SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
BOULDER TOTAL RETURN FUND, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transactions
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identity the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[GRAPHIC OMITTED] BOULDER TOTAL RETURN FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
April 5, 2004
Dear Fellow Stockholder,
You are cordially invited to attend the 2004 Annual Meeting of Stockholders
of Boulder Total Return Fund, Inc., which will be held on May 18, 2004 at 9:00
a.m. Mountain Standard time (local time), at the Doubletree La Posada Resort,
4949 E. Lincoln Drive, Scottsdale, Arizona. Details of the business to be
presented at the meeting can be found in the accompanying Notice of Annual
Meeting and Proxy Statement.
This is a very important meeting at which a number of corporate governance
initiatives are being proposed. These "Corporate Governance Proposals" are
described in the accompanying Proxy Statement. Your prompt consideration and
participation in voting on the various proposals is strongly encouraged.
The proposals are intended to implement a number of what might be referred
to as "shareholder-friendly" practices in the corporate governance area.
Generally, the proposals eliminate or modify a number of current charter
provisions that are often viewed as limiting accountability and insulating
management from stockholders. In particular, one of the proposals seeks to
"declassify" the Board of Directors so that each Director is elected annually.
The Board of Directors thinks it is important for stockholders to have an
enhanced say in the direction of the Fund and believes that the Corporate
Governance Proposals effectively promote this goal.
As Chairman of the Board, I encourage you to support each of the proposals.
After careful review by the independent directors, the Board of Directors
unanimously approved and has recommended to stockholders that they approve each
of the proposals.
We hope you plan to attend the meeting. Your vote is important. Whether or
not you are able to attend, it is important that your shares be represented at
the Meeting. Accordingly, we ask that you please sign, date and return the
enclosed Proxy Card or vote via telephone or the Internet at your earliest
convenience.
On behalf of the Board of Directors and the management of Boulder Total
Return Fund, I extend our appreciation for your continued support.
Sincerely,
/s/ Richard I. Barr
Richard I. Barr
Chairman of the Board
[GRAPHIC OMITTED] BOULDER TOTAL RETURN FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 18, 2004
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Boulder Total Return Fund, Inc. (the "Fund"), a Maryland
corporation, will be held at the Doubletree La Posada Resort, 4949 E. Lincoln
Drive, Scottsdale, Arizona at 9:00 a.m. Mountain Standard Time (local time), on
May 18, 2004, to consider and vote on the following matters:
1. The election of Directors of the Fund (Proposal 1).
2. An amendment to the Fund's charter (the "Charter") to declassify the Board
and provide for annual election of Directors (Proposal 2).
3. An amendment to the Charter providing that Directors shall be elected by a
plurality of votes cast at a meeting at which a quorum is present (Proposal
3).
4. An amendment to the Charter repealing a provision stating that Directors
may be removed only by the affirmative vote of the holders of at least 80%
of the class of stock entitled to elect that Director (Proposal 4).
5. An amendment to the Charter providing that the Secretary of the Fund shall
call a special stockholders meeting upon the written request of the holders
of 25% of outstanding shares entitled to vote at the meeting (Proposal 5).
6. An amendment to the Charter vesting in the stockholders the power to amend
or adopt Bylaws by the affirmative vote of a majority of votes cast at a
meeting at which a quorum is present (Proposal 6).
7. An amendment to the Charter prohibiting the Fund from opting into any
provision of the Maryland Unsolicited Takeovers Act (Proposal 7).
8. An amendment to the Charter repealing Article VII (Certain Transactions)
and replacing it with a new section providing that no (a) business
combination (e.g., mergers, consolidation, share exchanges), (b) voluntary
liquidation or dissolution, (c) stockholder proposal regarding specific
investment decisions, (d) proposal to open-end the Fund, or (e) self tender
for more than 25% of the Fund's shares in any twelve-month period, may be
effected without the affirmative vote of the holders of at least two-thirds
of outstanding shares entitled to be cast on the matter (Proposal 8).
9. An amendment to the Charter to establish the maximum number of Directors at
five (5) (Proposal 9).
10. An amendment to the Charter providing that, upon redemption of all of the
Fund's shares of preferred stock, including the Fund's Taxable Auction
Market Preferred Stock, the term of the Directors elected by the holders of
the Fund's preferred stock will automatically terminate (Proposal 10).
11. An amendment to the Charter repealing a provision that requires, under
certain circumstances, certain amendments to various other provisions of
the Charter to be approved by the holders of at least 80% of the shares of
the Fund's Common Stock and Preferred Stock, voting together as a single
class, and 80% of the shares of the Fund's Preferred Stock, voting
separately (Proposal 11).
12. A proposal to amend and restate the Charter, the implementation of which is
contingent on the approval of Proposals 2 through 11 (Proposal 12).
13. To transact such other business as may properly come before the Meeting or
any adjournments and postponements thereof.
The Board of Directors of the Fund has fixed the close of business on April
2, 2004 as the record date for the determination of stockholders of the Fund
entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
/s/ Stephanie Kelley
STEPHANIE KELLEY
Secretary
April 5, 2004
--------------------------------------------------------------------------------
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD. THE PROXY CARD SHOULD BE
RETURNED IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE
UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXIES ARE SET FORTH ON
THE INSIDE COVER.
STOCKHOLDERS WHO HAVE QUESTIONS OR NEED ASSISTANCE IN VOTING MAY CONTACT
MACKENZIE PARTNERS, INC. TOLL FREE AT 1-800-322-2885 OR BY EMAIL AT
PROXY@MACKENZIEPARTNERS.COM.
--------------------------------------------------------------------------------
Instructions for Signing Proxy Cards
The following general rules for signing Proxy Cards may be of assistance to
you and may avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your Proxy Card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the Proxy Card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the registration.
3. All Other Accounts: The capacity of the individual signing the Proxy
Card should be indicated unless it is reflected in the form of registration. For
example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp., c/o John Doe Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee, u/t/d 12/28/78 Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust., John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith John B. Smith, Jr., Executor
[GRAPHIC OMITTED] BOULDER TOTAL RETURN FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
QUESTIONS & ANSWERS REGARDING THE MEETING AND PROPOSALS
Question 1: What is the purpose of the Annual Meeting?
Answer: At the Meeting stockholders will be asked to vote on the election of
directors and a number of corporate governance proposals embodied in Proposals 2
through 11 (the "Corporate Governance Proposals"), all of which involve amending
the Charter. In particular, Proposal 2 recommends that stockholders approve an
amendment to the Charter to declassify the Board such that the election of all
Directors will be held annually. If approved, the declassification will apply to
the elections held at this Meeting.
Question 2: Who is being nominated for election at the Meeting?
Answer: On the assumption that Proposal 2 (regarding declassification of the
Board) will be approved at the Meeting, the Board has nominated the following
five incumbent Directors, each to serve a one-year term until the annual meeting
in 2005 and until their successors are duly elected and qualify: Richard I.
Barr, Joel W. Looney, Alfred G. Aldridge, Jr., Susan L. Ciciora, and Stephen C.
Miller. In this case, the holders of Common Stock will elect three of the five
directors standing for election and the holders of Preferred Stock will elect
the remaining two directors. Ms. Ciciora and Mr. Barr are being nominated to
represent the interests of the holders of the Preferred Stock (i.e., Taxable
Auction Market Preferred Stock or "AMPs"). If stockholders do not approve
Proposal 2, the Board has nominated Joel W. Looney and Susan L. Ciciora to serve
for a three-year term expiring in 2007.
Question 3: Why is the Board recommending these Corporate Governance Proposals?
Answer: The Board's recommendation to declassify and to effect the other
Corporate Governance Proposals is part of an ongoing corporate governance review
and initiative and in keeping with the Board's goal of ensuring that the Fund's
corporate governance policies maximize Board and management accountability to
stockholders. The Board believes that corporate power in America has subtly
shifted from the hands of owners/stockholders to those of boards and managers.
The Board believes that this power should be rightfully returned to
stockholders. The Corporate Governance Proposals seek to accomplish this
return-of-power by giving back to stockholders the ability to effect or have a
voice in effecting certain fundamental corporate changes. The Fund would support
these same corporate governance initiatives in any company in which it seeks to
invest as they are simply sound policies. Notably, most of the Corporate
Governance Proposals are contained in the Fund's proxy voting guidelines. Thus,
if we are going to "practice what we preach", the Fund should similarly adopt
the governance proposals it expects of other companies. At the end of the day,
the Board believes all stockholders will benefit long-term by returning control
of the Fund back to the owners and that the Fund's value and performance may be
enhanced thereby.
Question 4: What is meant by "Declassify the Board" under Proposal 2?
Answer: A "classified" or "staggered" board is divided into several classes and
directors of only one class are elected each year. Currently, the Board is
classified into three separate classes and staggered such that each Director
stands for election every 3 years rather than annually. Proposal 2 would
"declassify" the Board so that each Director will stand for election every year.
If Proposal 2 is approved by stockholders, the "declassifying" will become
effective at this Meeting such that all of the Directors will stand for election
at this Meeting and annually thereafter. By declassifying the Board, directors
become removable by stockholders without cause under Maryland law.
Question 5: Why is the Board recommending declassification?
Answer: The election of Directors is the primary means for stockholders to
exercise influence over the Fund and its policies. Your Board believes that
classified boards have the effect of reducing the accountability of directors to
a company's stockholders. A classified board prevents stockholders from electing
all directors on an annual basis and may discourage proxy contests in which
stockholders have an opportunity to vote for a competing slate of nominees.
While classified boards are viewed by many companies as increasing the long-term
stability and continuity of a board, the Board believes that long-term stability
and continuity should result from the annual election of Directors, which
provides stockholders with the opportunity to evaluate Director performance,
both individually and collectively, on an annual basis.
Question 6: How do Proposal 2 and other Corporate Governance Proposals benefit
or otherwise affect the Fund's current control group (i.e., the Horejsi
Affiliates)?
Answer: The Horejsi Affiliates (defined below) currently own an effective
controlling interest in the Fund (see "Security Ownership of Certain Beneficial
Owners" in the Proxy Statement). Horejsi Affiliates also own the Advisers
(defined below) and Administrator (defined below). Under Proposal 2, if a
large-block stockholder is able to significantly influence elections, and all
Board members are up for election annually (i.e., a declassified board), the
Horejsi Affiliates would likely be able to effect a change of control with
respect to the entire Board in a single election whereas under the current
classified structure, such a change would take two years. Similarly, several of
the Corporate Governance Proposals either grant stockholders voting power or
decrease the voting requirement necessary for stockholders to take certain
actions (e.g., Proposal 5 would give stockholders the power to compel a special
stockholder meeting with 25% of outstanding shares and Proposal 6 would give
stockholders the power to amend the Fund's Bylaws). Because the Horejsi
Affiliates own a large block of the Fund's shares, if the Corporate Governance
Proposals are approved, the Affiliates will have greater influence over the
adoption or failure of certain corporate actions requiring stockholder vote. In
particular, the Horejsi Affiliates would have the ability to compel a special
meeting without the support of other non-Horejsi stockholders. Nonetheless,
since most of the other actions under the Corporate Governance Proposals would
require the support of either a majority or two-thirds of outstanding shares for
a future change, although the Horejsi Affiliates could significantly influence
adoption of future proposals, assuming the Horejsi Affiliates maintain effective
control, it would remain difficult to accomplish without first soliciting Board
approval and non-Horejsi support. In these instances, where an action requires a
majority or two-thirds voting approval, the Horejsi Affiliates will have an
actual or effective veto, again assuming that they maintain their current
shareholdings. It should be noted that, even in the absence of adopting the
Corporate Governance Proposals, the Horejsi Affiliates already have significant
influence over the election of Board members and the adoption or failure of
certain corporate actions requiring a stockholder vote.
Question 7: How do the Horejsi Affiliates intend to vote on the Corporate
Governance Proposals?
Answer: The Horejsi Affiliates intend to vote in favor of each Proposal,
including each Corporate Governance Proposal.
Question 8: What does it mean that Directors are elected by a plurality of votes
cast (Proposal 3)?
Answer: Election by a "plurality of votes cast" simply means that in an election
where there are more candidates than there are vacancies to be filled, so long
as a quorum is present, the person receiving the most votes wins. Most public
office elections are determined by a "plurality".
Question 9: Why is the Board recommending reducing to 25% the percentage of the
Fund's outstanding shares required to compel a special meeting of stockholders
to be held (Proposal 5)?
Answer: Presently, under the Fund's Bylaws, stockholders cannot compel the
Fund's Secretary to call a special meeting unless a written request is submitted
by the holders of a majority of outstanding shares entitled to vote at the
meeting. This ownership threshold restricts a stockholder's right to call a
meeting. Proposal 5 would amend the Charter to reduce the percentage ownership
level from a "majority" to 25% of outstanding shares, thus making the potential
for a stockholder or group of stockholders to call a special meeting more
realistic and useful.
Question 10: Why is the Board recommending that the Charter be amended to permit
stockholders to amend the Fund's Bylaws (Proposal 6)?
Answer: The Board believes that all stockholders benefit if they have better
access and more influence in the Fund's governance. The Fund's Bylaws contain
important policies affecting the day-to-day management of the Fund which the
Board believes stockholders should have a voice in establishing. The
stockholders do not currently have the authority to amend the Fund's Bylaws. If
approved, Proposal 6 would amend the Charter to vest in the stockholders the
power to make, alter, amend or repeal Bylaws and ensure that, if stockholders do
make a change, that the Directors will not be able to override or modify what
the stockholders have decided upon.
Question 11: What is the Maryland Unsolicited Takeovers Act and why does the
Board recommend that the Fund be prohibited from becoming subject to it
(Proposal 7)?
Answer: The Maryland Unsolicited Takeovers Act ("MUTA") is a Maryland statute
pursuant to which the Board, among other things, could effect one or more of the
following actions: classify the Board, place super-majority voting requirements
on removal of Directors and require a request by holders of a majority of
outstanding shares to compel a special stockholders meeting. The Board believes
MUTA only serves to lessen the stockholders' influence over a board and thus has
the potential to diminish a board's responsiveness and accountability. The Board
believes that amending the Charter to prohibit the Fund from opting into MUTA
without prior approval by stockholders enhances the responsiveness and
accountability of the Board.
Question 12: Why is the Board recommending amending the Charter to alter the
stockholder vote necessary to effect "business combinations" and other
extraordinary corporate actions (Proposal 8)?
Answer: Proposal 8 would amend the Charter to change the stockholder vote
requirement to approve extraordinary corporate actions such as business
combinations (e.g., mergers, consolidations, share exchanges), open-ending the
Fund, liquidation, specific investment decisions, and certain self tenders. The
Board believes that most of the Fund's stockholders seek the long-term stability
and certainty offered by the closed-end investment company structure. The Board
believes that adopting this Proposal will assure that stockholder proposals that
could dramatically change the structure, operations or investments of the Fund
are not implemented except where there is widespread stockholder support. The
actions of arbitrageurs, who often have short-term goals at odds with long-term
stockholders, can increase Fund expenses if the Fund is forced to address
proposals to permit stockholders to effect extraordinary actions. Adopting the
proposed change may avoid such expenses.
Question 13: How does the Board recommend that stockholders vote on the various
proposals?
Answer: If no instructions are indicated on your proxy, the representatives
holding proxies will vote in accordance with the recommendations of the Board.
The Board, including all of the Independent Directors, has unanimously
recommended that stockholders vote FOR all of the Proposals.
Question 14: Are other technical amendments contemplated under the Corporate
Governance Proposals?
Answer: Yes. The Board has recommended Proposal 12 to amend and restate the
Charter. The purpose of this Proposal is to consolidate into one document all of
the provisions of the Charter (including amendments approved at the Meeting) and
to make technical amendments in the event that the other Corporate Governance
Proposals are approved. If Proposals 2 through 12 are approved, the Fund will
file with the State Department of Assessments and Taxation of Maryland ("SDAT")
Articles of Amendment and Restatement attached to this Proxy Statement as
Exhibit A (the "Articles of Amendment and Restatement").
Question 15: What happens if certain Corporate Governance Proposals are approved
by stockholders and others are not?
Answer: If certain of the Corporate Governance Proposals are approved by
stockholders and others are not, the Fund will not implement Proposal 12 and
will not file the Articles of Amendment and Restatement. Instead, the Fund will
file Articles of Amendment with the SDAT that will contain only the amendments
of the Charter approved by stockholders at the Meeting.
Question 16: Who is entitled to vote?
Answer: Stockholders of record at the close of business on April 2, 2004 (the
"Record Date") are entitled to notice of and to vote at the Meeting. Each of the
shares outstanding on the Record Date is entitled to one vote on each of the
Proposals. As explained more fully in the Proxy Statement, if Proposal 2
(Declassification of the Board) is approved at the Meeting, then the holders of
the Common Stock will be entitled to vote for three of the five Directors
standing for election and the holders of the Preferred Stock will be entitled to
vote for the remaining two Directors standing for election at the Meeting. If
Proposal 2 is not approved at the Meeting, only the holders of Common Stock will
be entitled to vote for the two Directors standing for election.
Question 17: What is the required quorum for the Meeting?
Answer: The holders of at least a majority of the outstanding common and
preferred shares must be represented at the Meeting, either in person or by
proxy, in order to constitute a quorum permitting business to be conducted at
the Meeting. If you have completed, executed and returned valid proxy
instructions (in writing, by phone or by Internet) or attend the Meeting and
vote in person, your shares will be counted for purposes of determining whether
there is a quorum, even if you abstain from voting on any or all matters
introduced at the Meeting.
Question 18: How do I vote?
Answer: Your vote is very important. Stockholders can vote in person at the
Meeting or authorize proxies to cast their votes ("proxy voting") by proxy. Most
stockholders will have a choice of proxy voting over the Internet at
http://www.proxyvote.com, by using a toll-free telephone number or by completing
a Proxy Card and mailing it in the postage-paid envelope provided. Please refer
to your Proxy Card or the information forwarded by your bank, broker or other
nominee to see which options are available to you. If you proxy vote by Internet
or telephone, you do NOT need to return your Proxy Card. If you vote by proxy,
the individuals named on the Proxy Card as proxy holders will vote your shares
in accordance with your instructions. You may specify whether your shares should
be voted for all, some or none of the nominees for director and whether your
shares should be voted for or against the other proposals. If you execute an
otherwise valid proxy but do not provide voting instructions, the persons named
as proxies will cast your votes FOR all of the Proposals.
Question 19: Can I revoke or change my proxy?
Answer: Yes. You may change or revoke your proxy at any time before the Meeting
by timely delivery of a properly executed, later-dated proxy (including an
Internet or phone vote), by sending a written revocation to the Secretary of the
Fund at the Fund's address listed on the accompanying Notice of Meeting, or by
attending and voting in person at the Meeting. The powers of the proxy holders
will be suspended with respect to your shares if you attend the meeting in
person and so request, but attendance at the Meeting will not by itself revoke a
previously granted proxy.
[GRAPHIC OMITTED] BOULDER TOTAL RETURN FUND, INC.
1680 38TH STREET, SUITE 800
BOULDER, COLORADO 80301
ANNUAL MEETING OF STOCKHOLDERS
May 18, 2004
PROXY STATEMENT
This proxy statement ("Proxy Statement") for Boulder Total Return Fund,
Inc., a Maryland corporation ("BTF" or the "Fund"), is furnished in connection
with the solicitation of proxies by the Fund's Board of Directors (collectively,
the "Board" and individually, the "Directors") for use at the Annual Meeting of
Stockholders of the Fund to be held on Tuesday, May 18, 2004, at 9:00 a.m.
Mountain Standard Time (local time), at the Doubletree La Posada Resort, 4949 E.
Lincoln Drive, Scottsdale, Arizona, and at any adjournments or postponements
thereof (the "Meeting"). A Notice of Annual Meeting of Stockholders and Proxy
Card for the Fund accompany this Proxy Statement. Proxy solicitations will be
made, beginning on or about April 5, 2004, primarily by mail, but proxy
solicitations may also be made by telephone, by Internet on the Fund's web site,
telegraph or personal interviews conducted by officers of the Fund and PFPC
Inc., the transfer agent and co-administrator of the Fund, and by MacKenzie
Partners, Inc. ("MacKenzie"), the Fund's proxy solicitor. MacKenzie's fee to
assist in the solicitation of proxies is estimated to be $7,500 plus expenses.
The costs of proxy solicitation and expenses incurred in connection with the
preparation of this Proxy Statement and its enclosures will be paid by the Fund.
The Fund also will reimburse brokerage firms and others for their expenses in
forwarding solicitation material to the beneficial owners of its shares. The
Board has fixed the close of business on April 2, 2004 as the record date (the
"Record Date") for determination of stockholders entitled to notice and to vote
at the Meeting.
The Annual Report of the Fund, including audited financial statements for
the fiscal year ended November 30, 2003, has been mailed to stockholders.
Additional copies are available upon request, without charge, by calling
1-800-331-1710. The report is also viewable online at the Fund's website at
www.boulderfunds.net. The report is not to be regarded as proxy solicitation
material.
Boulder Investment Advisers, L.L.C., 1680 38th Street, Suite 800, Boulder,
Colorado 80301, and Stewart Investment Advisers, Bellerive, Queen Street, St.
Peter, Barbados, currently serve as co-investment advisers to the Fund. PFPC
Inc. acts as the transfer agent and co-administrator to the Fund and is located
at 4400 Computer Drive, Westborough, Massachusetts 01581. Fund Administrative
Services, L.L.C. ("FAS"), serves as co-administrator to the Fund and is located
at 1680 38th Street, Suite 800, Boulder, Colorado 80301.
If the enclosed proxy is properly executed and returned by May 18, 2004 in
time to be voted at the Meeting, the Shares (as defined below) represented
thereby will be voted in accordance with the instructions marked thereon. Unless
instructions to the contrary are marked thereon, a proxy will be voted FOR the
election of the nominees for Directors, FOR each of the other Proposals and, in
the discretion of the proxy holders, on any other matters that may properly come
before the Meeting. Any stockholder who has given a proxy has the right to
revoke it at any time prior to its exercise either by attending the Meeting and
casting his or her votes in person or by submitting a letter of revocation or a
later-dated proxy to the Fund's Secretary at the above address prior to the date
of the Meeting.
A quorum of the Fund's stockholders is required for the conduct of business
at the Meeting. Under the Bylaws of the Fund, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the outstanding
shares of the Fund as of the Record Date. If a proposal is to be voted upon by
only one class of the Fund's shares, a quorum of that class of shares must be
present at the Meeting in order for the proposal to be considered. In the event
that a quorum is not present at the Meeting, or in the event that a quorum is
present but sufficient votes to approve one or more proposals are not received,
the persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies with respect to any proposal that did
not receive the votes necessary for its passage. With respect to those proposals
for which there is represented a sufficient number of votes in favor, actions
taken at the Meeting will be approved and implemented irrespective of any
adjournments with respect to any other proposals. Any such adjournment will
require the affirmative vote of a majority of votes cast on the matter at the
Meeting. If a quorum is present, the persons named as proxies will vote those
proxies which they are entitled to vote FOR any proposal in favor of such an
adjournment and will vote those proxies required to be voted AGAINST any
proposal against any such adjournment.
The Fund has two classes of stock: common stock, par value $0.01 per share
(the "Common Stock"), and preferred stock, par value $0.01 per share (the
"Preferred Stock"), 1000 shares of which have been designated as Taxable Auction
Market Preferred Stock (the "AMPs") (the Common Stock and AMPs are collectively
referred to herein as the "Shares"). On the Record Date, the following number of
Shares of the Fund were issued and outstanding:
Common Stock AMPs
Outstanding Outstanding
----------- -----------
12,338,660 775
Security Ownership of Certain Beneficial Owners. The following table
sets forth certain information regarding the beneficial ownership of the Shares
as of the Record Date by each person who is known by the Fund to beneficially
own 5% or more of the Fund's outstanding Common Stock. To the Fund's knowledge,
there are no 5% or greater beneficial owners of the AMPs.
Name of Owner* Number of Shares Number of Shares Percentage
Directly Owned (1) Beneficially Owned (2) Beneficially Owned
------------------------------------------- ------------------------ -------------------------- ----------------------
Badlands Trust Company (1)(3) 16,980 5,382,982 43.63%
Stewart R. Horejsi Trust No. 2 (4) 0 5,382,982 43.63%
Ernest Horejsi Trust No. 1B (1) 3,413,138 3,413,138 27.66%
Lola Brown Trust No. 1B (1) 1,370,515 1,370,515 11.11%
Evergreen Atlantic LLC (1) 343,748 343,748 2.79%
Stewart West Indies Trust (1)(2) 104,627 255,876 2.07%
Susan L. Ciciora Trust (1)(2) 72,176 175,300 1.42%
John S. Horejsi Trust (1)(2) 36,100 87,662 0.71%
Evergreen Trust (1)(2) 25,698 63,510 0.51%
------------------------ -------------------------- ----------------------
Aggregate Shares Owned by Horejsi 5,382,982 5,382,982 43.63%
Affiliates (defined below) **
------------------------------------------- ------------------------ -------------------------- ----------------------
Alter Asset Management, Inc.*** 1,276,754 1,276,754 10.35%
* The address of Evergreen Atlantic LLC is 1680 38th Street, Suite 800,
Boulder, Colorado 80301. The address of each other listed owner is c/o
Badlands Trust Company, POB 801, 614 Broadway, Yankton, South Dakota 57078.
** Aggregate number and percentage are less than the sum total of amounts
shown for each owner because the same shares may be deemed beneficially
owned by more than one party (see Footnotes 1 through 4 below).
*** As stated in a Schedule 13G filed with the Securities and Exchange
Commission on February 10, 2004.
(1) Direct Ownership. Evergreen Atlantic, LLC ("EALLC"), The Evergreen Trust
(the "Evergreen Trust"), John S. Horejsi Trust ("John Trust"), Susan L.
Ciciora Trust ("Susan Trust"), Stewart West Indies Trust ("SWI Trust"), the
Lola Brown Trust No. 1B (the "Brown Trust"), the Ernest Horejsi Trust No.
1B (the "EH Trust"), Badlands Trust Company ("Badlands"), the Stewart R.
Horejsi Trust No. 2 (the "SRH Trust") and Stewart R. Horejsi are, as a
group, considered to be a "control person" of the Fund (as that term is
defined in Section 2(a)(9) of the Investment Company Act of 1940, as
amended (the "1940 Act")). EALLC, the Evergreen Trust, John Trust, Susan
Trust, SWI Trust, the Brown Trust, the EH Trust and Badlands (collectively,
the "Horejsi Affiliates") directly own the shares indicated for such entity
in the table above, totaling 5,382,982 (43.63%). However, these entities
and other trusts or companies with interlocking management and/or common
ownership may be deemed to indirectly own additional Fund shares, which are
included in the table above.
(2) Indirect Ownership Through EALLC. Numbers shown in the table include shares
held directly (see Footnote No. 1) and shares that may be deemed to be
beneficially owned indirectly through ownership of EALLC. The outstanding
membership interests in EALLC are owned by the Evergreen Trust, the Susan
Trust, the John Trust and the SWI Trust in the following percentages - 11%,
30%, 15% and 44%. The Trustees of the Evergreen Trust are Stephen C.
Miller, Larry Dunlap and Badlands. Badlands is the sole trustee for each of
the Susan Trust, the John Trust and the SWI Trust. Mr. Horejsi is not a
beneficiary under any of the foregoing trusts. Badlands has sole discretion
with respect to the Susan Trust, John Trust and SWI Trust while any action
by the Evergreen Trust requires a majority vote of the trustees.
Consequently, both the trusts and each trustee disclaim beneficial
ownership of shares owned by EALLC. Mr. Horejsi is the manager of EALLC.
(3) Ownership by Badlands. The number shown in the table includes shares held
directly by Badlands (see Footnote No. 1) and shares that may be deemed to
be beneficially owned indirectly by Badlands through direct or indirect
ownership by the Brown Trust, the EH Trust, EALLC, Evergreen Trust, the
Susan Trust, the John Trust and the SWI Trust. Badlands is the sole trustee
of the Susan Trust, the John Trust and the SWI Trust, which together with
the Evergreen Trust control EALLC (see Footnote No. 2), the other two
trustees of Evergreen Trust being Stephen C. Miller and Larry Dunlap.
Badlands, together with Larry Dunlap and Susan Ciciora (Mr. Horejsi's
daughter), is one of three trustees of both the Brown Trust and the EH
Trust.
Badlands is a trust company organized under the laws of South Dakota, which
is wholly owned by the SRH Trust, an irrevocable trust organized by Mr.
Stewart Horejsi for the benefit of his issue. The directors of Badlands are
Larry Dunlap, Stephen C. Miller, Robert Ciciora, who is the brother of Mr.
Horejsi's son-in-law (John Ciciora), Gail G. Gubbels and Marty Jans.
Badlands and its directors disclaim beneficial ownership of shares owned
directly by the EALLC, the Evergreen Trust, the Susan Trust, the John
Trust, the SWI Trust, the Brown Trust and the EH Trust.
(4) Indirect Ownership by SRH Trust. The number shown in the table reflects
shares that may be deemed to be beneficially owned indirectly through the
SRH Trust's ownership of Badlands. The trustees of the SRH Trust are
Badlands, Robert Ciciora and Brian Sippy. Both the Trust and its trustees
disclaim beneficial ownership of shares beneficially owned directly or
indirectly by Badlands.
----------------------------
Information as to beneficial ownership in the above table and accompanying
footnotes has been obtained from a representative of the beneficial owners; all
other information as to beneficial ownership is based on reports filed with the
Securities and Exchange Commission (the "SEC") by such beneficial owners.
As of the Record Date, Cede & Co., a nominee partnership of the Depository
Trust Company, held of record, but not beneficially, 12,269,012 shares or 99.44%
of Common Stock outstanding and 775 shares or 100% of AMPs outstanding.
As of the Record Date, the executive officers and directors of the Fund, as
a group, owned 5,412,617 shares of Common Stock (this amount includes the
aggregate shares of Common Stock owned by the Horejsi Affiliates set forth
above) and 0 shares of AMPs of the Fund, representing 43.87% of Common Stock
outstanding and 0% of AMPs.
In order that your Shares may be represented at the Meeting, you are
requested to vote on the following matters:
PROPOSAL 1
ELECTION OF DIRECTORS OF THE FUND
The Charter provides that the Board is divided into three classes, each
class having a term of three years. Each year the term of one class expires and
the individuals elected to such class serve for a three-year term until their
successors are duly elected and qualify. The terms of two of the Directors
(Susan L. Ciciora and Joel W. Looney, both Class I Directors of the Fund) expire
at the Meeting.
As discussed in Proposal 2 below, this Proxy Statement contains a proposal
to amend the Charter to "declassify" the Board and require annual election of
all Directors beginning at this Meeting. If Proposal 2 is approved, the
Directors whose terms would not otherwise expire at the Meeting have agreed to
resign and stand for reelection at this Meeting for one-year terms expiring at
the annual meeting of stockholders in 2005.
IF PROPOSAL 2 IS APPROVED. If stockholders approve Proposal 2 regarding
declassification of the Board, proxy holders will propose and vote to adjourn
the Meeting for a short time in order for the amendments to the Charter to be
filed with the State Department of Assessments and Taxation of Maryland
("SDAT"). Once the proper amending documents are filed, the Meeting will be
reconvened and the following five incumbent Directors will stand for election,
each for a one-year term and until their successors are duly elected and
qualify: Richard I. Barr, Joel W. Looney, Alfred G. Aldridge, Jr., Susan L.
Ciciora and Stephen C. Miller.
If Proposal 2 is approved, holders of the AMPs will be entitled to elect
two of the five director positions. Under Charter provisions governing the AMPs,
holders of the AMPs, voting as a single class, are entitled to elect two
Directors (except in limited circumstances not present here) and holders of the
Common Stock are entitled to elect the remaining Directors. If stockholders
approve Proposal 2, Mr. Barr and Ms. Ciciora have been nominated to represent
holders of the AMPs. If stockholders do not approve Proposal 2, then no AMPs
directors will be considered for election at the Meeting. A quorum of the AMPs
stockholders must be present at the Meeting in order to consider and act on the
Proposal to elect Mr. Barr and Ms. Ciciora.
IF PROPOSAL 2 IS NOT APPROVED. If stockholders do not approve Proposal 2
regarding declassification of the Board, the Board has nominated Susan L.
Ciciora and Joel W. Looney, both Class I Directors of the Fund, to serve for a
three-year term to expire at the Fund's annual meeting in 2007 and until their
successors are duly elected and qualify.
Richard I. Barr and Stephen C. Miller, Class II Directors of the Fund, were
elected on April 26, 2002 for three-year terms to expire at the Fund's 2005
annual meeting of stockholders and until their successors are duly elected and
qualify: Alfred G. Aldridge, Jr., Class III Director of the Fund, was elected on
April 22, 2003 for a three-year term to expire at the Fund's 2006 annual meeting
of stockholders and until his successor is duly elected and qualified.
Currently, Messrs. Barr and Aldridge represent the AMPs stockholders and, since
their terms are not scheduled to expire until 2005 and 2006 respectively, if
Proposal 2 does not pass, no AMPs directors will be considered for election.
Thus, in summary, if Proposal 2 is approved, only the Common Stock holders
are entitled to vote on the election of Messrs. Looney, Aldridge and Miller and
only the AMPs holders are entitled to vote on the election of Mr. Barr and Ms.
Ciciora. If Proposal 2 is not approved, because no AMPs Directors are otherwise
being considered for election at the Meeting, only the Common Stock holders are
entitled to vote.
The above nominees have consented to serve as Directors if elected at the
Meeting either for three-year or one-year terms, as the case may be. If the
designated nominees decline or otherwise become unavailable for election,
however, the proxy confers discretionary power on the persons named therein to
vote in favor of a substitute nominee or nominees.
INFORMATION ABOUT DIRECTORS AND OFFICERS. Set forth in the following table
is information about the nominees for election to the Board of Directors, all of
whom are currently Directors of the Fund:
--------------------------------- ------------------------ ---------------------------------------------------- ----------------
Number of
Funds in Fund
Name, Address*, Age Position, Length of Principal Occupation(s) and Other Directorships Complex
Term Served, and Term held Overseen by
of Office During the Past Five Years Director
--------------------------------- ------------------------ ---------------------------------------------------- ----------------
Independent Directors
--------------------------------- ------------------------ ---------------------------------------------------- ----------------
Alfred G. Aldridge, Jr. Director of the Fund Retired; from 1982-2002, Sales Manager of Shamrock 2
Brig. Gen. (Retired) since 1999. Current Foods Company; Director of the Fiesta Bowl, Tempe,
Cal. Air National Guard term to expire at the AZ since 1997; Director, Boulder Growth & Income
Age: 66 2006 annual meeting, Fund, Inc., since 2002; Director, Maricopa Youth
unless Proposal 2 is Assistance Foundation, Phoenix, AZ since 2004.
approved.
Richard I. Barr Director of the Fund Retired; from 1963-2001, Manager of Advantage 3
Age: 65 since 1999. Chairman Sales and Marketing, Inc; Director, Boulder Growth
of the Board since & Income Fund, Inc., since 2002; Director, First
2003. Current term to Financial Fund, Inc., since 2001.
expire at the 2005
annual meeting,
unless Proposal 2 is
approved.
Joel W. Looney Director of the Fund Partner, Financial Management Group, LLC since 3
Age: 42 since 2001. Current July 1999; CFO, Bethany College from 1995 -1999;
term to expire at the Director, Boulder Growth & Income Fund, Inc.,
2004 annual meeting. since January 2002; Director and Chairman of the
Board, First Financial Fund, Inc. since August
2003.
--------------------------------- ------------------------ ---------------------------------------------------- ----------------
Interested Directors**
--------------------------------- ------------------------ ---------------------------------------------------- ----------------
Susan L. Ciciora Director of the Fund Owner, Superior Interiors (interior design for 3
Age: 40 since 2001. Current custom homes) since 1995; Corporate Secretary,
term to expire at the Ciciora Custom Builders, LLC since 1995; Trustee
2007 annual meeting, of the Brown Trust and the EH Trust; Director,
unless Proposal 2 is Boulder Growth & Income Fund, Inc., since January,
approved. 2002; Director, First Financial Fund, Inc. since
August 2003.
Stephen C. Miller Director since 1999. President of and General Counsel for Boulder 3
Age: 51 President of the Investment Advisers, LLC ("BIA"); Manager, FAS;
Fund. Current term to Vice President of Stewart Investment Advisers ("SIA");
expire at the 2005 Director, Chairman of the Board and President of Boulder
annual meeting, unless Growth & Income Fund, Inc., since 2002; Director
Proposal 2 is and President, First Financial Fund, Inc. since
approved. August 2003; President and General Counsel,
Horejsi, Inc. (liquidated in 1999); General
Counsel, Brown Welding Supply, LLC (sold in 1999);
officer of various other Horejsi Affiliates.; Of
Counsel, Krassa & Miller, LLC since 1991.
* Unless otherwise specified, the Directors' respective addresses are c/o
Boulder Total Return Fund, Inc., 1680 38th Street, Suite 800, Boulder, Colorado
80301.
** Mr. Miller is an "interested person" because he is an officer of BIA and SIA,
the Fund's investment advisers. Mr. Miller is also a officer of FAS, the Fund's
co-administrator. Ms. Ciciora is an "interested person" as a result of the
extent of her beneficial ownership of Fund shares and by virtue of her indirect
beneficial ownership of BIA and FAS.
----------------------------
From the late 1980's until January, 2001, Mr. Looney served, without
compensation, as one of three trustees of the Mildred Horejsi Trust, an
affiliate of the EH Trust.
The names of the executive officers of the Fund (other than Mr. Miller, who
is described above) are listed in the table below. Each officer was elected to
office by the Board at a meeting held on April 22, 2003. This table also shows
certain additional information. Each officer will hold such office until a
successor has been elected by the Board of Directors of the Fund.
------------------------------ -------------------------- ----------------------------------------------------------
Position, Length of
Name, Address, Age Term Served, and Term of Principal Occupation(s) and Other Directorships held
Office During the Past Five Years
------------------------------ -------------------------- ----------------------------------------------------------
Carl D. Johns Chief Financial Officer, Vice President and Treasurer of BIA and Assistant
1680 38th Street, Chief Accounting Manager of FAS, since April, 1999; Chief Financial
Suite 800 Officer, Vice President Officer and Chief Accounting Officer, Vice President,
Boulder, CO 80301 and Treasurer since and Treasurer Boulder Growth & Income Fund, Inc., since
Age: 41 1999. Appointed 2002 and First Financial Fund, Inc. since 2003.
annually.
Stephanie Kelley Secretary since 2000. Secretary, Boulder Growth & Income Fund, Inc., since
1680 38th Street, Appointed annually. 2002 and First Financial Fund, Inc. since 2003;
Suite 800 Assistant Secretary and Assistant Treasurer of various
Boulder, CO 80301 Horejsi Affiliates; employee of FAS since March 1999.
Age: 47
Set forth in the following table are the nominees for election to the
Board, assuming Proposal 2 is approved (all of whom are current Directors of the
Fund), together with the dollar range of the Fund's equity securities
beneficially owned by each Director as of the Record Date, as well as the
aggregate dollar range of equity securities in all funds overseen or to be
overseen in a family of investment companies (i.e., other funds managed by BIA
and SIA (collectively, the "Advisers")).
OWNERSHIP OF THE FUND BY DIRECTORS
Directors and Nominees Dollar Range of Equity Aggregate Dollar Range of
Securities in the Fund Equity Securities in All Funds
in the Family of Investment
Companies
-------------------------------------- -------------------------------- ---------------------------------
Independent Directors and Nominee
-------------------------------------- -------------------------------- ---------------------------------
Alfred G. Aldridge, Jr. $10,001 to $50,000 $10,001 to $50,000
Richard I. Barr Over $100,000 Over $100,000
Joel W. Looney $50,001 to $100,000 $50,001 to $100,000
Interested Directors
-------------------------------------- -------------------------------- ---------------------------------
Susan L. Ciciora Over $100,000+ Over $100,000
Stephen C. Miller Over $100,000++ Over $100,000
+ 3,413,138, 343,748 and 1,370,515 Shares of the Fund are held by the EH
Trust, EALLC, and Lola Brown Trust, respectively. Accordingly, Ms. Ciciora
may be deemed to have indirect beneficial ownership of such Shares. Ms.
Ciciora disclaims all such beneficial ownership. Ms. Ciciora directly owns
6,267 shares of the Fund.
++ Mr. Miller indirectly owns and controls 2,797 shares of the Fund through
his membership in Erma Miller, LLC. Mr. Miller is also a (i) trustee of
Evergreen Trust and (ii) director and officer of Badlands Trust Company. By
virtue of such relationships, Mr. Miller may be deemed to share the
indirect power to vote and direct the disposition of the Shares directly
and beneficially held by Evergreen Trust and Badlands Trust Company. Mr.
Miller disclaims beneficial ownership of such Shares.
----------------------------
None of the independent Directors or their family members owned
beneficially or of record any securities of the Advisers or any person directly
or indirectly controlling, controlled by, or under common control with the
Advisers.
DIRECTOR AND OFFICER COMPENSATION. The following table sets forth certain
information regarding the compensation of the Fund's Directors for the fiscal
year ended November 30, 2003. No persons (other than the independent Directors,
as set forth below) currently receive compensation from the Fund for acting as a
Director or officer. Directors and executive officers of the Fund do not receive
pension or retirement benefits from the Fund. Directors receive reimbursement
for travel and other out-of-pocket expenses incurred in connection with Board
meetings.
Name of Person and Aggregate Compensation Total Compensation from the Fund
Position with the Fund from the Fund Paid to Directors and Fund Complex Paid to Directors
--------------------------------------- ---------------------------------- ---------------------------------
Alfred G. Aldridge, Jr., Director $23,254 $ 37,784 (2 funds)
Richard I. Barr, Director $24,254 $ 50,713 (3 funds)
Joel W. Looney, Director $24,254 $ 45,784 (3 funds)
Susan L. Ciciora, Director $0 $0
Stephen C. Miller, President of the $0 $0
Fund and Director
Prior to October 15, 2003, each Director of the Fund who was not a
director, officer or employee of one of the Advisers, or any of their
affiliates, received a fee of $6,000 per annum plus $4,000 for each in-person
meeting, and $500 for each telephone meeting. As of October 15, 2003, each
Director of the Fund who was not a director, officer or employee of one of the
Advisers, or any of their affiliates, receives a fee of $8,000 per annum plus
$4,000 ($5,000 for the independent Chairman) for each in person meeting, $500
for each Audit Committee meeting ($1,000 for the independent Chairman of the
Audit Committee) and $500 for each telephonic meeting of the Board. Each
Director of the Fund is reimbursed for travel and out-of-pocket expenses
associated with attending Board and Committee meetings. The Board of Directors
of the Fund held five meetings during the fiscal year ended November 30, 2003.
Each Director currently serving in such capacity attended at least 75% of the
meetings of Directors and any Committee of which he is a member. The aggregate
remuneration paid to the Directors of the Fund for acting as such during the
fiscal year ended November 30, 2003 amounted to $71,762.
COMMITTEES OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE; REPORT OF AUDIT COMMITTEE. The purposes of the Audit
Committee are to assist Board oversight of the integrity of the Fund's financial
statements, the Fund's compliance with legal and regulatory requirements, the
independent auditor's qualifications and independence and the performance of the
Fund's independent auditors. The Audit Committee reviews the scope and results
of the Fund's annual audit with the Fund's independent accountants and
recommends the engagement of such accountants. Management, however, is
responsible for the preparation, presentation and integrity of the Fund's
financial statements, and the independent accountants are responsible for
planning and carrying out proper audits and reviews. The Board of Directors
adopted a written charter for the Audit Committee on January 21, 2000 and most
recently amended the Audit Committee Charter on January 23, 2004. A copy of the
Audit Committee Charter is attached hereto as Exhibit B. The Audit Committee is
composed entirely of the Fund's independent Directors, consisting of Messrs.
Barr, Looney and Aldridge. Each member of the Audit Committee is independent, as
that term is defined by the NYSE Listing Standards. The Audit Committee met two
times during the fiscal year ended November 30, 2003.
In connection with the audited financial statements as of and for the year
ended November 30, 2003 included in the Fund's Annual Report for the year ended
November 30, 2003 (the "Annual Report"), at a meeting held on January 23, 2004,
the Audit Committee considered and discussed the audited financial statements
with management and the independent accountants, and discussed the audit of such
financial statements with the independent accountants.
The Audit Committee has received the written disclosures and letter from
the independent accountants required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees) and has discussed with
independent accountants their independence. The Audit Committee discussed with
the independent accountants the accounting principles applied by the Fund and
such other matters brought to the attention of the Audit Committee by the
independent accountants required by Statement of Auditing Standards No. 61,
Communications With Audit Committees, as currently modified or supplemented.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not employed by the Fund for
accounting, financial management or internal control. Moreover, the Audit
Committee relies on and makes no independent verification of the facts presented
to it or representations made by management or the independent accountants.
Accordingly, the Audit Committee's oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting principles and policies, or internal controls and
procedures, designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions referred to above do not provide assurance that
the audit of the Fund's financial statements has been carried out in accordance
with generally accepted accounting standards or that the financial statements
are presented in accordance with generally accepted accounting principles.
Based on its consideration of the audited financial statements and the
discussions referred to above with management and the independent accountants
and subject to the limitation on the responsibilities and role of the Audit
Committee set forth in the Charter and those discussed above, the Audit
Committee of the Fund recommended to the Board of Directors of the Fund that the
audited financial statements be included in the Fund's Annual Report and be
mailed to stockholders and filed with the SEC.
Submitted by the Audit Committee of the Fund's Board of Directors:
Joel W. Looney
Richard I. Barr
Alfred G. Aldridge, Jr.
NOMINATING COMMITTEE. The Board of Directors has a Nominating Committee
consisting of Messrs. Barr, Looney and Aldridge, which is responsible for
considering candidates for election to the Board of Directors of the Fund in the
event a position is vacated or created. Each member of the Nominating Committee
is independent, as that term is defined by the NYSE Listing Standards. The
Nominating Committee did not meet during the fiscal year ended November 30,
2003. The Board of Directors has adopted a charter for the Nominating Committee
that is available on the Fund's website, www.boulderfunds.net.
The Nominating Committee does not have a formal process for identifying
candidates. The Nominating Committee takes into consideration such factors as it
deems appropriate when nominating candidates. These factors may include
judgment, skill, diversity, experience with investment companies and other
organizations of comparable purpose, complexity, size and subject to similar
legal restrictions and oversight, the interplay of the candidate's experience
with the experience of other Board members, and the extent to which the
candidate would be a desirable addition to the Board and any committees thereof.
The Nominating Committee will consider all qualified candidates in the same
manner. The Nominating Committee may modify its policies and procedures for
director nominees and recommendations in response to changes in the Fund's
circumstances, and as applicable legal or listing standards change. The
Nominating Committee would consider director candidates recommended by
stockholders (if a vacancy were to exist) and submitted in accordance with
applicable law and procedures as described in this Proxy Statement (see
"Submission of Stockholder Proposals" below). Such recommendations should be
forwarded to the Secretary of the Fund.
The Fund does not have a compensation committee.
OTHER BOARD-RELATED MATTERS
Stockholders who wish to send communications to the Board should send them
to the address of the Fund and to the attention of the Board. All such
communications will be directed to the Board's attention.
The Fund does not have a formal policy regarding Board member attendance at
the Annual Meeting of Stockholders; however, all of the Directors of the Fund
attended the April 22, 2003 Annual Meeting of Stockholders.
REQUIRED VOTE.
If Stockholders Approve Proposal 2. If stockholders approve Proposal 2 and thus
declassify the Board, the election of Messrs. Looney, Aldridge and Miller as
Directors of the Fund will require the affirmative vote of a plurality of the
votes cast by holders of the Common Stock at the Meeting in person or by proxy
on Proposal 1; and the election of Mr. Barr and Ms. Ciciora as Directors of the
Fund will require the affirmative vote of a plurality of the votes cast by the
holders of the AMPs at the Meeting in person or by proxy on Proposal 1.
If Stockholders Do Not Approve Proposal 2. If stockholders do not approve
Proposal 2, and thus the Board remains classified, the election of Ms. Ciciora
and Mr. Looney as Class I Directors of the Fund will require the affirmative
vote of a plurality of the votes cast by the holders of the Common Stock at the
Meeting in person or by proxy on Proposal 1. There will be no AMPs election at
this Meeting if Proposal 2 is not approved by stockholders and the votes
received by AMPs holders will be disregarded.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF ALL THE NOMINEES.
PROPOSAL 2
AMENDMENT TO THE CHARTER TO DECLASSIFY THE BOARD AND PROVIDE
FOR ANNUAL ELECTION OF DIRECTORS
The Charter currently provides that the Board is divided into three classes
with each class to be nearly as equal in number as possible. The Charter also
provides that the three classes of Directors have staggered terms, so that the
term of only one class expires at each annual meeting of stockholders and each
class is elected to a three-year term. The Board proposes and unanimously
recommends that stockholders approve an amendment to the Charter to declassify
the Board and provide for the annual election of Directors beginning at this
Meeting (the "Declassification Proposal"). If the Declassification Proposal is
approved by stockholders, because the Charter does not provide otherwise,
Directors thereafter may be removed by stockholders "without cause".
If the stockholders approve the Declassification Proposal, the Fund will
take action to implement declassification by filing the appropriate charter
documents with the SDAT.
If Proposal 2 is approved, the second paragraph of Article VI, Section 2 of
the Charter would be repealed in its entirety and replaced with the following
language:
The Directors shall be elected at each annual meeting of the stockholders
commencing in 2004, except as necessary to fill any vacancies, and each
Director elected shall hold office until his or her successor is duly
elected and qualifies, or until his or her earlier resignation, death, or
removal.
Corresponding amendments will also be made to Article IX of the Charter to
repeal a provision that requires a supermajority vote to amend Article VI,
Section (2), unless the proposed amendment is approved by the "Continuing
Directors" (as defined in the current Charter). If Proposal 2 is approved by
stockholders, any subsequent proposal to amend the Charter to classify the Board
would require the affirmative vote of a majority of all the votes entitled to be
cast on the matter. In addition, the Fund's Bylaws contain provisions that are
similar to certain of those in the Charter that are proposed to be changed
hereunder. If the Charter is amended, the corresponding provision in the Bylaws
will be amended by the Board in a like manner. The Board also intends to
consider certain additional corporate governance-related changes to the Bylaws,
including modifying the provision setting forth the prior notice required for
stockholders to propose matters to be considered at a regular or special
meeting.
Purpose of the Amendment. The Board is submitting the Declassification Proposal
to stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize management accountability to stockholders. The election of Directors is
the primary means for stockholders to exercise influence over the Fund and its
policies. Your Board believes that classified boards are often viewed as having
the effect of reducing the accountability and responsiveness of directors to a
company's stockholders. A classified board limits the power of stockholders to
elect all directors on an annual basis and may discourage proxy contests in
which stockholders have an opportunity to vote for a competing slate of
nominees. Moreover, accumulations of large stockholder positions are sometimes
followed by proxy contests. Declassifying the Board could therefore make it more
likely that an acquirer may precipitate actions that would result in the Fund's
stockholders receiving a premium over the Fund's then current market price for
their shares. However, if the Declassification Proposal is approved, the entire
Board could be removed in any single year, which could make it more difficult to
discourage persons from engaging in proxy contests or otherwise seeking control
of the Fund on terms that the then-incumbent Board did not believe are in the
best interest of the Fund. In addition, classified boards are viewed by many
companies as increasing the long-term stability and continuity of a board and
the company it serves; however, the Board believes that long-term stability and
continuity should result from the annual election of Directors, which provides
stockholders with the opportunity to evaluate the Directors' performance, both
individually and collectively, on an annual basis.
Effect of the Approval of the Amendment on Election of Directors. As more fully
discussed above, if the Declassification Proposal is approved, the Meeting will
be recessed briefly so that (i) the appropriate charter documents may be filed
with the SDAT, (ii) all of the Directors whose terms would not otherwise expire
at the Meeting may resign and (iii) all of the incumbent Directors will stand
for re-election.
Board Considerations Regarding Declassification and Other Corporate Governance
Proposals. The Board first considered the Declassification Proposal and other
Corporate Governance Proposals at its regularly scheduled meeting in January
2004. At the January meeting, the Board held informal meetings and a separate
executive session during which the significant aspects of the Corporate
Governance Proposals were discussed in detail. Also at the January meeting, the
Directors who are not "interested persons" of the Fund, as defined in the 1940
Act (the "Independent Directors") met separately with Fund counsel as well as
counsel for the Independent Directors to generally discuss the Corporate
Governance Proposals. At that time, the Board determined that it should defer
any action on the Corporate Governance Proposals pending further analysis and
consideration. Based on questions raised during the January meeting, the Board
directed management to prepare additional materials and analysis to refine the
Corporate Governance Proposals for the Board's subsequent review and
consideration. At a special meeting of the Board held in February 2004, the
Board again met to discuss the Corporate Governance Proposals and to consider
the supplementary analysis and materials prepared by management. The Independent
Directors met separately with Fund counsel, the Fund's Maryland counsel and
counsel for the Independent Directors to discuss the refined proposal and
supplementary materials. Again, at this meeting, the Board determined to defer
any immediate action on the proposals and directed management to prepare
additional materials including specific language for amending the Charter for
each of the Corporate Governance Proposals. On March 17, 2004, management
presented specific language and additional requested materials for each of the
Corporate Governance Proposals. At this meeting, the Board, including the
Independent Directors, unanimously resolved to recommend the Corporate
Governance Proposals, including the Declassification Proposal, for approval by
stockholders.
In considering the Declassification Proposal, the Board recognized that the
Horejsi Affiliates own an effective controlling interest in the Fund (see
"Security Ownership of Certain Beneficial Owners" above) and a controlling
interest in the Advisers and FAS. The Board recognized that, because a
large-block stockholder is able to significantly influence elections, if all
Board members were elected annually (i.e., a declassified board), the Horejsi
Affiliates would be able to significantly effect a change of the entire Board in
a single election. However, the Board noted that, even under the current
classified structure, such a change would likely only take two years, depending
on which classes were standing for election. Moreover, notwithstanding a
classified structure, the Horejsi Affiliates or any other significant group of
stockholders could seek to replace a majority of the Directors in a single year
by soliciting the votes of enough other holders of Common Stock to remove the
Directors as permitted under the Fund's current Charter (although there is, of
course, no assurance that the Horejsi Affiliates or such other group of
stockholders would be successful in any such effort).
The Board noted that the potential ability to replace a majority of the
Board in a single year may have the effect of increasing the Horejsi Affiliates'
influence over the Board, including with respect to matters on which the
interests of the Horejsi Affiliates, on one hand, and the non-controlling
stockholders, on the other, might diverge. For example, if the Declassification
Proposal is approved, the Horejsi Affiliates may be viewed as having
significantly greater influence over the Board with respect to future renewal of
the Fund's investment advisory and administrative contracts, which are presently
with companies owned by the Horejsi Affiliates. The Board also noted that, in
the unlikely event that the Horejsi Affiliates were to make repeated changes in
the composition of the Board, the continuity of experience on the Board could be
diminished, the Fund's ability to attract qualified director candidates to serve
on the Board could be lessened, and the Board might find it more difficult to
engage in strategic, long-term planning. Although one of the effects of the
Declassification Proposal would be that the Horejsi Affiliates would likely be
able to unseat the entire Board in a single year, or could make repeated changes
in the Board's composition, representatives of the Horejsi Affiliates have
advised the Fund that they have no current plan or intention to take any such
steps.
In its consideration of the Declassification Proposal, the Board noted that
one perceived benefit of a classified Board is that it lengthens the time
required for a substantial stockholder to gain control of the Board. Thus, a
classified Board may discourage attempts to remove Directors and could serve to
prevent a sudden change of control. Under a classified structure, the Board
would have more time to review any proposed business transaction and consider
all relevant factors, in an open and orderly process, and the Board would have
more negotiating leverage and flexibility to make decisions that are in the best
interests of the Fund. In the case of the Fund, however, the Board concluded
that the Horejsi Affiliates' current ownership of approximately 44% of the
voting power of the outstanding Common Stock may dissuade any acquisition of
control of the Fund by another party, and therefore, for so long as the Horejsi
Affiliates retain an influential ownership in the Fund and act together,
eliminating the classified Board is not likely to increase the Fund's
vulnerability to attempts to remove Directors in any material respect. If
ownership by the Horejsi Affiliates is significantly reduced, the Board believes
that it nonetheless would be able to fulfill its duties to the Fund in the
circumstances described in this paragraph.
Because the Declassification Proposal may give the Horejsi Affiliates
greater influence over the Board, and therefore the interests of the non-Horejsi
stockholders and the Horejsi Affiliates may diverge with respect to certain
aspects of the decision whether to declassify the Board, the Independent
Directors, who comprise a majority of the Board, met separately (without
representatives of management or the interested Directors) at all of the
meetings discussed above, and consulted with Fund counsel, counsel for the
Independent Directors and the Fund's Maryland counsel, as to the advisability of
all of the Corporate Governance Proposals, including the Declassification
Proposal. The Independent Directors observed that the Horejsi Affiliates'
ownership of the Fund has historically provided, and, based on representations
made by a representative of the Horejsi Affiliates, would likely continue to
provide, significant stability and continuity in the governance of the Fund. The
Independent Directors further observed that the Horejsi Affiliates have stated
that they value the contributions made to the Board by the Independent Directors
and noted that the Horejsi Affiliates, by their actions during the recent
history of their stock ownership, have demonstrated their awareness that any
arbitrary exercise of their influence to replace Directors would likely make it
more difficult for the Fund to attract qualified individuals to serve on the
Board in the future.
The Independent Directors determined that, in their judgment, the
elimination of the classified Board would not significantly increase the
influence of the Horejsi Affiliates, because the declassification only shortens
the period for replacement of a majority of directors, and does not change the
relative voting power of the Horejsi Affiliates compared to that of the
non-Horejsi stockholders. In addition, it does not diminish or change in any way
the Directors' fiduciary duties to the Fund and its stockholders, including
minority stockholders. The Independent Directors also concluded that having
annual elections of all directors would give all stockholders a more direct and
effective means to express their evaluation of the Directors' performance than
exists currently with the classified Board system in which directors, although
always subject to removal by the stockholders, are as a practical matter subject
to stockholder evaluation only once every three years with the three-year
election cycle. The Independent Directors believe that the annual election cycle
thus would provide significant benefits to the Fund's non-Horejsi stockholders
that would outweigh any disadvantage resulting from the potential increased
influence of the Horejsi Affiliates.
In approving the Declassification Proposal and the other Corporate
Governance Proposals, the Board was aware of their impact given the current size
of the Horejsi Affiliates' holdings in the Fund. In general, the Corporate
Governance Proposals make it harder for both the Board and other stockholders to
effect significant changes to the Fund that the Horejsi Affiliates might oppose.
At the same time, the proposed changes, by eliminating the ability of the
Continuing Directors to reduce the voting requirement on certain significant
changes, eliminates the ability of the Horejsi Affiliates to effect certain
changes unilaterally. The Board also noted that there is no requirement for the
Horejsi Affiliates to maintain their current dominant position in the Fund, and
that at lower ownership levels, the ability of the Horejsi Affiliates to
effectively block certain changes is reduced. The Board also believed that,
notwithstanding the effect of the Corporate Governance Proposals in light of
current stockholder demographics, the Proposals are part of a consistent
philosophy of Board accountability to Fund stockholders.
Accordingly, after due consideration of the various arguments in favor of
and against a classified board, and after taking into account the support of the
Horejsi Affiliates and the unanimous support of the Independent Directors, the
full Board has concluded that it is in the best interests of the Fund to
declassify the Board and to implement the Declassification Proposal as well as
the other Corporate Governance Proposals.
Vote Required. Proposal 2 requires the affirmative vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock and
Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 2.
PROPOSAL 3
AMENDMENT TO THE CHARTER PROVIDING THAT DIRECTORS SHALL BE
ELECTED BY A PLURALITY OF VOTES CAST
AT A MEETING AT WHICH A QUORUM IS PRESENT
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Fund's Charter to provide that the Directors shall be elected
by a "plurality" of votes cast at a meeting at which a quorum is present. A
"plurality of votes cast" simply means that, in an election where there are more
than two nominees for a single position, the person receiving the most votes
wins. Most public office elections are decided by a "plurality" of votes cast.
If Proposal 3 is approved by stockholders, any subsequent proposal to amend the
Charter to amend the plurality vote requirement would require the affirmative
vote of the holders of a majority of all the votes entitled to be cast on the
matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the SDAT
adding the following provision to the Charter:
A plurality of all the votes cast at a meeting at which a quorum is present
shall be sufficient to elect a director.
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize management accountability to stockholders. Under the Maryland General
Corporation Law ("MGCL"), a plurality vote is the vote currently required to
elect directors of the Fund. However, also under the MGCL, the Board may amend
the Fund's Bylaws to increase the vote requirement (e.g., the affirmative vote
of the holders of a majority of the outstanding shares entitled to vote in the
election of directors). Because, generally, bylaws of a Maryland corporation may
not conflict with charter provisions, the effect of Proposal 3, if approved,
would be to preclude the Board from changing the plurality vote through a Bylaw
amendment without a stockholder vote.
Generally, higher-than-plurality requirements to elect directors are viewed
as having the effect of reducing accountability of directors to a company's
stockholders and violating the principle that a simple plurality of voting
shares should be all that is necessary to effect change regarding a board of
directors. Requiring a higher voting standard may permit management to entrench
itself in contested elections. It is the Board's belief that election by a
"plurality" is an essential element of good corporate democracy and is the
fairest means of electing the Directors. Notably, under Maryland law, once
approved, the plurality voting requirement under this Proposal may not be
changed without the affirmative vote of a majority of the votes entitled to be
cast on the matter by the holders of the Fund's Common Stock and Preferred
Stock, voting as a single class.
The Board considered this Proposal as well as the other Corporate
Governance Proposals over three meetings held in early 2004 (see "Board
Considerations Regarding Declassification and Other Corporate Governance
Proposals" beginning on Page 9 above). The Board has determined that this
Proposal furthers the goal of ensuring that the Fund's corporate governance
policies maximize Board and management accountability to stockholders.
Vote Required. Approval of Proposal 3 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock and Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 3.
PROPOSAL 4
AMENDMENT TO THE CHARTER REPEALING A PROVISION STATING THAT DIRECTORS
MAY BE REMOVED ONLY BY THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT
LEAST 80% OF THE CLASS OF STOCK ENTITLED TO ELECT
THAT DIRECTOR
The Board proposes and unanimously recommends that stockholders approve an
amendment to Article VI, Section 3 of the Charter that would repeal a provision
providing that Directors may be removed only by the affirmative vote of the
holders of at least 80% of the outstanding shares entitled to vote in the
election of that Director. If Article VI, Section 3 is repealed, the vote
required to remove a Director will be the vote otherwise required under Maryland
law by the MGCL, that is, the affirmative vote of the holders of a majority of
the outstanding shares entitled to vote generally in the election of directors.
As is currently the case, Common Stock holders would have no authority to elect
or remove Directors elected by the Preferred Stock holders, and vice versa.
Corresponding amendments will also be made to Article IX of the Charter to
repeal certain obsolete cross-references. If Proposal 4 is approved, any
subsequent proposal to amend the Charter to increase the vote required to remove
a Director would require the affirmative vote of the holders of a majority of
all the votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT.
Purpose of the Amendment. The Board is recommending this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize the Board's accountability to stockholders. The current Charter
restricts stockholders' power to remove a Director by imposing a super-majority
voting requirement (i.e., 80% of outstanding shares). The proposed amendment
would repeal the Fund's current super-majority removal requirement, thus
allowing stockholders to remove a Director with or without "cause" by a simple
majority of outstanding shares as provided by the MGCL.
Generally, super-majority removal standards or provisions that prohibit
director removal "without cause" are viewed as having the effect of entrenching
incumbent directors who might act irresponsibly and thus reduce their
accountability and responsiveness to a company's stockholders. Super-majority
removal provisions are contrary to the notion that a majority of voting shares
should be able to effect removal of board members. It is the Board's belief that
a removal standard that permits stockholders to remove a director without having
to articulate a precise reason is an essential element of good corporate
governance and enhances Board accountability and responsiveness.
The Board considered this Proposal as well as the other Corporate
Governance Proposals over three meetings held in early 2004 (see "Board
Considerations Regarding Declassification and Other Corporate Governance
Proposals" beginning on Page 9 above). The Board determined that the present
standard for removing Directors (i.e., 80% of the Fund's outstanding shares) is
simply too high, especially in circumstances where a director is unresponsive to
stockholder concerns and given that, under Maryland law, the directors
themselves are not able to remove underperforming directors, even for "cause".
The Board determined that this Proposal furthers the goal of ensuring that the
Fund's corporate governance policies maximize Board and management
accountability to stockholders and would, if approved, allow stockholders the
opportunity at any time to register their views on the performance of any Board
member.
Vote Required. Approval of Proposal 4 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock and Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 4.
PROPOSAL 5
AMENDMENT TO THE CHARTER PROVIDING THAT THE SECRETARY SHALL
CALL A SPECIAL MEETING OF STOCKHOLDERS UPON THE REQUEST OF
HOLDERS OF 25% OF THE FUND'S OUTSTANDING SHARES
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter to provide that the Secretary of the Fund shall call a
special meeting of stockholders at the request of stockholders entitled to cast
at least 25% of all votes entitled to be cast at the meeting. If Proposal 5 is
approved, any subsequent proposal to amend the Charter to increase this
threshold would require the affirmative vote of the holders of a majority of all
votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, the Charter would be amended to add the
following provision:
The Secretary of the Corporation shall call a special meeting of the
stockholders on the written request of stockholders entitled to cast at
least 25% of all the votes entitled to be cast at the meeting.
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize management accountability to stockholders. This Proposal would allow
stockholders holding shares entitled to cast at least 25% of all of the votes
entitled to be cast at a meeting to compel the Secretary to call a special
meeting of stockholders. Most state corporation statutes allow stockholders to
compel a special meeting when they want to take action on certain matters that
arise between regularly scheduled annual meetings. Sometimes this right applies
only if a stockholder, or group of stockholders, owns a minimum threshold
percentage of outstanding shares. In terms of day-to-day governance,
stockholders may lose an important right (e.g., the ability to remove directors
or initiate a stockholder resolution without having to wait for the next
scheduled meeting) if they are unable to compel a special meeting. The inability
to compel a special meeting and the resulting insulation of management could
result in suffering corporate performance and stockholder returns. In summary,
excessive ownership requirements for calling meetings constrains the ability of
stockholders to act independently and hold the Board and management accountable.
Presently the Charter is silent on the ownership threshold to compel a
special meeting, although the Fund's Bylaws provide that a special meeting may
be called by the Secretary upon the request of stockholders "owning a majority
of the votes entitled to be cast at the meeting". If approved, Proposal 5 would
reduce the ownership threshold necessary to compel a special meeting to shares
entitled to cast 25% of all the votes entitled to be cast at the meeting and
would supersede the corresponding Bylaw provision. Notably, the 25% requirement
for compelling a special meeting is the threshold provided under the MGCL (see
MGCL ss.2-502) in the absence of a contrary Bylaw or charter provision.
The Board considered this Proposal as well as the other Corporate
Governance Proposals over three meetings held in early 2004 (see "Board
Considerations Regarding Declassification and Other Corporate Governance
Proposals" beginning on Page 9 above). The Board noted that, if approved,
because the Horejsi Affiliates own approximately 44% of the Shares, Proposal 5
would allow the Horejsi Affiliates to compel a special meeting at any time;
whereas under the present Bylaw provision, they would have to acquire additional
Fund shares or garner the support of other stockholders to reach the
majority-of-outstanding-shares threshold to compel a meeting. The Board also
considered the possibility of additional expenses associated with special
meetings and the potential disruption to Fund business and diversion of the
attention of Fund management should special meetings be called. Notwithstanding,
the Board determined that the majority-of-outstanding-shares threshold is simply
too high and only serves to insulate the Board from its stockholders. The Board
also considered the reduction in the number of shares needed to call a special
meeting to be appropriate in light of the proposed elimination of many of the
super-majority voting provisions in the Charter and Bylaws. When a supermajority
vote is required, a higher threshold for calling a meeting seems reasonable to
assure that the associated expenses are not incurred unless the proposal has a
reasonable prospect of passage. With lower voting requirements on many matters,
a lower threshold to hold a special meeting seems reasonable. The Board has
determined that this Proposal furthers the goal of ensuring that the Fund's
corporate governance policies maximize Board and management accountability to
stockholders and would, if approved, better allow stockholders the opportunity
to register their views on the performance of the Fund and the Board.
Vote Required. Approval of Proposal 5 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock and Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 5.
PROPOSAL 6
AMENDMENT TO THE CHARTER VESTING IN THE STOCKHOLDERS THE POWER
TO AMEND OR ADOPT BYLAWS
Under the Fund's Charter, the Board has exclusive power to amend the
Bylaws. The Board proposes and unanimously recommends that stockholders approve
an amendment to the Charter to (i) vest stockholders with the concurrent power
to make, amend, adopt or repeal Bylaws by the affirmative vote of the holders of
a majority of the votes cast on the matter, and (ii) prohibit the Board from
making, amending, adopting or repealing any Bylaw which conflicts with or
otherwise attempts to alter the effect of stockholder-approved Bylaws. If
Proposal 6 is approved, any subsequent proposal to amend the Charter to alter
stockholders' power to amend the Bylaws would require the affirmative vote of
the holders of a majority of all votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, the Charter will be amended to repeal Article
VI, Section 4(i) and add the following provisions:
The Bylaws of the Corporation, whether adopted by the Board of Directors or
the stockholders, shall be subject to amendment, alteration or repeal, and
new Bylaws may be made, by either (a) the affirmative vote of a majority of
all the votes cast at a stockholders' meeting at which a quorum is present;
or (b) the Board of Directors; provided, however, that the Board of
Directors may not (i) amend or repeal a Bylaw that allocates solely to
stockholders the power to amend or repeal such Bylaw, or (ii) amend or
repeal Bylaws or make new Bylaws that conflict with or otherwise alter in
any material respect the effect of Bylaws previously adopted by the
stockholders.
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize Board and management accountability to stockholders. This Proposal
would vest in the stockholders the power to amend, repeal or adopt Bylaws and
prevent the Board's unilaterally changing Bylaw amendments that are approved by
stockholders. Your Board believes that all stockholders benefit if they have
better access and more influence in the Fund's governance. The Fund's Bylaws
contain important policies affecting the day-to-day management of the Fund which
the Board believes stockholders should have a voice in establishing.
Presently the Charter authorizes the Board to "make, alter or repeal the
Bylaws of the Corporation, except as otherwise required by the 1940 Act" and
thus, under the Charter, the authority to make, alter or repeal Bylaws resides
exclusively with the Board. The Board believes that the authority to make, alter
or repeal Bylaws should be a shared authority between the Board and
stockholders. This permits the Board to be responsive to house-keeping as well
as substantive matters regarding Fund operations, while at the same time giving
stockholders the power to effect changes should they choose to do so. The Board
also believes that when stockholders "speak" by adopting a Bylaw, their action
should not be subject to being overturned or altered by unilateral Board action.
The Board believes that this Proposal will accommodate the practicalities of
managing the Fund while at the same time protecting an important right of
stockholders.
The Board considered this Proposal as well as the other Corporate
Governance Proposals over three meetings held in early 2004 (see "Board
Considerations Regarding Declassification and Other Corporate Governance
Proposals" beginning on Page 9 above). The Board has determined that this
Proposal furthers the goal of ensuring that the Fund's corporate governance
policies maximize Board and management accountability to stockholders and allow
stockholders better and consistent access to effect change in the Fund's
governing documents.
Vote Required. Approval of Proposal 6 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock and Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 6.
PROPOSAL 7
AMENDMENT TO THE CHARTER PROHIBITING THE FUND FROM OPTING INTO
ANY PROVISION OF THE MARYLAND UNSOLICITED TAKEOVERS ACT
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter that would prohibit the Fund from being subject to the
provisions of the Maryland Unsolicited Takeovers Act, MGCL ss.ss.3-801 through
805 ("MUTA"). Under MUTA, a Maryland corporation with three independent
directors and a class of equity securities registered under the 1934 Act may
elect to be subject, by provision in its charter or bylaws or a resolution of
its board of directors and notwithstanding any contrary provision in the charter
or bylaws, to any or all of five statutory provisions: (i) a classified board,
(ii) a two-thirds vote requirement for removing a director, (iii) a requirement
that the number of directors be fixed only by vote of the directors, (iv) a
requirement that a vacancy on the board be filled only by the remaining
directors and for the remainder of the full term of the class of directors in
which the vacancy occurred, and (v) a majority requirement for stockholders to
compel the calling of a special meeting of stockholders. If approved, Proposal 7
would amend the Charter to prohibit the Board from unilaterally electing to be
subject to any of MUTA's provisions without first obtaining stockholder
approval. Such approval, or any subsequent amendment to the Charter to alter or
repeal this prohibition, would require the affirmative vote of a majority of all
the votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, the Charter would be amended to add the
following provision:
The Corporation is prohibited from electing to be subject to any provision
of Title 3, Subtitle 8 of the MGCL, as amended from time to time, or any
successor to such provisions.
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize Board and management accountability to stockholders. Under several of
the Corporate Governance Proposals, the Board is recommending that stockholders
(i) declassify the Board (Proposal 2), (ii) permit Directors to be removed by
holders of a majority of outstanding shares (Proposal 4), (iii) require the
Secretary of the Fund to call special meetings of the stockholders on the
written request of the holders of 25% of outstanding shares (Proposal 5) and
(iv) limit the number of directorships to five (Proposal 9). MUTA conflicts with
each of these Proposals and, if the Board has the authority to elect on behalf
of the Fund to be subject to MUTA, it could circumvent each of these measures
which the stockholders have duly approved.
MUTA may be perceived as having the effect of entrenching management and
diminishing stockholder influence. Where, as here, a fund's stockholders have
expressed an informed decision to maximize stockholder influence, even at the
risk of incurring additional expense or facilitating unwanted stockholder
action, it would be anomalous for the Board at a later date to overturn those
decisions. The Board recognized that although adopting this Proposal would limit
their options in certain circumstances, it is an appropriate step in order to
protect the decision stockholders will have expressed in approving Proposals 2,
4, 5 and 9.
The Board considered this Proposal as well as the other Corporate
Governance Proposals over three meetings held in early 2004 (see "Board
Considerations Regarding Declassification and Other Corporate Governance
Proposals" beginning on Page 9 above and "Purpose of the Amendment" under
Proposals 2, 4, 5 and 9). The Board has determined that Proposal 7 furthers the
goal of ensuring that the Fund's corporate governance policies maximize Board
and management accountability to stockholders.
Vote Required. Proposal 7 requires the affirmative vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock and
Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 7.
PROPOSAL 8
AMENDMENT TO THE CHARTER TO ALTER THE VOTE REQUIRED TO EFFECT
CERTAIN EXTRAORDINARY CORPORATE TRANSACTIONS
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter that would repeal Article VII (Certain Transactions)
and replace it with a new section providing that no (a) business combination
(e.g., mergers, consolidation, share exchanges), (b) voluntary liquidation or
dissolution, (c) stockholder proposal regarding specific investment decisions,
(d) proposal to open-end the Fund, or (e) self tender for more than 25% of a
Fund's shares in any twelve-month period may be effected without the vote of
two-thirds of the Fund's outstanding shares, and that such amendment cannot be
amended, altered or repealed without the affirmative vote of at least two-thirds
of the votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, the Charter would be amended to repeal
Article VII in its entirety and replace it with the following provisions:
(1) In this Section, "Business Combination" means:
(i) a merger or consolidation of the Corporation with or into any
person other than an investment company in a family of investment
companies having the same investment adviser or administrator as the
Corporation;
(ii) the sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to or
with any other person of any assets of the Corporation except (x) for the
payment of dividends or other distributions, (y) for portfolio transactions
of the Corporation effected in the ordinary course of the Corporation's
business, including permitted borrowings, or (z) in connection with a
reorganization of the Corporation with another investment company in a
family of investment companies having the same investment adviser or
administrator as the Corporation; or
(iii) the issuance or transfer by the Corporation (in one
transaction or a series of transactions) of any shares of the Corporation
to any other person in exchange for cash, securities or other property of
the Corporation (or a combination thereof), but excluding (v) sales of any
shares of the Corporation in connection with a public offering thereof or,
for shares of preferred stock or debt securities of the Corporation, a
private placement thereof, (w) issuance of any securities of the
Corporation upon the exercise of any stock subscription right issued by the
Corporation, (x) with respect to the Corporation's dividend reinvestment
and/or cash purchase plan, (y) in connection with a dividend or
distribution made pro rata to all holders of stock of the same class, or
(z) a transaction within the scope permitted under (1)(i) or (ii) above.
(2) In addition to the approval by the Board of Directors required by
applicable law, the Charter or the Bylaws of the Corporation, the
affirmative vote of the holders of shares entitled to cast at least
two-thirds of all the votes entitled to be cast on the matter shall be
required to approve:
(i) a Business Combination;
(ii) a voluntary liquidation or dissolution of the Corporation;
(iii) a stockholder proposal as to specific investment decisions
made or to be made with respect to the Corporation's assets;
(iv) an amendment to the Charter to convert the Corporation from a
closed-end investment company to an open-end investment company or unit
investment trust (as such terms are defined by the 1940 Act), whether by
merger or otherwise;
(v) a self tender for, or acquisition by the Corporation of, more
than 25% of the Corporation's outstanding shares of stock, in the
aggregate, during any twelve-month period.
(3) This Section may not be amended, altered or repealed without
the affirmative vote of the holders of shares entitled to cast at least
two-thirds of all the votes entitled to be cast on the matter.
Additionally, Article IX of the Charter will be amended to repeal certain
obsolete cross-references.
Purpose of the Amendment. The Board is submitting this Proposal to assure
stockholders that the Fund's closed-end structure and certain other features
cannot be changed without substantial support of stockholders. The Board
believes that a consistent legal and operating structure is essential to the
Fund's long-range planning and investment horizons. The Board believes that all
of the extraordinary actions described in this Proposal ("Extraordinary
Actions") have the potential to be disruptive to the efficient and profitable
operation of the Fund. However, there may be times when Extraordinary Actions
are warranted and may receive substantial support of stockholders. In these
circumstances, if the Board approves such a transaction, and there is
substantial stockholder support, the Board believes that the transaction is
likely to go forward.
Board Considerations. The Board considered Proposal 8 along with, and at the
same meetings at which it considered, the other Corporate Governance Proposals
(see "Board Considerations Regarding Declassification and Other Corporate
Governance Proposals" beginning on Page 9 above). The Board recognized that the
Charter already imposes an 80% super-majority voting requirement on the approval
of certain Extraordinary Actions in the absence of prior approval by 80% of the
Continuing Directors. Proposal 8 would change that voting standard to
two-thirds, whether or not approved by the Continuing Directors. The Proposal
would also eliminate the proviso allowing an Extraordinary Action to be approved
by holders of a majority of outstanding shares (or, in some cases, a lower
voting requirement) if first approved by 80% of "Continuing Directors". Instead,
under the Proposal, any Extraordinary Action would require approval of holders
of two-thirds of all outstanding shares.
The Board understands that super-majority provisions are often viewed as
not being stockholder friendly. However, on balance, the Board determined that
the Proposal would result in a net benefit to stockholders. The Board determined
that the Proposal would protect the Fund and stockholders from certain
stockholders or the Fund's own management who may seek to change the Fund's
long-standing closed-end investment structure, or to effect a merger or other
business combination. Because such changes would be disruptive and contrary to
the expectations of many (if not most) stockholders and could result in adverse
economic effects, the Board determined that the special provisions contemplated
by this Proposal are reasonable and justified. The Board recognized that there
may be circumstances where a proposed Extraordinary Action may be warranted and
in the best interest of the Fund and that the Proposal might make such a
proposal more difficult to effect. However, if such a proposal was clearly in
the best interest of the Fund and stockholders, it would likely be supported by
the Board and would receive substantial - and thus the necessary - stockholder
support for passage. The Board noted that, because of the Horejsi Affiliates'
current control position in the Fund's shares, the effect of this Proposal would
be to give the Horejsi Affiliates considerable influence in the passage, or
actual or de facto veto power over any of the Extraordinary Actions contemplated
by the Proposal. Nonetheless, the Board determined that the net benefits to the
Fund outweighed any increase in influence of the Horejsi Affiliates because this
Proposal assures all stockholders of a stable and consistent operating structure
and environment within which they can further their investment goals. In
addition, the position of the Horejsi Affiliates, assuming approval of Proposal
8, is not significantly different from its position under existing Charter
provisions, although it will be somewhat easier for them to block Board or
stockholder proposals for Extraordinary Actions with which they disagree.
Vote Required. Approval of Proposal 8 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock and Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 8.
PROPOSAL 9
AMENDMENT TO THE CHARTER TO ESTABLISH THE MAXIMUM NUMBER OF
DIRECTORS AT FIVE
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter providing that the maximum number of Directors shall be
and not exceed five. Any subsequent amendment to this new Charter provision and
the conforming changes described below would require the affirmative vote of the
holders of a majority of all the votes entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, Article VI, Section 2(a) will be repealed and
replaced in its entirety (subject to the additions contemplated under Proposal
2) by the following provision:
The number of Directors shall be five, which number may be decreased by the
Board of the Directors pursuant to the Bylaws but never be less than the
minimum required by the MGCL.
In addition, corresponding changes will be made to the Charter. The second
paragraph of Article VI, Section 2 of the Charter will be repealed in its
entirety and replaced with the following language:
If the Corporation issues Preferred Stock entitling the holders to elect
additional Directors in specified circumstances, and the election of such
additional Directors would cause the number of Directors to exceed five,
then the terms of office of a number of Directors elected by the other
stockholders (excluding any Directors which the holders of the Preferred
Stock are entitled to elect in all events) shall terminate at the time of
the meeting of the holders of the Preferred Stock called to elect the
additional Directors such that the sum of the number of remaining Directors
and the number of additional Directors to be elected by the holders of the
Preferred Stock does not exceed five. The Directors whose terms shall
expire will be determined in reverse order of their initial election to the
Board of Directors or, if two or more Directors were elected at the same
time, by lot.
In addition, if this Proposal is approved, two conforming changes will need to
be made to the Articles Supplementary accepted for record by the SDAT on August
11, 2000 (the "Articles Supplementary"). Under the current Articles
Supplementary, if certain events occur, the holders of the Preferred Stock
become entitled to elect a majority of members of the Board. The mechanics for
doing so generally involve increasing the size of the Board to accommodate
additional directors elected by Preferred Stock holders. If the size of the
Board is limited to five as proposed, rather than increasing the size of the
Board to accommodate new Preferred Stock Directors, the terms of office of one
or more Directors elected by the Common Stock holders will expire such that the
Directors elected by Preferred Stock holders will constitute a majority of the
Board.
The first change is to the second sentence of Section 5(d)(iii) of the
Articles Supplementary, which shall be deleted and replaced in its entirety with
the following language:
If the election of additional directors by the holders of Preferred Stock,
including AMPS, would otherwise cause the number of directors to exceed
five, then the terms of office of a number of directors elected by the
holders of Common Stock shall terminate at the time of the special meeting
to elect such additional directors such that the sum of the number of
remaining directors and the number of additional directors does not exceed
five and the number of additional directors and the two directors elected
by the holders of Preferred Stock, including AMPS, constitute a majority of
the entire Board of Directors.
The second change is to the first sentence of Section 5(c) of the Articles
Supplementary, which shall be deleted and replaced in its entirety with the
following language:
During any period in which any one or more of the conditions described
below shall exist (such period being referred to herein as a "Voting
Period"), the holders of shares of Preferred Stock, including AMPS, shall
be entitled, voting as a single class to the exclusion of the holders of
all other securities and classes of capital stock of the Corporation, to
elect the smallest number of additional directors that, when added to the
two directors that the holders of Preferred Stock, including shares of
AMPS, are in any event entitled to elect, would constitute a majority of
the Board of Directors.
Corresponding amendments will also be made to Article IX of the Charter to
repeal a provision that requires a supermajority vote to amend Article VI,
Section (2), unless the proposed amendment is approved by the "Continuing
Directors".
Purpose of the Amendment. The Board is submitting this Proposal to the
stockholders as part of its ongoing corporate governance initiatives and in
keeping with its goal of ensuring that the Fund's corporate governance policies
maximize Board and management accountability to stockholders. Company charters
often contain provisions that set a high upper-limit on the number of board
seats, permitting the company's board to increase or decrease the number of
board seats in their discretion, though subject to this upper limit. Currently
the Fund's Charter and Bylaws contemplate a Board size of between three and
twelve Directors, permitting the Board to increase or decrease its size subject
to the upper limit of twelve. Often boards use such provisions to quickly
increase or decrease their size in an effort to dilute the voting impact of
directors - such as those elected in proxy contests - with views contrary to
those of management. The Board views the ability to manipulate the number of
members on the Board as unnecessary and ultimately ineffective in thwarting
stockholder activism. In addition, it potentially increases Fund expenses and
insulates the Board from stockholders. Common sense suggests that if the Fund
has more Board seats, it (and thus stockholders) will spend more on Board
compensation. The Board believes that, because of the relatively narrow business
focus of an investment company like the Fund, five Directors can adequately and
efficiently fulfill their obligation to oversee the operations of the Fund and
its management and act as "watchdogs" for stockholders. The Board believes that
the best approach is to seek a few highly qualified individuals to fill
directorships and pay them fairly. This way, stockholders get more "bang for the
buck" in their Board and don't pay unnecessary Board expenses.
Vote Required. Approval of Proposal 9 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock and Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 9.
PROPOSAL 10
AMENDMENT TO THE CHARTER PROVIDING THAT UPON REDEMPTION OF ALL
OF THE FUND'S SHARES OF PREFERRED STOCK, THE TERM OF ANY
DIRECTORS ELECTED BY THE HOLDERS OF PREFERRED STOCK WILL
AUTOMATICALLY TERMINATE
The Board proposes and unanimously recommends that stockholders approve an
amendment to the Charter providing that, upon redemption of all of the Fund's
shares of Preferred Stock and payment of all amounts due the holders of
Preferred Stock, the term of the Directors elected by the Preferred Stock
holders will automatically terminate. The remaining Directors would then choose
Directors to fill the vacancies created by the termination, subject to
compliance with applicable law. Any subsequent amendment to this new Charter
provision would require the affirmative vote of a majority of all the votes
entitled to be cast on the matter.
If stockholders approve this Proposal, the Fund will take action to
implement the Proposal by filing the appropriate charter documents with the
SDAT. If approved by stockholders, the Charter would be amended to add the
following provision:
Upon the redemption as a whole but not in part of the Preferred Stock, the
term of office of any Directors elected by the holders of the Preferred
Stock shall automatically and immediately terminate and the remaining
Directors shall constitute the directors of the Corporation.
Purpose of the Amendment. Under the Charter, Preferred Stock or "AMPs"
stockholders are entitled to elect at least two Directors (the "AMPs
Directors"). However, there are no provisions in the Charter as to what happens
to AMPs or other Preferred Stock Directors if all of the Preferred Stock is
redeemed. Proposal 10 provides for this event. The Board believes that the terms
of office of Directors elected by the Preferred Stock holders should expire when
the Preferred Stock is fully redeemed, and that this Proposal merely corrects a
drafting oversight. Obviously, the special protection afforded to Preferred
Stock holders by Board representation is no longer necessary when those shares
are no longer outstanding.
Vote Required. Approval of Proposal 10 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock and Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 10.
PROPOSAL 11
AMENDMENT TO THE CHARTER REPEALING A PROVISION REQUIRING THAT CERTAIN
AMENDMENTS TO VARIOUS PROVISIONS OF THE CHARTER BE APPROVED BY THE HOLDERS OF
AT LEAST 80% OF THE SHARES OF THE FUND'S COMMON STOCK AND PREFERRED STOCK,
VOTING TOGETHER AS A SINGLE CLASS, AND 80% OF THE SHARES OF THE FUND'S
PREFERRED STOCK, VOTING SEPARATELY
The Board proposes and unanimously recommends that stockholders approve a
Proposal to repeal Article IX, Section 2 of the Charter. If stockholders approve
this Proposal, the Fund will take action to implement the Proposal by filing the
appropriate charter documents with the SDAT. If approved by stockholders, the
Charter would be amended to repeal Article IX, Section 2.
Purpose of the Amendment. This amendment is necessary to conform the Charter and
eliminate conflicts in the Charter with respect to the other amendments
contemplated under the Corporate Governance Proposals.
Under Article IX, Section 2, various provisions of the Charter (including
Article IX, Section 2) cannot be amended without the affirmative vote of at
least 80% of votes entitled to be cast by holders of the Common Stock and
Preferred Stock voting as a single class, and 80% of votes entitled to be cast
by holders of the Preferred Stock, voting separately. However, also under
Article IX, Section 2, such provisions may be amended by a lesser voting
requirement (i.e., the affirmative vote of a majority of votes of the Common
Stock and Preferred Stock, voting as a single class) if the amendment is first
approved by 80% of the "Continuing Directors". Generally, a "Continuing
Director" is an Independent Director who has served on the Board for at least
twelve months. Each of the current Independent Directors has served on the Board
for more than twelve months (and thus each is a Continuing Director) and they
have unanimously approved this Proposal 11. Thus, this Proposal may be approved
(i.e., Article IX, Section 2 may be repealed) by the lesser voting requirement,
that is, the affirmative vote of a majority of the votes entitled to be cast on
the matter by the holders of the Common Stock and Preferred Stock.
Article IX, Section 2 was intended to impose a super-majority vote on the
amendment of certain provisions of the Charter (e.g., eliminating Board
classification, removing Directors, effecting certain extraordinary corporate
actions, or amending any of the foregoing) and each of these provisions is being
repealed or replaced under the Corporate Governance Proposals. Because these
Proposals themselves prohibit an amendment to the new provisions without the
specified stockholder vote, there is no need for Article IX, Section 2. However,
Article IX, Section 2 also applies to Article III of the Charter, which pertains
to the "Purposes and Powers" of the Fund, including the purpose of being formed
to carry on business as a closed-end investment company. Nonetheless, the Board
has determined that generally Maryland law, and particularly the Corporate
Governance Proposals, provide the stockholders with adequate protection with
respect to material changes under Article III (e.g., Proposal 8 prohibits
open-ending the Fund without the affirmative vote of two-thirds of outstanding
shares and prohibits an amendment of this provision without like stockholder
approval). Thus, the Board has determined that Proposal 11 is necessary to avoid
redundant and conflicting Charter provisions and conform the Charter to changes
effected under Proposals 2, 4, 8 and 9, is consistent with the Corporate
Governance Proposals and is in the best interest of the Fund.
Vote Required. Approval of Proposal 11 requires the affirmative vote of a
majority of the votes entitled to be cast on the matter by the holders of the
Common Stock and Preferred Stock, voting as a single class. If stockholders do
not approve Proposals 2, 4, 8 and 9, the Fund will not implement this Proposal
11.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 11.
PROPOSAL 12
PROPOSAL TO AMEND AND RESTATE THE FUND'S CHARTER
The Board proposes and unanimously recommends that stockholders approve a
Proposal to amend and restate the Charter as set forth in the Articles of
Amendment and Restatement attached hereto as Exhibit A.
Purpose of the Amendment. There are many Charter amendments proposed for
consideration and approval at this Meeting. Because, if approved, so many
amendments will be made to the Charter all at once, the Meeting presents an
opportunity to consolidate all of the provisions of the Charter (including the
amendments approved at the Meeting). Various conforming and organizational
amendments, as well as the substantive amendments described under each of the
Corporate Governance Proposals above, are reflected in their entirety in the
attached Articles of Amendment and Restatement.
If stockholders approve Proposals 2 through 12, the Fund will file the
Articles of Amendment and Restatement with the SDAT. If certain of the Corporate
Governance Proposals are approved by stockholders and others are not, the Fund
will not implement Proposal 12 and will not file the Articles of Amendment and
Restatement. Instead, the Fund will file Articles of Amendment with the SDAT
reflecting only those Charter amendments approved by stockholders at the Meeting
Vote Required. Proposal y12 requires the affirmative vote of a majority of the
votes entitled to be cast on the matter by the holders of the Common Stock and
Preferred Stock, voting as a single class.
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" PROPOSAL 12.
SUBMISSION OF STOCKHOLDER PROPOSALS
All proposals by stockholders of the Fund that are intended to be presented
at the Fund's next Annual Meeting of stockholders to be held in 2005 must be in
writing and received by the Fund for consideration for inclusion in the Fund's
proxy statement relating to the meeting no later than December 6, 2004. Any such
proposal shall set forth as to each matter the stockholder proposes to bring
before the meeting (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the meeting,
(ii) the name and address, as they appear on the Fund's books, of the
stockholder proposing such business, (iii) the class and number of shares of the
capital stock of the Fund which are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business. Stockholder
proposals, including any accompanying supporting statement, may not exceed 500
words. A stockholder desiring to submit a proposal must be a record or
beneficial owner of Shares with a market value of $2,000 and must have held such
Shares for at least one year. Further, the stockholder must continue to hold
such Shares through the date on which the meeting is held. Documentary support
regarding the foregoing must be provided along with the proposal. There are
additional requirements regarding proposals of stockholders, and a stockholder
contemplating submission of a proposal is referred to Rule 14a-8 promulgated
under the 1934 Act. The timely submission of a proposal does not guarantee its
inclusion in the Fund's proxy materials.
Any submission of a director nomination should include at a minimum the
following information: As to each individual proposed for election or
re-election as director, the name, age, business address, residence address and
principal occupation or employment of such individual, the class, series and
number of shares of stock of the Fund that are beneficially owned by such
individual, the date shares were acquired and the investment intent of such
acquisition, whether such stockholder believes such individual is, or is not, an
"interested person" of the Fund (as defined in the 1940 Act), and information
regarding such individual that is sufficient, in the discretion of the
Nominating Committee, to make such determination, and all other information
relating to such individual that is required to be disclosed in solicitation of
proxies for election of directors in an election contest (even if an election
contest is not involved) or is otherwise required, in each case pursuant to
Regulation 14A (or any successor provision) under the Securities Exchange Act of
1934, as amended, and the rules thereunder (including such individual's written
consent to being named in the proxy statement as a nominee and to serving as a
director (if elected)). In the case of the Fund holding a meeting of
stockholders, any such submission in order to be considered for inclusion in the
Fund's proxy statement, should be submitted by a date not later than the 120th
calendar day before the date the Fund's proxy statement was released to security
holders in connection with the Fund's previous year's annual meeting or, if the
Fund has changed the meeting date by more than 30 days or if no meeting was held
the previous year, within a reasonable time before the Fund begins to print and
mail its proxy statement.
A stockholder may nominate an individual to serve as a director or propose
other business at an annual meeting, even if the stockholder does not submit the
nomination or proposal for inclusion in the Fund's proxy statement. In this
case, the stockholder must provide notice to the Fund, including certain of the
information described above, at least 60 days before the date of the annual
meeting. If less than 70 days' notice or prior public disclosure of the meeting
is given or made to the stockholders, the stockholder's notice to the Fund must
be received by the Fund not later than the close of business on the tenth day
following the day on which the notice of the date of the annual meeting is given
or the public disclosure was made.
ADDITIONAL INFORMATION
INDEPENDENT ACCOUNTANTS. On January 23, 2004, the Audit Committee of the
Board, consisting of those Directors who are not "interested persons" (as
defined in the 1940 Act), selected KPMG LLP ("KPMG"), 99 High Street, Boston,
Massachusetts 02110-2371, as independent accountants for the Fund for the Fund's
fiscal year ending November 30, 2004. The selection of KPMG was ratified by the
entire Board. KPMG also served as independent accountants for the Fund for the
Fund's fiscal year ending November 30, 2003. A representative of KPMG will not
be present at the Meeting but will be available by telephone and will have an
opportunity to make a statement if the representative so desires and will be
available to respond to appropriate questions.
Set forth below are audit fees and non-audit related fees billed to the
Fund for professional services received from KPMG for the Fund's fiscal years
ended November 30, 2002 and 2003, respectively.
Fiscal Year Ended Audit Fees Audit-Related Fees* Tax Fees** All Other Fees
----------------- ---------- ------------------- ---------- --------------
11/30/2002 $20,500 $10,500 $5,000 $ 0
11/30/2003 $22,500 $16,000 $5,250 $5,000+
* "Audit-Related Fees" are those fees billed to the Fund by KPMG in
connection with their agreed-upon procedures reports under the Fund's
Articles Supplementary. Such reports are required quarterly by Moody's
Investor Service, Inc. and Standard & Poor's in connection with maintaining
public ratings for the Fund's AMP Shares.
** "Tax Fees" are fees billed to the Fund by KPMG in connection with tax
consulting services, including primarily the review of the Fund's income
tax returns.
+ This fee relates to services provided by KPMG in connection with a
registration statement filed by the Fund in June 2003.
The Audit Committee Charter requires that the Audit Committee pre-approve
all audit and non-audit services to be provided by the auditors to the Fund, and
all non-audit services to be provided by the auditors to the Fund's investment
adviser and any service providers controlling, controlled by or under common
control with the Funds' investment adviser ("affiliates") that provide ongoing
services to each Fund, if the engagement relates directly to the operations and
financial reporting of each Fund, or to establish detailed pre-approval policies
and procedures for such services in accordance with applicable laws. All of the
audit, audit-related and tax services described above for which KPMG billed the
Fund fees for the fiscal years ended November 30, 2002 and November 30, 2003
were pre-approved by the Audit Committee.
KPMG has informed the Fund that it has no direct or indirect financial
interest in the Fund. For the Fund's fiscal year ended November 30, 2003, KPMG
did not provide any non-audit services or bill any fees for such services to the
Funds' investment adviser or any affiliates thereof that provide services to the
Fund. The Horejsi Affiliates have engaged KPMG from time to time in the past to
provide various accounting, auditing and consulting services and currently
engages KPMG as a consultant with respect to ongoing tax-related issues.
However, for the twelve months ended November 30, 2003, the Horejsi Affiliates
paid $875 to KPMG for their services. The Audit Committee has considered and
concluded that the provision of non-audit services is compatible with
maintaining the auditors' independence.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the 1934 Act and Section 30(h) of the 1940 Act requires the Fund's Directors and
officers, persons affiliated with the Fund's investment advisers, and persons
who own more than 10% of a registered class of the Fund's securities, to file
reports of ownership and changes of ownership with the SEC and the New York
Stock Exchange. Directors, officers and greater-than-10% stockholders are
required by SEC regulations to furnish the Fund with copies of all Section 16(a)
forms they file. Based solely upon the Fund's review of the copies of such forms
it receives and written representations from such persons, the Fund believes
that through the date hereof all such filing requirements applicable to such
persons were complied with.
Broker Non-Votes and Abstentions. An uninstructed proxy for shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power on a particular matter is a broker
"non-vote". Proxies that reflect abstentions or broker non-votes (collectively
"abstentions") will be counted as shares that are present and entitled to vote
on the matter for purposes of determining the presence of a quorum. In
circumstances where the vote to approve a matter is a percentage of votes cast
(Proposal 1), abstentions have no effect because they are not a vote cast. Thus,
they will be disregarded in determining the "votes cast" on the particular
issue. However, with respect to Proposals 2 through 12, where the vote required
to approve the matter is the affirmative vote of the holders of a percentage of
the total number of votes entitled to be cast, an abstention will have the
effect of a vote "against" the respective proposals.
OTHER MATTERS TO COME BEFORE THE MEETING
The Fund does not intend to present any other business at the Meeting, nor
is it aware that any stockholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying form of proxy will vote thereon in accordance with their
discretion.
--------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN ALL PROXY CARDS AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
--------------------------------------------------------------------------------
EXHIBIT A
BOULDER TOTAL RETURN FUND, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
FIRST: Boulder Total Return Fund, Inc., a Maryland corporation (the
"Corporation"), desires to amend and restate its charter as currently in effect
and as hereinafter amended.
SECOND: The following provisions are all the provisions of the charter (the
"Charter") currently in effect and as hereinafter amended:
ARTICLE I
NAME
The name of the corporation (the "Corporation") is:
Boulder Total Return Fund, Inc.
ARTICLE II
PURPOSE
The Corporation is formed for the following purposes.
(1) To conduct and carry on the business of a closed-end investment
company registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
(2) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(3) To issue and sell shares of its stock in such amounts and on such
terms and conditions and for such purposes and for such amount or kind
of consideration as may now or hereinafter be permitted by law.
(4) To do any and all additional acts and to exercise any and all powers
or rights as may be necessary, incidental, appropriate or desirable
for the accomplishment of all or any of the foregoing purposes.
The Corporation shall be authorized to exercise and enjoy all of the powers,
rights and privileges granted to, or conferred upon, corporations by the
Maryland General Corporation Law (the "MGCL") now or hereinafter in force, and
the enumeration of the foregoing shall not be deemed to exclude any powers,
rights or privileges so granted or conferred.
ARTICLE III
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The address of the principal office of the Corporation in the State of
Maryland is c/o The Corporation Trust Incorporated, 300 East Lombard Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
the State of Maryland is the Corporation Trust Incorporated whose post address
is 300 East Lombard Street, Baltimore, Maryland 21202. The resident agent is a
Maryland corporation.
ARTICLE IV
AUTHORIZED STOCK AND PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS
Section 4.1 The total number of shares of stock that the Corporation shall
have the authority to issue is 250,000,000 shares, of which 240,000,000 shares
are classified as Common Stock, par value $.01 per share (the "Common Stock"),
and 10,000,000 shares are classified as Preferred Stock, par value $.01 per
share (the "Preferred Stock"). Of the Preferred Stock, 1,000 shares are
designated as Taxable Auction Market Preferred Stock, liquidation preference
$100,000 per share (the "Taxable Auction Market Preferred Stock"). The aggregate
par value of all shares of all classes that the Corporation is authorized to
issue is $2,500,000.
Section 4.2 The Board of Directors is authorized to determine the
designation of and to set the terms of the Preferred Stock, including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms and conditions of
redemption, prior to issuance. The Preferred Stock may be issued in series.
Section 4.3 The Board of Directors is authorized, from time to time, to fix
the price of the minimum price of the consideration or the minimum consideration
for, and to issue, the shares of stock of the Corporation.
Section 4.4 The Corporation may issue fractional shares. Any fractional
share shall carry proportionately the rights of a whole share including, without
limitation, the right to vote and the right to receive dividends. A fractional
share shall not, however, carry the right to receive a certificate evidencing
it.
Section 4.5 All persons who shall acquire stock in the Corporation shall
acquire the same subject to the provisions of this Charter and the Bylaws (the
"Bylaws") of the Corporation, as from time to time amended.
Section 4.6 No holder of stock of the Corporation by virtue of being such a
holder shall have any preemptive or preferential right to purchase or subscribe
for any shares of the Corporation's stock or any other security that the
Corporation may issue or sell other than a right that the Board of Directors in
its discretion may determine to grant.
Section 4.7 The Board of Directors shall have authority by resolution to
classify and reclassify any authorized by unissued shares of stock from time to
time by setting or changing in any one or more respects the preferences,
conversion or other rights, voting powers, restrictions, limitations to
dividends, qualifications or terms or conditions of redemption of the stock.
Section 4.8 The presence in person or by proxy of the holders of shares of
stock of the Corporation entitled to cast a majority of the votes entitled to be
cast (without regard to class) shall constitute a quorum at any meeting of the
stockholders, except with respect to any such matter that, under applicable
statutes or regulatory requirements, requires approval by a separate vote of one
or more classes of stock, in which case the presence in person or by proxy of
the holders of shares entitled to cast a majority of the votes entitled to be
cast by each such class on such a matter shall constitute a quorum.
Section 4.9 The Secretary of the Corporation shall call a special meeting
of the stockholders on the written request of stockholders entitled to cast at
least 25% of all the votes entitled to be cast at the meeting.
Section 4.10 The Bylaws of the Corporation, whether adopted by the Board of
Directors or the stockholders, shall be subject to amendment, alteration or
repeal, and new Bylaws may be made, by either (a) the affirmative vote of a
majority of all the votes cast at a stockholders' meeting at which a quorum is
present; or (b) the Board of Directors; provided, however, that the Board of
Directors may not (i) amend or repeal a Bylaw that allocates solely to
stockholders the power to amend or repeal such Bylaw, or (ii) amend or repeal
Bylaws or make new Bylaws that conflict with or otherwise alter in any material
respect the effect of Bylaws previously adopted by the stockholders.
Section 4.11 The Articles Supplementary Creating and Fixing the Rights of
Taxable Auction Market Preferred Stock of the Corporation (the "Articles
Supplementary"), accepted for record by the State Department of Assessments and
Taxation of Maryland on August 11, 2000, and as amended or supplemented from
time to time, is incorporated by reference in its entirety. Upon any restatement
of the Charter at such time as the Taxable Auction Market Preferred Stock is
outstanding, the Articles Supplementary may be restated in this Article IV with
any necessary or appropriate renumbering or re-lettering of the sections or
subsections of such Articles Supplementary.
ARTICLE V
DIRECTORS
Section 5.1 The number of the Directors shall be five, which number may be
decreased by the Board of Directors pursuant to the Bylaws but never be less
than the minimum required by the MGCL. The names of the directors who shall
serve until the next annual meeting of stockholders and until their successors
are duly elected and qualify are: Alfred G. Aldridge, Jr., Richard I. Barr, Joel
W. Looney, Stephen C. Miller and Susan L. Ciciora.
Section 5.2 The Directors shall be elected at each annual meeting of the
stockholders commencing in 2004, except as necessary to fill any vacancies, and
each Director elected shall hold office until his or her successor is duly
elected and qualifies, or until his or her earlier resignation, death, or
removal.
If the Corporation issues Preferred Stock entitling the holders to elect
additional Directors in specified circumstances, and the election of such
additional Directors would cause the number of Directors to exceed five, then
the terms of office of a number of Directors elected by the other stockholders
(excluding any Directors which the holders of the Preferred Stock are entitled
to elect in all events) shall terminate at the time of the meeting of the
holders of the Preferred Stock called to elect the additional Directors such
that the sum of the number of remaining Directors and the number of additional
Directors to be elected by the holders of the Preferred Stock does not exceed
five. The Directors whose terms shall expire will be determined in reverse order
of their initial election to the Board of Directors or, if two or more Directors
were elected at the same time, by lot.
Section 5.3 A plurality of all the votes cast at a meeting at which a
quorum is present shall be sufficient to elect a director.
Section 5.4 In furtherance, and not in limitation, of the powers conferred
by the laws of the State of Maryland, the Board of Directors is expressly
authorized to:
(1) From time to time to determine whether and to what extent and at
what times and places and under what conditions and regulations
the books and accounts of the Corporation, or any of them other
than the stock ledger, shall be open to the inspection of the
stockholders. No stockholder shall have any right to inspect any
account or book or document of the Corporation, except as
conferred by law or authorized by resolution of the Board of
Directors.
(2) Without the assent or vote of the stockholders, to authorize the
issuance from time to time of shares of the stock of any class of
the Corporation, whether now or hereafter authorized, and
securities convertible into shares of stock of the Corporation of
any class or classes, whether now or hereafter authorized, for
such consideration as the Board of Directors may deem advisable.
(3) Without the assent or vote of the stockholders, to authorize and
issue obligations of the Corporation, secured and unsecured, as
the Board of Directors may determine, and to authorize and cause
to be executed mortgages and liens upon the real or personal
property of the Corporation.
(4) In addition to the powers and authorities granted herein and by
statute expressly conferred upon it, the Board of Directors is
authorized to exercise all powers and do all acts that may be
authorized or done by the Corporation pursuant to the provisions
of the laws of the State of Maryland, the Charter and the Bylaws
of the Corporation.
Section 5.5 Any determination made in good faith and in accordance with the
Charter by or pursuant to the direction of the Board of Directors, with respect
to the amount of assets, obligations or liabilities of the Corporation, as to
the amount of net income of the Corporation 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 reserves or as to the use, alteration or
cancellation or any reserves or charges (whether or not any obligation or
liability for which the reserves or charges have been created has been paid or
discharged or is then or thereafter required to be paid or discharged), as to
the value of any security owned by the Corporation, as to the determination of
the net asset value of shares of any class of the Corporation's stock, or as to
any other matters relating to the issuance, sale or other acquisition or
disposition of securities or shares of stock of the Corporation, any reasonable
determination made in good faith by the Board of Directors whether any
transaction constitutes a purchase or securities on "margin," a sale of
securities "short," or an underwriting or the sale of, or participation in an
underwriting or selling group in connection with the public distribution of, any
securities, shall be final and conclusive, and shall be binding upon the
Corporation and all holders of its stock, past present and future, and shares of
the stock of the Corporation are issued and sold on the condition and
understanding, evidenced by the purchase of shares of stock or acceptance of
share certificates, that any and all such determinations shall be binding as
aforesaid. No provision of the Charter shall be effective to (i) require a
waiver of compliance with any provision of the Securities Act of 1933, as
amended, (the "Securities Act") or the 1940 Act, or of any valid rule,
regulation or order of the Securities and Exchange Commission under those Acts
or (ii) protect or purport to protect any director or officer of the Corporation
against any liability to the Corporation or its security holders to which he or
she would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office.
ARTICLE VI
EXTRAORDINARY ACTIONS
Section 6.1 Notwithstanding any provision of law requiring any action to be
taken or authorized by the affirmative vote of the holders of a greater
proportion of the votes of all classes or of any class of stock of the
Corporation, such action shall be effective and valid if taken or authorized by
the affirmative vote of a majority of the total number of votes entitled to be
cast thereon, except as otherwise provided in the Charter.
Section 6.2
(1) In this Section, "Business Combination" means:
(i) a merger or consolidation of the Corporation with or into
any person other than an investment company in a family of
investment companies having the same investment adviser or
administrator as the Corporation;
(ii) the sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of
transactions) to or with any other person of any assets of
the Corporation except (x) for the payment of dividends or
other distributions, (y) for portfolio transactions of the
Corporation effected in the ordinary course of the
Corporation's business, including permitted borrowings, or
(z) in connection with a reorganization of the Corporation
with another investment company in a family of investment
companies having the same investment adviser or
administrator as the Corporation; or
(iii)the issuance or transfer by the Corporation (in one
transaction or a series of transactions) of any shares of
the Corporation to any other person in exchange for cash,
securities or other property of the Corporation (or a
combination thereof), but excluding (v) sales of any shares
of the Corporation in connection with a public offering
thereof or, for shares of preferred stock or debt securities
of the Corporation, a private placement thereof, (w)
issuance of any securities of the Corporation upon the
exercise of any stock subscription right issued by the
Corporation, (x) with respect to the Corporation's dividend
reinvestment and/or cash purchase plan, (y) in connection
with a dividend or distribution made pro rata to all holders
of stock of the same class, or (z) a transaction within the
scope permitted under (1)(i) or (ii) above.
(2) In addition to the approval by the Board of Directors required by
applicable law, the Charter or the Bylaws of the Corporation, the
affirmative vote of the holders of shares entitled to cast at
least two-thirds of all the votes entitled to be cast on the
matter shall be required to approve:
(i) a Business Combination;
(ii) a voluntary liquidation or dissolution of the Corporation;
(iii)a stockholder proposal as to specific investment decisions
made or to be made with respect to the Corporation's assets;
(iv) an amendment to the Charter to convert the Corporation from
a closed-end investment company to an open-end investment
company or unit investment trust (as such terms are defined
by the 1940 Act), whether by merger or otherwise;
(v) a self tender for, or acquisition by the Corporation of,
more than 25% of the Corporation's outstanding shares of
stock, in the aggregate, during any twelve-month period.
(3) This Section may not be amended, altered or repealed without the
affirmative vote of the holders of shares entitled to cast at
least two-thirds of all the votes entitled to be cast on the
matter.
Section 6.3 The Corporation is prohibited from electing to be subject to
any provision of Title 3, Subtitle 8 of the MGCL, as amended from time to time,
or any successor to such provisions.
ARTICLE VII
LIMITATIONS ON LIABILITY; INDEMNIFICATION
Section 7.1 To the fullest extent that limitations on the liability of
directors and officers are permitted by the MGCL, no director or officer of the
Corporation shall have any liability to the Corporation or its stockholders for
damages. This limitation on liability applies to events occurring at the time a
person serves as a director or officer of the Corporation whether or not such
person is a director or officer at the time of any proceeding in which liability
is asserted.
Section 7.2 Any person who was or is a party or is threatened to be made a
party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of the Corporation,
or is or was serving while a director or officer of the Corporation at the
request of the Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes, settlements and reasonable
expenses (including attorneys' fees) actually incurred by such person in
connection with such action, suit or proceeding to the fullest extent
permissible under the MGCL, the Securities Act, and the 1940 Act as such
statutes are now or hereinafter in force. In addition, the Corporation shall
also advance expenses to its currently acting and its former directors and
officers to the fullest extent that indemnification of directors is permitted by
the MGCL, the Securities Act and the 1940 Act. The Board of Directors may by
Bylaw, resolution or agreement make further provision for indemnification of
directors, officers, employees and agents to the fullest extent permitted by the
MGCL.
Section 7.3 No provision of this Article VII shall be effective to protect
or purport to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he or she would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
Section 7.4 References to the MGCL in this Article VII are to that law from
time to time amended. No amendment to the Charter of the Corporation shall
affect any right of any person under this Article VII based on any event,
omission or proceeding prior to the amendment.
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right to make, from time to time, any
amendment to its Charter now or hereafter authorized by law (including any
amendment that alters the contract rights, as expressly set forth in the
Charter, of any class of outstanding stock) and all rights at any time conferred
upon the stockholders of the Corporation by the Charter are granted subject to
the provisions of this Article VIII. Except for Section 6.2, any of the
provisions of the Charter may be amended, altered or repealed upon the
affirmative vote of the holders of a majority of the votes entitled to be cast
by stockholders.
THIRD: The amendment to and restatement of the Charter as hereinabove set
forth have been duly advised by the Board of Directors and approved by the
stockholders of the Corporation as required by law.
FOURTH: The current address of the principal office of the Corporation is
as set forth in Article III of the foregoing amendment and restatement of the
Charter.
FIFTH: The name and address of the Corporation's current resident agent is
as set forth in Article III of the foregoing amendment and restatement of the
Charter.
SIXTH: The number of directors of the Corporation and the names of those
currently in office are as set forth in Article V of the foregoing amendment and
restatement of the Charter.
SEVENTH: The undersigned President acknowledges these Articles of Amendment
and Restatement to be the corporate act of the Corporation and as to all matters
or facts required to be verified under oath, the undersigned President
acknowledges that to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this statement is
made under the penalties for perjury.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
and Restatement to be signed in its name and on its behalf by its President and
attested to by its Secretary on this _____ day of ____________, 2004.
ATTEST: BOULDER TOTAL RETURN FUND, INC.
__________________________ By: _________________________(SEAL)
Stephanie Kelley, Secretary Stephen C. Miller, President
EXHIBIT B
BOULDER TOTAL RETURN FUND, INC.
AUDIT COMMITTEE CHARTER
1. The Audit Committee shall be composed entirely of directors who are not
"interested persons" of the Fund within the meaning of the Investment Company
Act of 1940 ("independent directors") and who are free of any other relationship
that, in the opinion of the Board of Directors, would interfere with their
exercise of independent judgment as Committee members. The Audit Committee
Chairman shall be selected by the members of the Committee. The Audit Committee
shall have at least three members, all of whom shall be financially literate.
The Chairman of the Committee must have accounting or related financial
management expertise, as determined by the Board in its judgment.
At least annually, the Board of Directors shall determine whether one or
more "audit committee financial experts," as such term is defined by the
Securities and Exchange Commission, are members of the Committee and whether any
such expert is "independent." For purposes of this finding only, in order to be
considered "independent," any such expert may not, other than in his or her
capacity as a member of the Committee, the Board or any other Board committee,
accept directly or indirectly any consulting, advisory or other compensatory fee
from the Fund (other than Board or committee fees). The designation of a person
as an audit committee financial expert ("ACFE") shall not impose any liability
greater than the liability imposed on such person as a member of the Audit
Committee or the Board of Directors in the absence of such designation.
2. The purposes of the Audit Committee are:
(a) to assist Board oversight of
1) the integrity of the Fund's financial statements
2) the Fund's compliance with legal and regulatory requirements
3) the independent auditor's qualifications and independence
4) the performance of the Fund's independent auditors
(b) to prepare an audit committee report if required by the SEC to be
included in the Fund's annual proxy statement;
(c) to oversee the Fund's accounting and financial reporting policies
and practices, its internal controls and, as appropriate, the
internal controls of certain service providers;
(d) to oversee the quality and objectivity of the Fund's financial
statements and the independent audit thereof;
(e) to determine the selection, appointment, retention and
termination of the Fund's independent auditors, as well as
approving the compensation of the auditors;
(f) to pre-approve all audit and non-audit services provided to the
Fund and certain other persons (as described in 4(d) and (e)
below) by such independent auditors; and
(g) to act as a liaison between the Fund's independent auditors and
the full Board of Directors.
The Fund's independent auditors shall report directly to the Committee.
The function of the Committee is oversight. The Fund's management is
responsible for (i) the preparation, presentation and integrity of the Fund's
financial statements, (ii) the maintenance of appropriate accounting and
financial reporting principles and policies and (iii) the maintenance of
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. The auditors are responsible for
planning and carrying out proper audits and reviews in accordance with generally
accepted auditing standards. In fulfilling their responsibilities hereunder, it
is recognized that members of the Committee are not full time employees of the
Fund and are not, and do not represent themselves to be, accountants or auditors
by profession or experts in the fields of accounting or auditing,
notwithstanding the possibility that one or more members may be designated an
ACFE. As such, it is not the duty or responsibility of the Committee or its
members to conduct "field work" or other types of auditing or accounting reviews
or procedures. Each member of the Committee shall be entitled to rely on (i) the
integrity of those persons and organizations within and outside the Fund from
which it receives information, (ii) the accuracy of the financial and other
information, including, for example, the information contemplated by paragraph
4(b), provided to the Committee by such persons and organizations absent actual
knowledge to the contrary (which shall be promptly reported to the Fund's Board)
and (iii) statements made by the officers and employees of the Fund, the Fund's
adviser or other third parties as to any information technology, internal audit
and other non-audit services provided by the independent auditors to the Fund.
In addition, the evaluation of the Fund's financial statements by the Committee
is not of the same scope as, and does not involve the extent of detail as,
audits performed by the auditors, nor does the Committee's evaluation substitute
for the responsibilities of the Fund's management for preparing, or the auditors
for auditing, the financial statements. The designation of a person as an ACFE
is not intended to impose any greater responsibility or liability on that person
than the responsibility and liability imposed on such a person as a member of
the Committee, nor does it decrease the duties and obligations of the other
Committee members or the Board.
The Committee shall have the appropriate resources and authority to discharge
its responsibilities, including the authority to retain special counsel and
other experts or consultants at the expense of the Fund. The Committee shall
also have the authority to seek information, data and services from management
in order to carry out its responsibilities.
3. With respect to any subsequent changes to the composition of the
Committee, and otherwise approximately once each year, the Board of Directors
shall determine:
(a) that each member of the Audit Committee is "independent" pursuant
to the NYSE's governance standards or applicable law or;
(b) that each Audit Committee member is financially literate;
(c) that at least one of the Committee members has accounting or
related financial management expertise; and
(d) the adequacy of the Charter.
4. To carry out its purposes, the Audit Committee shall have the following
duties and powers:
(a) to select, retain, determine the compensation of, or terminate
auditors and to oversee the work of the Fund's independent
auditors (or any other public accounting firm engaged for the
purpose of performing other audit, review or attestation services
for the Fund) and, in connection therewith, to evaluate the
independence of the auditors, including whether the auditors
provide any consulting services to any service provider, to
resolve any disagreements between management and the Fund's
independent auditors regarding financial reporting, to receive
the auditors' specific representations as to their independence
at least annually and to recommend the retention of such auditors
to the independent directors for their ratification and approval;
(b) to meet with the Fund's independent auditors, including meetings
apart from management, as necessary (i) to review the
arrangements for and scope of the annual audit and any special
audits; (ii) to discuss critical accounting policies and
practices to be used in the annual audit and all alternative
treatments of financial information within generally accepted
accounting principles that have been discussed with management,
the ramifications of the use of such alternative treatments, and
the treatments preferred by the auditor; (iii) to discuss any
matters of importance relating to the Fund's financial
statements, including any adjustments to such statements
recommended by the auditors, or other results of said audit(s);
(iv) to consider the auditors' comments with respect to the
acceptability and appropriateness of the Fund's financial
reporting policies, procedures and internal accounting controls,
and management's responses thereto; (v) to review the form of
opinion the auditors propose to render to the Board and
shareholders; (vi) to review copies of any material written
communication between the auditor and management, such as any
management letter or schedule of unadjusted differences; (vii) to
review the adequacy and effectiveness of relevant internal
controls and procedures and the quality of the staff implementing
those controls and procedures and to obtain annually in writing
from the independent auditors their letter as to the adequacy of
such controls as required by Form N-SAR; (viii) to receive
periodic reports concerning regulatory changes and new accounting
pronouncements that significantly affect the value of the Fund's
assets and its financial reporting; (ix) to discuss any audit
problems or difficulties and management's response, including any
restrictions on the scope of the auditor's activities or on
access to requested information, and any significant
disagreements with management; and (x) to receive disclosure from
the auditor regarding all services provided by the auditor to the
Fund, including the fees associated with those services, at least
annually, and if the annual communication is not made within 90
days before the filing of the Fund's annual report, to receive an
update, in the 90 day period before the filing, of any changes to
the previously reported information;
(c) to consider the effect upon the Fund of any changes in accounting
principles or practices proposed by management or the auditors,
and to consider, in consultation with management and the Fund's
independent auditors, any significant changes to the Fund's tax
accounting policies, including those pertaining to its
qualification as a regulated investment company under the
Internal Revenue Code;
(d) to review and pre-approve all auditing services and permissible
non-audit services (e.g., tax services) to be provided to the
Fund by the auditor, including the fees therefore. The Committee
may delegate to one or more of its members the authority to grant
pre-approvals. In connection with such delegation, the Committee
shall establish pre-approval policies and procedures, including
the requirement that the decisions of any member to whom
authority is delegated under this sub-section (d) shall be
presented to the full Committee at each of its scheduled
meetings.
(1) Pre-approval for a permitted non-audit service shall not be
required if: (1) the aggregate amount of all such non-audit
services is not more than 5% of the total revenues paid by
the Fund to the auditor in the fiscal year in which the
non-audit services are provided; (2) such services were not
recognized by the Fund at the time of the engagement to be
non-audit services; and (3) such services are promptly
brought to the attention of the Committee and approved prior
to the completion of the audit by the Committee or by one or
more members of the Committee to whom authority to grant
such approvals has been delegated by the Committee.
(2) Additionally, the Committee shall pre-approve the auditor's
engagements for non-audit services with the Fund's
investment advisers (each, an "Adviser") and any service
providers controlling, controlled by or under common control
with an Adviser ("affiliate") that provides ongoing services
to the Fund in accordance with the foregoing paragraph, if
the engagement relates directly to the operations and
financial reporting of the Fund, unless the aggregate amount
of all services provided constitutes no more than 5% of the
total amount of revenues paid to the auditor by the Fund, an
Adviser and any affiliate of the Adviser that provides
ongoing services to the Fund during the fiscal year in which
the services are provided that would have to be pre-approved
by the Committee pursuant to this paragraph (without regard
to this exception).
(3) Prohibited Services - The auditor may not perform
contemporaneously any of the following non-audit services
for the Fund: bookkeeping or other services related to the
accounting records or financial statements of the Fund;
financial information systems design and implementation;
appraisal or valuation services, fairness opinions, or
contribution-in-kind reports; actuarial services; internal
audit outsourcing services; management functions or human
resources; broker or dealer, investment adviser, or
investment banking services; legal services and expert
services unrelated to the audit; and any other service that
the Public Company Accounting Oversight Board determines, by
regulation, is impermissible.
(e) to consider whether the provision by the Fund's auditor of
non-audit services to its investment adviser or adviser affiliate
that provides ongoing services to the Fund, which services were
not pre-approved by the Audit Committee, is compatible with
maintaining the auditor's independence;
(f) to investigate any improprieties or suspected improprieties in
fund operations and to establish procedures for the receipt,
retention, and treatment of complaints received by the Fund with
respect to accounting, internal accounting controls, or auditing
matters and the confidential anonymous submission by employees of
the Fund and its service providers of concerns regarding
questionable accounting or auditing matters;
(g) to review the findings made in any regulatory examinations of the
Fund and consult with management on appropriate responses;
(h) to review any material violations of the Code of Ethics for the
Fund and its Advisers and report the Committee's findings to the
full Board with recommendations for appropriate action;
(i) to review with the Fund's principal executive officer and/or
principal financial officer in connection with their
certification of Form N-CSR any significant deficiencies in the
design or operation of internal controls which could adversely
affect the Fund's ability to record, process, summarize and
report financial data or material weaknesses therein and any
reported evidence of fraud involving management of other
employees who have a significant role in the Fund's internal
controls;
(j) to discuss with management policies and guidelines with respect
to risk assessment and risk management and the system of internal
control, and the steps taken to monitor and control such risks;
(k) to meet periodically with Fund management, apart from the Fund's
independent auditors;
(l) to discuss the types of information to be disclosed in press
releases concerning dividends, as well as financial information
provided to analysts and rating agencies, and the type of
presentation to be made;
(m) to establish hiring policies for employees or former employees of
the auditor consistent with government regulations;
(n) at least annually, to obtain and review a report by the Fund's
independent auditors describing: (1) the audit firm's internal
quality control procedures; (2) any material issues raised by the
most recent internal quality control review, or peer review, of
the firm, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
audit firm, and any steps taken to deal with any such issues; and
(3) for the purpose of assessing the auditor's independence, all
relationships between the independent auditors and the Fund;
(o) to review and evaluate the qualifications, performance and
independence of the lead partner of the auditors;
(p) to assure the regular rotation of the lead audit partner and the
reviewing partner, and to consider whether there should be
regular rotation of the audit firm itself;
(q) to review and discuss the Fund's audited and unaudited financials
statements with management and, in the case of the audited
financial statements, the independent auditor, including the
Fund's disclosure of management's discussion of Fund performance,
and to recommend to the Board, as appropriate, the inclusion of
the Fund's audited financial statements in the Fund's annual
report;
(r) to cause the preparation of any report or other disclosures
required by the New York Stock Exchange or the Securities and
Exchange Commission;
(s) to oversee the Fund's compliance with 1940 Act asset coverage
tests and coverage tests under applicable rating agency
guidelines and the Fund's Articles Supplementary, as amended or
supplemented from time to time; and
(t) to report regularly to the full Board any issues that arise with
respect to: (1) the quality or integrity of the Fund's financial
statements, (2) the Fund's compliance with legal or regulatory
requirements and (3) the performance and independence of the
Fund's independent auditors, and to make such recommendations
with respect to the above and other matters as the Committee may
deem necessary or appropriate.
5. The Fund's independent auditors are ultimately accountable to the Audit
Committee, as representatives of the Board of Directors and the shareholders of
the Fund, and the Audit Committee has the ultimate authority and responsibility
to select, evaluate and, where appropriate, replace the independent auditors (as
well as to nominate the independent auditors to be proposed for shareholder
approval, if necessary), subject to ratification and approval of the independent
directors of the Fund. The Committee will ensure that the Fund's independent
auditors submit to the Audit Committee, on a periodic basis, a formal written
statement delineating all relationships between the independent auditors and the
Fund and its service providers. The Committee will actively engage in a dialogue
with the Fund's independent auditors with respect to any disclosed relationships
or services that may impact the objectivity and independence of the independent
auditors, and will consider recommending that appropriate action be taken by the
Board of Directors to ensure the independence of the independent auditors.
6. The Committee shall meet at least twice annually, which shall include
separate executive sessions as the Committee may deem appropriate, and is
empowered to hold special meetings as circumstances require. The Committee shall
submit the minutes of all of its meetings to, or discuss the matters discussed
at each meeting with, the Board of Directors.
7. The Committee shall regularly meet with the Treasurer of the Fund and
with internal auditors, if any, for the Fund's Advisers and/or administrator to
review and discuss matters relevant to the Committee's duties and
responsibilities.
8. The Committee shall be responsible for reviewing any required
description of the Committee in the Fund's annual reports or proxy statements.
9. The Committee will periodically assess the independence of its members
and will evaluate its performance under the Charter annually.
10. The Committee will also serve as the Qualified Legal Compliance
Committee. The following procedures are designed to implement the Standards of
Professional Conduct for Attorneys pursuant to the Sarbanes-Oxley Act of 2002.
(a) Provision of Information to Outside Counsel and Service
Providers. To assist attorneys employed by law firms retained by
the Funds or service providers engaged by the Funds, the chief
executive officer of each Fund (the "CEO") must send a notice to
each such law firm and service provider providing contact
information with respect to each Fund's Legal Compliance
Committee Chairperson. The CEO must send a similar notice to each
law firm and service provider when the information provided in
the most recent notice sent to such law firm or service provider
has changed.
(b) Investigations and Responses. Upon receiving a report of evidence
of a material violation from an attorney employed by a law firm
or service provider, the CEO shall (i) record receipt of the
report and (ii) report the matter promptly to the Legal
Compliance Committee (the "Committee"). Upon receiving a report
of evidence of a material violation from an attorney employed by
a law firm or service provider or from the CEO, the Committee
shall (i) record the Committee's receipt of the report, (ii)
inform the Fund's CEO of the report (other than those received
from the and (iii) determine whether an investigation of a
material violation is necessary or appropriate. In determining
whether an investigation is necessary or appropriate, the
Committee shall consider such factors as it considers appropriate
under the circumstances, which may include the seniority of the
alleged wrongdoer, the seriousness of the alleged violation and
the credibility of the allegation. If the Committee determines
that an investigation is necessary, the Committee must (A) notify
the Fund's Audit Committee or the Board of Directors, (B)
initiate an investigation and (C) retain additional expert
personnel as it deems necessary. The Committee shall have the
discretion to engage auditors, counsel or other experts to assist
in the investigation of any report and in the analysis of
results.
(1) Investigations. If the Committee deems it necessary, the
Committee may direct outside counsel to conduct a
preliminary internal investigation to determine whether the
reported material violation has occurred, is ongoing or is
about to occur. The Committee may direct employees of the
Funds' investment advisers or administrators or any
officer(s) of the Funds to assist outside counsel. If Fund
counsel is the reporting counsel, Fund counsel nonetheless
may be engaged to conduct the preliminary internal
investigation. If Fund counsel is the reporting counsel,
Fund counsel may decline to lead the preliminary internal
investigation and may recommend that the Fund seek
alternative counsel for purposes of conducting such
investigation. Any investigation may be conducted by the
relevant Fund's CEO or chief legal officer (or the
equivalent thereof) if such officer is not the reporting
attorney and is not the subject of the alleged violation
described in the report.
(2) Responses. At the conclusion of any investigation, the
Committee, by majority vote, shall recommend that the
relevant Fund implement an appropriate response to evidence
of a material violation. What constitutes an appropriate
response will depend on whether the Committee determines, on
the basis of the facts and circumstances, that a material
violation has occurred, is ongoing or is about to occur.
Unless the Committee reasonably believes that no material violation has
occurred, is ongoing or is about to occur, the Committee shall take all
reasonable steps to cause the Funds to adopt an appropriate response. If the
preliminary internal investigation is performed by outside counsel, such counsel
may recommend a proposed response for adoption by the Committee.
Determination: No Violation. The Committee may determine that no material
violation has occurred, is ongoing or is about to occur. That determination
must be made on the basis that the Committee "reasonably believes" that no
material violation has occurred, is ongoing or is about to occur.
"Reasonably believes" means that the Committee "believes the matter in
question and that the circumstances are such that the belief is not
unreasonable."
Determination: Material Violation Has Occurred, Is Ongoing or Is About to
Occur. If the Committee reasonably believes that a material violation has
occurred, is ongoing or is about to occur, the following responses should
be considered:.
(1) A Material Violation Has Occurred If the Committee reasonably believes
that the reported material violation has already occurred, the Committee
should seek to remedy or otherwise address the material violation. The
Committee should explore what steps would be necessary or appropriate to
reduce the likelihood of a recurrence of the material violation. The
Committee should consider recommending that sanctions be imposed in
connection with the violation. Disclosure to the public or to the SEC
should be considered, depending on the nature of the violation and other
relevant factors.
(2) A Material Violation Is Ongoing If the Committee reasonably believes
that the reported material violation is ongoing, the Committee should seek
to take or recommend steps, measures and/or sanctions that are designed to
(i) stop any material violations that are ongoing, (ii) remedy or otherwise
appropriately address the portion of the material violation that has
already occurred, and (iii) reduce the likelihood of a recurrence of the
material violation. Disclosure to the public or to the SEC should be
considered, depending on the nature of the violation and other relevant
factors.
(3) A Material Violation Has Yet to Occur If the Committee reasonably
believes that the reported material violation has not yet occurred, the
Committee should seek to take or recommend steps and/or measures to prevent
the reported material violation from occurring. Depending on the
circumstances of the impending violation, actions to address potential
future violations, including sanctions, should be considered. In unusual
circumstances, disclosure to the SEC may also be appropriate. The Committee
may retain outside counsel, which may be Fund counsel, to undertake a
review of the reported evidence of a material violation in order to assist
the Committee in determining what remedial measures would be appropriate
under the circumstances.
Other Action. The Committee shall have the authority and responsibility,
acting by majority vote, to take all other appropriate action, including
the authority to notify the SEC, in the event a Fund fails in any material
respect to implement a recommendation that the Committee has made within a
reasonable period of time.
(c). Reporting and Recordkeeping. The Committee shall inform the
relevant Fund's CEO and chief legal officer (or the equivalent
thereof) and the Board of Directors of the results of any
investigation of a report of a material violation and any
appropriate remedial measures to be adopted. The Committee or its
delegate shall prepare, or cause to be prepared, a memorandum
reflecting (i) the information developed in any internal
investigation, (ii) any remedial recommendation made by the
Committee or by outside counsel retained to review any report of
a material violation and (iii) any remedial actions taken. The
Committee should review these records periodically to determine
whether there are any patterns of activity or violations that
have emerged.
(d). Protection of Reporting Attorneys. The Committee shall not
retaliate, and shall not tolerate any retaliation by Fund
management or any other person or group, directly or indirectly,
against anyone who, in good faith, reports evidence of a material
violation or provides assistance to the Committee or any other
person or group, including regulatory authorities, investigating
a report. The Committee shall seek to maintain the
confidentiality of any person who submits a report and who asks
that his or her identity remain confidential and shall not make
any effort, or tolerate any effort made by any other person or
group, to ascertain the identity of any person who makes a report
anonymously.
(e). Oversight Responsibilities. The Committee will undertake an
annual review of these Procedures and the reporting and
investigation systems to determine whether they are functioning
properly. The Boards of Directors of the Funds have reviewed and
adopted these Procedures. The Boards of Directors will review
these Procedures periodically to assure that they appropriately
address then-existing requirements for attorney up-the-ladder
reporting.
11. The Committee shall review this Charter at least annually and recommend
any changes to the full Board of Directors.
12. This Charter may be altered, amended or repealed, or a new Charter may
be adopted, by the Board by the affirmative vote of a majority of all the
members of the Board, including a majority of the "non-interested" Board members
(within the meaning of the Investment Company Act of 1940, as amended).
13. The Chief Executive Officer ("CEO") of the Fund shall certify to the
Audit Committee of the Fund annually that he is not aware of any violation by
the Fund of any corporate governance standards or policies to which the Fund is
subject. In addition, the CEO of the Fund must promptly notify the Audit
Committee in writing after any executive officer of the Fund becomes aware of
any material non-compliance with any applicable corporate governance listing
standard or policy.
14. The Fund shall provide the NYSE, with respect to any subsequent changes
to the composition of the Audit Committee or otherwise approximately once each
year, written confirmation of the determinations required by Section 3 above.
15. The CEO of the Fund shall certify to the NYSE annually that he is not
aware of any violation by the Fund of the NYSE corporate governance listing
standards and such certification shall be included in the Fund's annual report
to shareholders. If the CEO of the Fund provides notice to the NYSE upon receipt
of any report by any executive officer of any material non-compliance with any
applicable provisions of the NYSE corporate governance listing standards, copies
of any such certification or notice shall be provided to the Audit Committee of
the Fund.
Adopted January 23, 2004
PROXY
BOULDER TOTAL RETURN FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Common Stock of Boulder Total Return Fund,
Inc., a Maryland corporation (the "Fund"), hereby appoints Stephen C. Miller,
Carl D. Johns, and Thomas N. Calabria, or any of them as proxies for the
undersigned, with full powers of substitution in each of them, to attend the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the
Doubletree La Posada Resort, 4949 E. Lincoln Drive, Scottsdale, Arizona at 9:00
a.m. Mountain Standard Time (local time), on May 18, 2004, and any adjournments
or postponements thereof, to cast on behalf of the undersigned all votes that
the undersigned is entitled to cast at the Annual Meeting and to otherwise
represent the undersigned at the Annual Meeting with all the powers possessed by
the undersigned if personally present at the Meeting. The votes entitled to be
cast will be cast as instructed below. If this Proxy is executed but no
instruction is given, the votes entitled to be cast by the undersigned will be
cast "FOR" each of the nominees for Director and "FOR" each of the other
proposals described in the Proxy Statement. The undersigned hereby acknowledges
receipt of the Notice of Annual Meeting and Proxy Statement. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Meeting. A majority of the proxies present and acting
at the Annual Meeting in person or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 THROUGH 12.
Please refer to the Proxy Statement for a discussion of the Proposals.
1 Election of Directors: Nominees are Richard I. Barr, Joel W. Looney, Alfred
G. Aldridge, Jr., Susan L. Ciciora, and Stephen C. Miller.
FOR____ WITHHOLD___ FOR ALL EXCEPT ___
Instruction: If you do not wish your shares voted "for" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted "For" the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ELECTION OF
ALL THE NOMINEES
STOCKHOLDERS MAY VOTE WITH RESPECT TO ALL OF THE PROPOSALS 2 THROUGH 12 BY
MAKING THE APPROPRIATE OMNIBUS SELECTION TO THE RIGHT
FOR ___ AGAINST ___ ABSTAIN___
2 An amendment to the Fund's charter (the "Charter") to declassify the Board
and provide for annual election of Directors FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
3 An amendment to the Charter providing that Directors shall be elected by a
plurality of votes cast at a meeting at which a quorum is present
FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
4 An amendment to the Charter repealing a provision stating that Directors
may be removed only by the affirmative vote of the holders of at least 80%
of the class of stock entitled to elect that Director
FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
5 An amendment to the Charter providing that the Secretary of the Fund shall
call a special stockholders meeting upon the written request of the holders
of 25% of outstanding shares entitled to vote at the meeting.
FOR___ AGAINST___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
6 An amendment to the Charter vesting in the stockholders the power to amend
or adopt Bylaws by the affirmative vote of a majority of votes cast at a
meeting at which a quorum is present FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
7 An amendment to the Charter prohibiting the Fund from opting into any
provision of the Maryland Unsolicited Takeovers Act
FOR___ AGAINST ___ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
8 An amendment to the Charter to alter the vote required to effect certain
extraordinary corporate transactions FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
9 An amendment to the Charter to establish the maximum number of Directors at
five FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
10 An amendment to the Charter providing that upon redemption of all of the
Fund's Preferred Stock, the term of the Directors elected by the holders of
the Preferred Stock will automatically terminate
FOR___ AGAINST ___ ABSTAIN___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
11 An amendment to the Charter repealing a provision requiring that certain
amendments to various other provisions of the Charter be approved by the
holders of at least 80% of the shares of the Fund's Common Stock and
Preferred Stock, voting together as a single class, and 80% of the shares
of the Fund's Preferred Stock, voting separately
FOR___ AGAINST ___ ABSTAIN___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
12 A proposal to amend and restate the Charter, the implementation of which is
contingent on the approval of Proposals 2 through 12
FOR___ AGAINST ___ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
13 TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON ANY OTHER MATTER THAT
MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF IN THE DISCRETION OF THE PROXY HOLDER
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EACH should sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature: -------------------------
Date: -------------------------
Signature: -------------------------
Date: -------------------------
[AMPS PROXY CARD]
PROXY
BOULDER TOTAL RETURN FUND, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Taxable Auction Market Preferred Stock
("AMPS") of Boulder Total Return Fund, Inc., a Maryland corporation (the
"Fund"), hereby appoints Stephen C. Miller, Carl D. Johns, and Thomas N.
Calabria, or any of them as proxies for the undersigned, with full powers of
substitution in each of them, to attend the Annual Meeting of Stockholders (the
"Annual Meeting") to be held at the Doubletree La Posada Resort, 4949 E. Lincoln
Drive, Scottsdale, Arizona at 9:00 a.m. Mountain Standard Time (local time), on
May 18, 2004, and any adjournments or postponements thereof, to cast on behalf
of the undersigned all votes that the undersigned is entitled to cast at the
Annual Meeting and to otherwise represent the undersigned at the Annual Meeting
with all the powers possessed by the undersigned if personally present at the
Meeting. The votes entitled to be cast will be cast as instructed below. If this
Proxy is executed but no instruction is given, the votes entitled to be cast by
the undersigned will be cast "FOR" each of the nominees for Director and "FOR"
each of the other proposals described in the Proxy Statement. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement.
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Meeting. A majority of the proxies present and
acting at the Annual Meeting in person or by substitute (or, if only one shall
be so present, then that one) shall have and may exercise all of the power and
authority of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
If stockholders do not approve Proposal 2, AMPS stockholders will not be
entitled to vote on Directors at this Meeting and thus their votes cast under
Proposal 1 will be disregarded.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 THROUGH 12.
Please refer to the Proxy Statement for a discussion of the Proposals.
1 Election of Directors: Nominees are Richard I. Barr and Susan L. Ciciora
FOR____ WITHHOLD___ FOR ALL EXCEPT ___
Instruction: If you do not wish your shares voted "for" a particular nominee,
mark the "For All Except" box and strike a line through the name(s) of the
nominee(s). Your shares will be voted "For" the remaining nominee(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" ELECTION OF
ALL THE NOMINEES
STOCKHOLDERS MAY VOTE WITH RESPECT TO ALL OF THE PROPOSALS 2 THROUGH 12 BY
MAKING THE APPROPRIATE OMNIBUS SELECTION TO THE RIGHT
FOR ___ AGAINST ___ ABSTAIN___
2 An amendment to the Fund's charter (the "Charter") to declassify the Board
and provide for annual election of Directors FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
3 An amendment to the Charter providing that Directors shall be elected by a
plurality of votes cast at a meeting at which a quorum is present
FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
4 An amendment to the Charter repealing a provision stating that Directors
may be removed only by the affirmative vote of the holders of at least 80%
of the class of stock entitled to elect that Director
FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
5 An amendment to the Charter providing that the Secretary of the Fund shall
call a special stockholders meeting upon the written request of the holders
of 25% of outstanding shares entitled to vote at the meeting.
FOR___ AGAINST___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
6 An amendment to the Charter vesting in the stockholders the power to amend
or adopt Bylaws by the affirmative vote of a majority of votes cast at a
meeting at which a quorum is present FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
7 An amendment to the Charter prohibiting the Fund from opting into any
provision of the Maryland Unsolicited Takeovers Act
FOR___ AGAINST ___ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
8 An amendment to the Charter to alter the vote required to effect certain
extraordinary corporate transactions FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
9 An amendment to the Charter to establish the maximum number of Directors at
five FOR___ AGAINST ___ ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
10 An amendment to the Charter providing that upon redemption of all of the
Fund's Preferred Stock, the term of the Directors elected by the holders of
the Preferred Stock will automatically terminate
FOR___ AGAINST ___ ABSTAIN___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
11 An amendment to the Charter repealing a provision requiring that certain
amendments to various other provisions of the Charter be approved by the
holders of at least 80% of the shares of the Fund's Common Stock and
Preferred Stock, voting together as a single class, and 80% of the shares
of the Fund's Preferred Stock, voting separately
FOR___ AGAINST ___ ABSTAIN___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
12 A proposal to amend and restate the Charter, the implementation of which is
contingent on the approval of Proposals 2 through 12
FOR___ AGAINST ___ABSTAIN ___
THE BOARD OF DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS PROPOSAL, AS MORE FULLY
DESCRIBED IN THE PROXY STATEMENT
13 TO VOTE AND OTHERWISE REPRESENT THE UNDERSIGNED ON ANY OTHER MATTER THAT
MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF IN THE DISCRETION OF THE PROXY HOLDER
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ____
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as your name appears on this Proxy. If joint owners,
EACH should sign this Proxy. When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your full title.
Signature: -------------------------
Date: -------------------------
Signature: -------------------------
Date: -------------------------