of a majority of the Fund's shares could elect
all of the Directors. It is expected that the proxies received by the
Directors' nominees will be voted, except to the extent that authority is
withheld on any proxy as to all or one or more individuals, to elect as
Directors the following nominees, whose principal occupations during the past
five (5) years, directorships and certain other affiliations and information
are set forth below:
A. Information Concerning Nominees
--------------------------------
The following table sets forth certain information about the
nominees for election as directors:
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation Shares Beneficially
Name, Age and During Past Five Years and Owned As Of
Office With Fund Current Affiliations April 30, 1997
---------------- -------------------------- --------------
<S> <C> <C>
Stephen G. Calandrella*, 36, Mr. Calandrella has been President and a 233,000 shares
President and Director since Director of The Rockies Fund, Inc. since 36.4%
February, 1991, and CEO since February, 1991, and Chief Executive
January, 1994 Officer since January 30, 1994.
_______ Mr. Calandrella has previously served as
a Director of Kelly Motors, Ltd., Good
* Mr. Calandrella is considered Times Restaurants, Inc., Southshore
by the Fund and its counsel to be Corp., Gold Capital Corporation and
a person who is an "interested Cogenco International, Inc.
person" (as defined in the 1940 Mr. Calandrella also served as a
Act) of the Fund because he is an Director for Combined Penny Stock Fund,
officer of the Fund. Inc. and Redwood MicroCap Fund, Inc.,
both of which are closed-end investment
companies registered under the
Investment Fund Act of 1940.
Mr. Calandrella currently serves as
Interim President and a member of the
Board of Directors of Global Casinos,
Inc., a publicly-held company engaged in
the ownership and operation of domestic
and international casinos and limited
stakes gaming properties; and as a
Director of Optimax Industries, Inc., a
NASDAQ listed holding company; American
Educational Products, a NASDAQ listed
manufacturer of secondary educational
materials; and Guardian Technologies, a
NASDAQ listed manufacturer of products
for the law enforcement sector.
Mr. Calandrella has also engaged in
financing and consulting activities for
development stage companies, which
consist of advising public and private
companies on capital formation methods,
enhancing shareholder valuations,
mergers, acquisitions and corporate
restructurings, as well as arranging
for bridge loans and equity purchases.
Charles Powell, 43, Director Mr. Powell is currently President and -0- shares
since February, 1991 Director of Antalys Corporation, a
wholly owned subsidiary of Baan Company.
From 1992 to 1996, Mr. Powell was Vice-
President of Finance for KaPre Software.
From March 1992 to June 1993, Mr. Powell
was CEO of Generation 5 Technologies,
Inc. From January 1989 to March 1992,
he was Director of International
Operations at J.D. Edwards & Company, a
software company that develops and
distributes general business application
financial software. From September to
December, 1988, Mr. Powell was employed
by the company to provide assistance in
financial and operation areas. From
April 1988 to June 1989, Mr. Powell was
President of Sheridan Securities, Inc.,
an investment banking firm. From
January 1987 to March 1988 he was
international sales manager for
Columbine Systems, a software
development Fund for the broadcast
industry. From January 1985 to December
1986, he was employed by Aweida Systems
engaged in the business of distributing
company products, first as Chief
Financial Officer and subsequently as
Vice President of Marketing. From
February 1979 to December 1985, he was
employed by Storage Technology, Inc.,
engaged in the business of manufacturing
computer storage devices in a variety of
capacities, with his last position being
that of Vice President of Financial
Marketing. Mr. Powell graduated from
the University of Colorado with a
Bachelor of Science degree in accounting
and finance in 1976 and he received his
license as a Certified Public Accountant
in 1976. Mr. Powell currently serves as
a Director for The Rockies Fund,
Kinetics.com, and International Nursing.
Clifford C. Thygesen, 62, Mr. Thygesen has been a director of the 2,000 shares
Director since February 1991 Fund since February, 1991. Mr. Thygesen 0.3%
has also been a Director of American
Educational Products, Inc. since 1986,
and President since January, 1996.
American Education Products is a
publicly traded company involved in the
manufacture and distribution of
educational products, with principal
offices in Boulder, Colorado. Mr.
Thygesen is also a current Director of
Wall Street Racing Stables, a publicly-
traded company involved in the
ownership, racing and breeding of
thoroughbred horses. Mr. Thygesen is
also a partner in two land development
firms located on Colorado Springs and
Fleming, Colorado and a Board of
Director for Unasurance Group. From
1971 to 1973, Mr. Thygesen was Vice-
President of Operations for the Ithaca
Gun Company of Ithaca, New York, a
manufacturer of high quality firearms.
From 1973 to 1976, Mr. Thygesen served
as President of Alpine Designs
Corporation, a company which produces
backpacking equipment, ski wear and
hunting apparel. From 1977 to 1981, he
served as Vice-President of
Manufacturing for Pure Cycle
Corporation, a company that designed
water recycling systems for residential
use. From 1981 until February, 1988,
Mr. Thygesen was President, Chief
Operating Officer and a Director of Tri
Coast Environmental Corporation,
formerly Colorado Venture Capital
Corporation. He received his B.S.
degree in Industrial Administration from
the University of Illinois in 1961.
</TABLE>
<PAGE>
B. Meetings and Committees of the Board of Directors
-------------------------------------------------
i. Meetings of the Board of Directors
----------------------------------
During the fiscal year ended December 31, 1996, the
Company's Board of Directors held four (4) meetings which were attended,
either in person or by telephone, by 100% of the Board members. Each
incumbent director participated in each action of the Board of Directors.
Each director of the Fund who is not also an officer is paid the sum of $1,000
for each Board meeting attended by such director. All directors are
reimbursed for expenses associated with attendance at Board of Directors
meetings of the Fund. Other than the foregoing, no director receives any
additional compensation or remuneration as a member of the Fund's Board of
Directors.
ii. Appraisal and Review
--------------------
While no formal Appraisal or Review Committee exists, the
Board has established Appraisal and Review procedures to facilitate the
Board's review of all transactions with respect to execution price and
brokerage commissions, to determine if the Fund is receiving "the best
execution." The Board is also responsible for developing and implementing
appropriate methods of evaluation for securities that are not publicly-traded
or are otherwise subject to restrictions upon transfer. Evaluations for such
securities are determined in good faith by the Board of Directors. Finally,
the Board has established and implemented procedures to evaluate and make
recommendations with respect to all investment opportunities presented to the
Fund.
iii. Committees
----------
There are no standing audit, compensation or nominating
committees of the Board. The foregoing notwithstanding, Barbara A. Hamstad,
the Fund's Chief Accounting Officer, has been charged with the responsibility
of maintaining all journals and ledgers which the Investment Company Act of
1940, as amended, and the rules and regulations promulgated thereunder,
require the Fund to maintain.
C. Other Executive Officers
------------------------
Barbara A. Hamstad,
------------------
Mrs. Hamstad has served as Internal Accountant for The Rockies Fund, Inc.
since September of 1993 and as Chief Accounting Officer and Treasurer since
September, 1996. Mrs. Hamstad also serves as Secretary and Director for Marco
Foods, Inc., a small public shell actively trading in the stock market. Prior
to Mrs. Hamstad's accounting positions she worked as a Vendor Cost Analyst for
Raytheon in Santa Barbara, California. From January, 1989, through June,
1992, she analyzed vendor cost proposals for subcontracted components,
conducted on-site evaluations of subcontractors, and developed price
recommendations based on detailed analyses of cost structure. From June 1987
through August 1988, she worked as a Financial Assistant at IDS Financial
Services in San Luis Opisbo, California. Mrs. Hamstad graduated from
California Polytechnic State University, San Luis Obispo, CA, with a
bachelor's degree in Business Administration, concentrating in Financial
Management.
Windy D. Haddad,
---------------
has worked for The Rockies Fund, Inc. since August 9, 1993 and has served as
Chief Administrative Officer since October 1, 1995 and as Corporate Secretary
since September 1, 1996. Ms. Haddad also serves as Vice President, Secretary
and Director of Land Resources Corporation, which provides financing for real
estate development with operations in Flemming, Colorado. Ms. Haddad
graduated from Colorado College in 1993, earning her Bachelor of Arts Degree
in Economics.
D. Legal Proceedings
-----------------
During the beginning of 1996, the Fund received requests for
information from the United States Securities and Exchange Commission ("SEC")
related to an investigation begun by the SEC during 1994 into various matters,
including the administrative and record keeping practices of the Fund, its
securities trading activities and those of its officers and directors. In
September 1996, the Company was notified by the Commission's Staff that it
intends to request that the Commission commence an administrative proceeding
against the Company and its directors based upon certain transactions in
securities formerly included in the Company's securities portfolio. The
Company has responded to the Commission with a written submission which sets
forth why there exists no basis in fact or law for such a proceeding. It is
impossible to predict whether the Staff will recommend a proceeding against
the Company or any of its directors, and if such a recommendation is made,
whether the Commission will authorize the institution of a proceeding. There
can be no assurance of the outcome of this matter or the ultimate effect on
the Fund's financial position.
Other than the foregoing, during the last five (5) years no
director or officer of the Company has:
(1) had any bankruptcy petition filed by or against any
business of which such person was a general partner or
executive officer either at the time of the bankruptcy or
within two (2) years prior to that time;
(2) been convicted in a criminal proceeding or subject to a
pending criminal proceeding;
(3) been subject to any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily,
enjoining, barring, suspending, or otherwise limiting his
involvement in any type of business, securities or banking
activities; or
(4) been found by a Court of competent jurisdiction in a civil
action, the Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities
or commodities law, and the judgement has not been
reversed, suspended, or vacated.
Mr. Calandrella serves as Interim President of Global Casinos,
Inc., a portfolio and affiliated company. During 1995, Global Casinos, Inc.
caused one of its wholly-owned subsidiaries, Casinos USA, Inc. to file a
voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code. In December 1996, the United States Bankruptcy Court for the
District of Colorado entered an order confirming a Plan of Reorganization for
Casinos USA, Inc.
E. Transactions With Management and Others
---------------------------------------
Notes payable to related parties at December 31, 1996 include
$6,500 payable to a related party of the Fund's President, which note is
unsecured, carries interest at the rate of twelve percent (12%) per annum, and
is due upon demand.
The Fund currently holds a 5% ownership interest in Bear Star,
LLC., formerly a wholly owned subsidiary of Columbine Home Sales, LLC., and
therefore Bear Star, LLC. would be considered to be an affiliated company as a
result of the Fund's ownership during 1996.
As a result of the Fund's investment during 1996 and/or
position on the entity's Board of Directors, the Fund would, at various times
during fiscal 1996, be considered to have been an affiliate of Global Casinos,
Inc., Optimax Industries, Inc., Southshore Corporation, Cova Technologies,
Kinetiks.com and Land Resources Corporation.
On October 1, 1995, Mr. Calandrella, the Fund's President and
Director, was elected to serve as Interim President of Global Casinos, Inc., a
portfolio company and affiliate of the Fund. In consideration of his services
as Interim President of Global Casinos, Inc., Mr. Calandrella received 9,000
shares in 1996 and has also been granted Incentive Stock Options under the
Global Casinos, Inc. Stock Incentive Plan, exercisable to purchase, in the
aggregate, 15,000 shares of common stock at an exercise price of $5.00 per
share. Of those Incentive Stock Options, 5,000 are fully vested, and the
remaining 10,000 Incentive Stock Options vest ratably over two (2) years,
subject to Mr. Calandrella's continuing to serve as an executive officer or
key employee of Global Casinos, Inc. As of April 30, 1997, Mr. Calandrella
has continued to serve as Interim President of Global Casinos.
Mr. Calandrella also serves as a member of the Board of
Directors of Global Casinos, Inc. In consideration of his services as a
director of Global Casinos, Inc., Mr. Calandrella has been granted Non-
Qualified Stock Options exercisable to purchase, in the aggregate, an
additional 15,000 shares of common stock at an exercise price of $5.00 per
share, of which 5,000 Non-Qualified Stock Options are fully vested, and the
remaining 10,000 Non-Qualified Stock Options vest ratably over two (2) years,
subject to Mr. Calandrella's continuing to serve as a director of that Fund.
There exists no arrangement or agreement whereby the Fund has
any direct or indirect beneficial interest or pecuniary interest in any of the
securities or other compensation issued to Mr. Calandrella in consideration of
his services as an executive officer or director of Global Casinos, Inc.
F. Compliance With Section 16(a) of the Exchange Act
-------------------------------------------------
Under the Securities Laws of the United States, the Fund's
Directors, its Executive (and certain other) officers, and any persons holding
more than ten percent (10%) of the Fund's common stock are required to report
their ownership of the Fund's common stock and any changes in that ownership
to the Securities and Exchange Commission and the NASDAQ stock market.
Specific due dates for these reports have been established and the Fund is
required to report in this Report any failure to file. Based upon information
provided to the Company, all of these filing requirements were satisfied by
its Officers and Directors and ten percent holders as of December 31, 1996.
G. Director and Executive Compensation
-----------------------------------
The following tables and discussion set forth information with
respect to all plan and non-plan compensation awarded to, earned by or paid to
all directors of the Fund, and for each of the three (3) highest-paid
executive officers that have aggregate compensation from the Fund for the most
recently completed fiscal year in excess of $60,000.00.
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------
COMPENSATION TABLE
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
<CAPTION>
Name of Aggregate Pension or Estimated Total
Person, Position Compensation Retirement Annual Compensation
Benefits Benefits Upon From Fund
Accrued Retirement and Fund
As Part Complex
of Fund Paid to
Expenses Director
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stephen G. $ 48,000 -0- -0- $ 48,000
Calandrella,
President and
Director
Charles C. Powell, $ 3,000 -0- -0- $ 3,000
Director
Clifford C. Thygesen, $ 3,000 -0- -0- $ 3,000
Director
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
No other executive officer of the Fund received compensation during the fiscal
year ended December 31, 1996 in excess of $60,000.
All officers and employees of the Company are eligible to
participate in the Company's group health and dental insurance plan. The
Company has a Salary Deferred Simplified Employee Pension Plan (SAR-SEP)
adopted in September, 1994. There has been no employer contribution made to
the Plan since inception, nor does the Company incur any administrative fees
associated with this Plan. The Company currently has no written employment
agreements with any of its executive officers. The Company has not
implemented any stock option, stock bonus, incentive stock option or other
similar plans; although the Company may consider the implementation of such
plans in the future. The Fund currently has one (1) three (3) year employment
agreement written to an executive officer, Ms. Windy D. Haddad, effective
October 1, 1995. In 1996, the Fund issued two cash bonuses to its employees,
Mrs. Barbara Hamstad and Ms. Windy Haddad.
H. Voting Requirement
------------------
Election of the nominees as directors requires the affirmative
vote of a majority of the Fund's outstanding voting securities as defined in
the 1940 Act (the lesser of (i) 67% of the shares represented at a meeting at
which more than 50% of the outstanding shares are represented or (ii) more
than 50% of the outstanding shares).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE NOMINEES AS DIRECTORS
3. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS FOR FISCAL YEAR
1997
--------------------------------------------------------------------
On July 1, 1996, the client-auditor relationship between the Company
and its principal accountants, KPMG Peat Marwick LLP, ceased. The cessation
of the relationship was the result of the resignation by KPMG Peat Marwick LLP
and was effective July 1, 1996. The cessation of the relationship was
approved by the Company's Board of Directors. The reports of KPMG Peat
Marwick LLP related to the consolidated financial statements of the Company
for the fiscal years ended December 31, 1994 and 1995, did not contain any
adverse opinion or disclaimer of opinion, and was not qualified or modified as
to uncertainty, audit scope, or accounting principles. In connection with the
audits of the Company's financial statements for each of the fiscal years
ended December 31, 1994 and 1995, and for the period from January 1, 1996
through July 1, 1996, there were no disagreements with KPMG Peat Marwick LLP
on any matters of accounting principles or practices, financial statement
disclosure, or auditing scope and procedures which, if not resolved to the
satisfaction of KPMG Peat Marwick LLP, would have caused KPMG Peat Marwick LLP
to make reference to the matter in their report.
A majority of the members of the Board of Directors who were not
interested persons of the Fund appointed GELFOND HOCHSTADT PANGBURN & CO., a
Professional Corporation, to replace KPMG Peat Marwick LLP, and to serve as
the Fund's independent certified public accountants for fiscal year 1996.
This engagement is effective July 30, 1996. Prior to its engagement as the
Company's principal independent accountant, GELFOND HOCHSTADT PANGBURN & CO.,
a Professional Corporation, had not been consulted by the Company either with
respect to the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company's financial statements or on any matter which
was the subject of any prior disagreement between the Company and its previous
certifying accountant.
A majority of the members of the Board of Directors who are not
interested persons of the Fund have appointed GELFOND HOCHSTADT PANGBURN &
CO., a Professional Corporation, to serve as the Fund's independent certified
public accountants for fiscal year 1997. The affirmative vote of the holders
of at least a majority of the shares of the Fund's common stock present and
voting, in person or by proxy, at the Meeting, is required to ratify and
confirm this appointment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE IN FAVOR OF THE APPOINTMENT.
If such appointment is not approved by the shareholders, it would be
unlawful for the Fund to file with the United States Securities and Exchange
Commission any financial statement signed or certified by GELFOND HOCHSTADT
PANGBURN & CO., a Professional Corporation, and new independent certified
public accountants would have to be appointed and the appointment submitted to
shareholders for approval. A representative of GELFOND HOCHSTADT PANGBURN &
CO., a Professional Corporation, is not expected to be present at the Meeting.
However, should a representative of the accounting firm attend the Meeting, he
will be given the opportunity to make a statement if he so desires, and would
be available to respond to appropriate questions.
4. STATEMENT OF RISKS OF INVESTMENTS IN BUSINESS DEVELOPMENT COMPANIES
-------------------------------------------------------------------
A. Regulation.
----------
The Fund has elected to be treated as a Business Development
Company ("BDC") under the Small Business Investment Incentive Act of 1980 (the
"1980 provisions"), which modifies the Investment Company Act of 1940 (the
"1940 Act"). Although the 1980 provisions exempt BDC's from registration
under the 1940 Act and relieve such companies from compliance with many of the
provisions of the 1940 Act, the 1980 provisions impose on BDC's greater
restrictions on permitted types of investments. Moreover, the applicable
provisions of the 1940 Act continue to impose numerous restrictions on the
activities of the Fund, including restrictions on the nature of its
investments. There can be no assurance that the 1980 provisions will be
interpreted or administratively implemented in a manner consistent with the
Fund's investment objectives and manner of operation. In the event that the
Fund determines that it can not operate effectively as a BDC, the Fund may at
some future date decide to withdraw its election to be treated as a BDC.
Should the Fund seek to withdraw such election, it must obtain the approval of
stockholders who represent a majority of the Fund's outstanding stock (as
defined in the 1940 Act).
B. Transactions with affiliates; potential conflict of interest.
------------------------------------------------------------
The 1940 Act restricts transactions between the Fund and
"affiliated persons" (as defined in the 1940 Act) including, among others, the
Fund's officers, directors, principals, stockholders and employees, and any
affiliates of such affiliates. In many cases, the 1940 Act prohibits
transactions between the Fund and such persons unless the Fund first applies
for and obtains an exemptive order from the Commission. Delays and costs
involved in obtaining necessary approvals may decrease the profitability of
such transactions or make it impracticable or impossible to consummate such
transactions. The Fund's Board of Directors has implemented procedures
designed to regulate investment activity by affiliates in conflict with or in
conjunction with the Fund's activities, including adopting a Code of Ethics
containing provisions designed to prevent employees from engaging in acts
prohibited by Rule 17j-i under the 1940 Act. However, circumstances could
develop which would require Commission approval in advance of proposed
transactions by the Fund or its affiliates with Eligible Portfolio Companies
("Portfolio Company(ies)") or their affiliates. Depending upon the extent of
management's influence and control with respect to such Portfolio Companies
the selection of the affiliates of management to perform various services for
Portfolio Companies may not be a disinterested decision, and the terms and
conditions for the performance of such services and the amount in terms of
compensation to be received therefor may not be determined in arm's length
negotiations. In addition, officers or directors of the Fund or its
affiliates may serve as directors of or act as underwriter or placement agent
or as a consultant to certain Portfolio Companies and, in connection
therewith, earn consulting fees, finder's fees and underwriter's or placement
agent's commissions and other fees and commissions, which may be paid in the
form of cash, securities or other forms of consideration. Moreover, while
members of management are obligated to use their best efforts to provide the
Fund with a continuing and suitable investment program consistent with its
investment objectives and policies, subject to any applicable legal
restrictions, members of management are not required to present to the Fund
any particular investment opportunity which has come to their attention, even
if such opportunity is within the investment objectives and policies of the
Fund. As a result, certain conflicts of interest may exist between the Fund
and its officers and directors (as in the area of corporate opportunities)
which can only be properly resolved through exercise by the officers and
directors of such judgment as is consistent with their fiduciary duties to the
Fund. The Fund's Portfolio Companies may also enter into certain financial
arrangements with the Fund and or its affiliates subject to the appropriate
regulatory guidelines or approvals as required. Additionally, the Fund may
from time to time co-invest in Portfolio Companies with an officer and/or
director of the Fund or with an affiliate of such an officer or director,
subject to the appropriate regulatory guidelines or approvals as required.
Because of their potentially varying investment objectives or other factors,
conflicts could arise between the Fund and its affiliates relating to such co-
investments, which can only be resolved through the exercise by the Fund's
officers and directors of such judgment as is consistent with their fiduciary
duties to the Fund. Even with the proper exercise of such judgment, however,
there can be no assurance that potential conflicts will be resolved in a
manner favorable to the Fund.
C. High risk investments.
---------------------
The Fund currently makes investments in small public and
private companies, some of which are in the early stages of development with
little or no operating history, or more seasoned companies that operate at
losses or which experience substantial fluctuations in operating results.
These companies may also need substantial capital to support expansion or to
achieve or maintain a competitive position. Such companies may face intense
competition, including competition from companies with greater financial
resources, more extensive research and development, manufacturing, marketing
and service capabilities, and a larger number of qualified managerial and
technical personnel. Such companies may have insufficient cash flow to
service their debt obligations, including bridge loans made by the Fund and
may not have the resources to pay principal and/or interest on such loans in
the event of failure to consummate a proposed public offering or inability to
obtain subsequent financing. Additionally, such investments will generally be
unsecured. Moreover, the Fund may take significant positions in companies in
rapidly changing high-technology fields or intensely regulated industries.
Such companies may face additional risks of product and technological
obsolescence or rapidly changing regulatory environments which could adversely
affect such company's prospects, over which the Fund will have no control. As
a result, no assurance can be given that the Fund's investments will not
result in substantial or complete losses.
D. Bridge financing.
----------------
Although, with respect to its bridge financing activities the
Fund has, and intends to continue, to invest primarily in Portfolio Companies
which have entered into a letter of intent relating to a public offering,
there is substantial risk that such offerings will not be consummated.
Portfolio Companies may be unable to repay bridge loans made by the Fund in
the event that a contemplated public offering of securities by any such
Portfolio Company or other transaction involving such company is not
consummated. Additionally, the Fund may invest in companies that have not
entered into letters of intent relating to future public offerings and such
transactions may not be pursued.
E. Limited liquidity of portfolio investments.
------------------------------------------
Currently, a significant portion of the equity participations
obtained in bridge financings and securities purchased in other types of
private placements in which the Fund invests consist of securities that are
subject to restrictions on sale. Restricted securities can not be sold
publicly without prior agreement with the issuer to register these securities
under the Securities Act of 1933, as amended, (the "1933 Act"), or by selling
such securities under Rule 144 or other rules under the 1933 Act which permit
only limited sales under specified conditions. Since it is anticipated that
the Fund will continue to invest in emerging growth companies underwritten by
relatively small underwriters and which may have a limited number of market
makers, the Fund's ability to sell its equity participations and other
securities purchased in private placements may be limited by, and subject to,
the lack or limited nature of a trading market for the securities of Portfolio
Companies and the volatility of the stock market as a whole. Such limitations
could prevent or delay any sale of the Fund's securities or reduce the amount
of proceeds that might otherwise by realized therefrom. Accordingly, the Fund
is substantially dependent upon the ability of the Portfolio Company to
implement a plan which, within a reasonable period of time, would facilitate a
trading market for its securities. Restricted securities generally sell at a
price lower than similar securities that are not subject to restrictions on
sale. When restricted securities are sold to the public, the Fund, under
certain circumstances, may be deemed an "underwriter" or a controlling person
with respect thereto for the purposes of the 1933 Act, and be subject to
liabilities as such under that Act.
F. Possible need for additional investments in Portfolio
Companies.
-----------------------------------------------------
Following its initial investment, the Fund may make additional
debt and equity investments in Portfolio Companies ("Additional
Investment(s)") in order to increase its investment in a successful Portfolio
Fund, to exercise warrants, options, or convertible securities that were
acquired in the original financing, to preserve the Fund's proportionate
ownership when a subsequent financing is planned or to protect the Fund's
initial investment when such Portfolio Companies' performance does not meet
expectations. The Fund will have the discretion to make any Additional
Investments as it determines subject to the availability of capital resources.
The failure to make such Additional Investments may, in certain circumstances,
jeopardize the continued viability of a Portfolio Company and the Fund's
initial investment. The necessity of making Additional Investments may limit
the number of companies in which the Fund has the ability to invest. There
can be no assurance that the Fund will have sufficient funds to make necessary
Additional Investments or that, following an Additional Investment, the Fund
will not lose the entire amount of its initial and Additional Investment. The
Fund has no established criteria in deciding whether to make an Additional
Investment except that management will exercise its business judgment and
apply similar criteria as it does with initial investments. In addition, it
is possible that there may be circumstances under which an Additional
Investment would be considered an affiliated transaction requiring prior
Commission approval. The approval process could be time consuming and costly
and there can be no assurance that such approval would be obtained.
G. Dependence on public offering market.
------------------------------------
The investment strategy of the Fund is based in large part upon
the state of the securities markets in general and the market for public
financing in particular. Changes in these securities markets and general
economic conditions, including economic downturns, fluctuations in interest
rates, the availability of credit, inflation and other factors, may affect the
value of investments of the Fund. The market for public offerings is cyclical
in nature and, accordingly, there can be no assurance that the securities
markets will, at any point in time, be receptive to public offerings,
particularly those of emerging growth companies. Any adverse change in the
market for public offerings could have a material adverse effect on the Fund
and could severely limit the Fund's ability to realize its investment
objective.
H. Competition for investments.
---------------------------
The Fund has and expects to continue to encounter competition
in its efforts to locate attractive opportunities for the investment of its
capital from other entities and individuals having similar investment
objectives. The primary competition for desirable investments comes from
investment companies, investment partnerships and wealthy individuals. Some
of the competing entities and individuals have investment managers or advisors
with significantly greater experience, resources and managerial capabilities
then the Fund and are therefore in a better position than the Fund to obtain
access to attractive investments. To the extent that the Fund can compete for
such investments it may only be able to do so on less favorable terms than
those obtained by larger more established investors.
I. Developing companies.
--------------------
Although the Fund believes that developing companies may have
significant potential for price appreciation, higher market and credit risks
are often associated with these companies. Developing companies generally
have limited product lines, markets, market share and financial resources, or
generally are dependent on a smaller inexperienced management team. In
addition, stocks of developing companies may trade less frequently and in more
limited volume and be subject to greater and more abrupt price swings than
stocks of larger companies. There can be no assurance that any of the
developing companies in which the Fund may invest will realize any anticipated
price appreciation.
J. Turnaround and restructuring companies.
--------------------------------------
The Fund has, and may continue, to invest a portion of its
assets in companies involved in "turnaround" or other "restructuring"
situations that management believes, with the infusion of additional working
capital and/or strengthening of the management team, will realize significant
price appreciation and rapid growth in profits. To the extent that these
companies are unable to successfully turnaround or restructure, the Fund's
investment is likely not to appreciate in value and may be lost in its
entirety.
K. Dependence on management.
------------------------
The Fund will be substantially dependent upon the services of
Mr. Calandrella, the Fund's President and Portfolio Manager, who has assumed
principal responsibility for the Fund's investments. The Fund is, therefore,
dependent upon the ability of Mr. Calandrella to select what he believes are
appropriate investments for the Fund and upon the personal contacts and
relationships of Mr. Calandrella and other members of the Fund's management in
order for such investment opportunities to be offered to the Fund. The Fund
has not entered into employment, consulting or non-competition agreements with
Mr. Calandrella or any of its other officers. Therefore, there can be no
assurance that such officers will remain associated with the Fund in any
particular capacity or that they will not, in the future, compete, directly or
indirectly, with the Fund. In the event that any officers of the Fund cease
to be associated with the Fund, the Fund will seek to find a qualified person
or persons to fill their positions. There can, however, be no assurance that
such individuals can be engaged by the Fund. The loss of services of any of
the Fund's officers could have an adverse effect on the Fund.
L. Reduced Access to, and Limited Participation in, Management.
-----------------------------------------------------------
As a result of the decision by the Board of Directors to amend
the Fund's Investment Objective, increasing the geographic region within which
it conducts its investment activities from the Rocky Mountain region of the
United States to the entire geographic region of the United States, the Fund's
ability to actively participate in the management of those Portfolio Companies
located outside the Rocky Mountain region is greatly reduced. As a
consequence, the Fund must rely upon the expertise and abilities of existing
management teams, which, in many instances, are smaller and lack hands on
management experience.
OTHER MATTERS
The Board of Directors knows of no business to be brought before the
Meeting other than as set forth above. If, however, any other matters
properly come before the Meeting, it is the intention of the person's named in
the enclosed proxy form to vote such proxies on such matters in accordance
with their best judgment.
Whether or not you expect to be present at the meeting, please sign and
return the enclosed proxy promptly. Your vote is important. If you wish to
attend the Meeting and wish to vote in person, you may withdraw your proxy.
THE ROCKIES FUND, INC.
___________________________________
Windy D. Haddad, Secretary
Shareholder Proposals For The 1998 Annual Meeting
-------------------------------------------------
If any shareholder wishes to present a proposal for inclusion in the
proxy materials to be mailed by the Fund with respect to the 1998 Annual
Meeting of Shareholders, the proposal must be presented to the Fund's
management prior to January 31, 1998, along with proof of common stock
ownership in the Fund.
<PAGE>
<PAGE>
THE ROCKIES FUND, INC.
PROXY SOLICITED ON BEHALF OF THE COMPANY
The undersigned hereby constitutes and appoints Stephen G. Calandrella or
Clifford C. Thygesen _________________________________________________________
_______________________ (SEE NOTE BELOW) or either of them acting in the
absence of the other, with full power of substitution the true and lawful
attorneys or attorney and proxies of the undersigned to attend the Annual
Meeting of the Shareholders of The Rockies Fund, Inc. (the "Fund") to be held
at the principal offices of the Fund, 4465 Northpark Drive, Colorado Springs,
Colorado, 80907, on June 30, 1997 at 10:00 o'clock a.m. Mountain Daylight
Time, or any adjournment or adjournments thereof, and vote all the shares of
the Fund standing in the name of the undersigned with all the powers the
undersigned would possess if present at said meeting.
(1) FOR __________ WITHHOLD AUTHORITY __________
To elect all of the nominees listed below:
Stephen G. Calandrella, Charles Powell and Clifford C. Thygesen
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name below)
________________________________________
(2) FOR __________ AGAINST __________ ABSTAIN __________
The ratification and approval of the selection by the Board of
Directors of the firm of GELFOND HOCHSTADT PANGBURN & CO., a
Professional Corporation, as the independent accountants for
the Fund for the fiscal year ending December 31, 1997.
(3) Upon such other matters as may properly come before the
meeting.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEM 1 AND ITEM 2 AND
IN THE DISCRETION OF THE PERSON HOLDING THE PROXY FOR ANY OTHER BUSINESS.
(NOTE: Should you desire to appoint a proxy other than the management
designees named above, strike out the names of the management designees and
insert the name of your proxy in the space provided above. Should you do
this, give this proxy card to the person you appoint instead of returning the
proxy card to the Company.)
(PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.)
Receipt is acknowledged of Notice of Annual Meeting and Proxy Statement for
the meeting.
Date ______________________________________________, 1997
______________________________________________________
Name (please type or print)
______________________________________________________
Signature
______________________________________________________
Signature, if held jointly
Please sign exactly as name appears to the left. When shares are held by
joint tenants, both should sign. When signing as executor,
administrator, attorney, trustee, or guardian, please give full title as
such. If a corporation, please sign in full corporation name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
