SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
----------
BRIDGES INVESTMENT FUND, INC.
(Name of Registrant as Specified in its Charter)
----------
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 transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
BRIDGES INVESTMENT FUND, INC.
256 Durham Plaza
8401 West Dodge Road
Omaha, Nebraska 68114
402-397-4700
February 16, 2006
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT
To the Shareholders of
Bridges Investment Fund, Inc.
The Annual Meeting of the shareholders of Bridges Investment Fund, Inc., a
Nebraska corporation, will be held at Happy Hollow Country Club, 1701 South
105th Street, Omaha, Nebraska, on Wednesday, March 22, 2006, at 7:00 p.m.,
Central Standard Time, for the following purposes:
1. To elect a Board of ten (10) Directors, as provided in Proposal 1
below;
2. To approve or reject the continuance of the investment advisory
contract with Bridges Investment Management, Inc. as investment
adviser to the Fund for the year commencing April 17, 2006, and ending
April 17, 2007, as more fully described in Proposal 2 below;
3. To approve or reject the ratification of the selection of Deloitte &
Touche LLP as independent public accountant for the Fund for the year
ending December 31, 2006, as provided in Proposal 3 below;
4. To approve or reject new Articles VII and IX of the Fund's Articles of
Incorporation, as more fully described in Proposal 4 below, to
increase capitalization and authorize new series;
5. To approve or reject the amendment of Article X of the Fund's Articles
of Incorporation, as more fully described in Proposal 5 below,
relating to the determination of the net asset value of the Fund;
6. To approve or reject new Article XIV of the Fund's Articles of
Incorporation, as more fully described in Proposal 6 below, providing
indemnification for directors and officers;
7. To approve or reject new Article XV of the Fund's Articles of
Incorporation, as more fully described in Proposal 7 below, providing
limitation of liability for directors;
8. To approve or reject new Article XVI of the Fund's Articles of
Incorporation, as more fully described in Proposal 8 below, to permit
in certain circumstances the elimination of the annual meeting
requirement;
9. To approve or reject all other amendments to and the restatement of
the Fund's Articles of Incorporation, as more fully described in
Proposal 9; and
10. To transact such other business as may properly come before the
meeting.
Nebraska Business Corporation Act provisions entitle Fund shareholders to
dissent from the proposed amendment and restatement of the Fund Articles of
Incorporation (Proposals 4-9) and to obtain the "fair value" of their shares.
In order to qualify for those rights, you must (1) not vote in favor of any
proposal if you intend to exercise your right to dissent on such proposal(s),
(2) deliver written notice of your intent to dissent to the Fund prior to the
vote on any such proposal(s), (3) make a written demand for appraisal in
accordance with Fund notice provided after shareholder approval of any
proposal(s), and (4) otherwise comply with the Nebraska law procedures for
exercising dissenters' appraisal rights. See "Rights of Dissenting
Shareholders" in the accompanying Fund Proxy Statement for a more detailed
description of such rights.
This proxy is solicited by the Board of Directors, to be voted at the
Annual Meeting or any adjournment thereto. The cost of the Proxy solicitations
will be paid by the investment adviser for the Fund. Additional solicitation
may be made by mail, personal interview, or telephone by Fund personnel, who
will not be compensated therefore. The cost of any such additional solicitation
will also be paid by the Fund's investment adviser. This proxy statement is
first being mailed to shareholders on or around February 21, 2006.
If you do not expect to be present, please sign the enclosed Proxy and mail
it to Proxy Tabulator, P.O. Box 9112, Farmingdale, New York 11735. All valid
Proxies obtained will be voted in favor of the election of directors, unless
specified to the contrary. With respect to the approval of the investment
advisory contract (Proposal 2 above), the ratification of the selection of
accountants (Proposal 3 above), and the amendment and restatement of the
Articles of Incorporation (Proposals 4-9 above), all valid Proxies will be voted
in accordance with the designation on the Proxies. If no designation is made,
Proxies will be voted in favor of the proposals. Any shareholder has the power
to revoke his or her Proxy at any time prior to the voting thereof by sending a
letter to the Fund's office, or by executing a new Proxy. The giving of a Proxy
will not affect your right to vote in person if you attend the Annual Meeting.
At the beginning of the meeting, all shareholders in attendance will be given an
opportunity to revoke their Proxies and to vote personally on each matter
described herein.
The Annual Report for the year ended December 31, 2005, which is being
mailed with this Proxy Statement, includes a statement of assets and
liabilities as of December 31, 2005, and a statement of income and expenses for
the year ended that date. Any shareholder who desires additional copies may
obtain them upon request at the office of the Fund, 256 Durham Plaza, 8401 West
Dodge Road, Omaha, Nebraska 68114.
The Board of Directors has fixed the close of business on January 31,
2006, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting. The transfer books of the Fund
will not be closed.
On January 31, 2006, the Fund had outstanding 2,317,830 shares of capital
stock, par value $1 per share. In the election of directors, shareholders are
entitled to cumulative voting, which means that each share is entitled to as
many votes as there are directors to be elected. Such votes may all be cast for
one nominee or distributed among as many nominees and in such proportions as
the holder sees fit. The ten nominees with the most votes will be elected as
directors (Proposal 1). Unless otherwise instructed, the proxy holders will
vote the proxies received by them equally for each nominee shown in this Proxy
Statement. In other matters, each share is entitled to one vote. The
affirmative vote of the holders of a majority of the outstanding shares of the
capital stock entitled to vote at the Annual Meeting is required to approve the
continuance of the investment advisory contract (Proposal 2). The affirmative
vote of the holders of a majority of the outstanding shares of capital stock
present and entitled to vote either in person or by proxy is required to
approve the ratification of Deloitte and Touche LLP as the Fund's independent
public accountants for the year ending December 31, 2006 (Proposal 3). A
two-thirds majority vote of the holders of all of the votes entitled to be cast
either in person or by proxy is required to approve the amendment and
restatement of the Fund's Articles of Incorporation (Proposals 4-9).
Votes will be counted by the inspector of election appointed for the
meeting, who will separately count "For" and (with respect to proposals other
than the election of directors) "Against" votes, abstentions and broker
non-votes. A "broker non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that proposal and has
not received instructions with respect to that proposal from the beneficial
owner (despite voting on at least one other proposal for which it does have
discretionary authority or for which it has received instructions). Abstentions
will be counted toward the vote total for each proposal, and will have the same
effect as "Against" votes. With respect to Proposals 1 and 3, broker non-votes
have no effect and will not be counted toward the vote total for any proposal.
With respect to Proposals 2 and 4 through 9, broker non-votes will have the
same effect as "Against" votes.
In order to transact business at the Annual Meeting, a quorum must be
present. Under the Fund's By-Laws, a quorum is present if the holders of a
majority of the total number of outstanding shares as of the record date are
represented at the Annual Meeting either in person or by proxy. Abstentions and
broker non-votes will be counted for the purpose of determining whether a
quorum is present.
PROPOSAL ONE
ELECTION OF DIRECTORS
In accordance with the Fund's Articles of Incorporation and By-Laws, the
Fund's Board of Directors set the size of the Fund's Board of Directors at ten
(10) directors. The Fund's By-Laws provide for the election of these directors
who will serve until the next Annual Meeting of the shareholders and until
their successors are elected and qualified. The Fund's Board of Directors has
amended the Fund's By-Laws to provide the Board of Directors discretion to
select the date and time of the Annual Meeting, provided such date is no longer
than six months after the end of the Fund's fiscal year or fifteen months after
the Fund's last annual meeting.
2
In April, 2003, the Fund's Administration and Nominating Committee adopted
a retirement policy whereby directors of the Board will not stand for
reelection in the year in which that director becomes 72 unless the
Administration and Nominating Committee determines that an exception is
applicable to an individual that continues to be employed in an executive
position with a service provider of the Fund or an individual that has a
significant portion of his or her net worth invested in the Fund. The
Administration and Nominating Committee has granted an exception from the
application of such policy to Mr. Edson L. Bridges II in view of his 43 years
of experience with the leadership and management of the Fund and its affiliates
and to Mr. Estabrook and Mr. Smith in recognition of their families'
significant holdings in the Fund.
The persons named in the enclosed Proxy intend to nominate and vote in
favor of the election of the nominees listed below, all of whom have consented
to serve the term for which they are standing for election. If for any reason
any of the nominees shall become unavailable for election, the vacancy may be
filled by the Board of Directors in accordance with the By-Laws, and the Proxy
will be voted for nominees selected by the Board of Directors, unless the Board
of Directors determines not to fill such vacancy.
The determination of an interested person is based on the definition in
Section 2(a)(19) of the Investment Company Act of 1940 and Securities and
Exchange Commission Release (Release No. IC-24083, dated October 14, 1999),
providing additional guidance to investment companies about the types of
professional and business relationships that may be considered to be material
for purposes of Section 2(a)(19). Interested persons include a director or
officer of the Fund who has a significant or material business or professional
relationship with the Fund's investment adviser, Bridges Investment Management,
Inc. Those individuals who are not "interested persons" are disinterested
persons for this disclosure. Bridges Investment Fund, Inc. considers these
proposed Board members to be "independent directors" exercising care, diligence
and good business judgment with respect to the governance of the Fund.
Two Fund directors, John T. Reed and Janice D. Stoney, have elected not to
stand for re-election as Board members after the 2006 Annual Meeting of
Shareholders. At December 31, 2005, Mr. Reed beneficially owned 32 shares, and
Mrs. Stoney owned 1,925 shares, or 0.08% of the Fund shares.
The following information is furnished as to the proposed nominees whose
terms of office will run from March 22, 2006 to the 2007 annual meeting and
until their successors are elected and qualified:
Disinterested Persons
Also Known As Independent Directors
Number and
Percentage of
Fund Shares
Beneficially
Name, Age, Position with Owned as of
Fund and Term of Office Principal Occupation(s) and Directorships* December 31, 2005
- ---------------------------- ------------------------------------------------------ ------------------
N. Phillips Dodge, Jr., 69 Mr. Dodge is President of N. P. Dodge Company, a 5,176 shares
leading commercial and residential real estate 0.22%
Director brokerage concern in the area of Omaha, Nebraska.
(1983-present) Mr. Dodge has held this position since July, 1978.
Mr. Dodge is also a principal officer and director of
a number of subsidiary and affiliated companies in
the property management, insurance, and real estate
syndication fields. Mr. Dodge became a Director of
American States Water Company (formerly
Southern California Water Company) in April, 1990,
and a Director of the Omaha Public Power District
as of January 5, 2000, for a six year term.
3
Number and
Percentage of
Fund Shares
Beneficially
Name, Age, Position with Owned as of
Fund and Term of Office Principal Occupation(s) and Directorships* December 31, 2005
- -------------------------- ------------------------------------------------------ ------------------
John W. Estabrook, 78 Mr. Estabrook was the Chief Administrative Officer 47,142 shares
of the Nebraska Methodist Hospital and its holding 2.04%
Director company, Nebraska Methodist Health System, in
(1979-present) Omaha, Nebraska, beginning June, 1959. Effective
January 1, 1987, Mr. Estabrook relinquished the
position of President of Nebraska Methodist
Hospital, assuming the Presidency of the Nebraska
Methodist Health System until his retirement on
August 31, 1992.
Jon D. Hoffmaster, 57 From 1987 to 1998, Mr. Hoffmaster was employed 504 shares
by InfoUSA, where he served as President and 0.01%
Director Chief Operating Officer, Chief Financial Officer,
(1993-present) Executive Vice President and director. From 1980
to 1987, Mr. Hoffmaster was President and Chief
Executive Officer of First National Bank of
Bellevue, Nebraska. Mr. Hoffmaster has been
determined to be an "audit committee financial
expert" within the meaning of the Sarbanes Oxley
Act of 2002 and the regulations related thereto by
the Fund's Board of Directors. Mr. Hoffmaster
serves as the Chairman of the Audit Committee.
As of June 1, 2003, Mr. Hoffmaster has been the
President of W.F. Enterprises, LLC, a recreational
vehicle company.
John J. Koraleski, 55 Mr. Koraleski was elected Chairman on April 13, 2,630 shares
2005. Mr. Koraleski is Executive Vice President -- 0.11%
Chairman Marketing & Sales of the Union Pacific Railroad
(2005-present) Company headquartered in Omaha, Nebraska.
Mr. Koraleski was employed by Union Pacific
in June, 1972, where he has served in various
Director capacities. He was promoted to his present position
(1995-present) in March, 1999. As the Executive Vice President --
Marketing & Sales, Mr. Koraleski is responsible
for all sales, marketing, and commercial activities
for the railroad and its Union Pacific Distribution
Services subsidiary. He is a member of the Railroad's
Operating Committee. Currently, Mr. Koraleski is
Vice President -- Finance and a Member of the
Board of Trustees for Union Pacific Foundation.
Prior to his current officer position with the
Railroad, Mr. Koraleski was the Railroad's Chief
Financial Officer, Controller of Union Pacific
Corporation. In those positions, he was responsible
for the Railroad's Information Technologies and
Real Estate Departments. Mr. Koraleski has been
designated as the Lead Independent Director of
the Fund.
4
Number and
Percentage of
Fund Shares
Beneficially
Name, Age, Position with Owned as of
Fund and Term of Office Principal Occupation(s) and Directorships* December 31, 2005
- -------------------------- ----------------------------------------------------- --------------------
Gary L. Petersen, 62 Mr. Petersen is the retired President of Petersen 47,527 shares
Manufacturing Co. Inc. of DeWitt, Nebraska. 2.06%
Director Mr. Petersen commenced employment with the
(1987-present) Company in February, 1966. He became President
in May, 1979, and retired in June, 1986. Petersen
Manufacturing Co. Inc. produced a broad line
of hand tools for national and worldwide
distribution under the brand names Vise-Grip,
Unibit, Prosnip, and Punch Puller. Mr. Petersen
serves as Chairman of the Fund's Administration
and Nominating Committee.
Roy A. Smith, 71 Mr. Smith was President of H. P. Smith Motors, 27,768 shares (1)
Inc. for decades until the Company was sold to a 1.20%
Director new owner in the Third Quarter of 1997. Mr. Smith
(1976-present) is currently President of Old Mill Toyota of Omaha,
Nebraska, and is a director of the Mid City Bank
of Omaha.
L.B. Thomas, 69 Mr. Thomas retired in October, 1996, from 875 shares
ConAgra, Inc. headquartered in Omaha, Nebraska. 0.04%
Director He retired as Senior Vice President, Risk Officer
(1992-present) and Corporate Secretary. ConAgra had sales of
approximately $25 billion world-wide and was the
second largest processor of food products in the
United States when Mr. Thomas retired. He was
also a member of ConAgra's Management
Executive Committee. Mr. Thomas joined ConAgra
as assistant to the Treasurer in 1960. He was named
Assistant Treasurer in 1966; Vice President, Finance
in 1969; Vice President, Finance and Treasurer in
1974; added the Corporate Secretary responsibility
in 1982; and became Senior Vice President in 1991.
Mr. Thomas is a director of Lozier Corp. located
in Omaha, Nebraska and the Exchange Bank of
Mound City, Missouri, and a member and treasurer
of the Nebraska Methodist Health System Board
of Directors.
5
Number and
Percentage of
Fund Shares
Beneficially
Name, Age, Position with Owned as of
Fund and Term of Office Principal Occupation(s) and Directorships* December 31, 2005
- -------------------------- ----------------------------------------------------- ------------------
John K. Wilson, 51 Mr. Wilson is President of Durham Resources, 2,081 shares
LLC. Durham Resources, LLC is a privately held 0.09%
Director investment company headquartered in Omaha,
(1999-present) Nebraska. Mr. Wilson commenced his career with
Durham Resources, LLC in February, 1983. Prior to
becoming President in May, 1994, Mr. Wilson
served in the position of Secretary -- Treasurer and
Vice President -- Finance. Mr. Wilson currently
serves on the Advisory Board -- U.S. Bank
National Association, Omaha, Nebraska and as a
director of MDU Resources Group, Inc.
headquartered in Bismarck, North Dakota.
Mr. Wilson has been determined to be an "audit
committee financial expert" within the meaning of
the Sarbanes Oxley Act of 2002 and the regulations
related thereto by the Fund's Board of Directors.
- ------------
(1) This includes 3,906 shares that are held for Roy A. Smith's niece and
nephew in two trusts, and for which Mr. Smith is the custodian and has the
right to vote the shares.
* Except as otherwise indicated, each individual has held the position shown
or other positions in the same company for the last five years.
The address for all Fund Directors is 256 Durham Plaza, 8401 West Dodge
Road, Omaha, Nebraska 68114.
6
Interested Person Directors and Officers
The following Directors and Officers are interested persons of the Fund.
The determination of an interested person is based on the definition in Section
2(a)(19) of the Investment Company Act of 1940 and Securities and Exchange
Commission Release (Release No. IC-24083, dated October 14, 1999), providing
additional guidance to investment companies about the types of professional and
business relationships that may be considered to be material for purposes of
Section 2(a)(19).
Number and
Percentage of
Fund Shares
Beneficially
Name, Age, Position with Owned as of
Fund and Term of Office Principal Occupation(s) and Directorships* December 31, 2005
- ------------------------------ ----------------------------------------------------- -----------------------
Edson L. Bridges II, 73 (1) Mr. Bridges became Vice-Chairman on April 13, 79,000 shares
2005. Mr. Bridges had previously served as (2), (3)
Vice-Chairman Chairman, Chief Executive Officer, and President 3.43%
(2005-present) of the Fund. Mr. Bridges was replaced by Edson L.
Bridges III as Chief Executive Officer of the Fund
Chairman on April 13, 2004. In September, 1959, Mr. Bridges
(1997-2005) became associated with the predecessor firm to
Bridges Investment Counsel, Inc. and is presently
Chief Executive Officer the President and Director of Bridges Investment
(1997-2004) Counsel, Inc. Mr. Bridges is also President and
Director of Bridges Investor Services, Inc.
Director Mr. Bridges is President and Director of Provident
(1963-present) Trust Company, chartered to conduct business on
March 11, 1992, and, since December 2000,
Director of Bridges Investment Management, Inc.
Edson L. Bridges III, 47 (4) Mr. Bridges has been a full-time member of the 50,591 shares
professional staff of Bridges Investment Counsel, (5), (6)
President Inc. since August 1983. Mr. Bridges has been 2.19%
(1997-present) responsible for securities research and the
investment management for an expanding base of
Chief Executive Officer discretionary management accounts, including the
(2004-present) Fund, for more than nine years. Mr. Bridges was
elected President of Bridges Investment Fund, Inc.
Director on April 11, 1997, and he assumed the position of
(1991-present) Portfolio Manager at the close of business on that
date. Mr. Bridges became Chief Executive Officer
of the Fund on April 13, 2004. Mr. Bridges has
been Executive Vice President of Bridges
Investment Counsel, Inc. since February, 1993, and
he is a Director of that firm. Mr. Bridges is an
officer and a Director of Bridges Investor Services,
Inc. and Provident Trust Company. Since December
2000, Mr. Bridges has been President and Director
of Bridges Investment Management, Inc.
Mr. Bridges became a Director of Stratus Fund,
Inc., an open-end, regulated investment company
located in Lincoln, Nebraska, in October, 1990
and is Chairman of the Audit Committee of the
Stratus Fund.
- ------------
* Except as otherwise indicated, each individual has held the position shown
or other positions in the same company for the last five years.
7
(1) Edson L. Bridges II is the father of Edson L. Bridges III. Mr. Bridges II
is an interested person because he is a director and officer of the Fund's
investment adviser, Bridges Investment Management, Inc.
(2) 9,070 shares are owned in Mr. Bridges' name and 1,486 shares as Edson L.
Bridges II Investment Counsel in California (a.k.a. Bridges Investment
Advisers); 7,595 shares are held by a corporate trustee for the Bridges
Investment Counsel, Inc. Profit Sharing Trust, and 5,006 shares represent a
beneficial interest in Bridges Investment Counsel, Inc. Pension Trust.
These shares represent estimated interests in the Trusts' holding of the
Fund's shares. In addition, Mr. Bridges owns 3,176 shares held by U.S. Bank
National Association as Custodian for master plan Individual Retirement Act
and Simplified Employee Pension accounts and a Non-Deductible IRA. Sally S.
Bridges, Mr. Bridges' wife, owns 3,260 shares in her own name and 1,269
shares in a master plan IRA account, and 63 shares in a Non-Deductible IRA.
(3) Edson L. Bridges II acts as a sole trustee for two trusts that are
registered with the Fund's transfer agent in the name of the grantor or the
principal beneficiary of the trust. These trusts have an ownership of
10,910 shares of the Fund outstanding as of December 31, 2005. Mr. Bridges
also serves as a co-trustee of five other trusts with individual trustees
and corporate trustees for 25,795 shares and co-trustee with Edson L.
Bridges III of two trusts with individual trustees for 11,370 shares for a
total of 37,165 shares of the Fund as of December 31, 2005. These shares
are reported in the beneficial ownership interests of Mr. Bridges solely
because of his voting power. The 11,370 shares of the Fund are also
reported in the beneficial ownership interests of Edson L. Bridges III. See
footnote (6). Mr. Bridges' practice with respect to voting shares of the
Fund will be to deliver proxies to the beneficial owners, other
co-trustees, or other representatives for the trustees' accounts in all
situations where such policy is administratively feasible and legally
possible.
(4) Edson L. Bridges III is the son of Edson L. Bridges II. Mr. Bridges III is
an interested person because he is a director and officer of the Fund and a
director and officer of the Fund's investment adviser, Bridges Investment
Management, Inc.
(5) Mr. Bridges' ownership is represented by 3,041 shares held in the Bridges
Investment Counsel, Inc. Profit Sharing Trust; 3,153 shares held in the
Pension Trust of Bridges Investment Counsel, Inc. by the Trustees of these
plans; 5,303 shares held in a 401(k) Plan and Trust for employees of
Bridges Investment Counsel, Inc. and 1,266 shares in an IRA Custodial
Account held by U.S. Bank National Association. Mr. Bridges also has an 814
share interest in a family trust in addition to a joint account with Tracy
Taylor Bridges, Mr. Bridges' wife, with 2,993 shares. Tracy Taylor Bridges
holds 317 shares in an IRA Custodial Account and 20,058 shares in a 401(k)
Plan. In addition, 367 shares are held in Educational IRA Accounts for each
of Mr. Bridges three children, Edson L. IV, Taylor K. and Mary E. Bridges,
and 1,909 shares are held in a custodial account for each of Mr. Bridges
three children.
(6) Edson L. Bridges III is named as co-trustee with Edson L. Bridges II for
two trusts with a total of 11,370 shares of capital stock of the Fund as of
December 31, 2005. The capital stock owned is registered with the Fund's
transfer agent in the name of the trust, and these shares are reported in
the beneficial ownership interests of Mr. Bridges III solely because of his
voting power. The 11,370 shares of the Fund are also reported in the
beneficial ownership interests of Edson L. Bridges II. See footnote (3).
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE
IN FAVOR OF EACH NOMINEE FOR DIRECTOR.
8
Bridges Investment Counsel, Inc., the former investment adviser to the
Fund, has a Cash or Deferred Profit Sharing Plan and Trust (the "BIC Profit
Sharing Trust") and a Pension Plan and Trust ("BIC Pension Plan") for its
employees, and both include some persons who are not officers or directors of
the Fund. Provident Trust Company, as non-discretionary Trustee of the BIC
Profit Sharing Trust, 401-K and BIC Pension Plan held a total of 72,122 shares
of the Fund on behalf of the participants. The beneficial interests of the
officers and employees of Bridges Investment Counsel, Inc. in the BIC Profit
Sharing Plan and the BIC Pension Plan who are also directors and officers of
the Fund are included in their statements of beneficial stock ownership based
upon December 31, 2005 allocations of percentage interests in the retirement
plans for each employee.
Provident Trust Company of Omaha, Nebraska, had 190 shareholders as of
December 31, 2005, no one of whom owned more than 4.9% of the total outstanding
voting shares of common stock. Provident Trust Company is managed by personnel
of Bridges Investment Counsel, Inc. under a perpetual Management Agreement. At
December 31, 2005, Provident Trust Company maintained accounts that held shares
of Bridges Investment Fund, Inc. for its customers in the following capacities
where Provident Trust Company has the right to vote the Fund shares: 139,635
shares as sole trustee and 17,145 shares as co-trustee with an individual. The
total shares held by Provident Trust Company in these two capacities is
156,780. The number of shares that Provident Trust Company has the right to
vote in its capacity as trustee or co-trustee is 6.80% of the total Fund shares
outstanding on December 31, 2005. Provident Trust Company does not own any
shares of the Fund as principal. The records of the transfer agent for the Fund
maintain the ownership of the shares in the name of the trust account or the
beneficial owner. Ownership interests are reported in this Proxy Statement in
the name of the trust account or the beneficial owners. Provident Trust
Company's practice with respect to voting shares of the Fund will be to deliver
proxies to the beneficial owners or other representatives for the customer
accounts in all situations where such policy is administratively feasible and
legally possible. Provident Trust Company has officers who are not employees of
Bridges Investment Counsel, Inc., employees of Bridges Investment Management,
Inc. or officers of Bridges Investment Fund, Inc. who may vote proxies for
trust customers in those instances where an independent point of view and the
avoidance of a conflict of interest are important considerations. Fund
Directors John W. Estabrook, Edson L. Bridges II and Edson L. Bridges III are
also Directors of Provident Trust Company.
9
The officers of the Fund as disclosed herein have been elected by the
Board of Directors on April 12, 2005, and their terms of office run from April
13, 2005, to April 13, 2006.
Additional Officers of the Fund
Number and
Percentage of
Fund Shares
Beneficially
Name, Age, Position with Owned as of
Fund and Term of Office Principal Occupation(s) and Directorships* December 31, 2005
- -------------------------- ------------------------------------------------------ ------------------
Susan T. Bailey, 42 Mrs. Bailey has been an employee of Bridges 104 shares
Investment Counsel, Inc. since February 24, 2003. 0.01%
Assistant Secretary Mrs. Bailey is currently Executive Assistant for
(2004-Present) Edson L. Bridges II and Randall D. Greer, and she
handles administrative matters for the various
businesses operated by the Firm including the Fund.
Prior to her employment at Bridges Investment
Counsel, Inc., Mrs. Bailey's principal occupation
has been working as a sales assistant for several
securities brokerage firms, beginning with Piper
Jaffray in September, 1992
Nancy K. Dodge, 44 Mrs. Dodge has been an employee of Bridges 3,210 shares
Investment Counsel, Inc. since January, 1980 and 0.14%
Treasurer Bridges Investment Management, Inc. since 1994.
(1986-present) Her career has progressed through the accounting
department of that Firm, to her present position as
Vice President of Fund Services. Mrs. Dodge is the
person primarily responsible for overseeing day to
day operations for the Fund, and she is also the key
person for handling relations with shareholders, the
custodian bank, transfer agent, and the auditor.
Mrs. Dodge is a Vice President of Bridges
Investment Management, Inc., an officer and
Director of Bridges Investor Services, Inc., and a
Trust Administrator for Provident Trust Company.
Starr Frohlich, 33 Ms. Frohlich also serves as a Vice President of U.S. None
Bancorp Fund Services, LLC and as Compliance
Assistant Secretary Administrator for a select group of U.S. Bancorp
(2004-present) mutual fund clients. Ms. Frohlich reviews all 1940
Act, SEC and IRS compliance, prepares financial
statements, facilitates board meetings, educates fund
boards concerning regulatory issues, prepares tax
returns and meets SEC filing requirements on behalf
of mutual fund clients. Prior to joining U.S.
Bancorp in 1997, Ms. Frohlich worked for Fabcon,
Inc., a manufacturing company located in
Minneapolis, Minnesota, as a Senior Accountant
working mainly with financial statement preparation
and expense analysis. Ms. Frohlich received her
Bachelor of Science in Business degree in
accounting from the University of Minnesota.
10
Number and
Percentage of
Fund Shares
Beneficially
Name, Age, Position with Owned as of
Fund and Term of Office Principal Occupation(s) and Directorships* December 31, 2005
- -------------------------- ------------------------------------------------------ ------------------
Randall D. Greer, 54 Mr. Greer has been an employee of Bridges 36,290 shares
Investment Counsel, Inc. and Bridges Investment 1.57%
Executive Vice President Management, Inc. since December 1, 2002.
(2005-present) Mr. Greer was the Chief Investment Officer of
Westchester Capital Management, Inc. from
Chief Compliance Officer November, 2000 through November, 2002. Between
(2004-present) October, 1975 and February, 2000, Mr. Greer held
several management positions with Kirkpatrick,
Vice President Pettis, Smith, Polian Inc. in Omaha, Nebraska, most
(2003-present) recently as a Principal. His responsibilities at
Kirkpatrick Pettis included research, portfolio
management and executive administration.
Mr. Greer is a full-time member of the professional
staff of Bridges Investment Counsel, Inc., and Vice
President of Bridges Investment Management, Inc.,
and is responsible for planning and administration
as well as investment management for an expanding
base of client accounts. Mr. Greer was appointed
Chief Compliance Officer of the Fund, as of
July 21, 2004, and Executive Vice President as of
April 13, 2005. Mr. Greer has also served as a Vice
President of Bridges Investor Services, Inc. since
April 8, 2003 and as a Vice President of Provident
Trust Company since December 10, 2002.
Jason Hadler, 30 Mr. Hadler, CPA, is an Assistant Vice President at None
U.S. Bancorp Fund Services, LLC and provides
Assistant Treasurer fund administration duties for a select group of U.S.
(2004-present) Bancorp mutual fund clients. In his capacity as a
Compliance Administrator, Mr. Hadler handles daily
client issues, performs 1940 Act, SEC and IRS
compliance, reviews financial statements and board
reports, coordinates the annual audit and meets SEC
filing requirements on behalf of mutual fund clients.
Prior to joining U.S. Bancorp in 2003, Mr. Hadler
worked at UMB Fund Services for five years,
where he provided administrative services to several
mutual fund families. Mr. Hadler has over eight
years' experience in the financial services industry,
including public accounting and mutual fund
accounting. Mr. Hadler is a member of the
Wisconsin Institute of Certified Public Accountants
and received a Bachelor of Science degree in
accounting from Marquette University.
11
Number and
Percentage of
Fund Shares
Beneficially
Name, Age, Position with Owned as of
Fund and Term of Office Principal Occupation(s) and Directorships* December 31, 2005
- -------------------------- ----------------------------------------------------- ------------------
Brian Kirkpatrick, 34 Mr. Kirkpatrick has been an employee of Bridges 3,961 shares
Investment Counsel, Inc. since August 24, 1992 and 0.17%
Vice President Bridges Investment Management, Inc. since 1994.
(2000-present) Mr. Kirkpatrick has been a full-time member of the
professional staff of Bridges Investment Counsel,
Inc., responsible for securities research, and the
investment management for an expanding base
of discretionary management accounts, including
the Fund, for several years. Mr. Kirkpatrick was
appointed Sub Portfolio Manager of the Fund on
April 12, 2005. Mr. Kirkpatrick is a Vice President
of Bridges Investment Management, Inc., and a
Trust Assistant for Provident Trust Company.
Mary Ann Mason, 54 Mrs. Mason has been an employee of Bridges 13,188 shares
Investment Counsel, Inc. since June, 1981 0.57%
Secretary and is Senior Vice President Operations and
(1987-present) Administration, and an employee of Bridges
Investment Management, Inc. since 1994.
Mrs. Mason is also Corporate Secretary and
Treasurer for Bridges Investment Counsel, Inc.,
Secretary, Treasurer and Trust Administrator for
Provident Trust Company, Secretary and Treasurer
for both Bridges Investor Services, Inc. and Bridges
Investment Management, Inc., and a Director of
Bridges Investor Services, Inc.
Linda Morris, 39 Mrs. Morris has been an employee of Bridges 928 shares
Investment Counsel, Inc. since August, 1992 and 0.04%
Assistant Treasurer Bridges Investment Management, Inc. since 1994.
(1999-present) Her career with Bridges Investment Counsel, Inc.
has been largely in the client accounting area.
Mrs. Morris was elected Assistant Treasurer of the
Fund in April, 1999. Mrs. Morris is also Associate
Director of Accounting for Bridges Investment
Counsel, Inc. and a Trust Assistant for Provident
Trust Company.
Kathleen J. Stranik, 62 Mrs. Stranik has been an employee of Bridges 3,162 shares
Investment Counsel, Inc. since January, 1986 and 0.14%
Assistant Secretary Bridges Investment Management, Inc. since 1994.
(1995-present) Mrs. Stranik has functioned as an executive
assistant to both Edson L. Bridges II and Edson L.
Bridges III throughout her career with the Fund.
Mrs. Stranik is Vice President of Administration
for Bridges Investment Counsel, Inc., Assistant
Secretary, Assistant Treasurer and Trust Officer for
Provident Trust Company, and Assistant Secretary
and Assistant Treasurer for Bridges Investment
Management, Inc.
12
Number and
Percentage of
Fund Shares
Beneficially
Name, Age, Position with Owned as of
Fund and Term of Office Principal Occupation(s) and Directorships* December 31, 2005
- -------------------------- -------------------------------------------------- ------------------
Trinh Wu, 48 Mrs. Wu has been an employee of Bridges 1,836 shares
Investment Counsel, Inc. and Bridges Investment 0.08%
Controller Management, Inc. since February 1, 1997. Mrs. Wu
(2001-present) has functioned as the lead accountant for the day
to day operation of the Fund. Prior to employment
at Bridges Investment Counsel, Inc., Mrs. Wu
performed operating and accounting activities for
17 years in the Estate and Trust Department of
the predecessor institutions to U.S. Bank, N.A.
Nebraska. Mrs. Wu was elected to the position of
Controller of the Fund at the October 16, 2001
meeting of the Board of Directors.
- ------------
* Except as otherwise indicated, each individual has held the position shown
or other positions in the same company for the last five years.
The address for all Fund Officers is 256 Durham Plaza, 8401 West Dodge
Road, Omaha, Nebraska 68114.
The share ownership disclosures reported herein are as of December 31,
2005. To summarize the foregoing information, the Directors and Officers of the
Fund own beneficially or of record 268,485 shares, which are equal to 11.64% of
the 2,305,765 Fund shares outstanding on December 31, 2005.
Set forth below are the dollar ranges of securities of the Fund
beneficially owned by each director as of December 31, 2005.
Dollar Range of Equity Securities in the Fund
--------------------------------------------------
$10,001- $50,001- Over
Name of Director or Nominee None $1-$10,000 $50,000 $100,000 $100,000
- -------------------------------- ------ ------------ ---------- ---------- ---------
Edson L. Bridges II ............ X
Edson L. Bridges III ........... X
N. Phillips Dodge, Jr. ......... X
John W. Estabrook .............. X
Jon D. Hoffmaster .............. X
John J. Koraleski .............. X
Gary L. Petersen ............... X
John T. Reed(1) ................ X
Roy A. Smith ................... X
Janice D. Stoney(1) ............ X
L.B. Thomas .................... X
John K. Wilson ................. X
- ------------
(1) Mr. Reed and Mrs. Stoney have elected not to stand for re-election as Board
members after the 2006 Annual Meeting of Shareholders.
Meetings
During 2005, the Board of Directors held five meetings, the Administration
and Nominating Committee held three meetings and the Audit Committee held three
meetings. Members of the various committees are listed below in this Proxy
Statement. All Fund Directors had an individual attendance record of at least
75% at all meetings of the Board of Directors and all meetings of committees of
which they are members (on a combined basis), with the exceptions of N.
Phillips Dodge, Jr. and John K. Wilson who had a 63% attendance record.
13
Compensation
The directors as a group were paid a total of $18,400 by the Fund for
their attendance at Audit Committee, Administration and Nominating Committee,
and Board of Directors meetings during 2005.
During 2006, each Director of the Fund will be paid a fee of $350 for each
meeting of the Board of Directors at which he or she is in attendance, $175 for
each Committee meeting, $125 for attendance at educational meetings, $350 for
the Audit Committee Chairman and the Administration and Nominating Committee
Chair and $500 for the Board Chairman. No fee will be paid for a committee when
such a meeting occurs in consecutive times on the same date as the meeting of
the Board of Directors. Interested Directors Edson L. Bridges II and Edson L.
Bridges III are not paid any Director fees. These guidelines for compensation
for directors were based on considerations by the Administration and Nominating
Committee that were forwarded to a session of the Independent Directors where
they were approved and passed along to the full Board of Directors for final
confirmation.
The compensation information set forth below is provided for all directors
of the Fund and for each of the executive officers or any affiliated person of
the Fund (with annual compensation in excess of $60,000) for the most recently
completed fiscal year ended December 31, 2005:
Compensation Table
------------------------------------------------------------------------
Total
Pension or Estimated Compensation
Aggregate Retirement Benefits Annual From Fund
Compensation Accrued as Part Benefits Upon Paid to
Name of Person, Position From Fund of Fund Expenses Retirement Directors
- ------------------------------ -------------- --------------------- --------------- -------------
Executive Officers:
Edson L. Bridges II, ......... None None None None
Chairman, Director
Edson L. Bridges III ......... None None None None
President, CEO and Director
Directors of the Fund:
N. P. Dodge, Jr. ............. $1,300 None None $1,300
John W. Estabrook ............ $1,900 None None $1,900
Jon D. Hoffmaster ............ $1,750 None None $1,750
John J. Koraleski ............ $2,050 None None $2,050
Gary L. Petersen ............. $1,900 None None $1,900
John T. Reed(1) .............. $2,050 None None $2,050
Roy A. Smith ................. $1,900 None None $1,900
Janice D. Stoney(1) .......... $1,900 None None $1,900
L.B. Thomas .................. $2,050 None None $2,050
John K. Wilson ............... $1,600 None None $1,600
- ------------
(1) Mr. Reed and Mrs. Stoney have elected not to stand for re-election as Board
members after the 2006 Annual Meeting of Shareholders.
With respect to Proposal 1 (the election of directors), shareholders are
entitled to cumulative voting, which means that each share is entitled to as
many votes as there are directors to be elected. Such votes may all be cast for
one nominee or distributed among as many nominees and in such proportions as
the holder sees fit. The ten (10) nominees with the most votes will be elected
as directors. Unless otherwise instructed, the proxy holders will vote the
proxies received by them equally for each nominee shown in this Proxy
Statement.
14
PROPOSAL TWO
APPROVAL OF THE CONTINUANCE OF THE
INVESTMENT ADVISORY CONTRACT
At the 2006 Annual Meeting, shareholders will be asked to consider and act
upon a proposal to continue the investment advisory contract between the Fund
and Bridges Investment Management, Inc. (BIM). If approved, the BIM investment
advisory contract would be effective as of April 17, 2006 for an additional
annual period, through April 17, 2007.
At the 2004 Annual Meeting of Fund shareholders held February 24, 2004,
shareholders of the Fund approved the new investment advisory agreement between
the Fund and Bridges Investment Management, Inc. The BIM investment advisory
agreement became effective as of April 17, 2004, and replaced the prior
investment advisory agreement with Bridges Investment Counsel, Inc. which
commenced with the Fund on April 17, 1963. The continuation of the BIM
investment advisory agreement was approved by the Fund shareholders at the 2005
Annual Meeting held March 22, 2005 for the period of April 17, 2005 through
April 16, 2006.
Terms of BIM Advisory Agreement
The BIM advisory agreement continues in effect only so long as such
continuance is specifically approved at least annually by the Board of Fund
Directors, or by vote of a majority of the outstanding voting securities of the
Fund; in either case, the terms of the BIM advisory agreement and any renewal
thereof must have been approved by the vote of a majority of directors who are
not parties to the advisory agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
The BIM advisory agreement may be terminated by either party on sixty days'
written notice and terminates automatically if assigned.
Under the BIM advisory agreement, BIM will furnish continuing investment
supervision for the Fund and through an outsourcing agreement with BIC provide
office space, facilities, and equipment. In addition, BIM will pay all of the
expenses related to registering the Fund with the Securities and Exchange
Commission under the Investment Company Act of 1940 and the Securities Act of
1933 and has agreed to pay all expenses of maintaining those registrations.
Further, under this agreement, BIM has agreed to pay all expenses of initially
qualifying and maintaining the qualification of shares of the Fund in whole or
in part under the securities laws of such states as the Fund may from time to
time designate.
For these services, the Fund agrees to pay BIM a quarterly fee of
one-eighth (1/8) of one percent (1%) of the average net asset value of the
Fund, which equals 1/2 of 1% on an annual basis, as determined by appraisals
made as of the close of each month of the applicable quarter. However, BIM has
agreed to reimburse the Fund for its total expenses (exclusive of stamp and
other taxes but including fees paid to BIM) to the extent such expenses in the
aggregate exceed one and one-half percent (1-1/2%) of the average net asset
value of the Fund for such year as determined as of the close of each month
thereof. The fees paid to BIM under the investment advisory agreement for the
fiscal year 2005 were $379,884.
Information concerning Bridges Investment Management, Inc. (BIM)
BIM is an investment advisory firm located at 256 Durham Plaza, 8401 West
Dodge Road, Omaha, Nebraska 68114. As part of its prudent long range planning
to establish an orderly and well-managed transfer of advisory relationships,
BIC formed BIM, as a wholly owned subsidiary in late 1994, and has provided
working capital and other resources to it since 1995. Effective December 15,
2000, BIM separated from BIC and is no longer a wholly-owned subsidiary of BIC.
BIM has been registered with the Securities and Exchange Commission as an
investment adviser since December 9, 1999. The following lists the principal
executive officers and directors of BIM.
Officers and Directors of BIM: Edson L. Bridges III, Director, President
and CEO; Edson L. Bridges II, Director and Executive Administrator; Deborah L.
Grant, Director, Vice President and COO; Randall D. Greer, Vice President;
Nancy K. Dodge, Vice President; Mary Ann Mason, Secretary/Treasurer; Kathleen
J. Stranik, Asst. Secretary Asst. Treasurer; Brian M. Kirkpatrick, Vice
President; Douglas R. Plahn, Vice President; and Patricia S. Rohloff, Vice
President.
As of December 31, 2005, Edson L. Bridges III owned 76.5% of the voting
common stock and 48.0% of the total equity (voting and nonvoting stock) of BIM,
with the remaining common stock owned by various BIM employees. Edson L.
Bridges II and Edson L. Bridges III, as co-trustees, have the right to vote BIM
shares
15
representing 87.7% of its voting common stock. The voting trust arrangement has
been entered into in order to comply with Nebraska Department of Banking,
Bureau of Securities regulations concerning control of investment advisory
representatives.
Since the commencement of active investment advisory operations in the
first quarter of 2001, BIM has grown to total assets under management of
approximately $377.2 million at December 31, 2005. Based on Fund net assets of
$80.7 million at December 31, 2005, the Fund represents approximately 21.4% of
BIM's total portfolio responsibilities. BIM does not advise any other
investment companies.
Evaluation by the Fund's Board of Directors
The proposal to continue the investment advisory agreement with BIM was
initially made to the independent members of the Board of Directors at a
meeting of independent directors held on November 15, 2005. This proposal was
then favorably acted upon at the meeting of the Board of Directors held on
November 15, 2005, with the Board recommending approval and submission to the
Fund shareholders for action at the Fund's 2006 Annual Meeting of shareholders.
In order for the investment advisory agreement to be adopted for an
additional year, approval by the holders of the majority of the outstanding
shares of the Fund or a majority of the independent directors is necessary. As
a matter of historical practice, the Fund has obtained the approval of both the
Fund's Board of Directors and the shareholders, and it is the Board's current
intent to continue with this practice of obtaining both Board and shareholder
approval each year.
Prior to recommending approval of the continuation of the investment
adviser agreement at their November 15, 2005, meeting, the independent
Directors of the Fund reviewed the financial resources of BIM, the investment
performance record, types of securities purchased, and asset size of the Fund
in comparison with funds of similar size and comparable investment objectives,
the operating costs relative to other funds, and other factors including the
quality of investment advice and other services set forth in a special study
prepared annually for the Board members by the investment manager. In addition,
the independent Directors reviewed the expertise, personnel, and resources BIM
is willing to commit to the management of the Fund, its compliance program, the
cost of comparable services and the benefits to be received by BIM.
With respect to BIM's financial resources, BIM provided the Fund's Board
of Directors information showing (as of June 30, 2005) total assets of
$2,163,103, no long-term debt, and total shareholders' equity of $1,827,801,
with a current ratio (current assets to current liabilities) of 4.01 and an
equity to total assets ratio of 84.5%. With respect to the investment
performance record, types of securities purchased, quality of investment
advice, and operating costs, because Edson L. Bridges III has been and will
continue as the person responsible for the day-to-day management of the Fund's
portfolio, a position he has held since April 11, 1997, and because the
transfer of the investment advisory arrangement from BIC to BIM continued the
Fund operations in similar form with minimal disruption of operations and
arrangements, the directors reviewed and focused on the Fund's past performance
and operations in their evaluation and decision.
Based on information gathered from a leading mutual fund evaluator, the
Fund directors compared the Fund's performance criteria to funds with similar
investment objectives. The total fund comparison universe varied depending on
the time frame of the comparison and other investment parameters included, but
with respect to funds with a growth and income investment objective, the Fund
ranked in the 58th percentile of 1,359 funds over a trailing 12-month period
(as of June 30, 2005), 22nd of 1,114 funds over a 3-year period, 22nd of 892
funds over a 5-year period, 38th of 276 funds over a 10-year period, and 54th
of 98 funds over a 15-year period.
The Fund directors reviewed the asset allocation of the Fund, including
the percentage of Fund assets invested in stocks (92.2% as of June 30, 2005)
and bonds (4.90% as of June 30, 2005) and the sector weighting of stocks owned
by the Fund, with 12.7% of Fund stocks held in the "information economy"
(including software, hardware, media and telecommunications stocks), 70.2% of
Fund stocks held in the "service economy" (including healthcare, consumer
services, business services and financial services), and 20.0% of Fund stocks
held in the "manufacturing economy" (including consumer goods, industrial
materials, energy and utilities).
The Fund directors reviewed a number of current ratios for the Fund's
portfolio, including the current price/ earnings ratio of Fund stocks (19.9 as
of June 30, 2005), price/cash ratio (14.9) and price/book ratio (3.6), as well
as the Fund's turnover ratio, which declined moderately to 17% in 2004, compared
to a turnover ratio average of
16
101% for a comparison group of large no-load growth funds. The directors also
reviewed the Fund's expense ratio, which was 0.85% for 2004, compared to an
average of 1.49% for a peer group of 1,497 funds selected as the comparison
group.
The Fund directors reviewed the economies of scale if Fund assets grow in
the future. Generally, as the Fund's asset base increases, the Fund should
experience a lower ratio of fees to average assets. However, these economies of
scale may be partially or totally offset by increased third party fees and
expenses in the future, and since the Fund's current expense ratio is already
low (0.85% versus 1.49% for its peer group), it may be more difficult for the
Fund to realize additional benefits in its fee structure from economies of
scale.
With respect to the Fund's compliance program, the Fund directors were
provided information concerning both the historical practices to ensure
compliance by Fund personnel, as well as current actions taken to strengthen
the Fund compliance structure, including assignment of new officers in charge
of the Fund's codes of ethics and oversight of trading policies and procedures.
The Board of Directors noted that Edson L. Bridges III has more than 20
years experience with the Fund's portfolio and thus is very familiar with the
Fund's history and operations. The Board of Directors further noted that Edson
L. Bridges III has been responsible for the day-to-day management of the Fund's
portfolio since April 11, 1997, with Brian M. Kirkpatrick as the back-up person
in this position.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF THE APPROVAL OF THE PROPOSAL TO
CONTINUE THE INVESTMENT ADVISORY AGREEMENT WITH BRIDGES INVESTMENT MANAGEMENT,
INC.
At each Board of Directors meeting, the Board reviews the brokerage
commissions and fees paid with respect to securities transactions undertaken
for the Fund's portfolio during the prior three-month period for the cost
efficiency of the services provided by the brokerage firms involved, all of
which brokerage firms are non-affiliated with the Fund and BIM. In January
2005, the Fund's Board of Directors reviewed the soft dollar commission
arrangements of BIM and the benefits that BIM and its clients may receive from
the Fund's portfolio transactions. The Board has regularly reviewed the
brokerage commissions paid on each portfolio security transaction since 1995,
and the actions taken by the management during the prior quarter with respect
to portfolio transactions and commission levels have been approved by the Board
of Directors. At its February 2006 meeting, the Fund's Board of Directors
intends to review BIM's soft dollar commission arrangements and the benefits
that BIM and its clients may receive.
PROPOSAL THREE
RATIFICATION OR REJECTION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANT
The Investment Company Act of 1940 provides that the accountants of an
investment company shall be selected by a majority of the members of the Board
of Directors who are not affiliated with the investment adviser of the Fund,
that such selection shall be submitted for ratification or rejection at the
Annual Meeting of the shareholders. Although the Fund has an Audit Committee
comprised of independent directors and otherwise meets the standards of SEC
Rule 32a-4 which exempts it from the requirement that the independent
accountant be ratified by the shareholders, the Audit Committee has directed
the submission of the selection of the independent public accountant to the
Fund shareholders for ratification.
On February 3, 2006, the members of the Audit Committee of the Board of
Directors recommended the selection of Deloitte & Touche LLP as auditors for
the Fund for the year ending December 31, 2006 and directed the submission of
this recommendation to the shareholders for ratification. Through the Proxy
solicited for the Annual Meeting scheduled for March 22, 2006, you will be
ratifying the selection of Deloitte & Touche LLP as the independent public
accountant for the year-ending 2006 financial statements for the Fund. A
representative of Deloitte & Touche LLP will be in attendance at the Annual
Meeting of Shareholders on March 22, 2006 to respond to appropriate questions
and, at the representative's discretion, to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE
IN FAVOR OF THE APPROVAL OF THE INDEPENDENT PUBLIC ACCOUNTANT.
17
PROPOSALS RELATING TO THE
AMENDMENT AND RESTATEMENT
OF THE FUND'S ARTICLES OF INCORPORATION
Background
The Fund's current Articles of Incorporation were originally adopted in
1963 and with the exception of minor amendments in 1969, the addition of two
articles in 1970, and amendments increasing the authorized capital, the
Articles have remained substantially unchanged since their adoption. On January
17, 2006, the members of the Board of Directors recommended the amendment and
restatement of the Articles of Incorporation in the form attached hereto as
Appendix A. The Board directed the submission of its recommendation to the
shareholders for approval.
Proposals 4 through 9 relate to the approval of certain amendments to and
the restatement of the Articles of Incorporation. The articles that may be
materially amended by these proposals are set forth in Appendix B attached
hereto. Each proposal contains a summary of the proposed amendments with
emphasis on those amendments that are material. While a summary of each
proposed amendment is set forth below, it is only a summary, and shareholders
should refer to Appendices A and B for a complete understanding of the proposed
amendments.
PROPOSAL FOUR
APPROVAL OF NEW ARTICLES VII AND IX TO
INCREASE CAPITALIZATION AND AUTHORIZE NEW SERIES
Under current Article VI, the Fund's capitalization is 6 million shares,
par value $1.00 per share, for a total authorized capitalization of $6 million,
and under current Article VII, the Fund's minimum amount of capital and surplus
to commence business was $100,000. See Appendix B for the full text of current
Articles VI and VII, which will be deleted if Proposal 4 is approved by the
shareholders. At December 31, 2005, the Fund had 2,305,765 shares issued and
outstanding. New Article VII replaces Article VI and increases the authorized
capital stock to 100 million shares and reduces the par value to $0.00001 per
share, for a total authorized capital of $10,000. The reduction in par value
and total authorized capital is intended to reduce the amount of the Fund's
state franchise tax expenses.
New Article VII also provides that of the 100 million shares authorized,
50 million shares are specifically designated as common shares for the Fund,
and 50 million shares are reserved for issuance as additional series. New
Article VII permits flexibility in the future for the Fund to issue new series
with such designations and preferences as set by the Board of Directors.
The additional 44 million shares of Fund common stock for which
authorization is sought would be identical to the current issued and
outstanding shares of the Fund. Shareholders do not have preemptive rights to
subscribe to additional securities which may be issued by the Fund. The
additional 50 million shares reserved for issuance as additional series may not
have the same rights and privileges as the Fund's shares of common stock issued
and outstanding. The shares could be issued from time to time for such purposes
as the Board may approve and, unless required by applicable law, no further
vote of the shareholders will be required. The Board has no present plans,
proposals or arrangements to create any new series of stock or to issue any
such shares.
New Article IX was added relating to the rights and preferences of future
series of shares authorized by the Board of Directors. Any future establishment
of a new series of Fund shares would require approval by the Fund's Board of
Directors, with a detailed Board resolution setting out the specific terms of
the new series of shares required to be filed with the appropriate state
authority. This new Article IX, together with Article VII, provides flexibility
in the future for the Fund to create a new series. Such future series may not
have the same rights and privileges as the Fund's shares of common stock, and
the shares could be issued from time to time for such purposes as the Board may
approve and, unless required by applicable law, no further vote of the
shareholders will be required. The Board has no present plans, proposals or
arrangements to create any new series of Fund shares.
Approval of new Articles VII and IX of the Articles of Incorporation
requires the affirmative vote of at least two-thirds majority of the votes
entitled to be cast either in person or by proxy as of the record date. After
carefully reviewing all of the factors described above, as well as the
requirements of the current Articles of Incorporation, the Fund's By-Laws and
Nebraska law, the Board approved new Articles VII and IX of the Articles of
Incorporation to increase capitalization and authorize new series of stock.
18
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF THE APPROVAL OF NEW ARTICLES VII AND
IX OF THE FUND'S ARTICLES OF INCORPORATION.
PROPOSAL FIVE
APPROVAL OF THE AMENDMENT OF ARTICLE X
RELATING TO THE DETERMINATION OF THE
NET ASSET VALUE OF THE FUND
Proposed Article X revises and updates current Article X. Current Article
X contains limiting and regulating powers of the Fund and detailed provisions
as to determining the Net Asset Value of the Fund. The text of current Article
X is set forth in Appendix B.
Subsections A through D of current Article X remain substantially
unchanged and are summarized below:
1. Subsection A empowers the Board of Directors to issue shares of the
Fund's stock from time to time; this power is now set forth in
proposed Article X(a)(1).
2. Subsection B states that no shareholder shall have any preemptive
right which provision now is set forth in new Article VIII.
3. Subsection C provides that each shareholder shall be entitled to one
vote for each share, and that at elections of the Fund's directors,
each shareholder shall be entitled to as many votes as shall equal the
number of shares of stock multiplied by the number of directors to be
elected. The cumulative voting provision is set forth in proposed
Article IX(a).
4. Subsection D provides the time and place that the shareholders may
inspect the Fund's books, accounts and documents. This provision now
is set forth in proposed Article X(a)(2).
Subsection E of current Article X has been proposed to be deleted in its
entirety and replaced by the new provisions of Article X. Current Article X E.
contains provisions as to determining the Net Asset Value of the Fund,
including specific timing provisions. These provisions have been replaced by
more flexible provisions permitting the Board to make determinations of Net
Asset Value in accordance with the Investment Company Act. These provisions are
intended to give the Fund Board the flexibility to make determinations of Net
Asset Value in accordance with SEC regulatory interpretations or changes, as
they may occur from time to time.
Approval of amendment of Article X of the Articles of Incorporation
requires the affirmative vote of at least two-thirds majority of the votes
entitled to be cast either in person or by proxy as of the record date. After
carefully reviewing all of the factors described above, as well as the
requirements of the current Articles of Incorporation, the Fund's By-Laws and
Nebraska law, the Board approved the amendment of Article X of the Articles of
Incorporation to revise the provisions relating to the determination of the net
asset value of the Fund.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF THE APPROVAL OF THE AMENDMENT OF
ARTICLE X OF THE FUND'S ARTICLES OF INCORPORATION.
PROPOSAL SIX
APPROVAL OF NEW ARTICLE XIV
INDEMNIFICATION FOR DIRECTORS AND OFFICERS
Article XIV is new and provides for mandatory indemnification for Fund
directors and officers to the fullest extent permitted by Nebraska law and the
Investment Company Act. The Nebraska Business Corporation Act sets forth the
standards to be met in such indemnification, including a requirement that the
director or officer have acted in good faith and with a reasonable belief that
such conduct was in the best interests of the corporation. As noted below,
these indemnification provisions are limited by certain sections of the
Investment Company Act. Indemnification of Fund employees or agents is also
permitted to the extent authorized by the Board of Directors or the By-Laws,
and as permitted by law.
The Investment Company Act prohibits an SEC-registered mutual fund from
including in its articles of incorporation or bylaws any provision which
protects or purports to protect any director or officer against any
19
liability to the fund or its shareholders to which such director or officer
would otherwise be subject "by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office." This Investment Company Act limitation has been expressly added to new
Article XIV which provides: "[n]othing contained herein shall be construed to
protect any director or officer of the [Fund] against any liability to the
[Fund] or its shareholders 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."
Approval of new Article XIV to the Articles of Incorporation requires the
affirmative vote of at least two-thirds majority of the votes entitled to be
cast either in person or by proxy as of the record date. After carefully
reviewing all of the factors described above, as well as the requirements of
the current Articles of Incorporation, the Fund's By-Laws and Nebraska law, the
Board approved new Article XIV of the Articles of Incorporation to provide
indemnification for directors and officers of the Fund.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF NEW ARTICLE XIV OF THE FUND'S
ARTICLES OF INCORPORATION.
PROPOSAL SEVEN
APPROVAL OF NEW ARTICLE XV
LIMITATION OF LIABILITY FOR DIRECTORS
The Nebraska Business Corporation Act (Section 21-2018(d)) permits
Nebraska corporations to add a provision to its Articles of Incorporation which
limits the liability of directors to the corporation or its shareholders for
money damages for any action taken, or any failure to take an action, with the
following exceptions: (i) the amount of a financial benefit received by a
director to which he or she is not entitled; (ii) an intentional infliction of
harm on the corporation or shareholders; (iii) a violation of Section 21-2096,
Nebraska Business Corporation Act (which covers unlawful distributions, such as
dividends, approved by the directors); or (iv) an intentional violation of
criminal law. In accordance with the Investment Company Act requirements noted
above, proposed Article XV also provides that it shall not be construed "to
protect any director of the [Fund] against any liability to the [Fund] or its
shareholders to which he or she would otherwise by 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."
Approval of new Article XV to the Articles of Incorporation requires the
affirmative vote of at least two-thirds majority of the votes entitled to be
cast either in person or by proxy as of the record date. After carefully
reviewing all of the factors described above, as well as the requirements of
the current Articles of Incorporation, the Fund's By-Laws and Nebraska law, the
Board approved new Article XV of the Articles of Incorporation to provide
limitation of liability for Fund directors.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF NEW ARTICLE XV OF THE FUND'S ARTICLES
OF INCORPORATION.
PROPOSAL EIGHT
APPROVAL OF NEW ARTICLE XVI
ELIMINATION OF ANNUAL MEETING REQUIREMENT
The Nebraska Business Corporation Act (Section 21-2051(4)) permits an
investment company registered under the Investment Company Act to include a
provision in its articles of incorporation limiting or eliminating the
requirement to hold an annual meeting of shareholders. Consistent with the
Nebraska Business Corporation Act, new Article XVI is proposed as follows:
Pursuant to Neb. Rev. Stat. Section 21-2051(4) as it presently exists or is
hereafter amended, the [Fund] shall not be required to hold annual meetings
of shareholders pursuant to Neb. Rev. Stat. Section 21-2051(1) unless the
holding of an annual meeting of shareholders is otherwise required by these
Articles of Incorporation or the Investment Company Act and the rules and
regulations thereunder.
The historical practice of the Fund has been to hold annual shareholder
meetings, and it is the current intent of the Board of Directors to continue to
hold such annual meetings. In accordance with this intent, on January 17, 2006,
the Board of Directors amended the Fund's By-Laws to require that an annual
shareholder meeting be held,
20
notwithstanding the provisions of Article XVI (if approved by the Fund
shareholders at the annual meeting). As a result of this amendment to the
By-Laws, the Fund will be required to hold annual shareholder meetings until
its By-Laws are amended and as otherwise required by the Investment Company
Act.
Although the Investment Company Act does not require an investment company
to hold a shareholders meeting on an annual basis, the Investment Company Act
does require an investment company to call a special or annual meeting of
shareholders in the event less than a majority of the board of directors have
been elected by the shareholders. Vacancies between meetings may be filled by
the existing board members as long as immediately after filling the vacancy
two-thirds (2/3) of the directors then holding office have been elected by the
shareholders. As interpreted by the SEC, the Investment Company Act would
require the Fund to hold an annual meeting (or special meeting) to ratify the
new director filling the vacancy filled by the Board on an interim basis.
Annual or special meetings of the shareholders of the Fund may be required
for other reasons than the election of directors, including the following: (i)
change of control in the investment adviser; (ii) change in fundamental
policies regarding borrowing money, issuing securities, underwriting securities
issued by others, purchasing or selling real estate or commodities, or making
loans to others; and (iii) changes in or deviations from fundamental investment
policies of the Fund.
If the Fund shareholders approve the Amended and Restated Articles of
Incorporation and if the Board of Directors took action in the future to amend
the By-Laws to eliminate the current requirement that the Fund hold an annual
shareholders meeting, then the Fund would have the option of foregoing the
annual meeting of shareholders except as required by the Investment Company
Act. In such event, if no annual meeting of shareholders were held, the term of
each Director would be extended until the next annual meeting of shareholders
or until the earlier death, disability, resignation or removal of such
Director. In any year in which the Investment Company Act would not require the
election of directors, the Fund would be exempt from the state law requirement
to hold an annual meeting of shareholders. As a result, the Fund would not have
to cover the expense of conducting annual meetings of shareholders each year,
and no further action of shareholders would be required to the extent permit by
law. As noted above, the Board of Directors currently does not intend to amend
its By-Laws to eliminate the current requirement of holding an annual meeting
of shareholders.
Approval of new Article XVI to the Articles of Incorporation requires the
affirmative vote of at least two-thirds majority of the votes entitled to be
cast either in person or by proxy as of the record date. After carefully
reviewing all of the factors described above, as well as the requirements of
the current Articles of Incorporation, the Fund's By-Laws and Nebraska law, the
Board approved new Article XVI of the Articles of Incorporation to provide
limitation of liability for Fund directors.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF NEW ARTICLE XVI OF THE FUND'S
ARTICLES OF INCORPORATION.
PROPOSAL NINE
APPROVAL OF ALL OTHER AMENDMENTS
AND THE RESTATEMENT OF THE
FUND'S ARTICLES OF INCORPORATION
In addition to the amendments proposed in Proposals 4 through 8, the Board
of Directors approved the following amendments to, and the general restatement
of, the Articles of Incorporation:
A. Directors. Under proposed Article III, the Fund shall have not less
than three (3) nor more than fifteen (15) directors. The range of directors
remains unchanged from current Article III. Proposed Article III clarifies that
the number of directors shall be "determined from time to time by the Board of
Directors or the shareholders." Article III is proposed to be amended as
follows (new language in brackets):
The Corporation shall have not less than three (3) nor more than
fifteen (15) directors [as determined from time to time by the Board
of Directors or the shareholders. The Board members] shall serve until
their successors are elected and qualified.
B. Purposes. New Article VI replaces Article IX and provides broad
purposes subject to compliance with the Nebraska Business Corporation Act and
the Investment Company Act. Current Article IX contains numerous
21
specifically delineated purposes such as (i) purchasing or otherwise acquiring,
holding for investment or otherwise, and selling, exchanging or otherwise
disposing of securities of any class, (ii) investing its funds from time to
time by deposit at interest in any bank, savings bank, savings and loan
association, or trust company in good standing, (iii) conducting researches and
investigations in respect of securities, organizations, business and general
business conditions, (iv) paying all assessments, subscriptions and other sums
of money or other considerations as it may deem expedient for the protection of
its interests as holder of any stocks or other securities of any company whose
securities are held by it, (v) exercising any right or option contained in,
appertaining to, or granted or issued to holders of any stocks or other
securities for conversion into, or exchange for, or purchase of, other stocks
or securities, and (vi) borrowing money as a temporary measure. See, Appendix B
for the full text of current Article IX.
Under the Nebraska Business Corporation Act, neither the purposes nor the
powers of a Nebraska corporation are required to be enumerated in the Articles
of Incorporation, and new Article VI is consistent with current corporate and
investment company practice.
C. Amendment to Articles. Proposed Article XII revises current Article XIV
by changing the requirement of a 51% vote for the amendment, alteration,
change, or repeal of any provision contained in the Articles of Incorporation
to a requirement that such amendment be approved in accordance with the voting
requirements of the Nebraska Business Corporation Act. The change is intended
to assure that the Articles of Incorporation are consistent with the Nebraska
Business Corporation Act, and any amendments are adopted in accordance with its
provisions, as they may exist from time to time. The text of current Article
XIV is set forth in Appendix B.
D. Housekeeping Amendments. Additional non-substantive amendments were
made in the proposed Amended and Restated Articles of Incorporation. The
purposes of these non-substantive amendments were to provide consistency
throughout the Articles and to modernize certain provisions.
Approval of all other amendments and the restatement of the Articles of
Incorporation requires the affirmative vote of at least two-thirds majority of
the votes entitled to be cast either in person or by proxy as of the record
date. After carefully reviewing all of the factors described above, as well as
the requirements of the current Articles of Incorporation, the Fund's By-Laws
and Nebraska law, the Board approved these amendments and the restatement of
the Articles of Incorporation.
BASED ON THE FOREGOING, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF THE AMENDMENTS AND THE RESTATEMENT OF
THE FUND'S ARTICLES OF INCORPORATION.
Rights of Dissenting Shareholders
Sections 21-20,137 through 21-20,150 of the Nebraska Business Corporation
Act (NBCA) entitle each shareholder of the Fund to dissent from the proposed
amendment and restatement of the Fund's Articles of Incorporation and to obtain
payment of the fair value of his or her shares of Fund capital stock. "Fair
value" is defined in the statute as the value of the shares immediately before
the effective date of the corporate action to which the dissenter objects,
excluding any appreciation or depreciation in anticipation of the corporate
action unless exclusion would be inequitable.
In order to exercise his or her right to dissent, the shareholder must,
prior to the taking of the vote of the shareholders on the amendment and
restatement of the Fund's Articles of Incorporation, deliver to the Fund
written notice of his or her intent to demand payment for his or her shares if
any of the Proposals 4-9 is effected and giving his or her address to which
notice shall be delivered or mailed in such event. Such dissenting shareholder
must not vote in favor of any such proposal, although it is not necessary for
the shareholder to vote against any proposal. Note that a vote against a
proposal alone will not satisfy the requirement under the NBCA that the
shareholder make demand for payment for his or her shares.
If any of Proposals 4-9 is approved, the Fund shall give notice to such
dissenting shareholder within 10 days after any such proposal is approved by
the shareholders. Such notice from the Fund will: (i) state an address at which
the Fund will receive payment demands and an address of a place where
certificates for certified shares must be deposited; (ii) inform holders of
uncertified shares as to what extent transfer of the shares will be restricted
after the payment demand is received; (iii) supply a form for demanding payment
that includes the date of the first announcement to shareholders of the terms
of the proposed corporate action and requires that the person asserting
22
dissenters' rights certify whether or not he or she acquired beneficial
ownership of the shares before that date; (iv) set the date by which the Fund
must receive the payment demand, which date shall be not fewer than 30 days nor
more than 60 days after the date notice from the Fund is given; and (v) be
accompanied by a copy of the NBCA provisions related to dissenters' rights.
A Fund shareholder who is delivered a dissenter's notice by the Fund and
who wishes to assert dissenters' rights is required to deliver a payment demand
in the form provided by the Fund or in another writing to the Fund and deposit
the shareholder's certificates for certificated shares owned by the shareholder
within the time frame set forth in the Fund's notice. A shareholder who demands
payment in accordance with his or her dissenters' rights retains all rights of
a shareholder, except the right to transfer the shares, until the effective
date of the proposed amendment and restatement of the Articles of Incorporation
and has only the right to receive payment for the shares after the effective
date of such amendment and restatement of Articles of Incorporation, which is
the date that such amendment and restatement is filed with the Nebraska
Secretary of State.
Except as set forth below, the demand for payment by a dissenting
shareholder and the deposit of certificates are irrevocable. A shareholder who
does not demand payment and deposit the shareholder's share certificates as
required by the date set forth in the Fund's dissenter's notice is not entitled
to payment for his or her shares under the NBCA.
Upon the effective date of the amendment and restatement of the Articles
of Incorporation of the Fund or upon the receipt of a payment demand pursuant
to the foregoing procedures, whichever is later, the Fund shall pay each
dissenter who has complied with the foregoing procedures the amount of the
Fund's estimate of the fair value of the dissenter's shares, plus accrued
interest. The payment to the dissenting shareholder will be accompanied by (i)
the Fund's balance sheet as of the end of its most recent fiscal year, an
income statement for that year, a statement of changes in shareholders' equity
for that year, and the latest available interim financial statements, if any;
(ii) a statement of the Fund's estimate of the fair value of the shares; (iii)
an explanation of how the interest was calculated; (iv) a statement of the
dissenter's right to demand additional payment under the NBCA; and (v) a copy
of the dissenters' rights provisions of the NBCA.
If the effective date of the amendment and restatement of Articles of
Incorporation of the Fund does not occur within 60 days after the date set by
the Fund by which the Fund must receive the payment demand from the dissenting
shareholder, the Fund shall return the deposited certificates and release the
transfer of restrictions imposed on uncertified shares. If the effective date
of the amendment and restatement of the Fund's Articles of Incorporation occurs
more than 60 days after the date set by the Fund by which the Fund must receive
the payment demand from the dissenting shareholder, then the Fund shall send a
new dissenters' notice, as set forth above, and the provisions of the NBCA with
respect to dissenters' rights shall again be applicable.
Special provisions of the NBCA define the rights of dissenting
shareholders who acquired their shares after the announcement of the proposed
amendment and restatement of Articles of Incorporation of the Fund. Those
provisions are found in Section 21-20,147, NBCA (Appendix C).
If a shareholder believes that the amount paid by the Fund for his or her
shares was less than the fair value of the shares or that the interest due was
incorrectly calculated, or if the Fund fails to make the required payment
within 60 days after the date set by the Fund by which the Fund must receive
the payment demand, or if the Fund does not return the deposit of certificates
or release the transfer restrictions imposed on uncertified shares as required
by the statute, a dissenting shareholder may give notice to the Fund in writing
of the dissenter's own estimate of the fair value of the dissenter's shares and
of the amount of interest he or she believes due and make demand for payment of
such estimated amount, less any payment previously made by the Fund. Dissenters
waive the right to demand additional payment unless the Fund receives the
notice of additional demand within 30 days after the Fund made or offered
payment for the dissenter's shares.
If the demand for payment by a dissenting shareholder remains unsettled,
the Fund may, within 60 days after receiving the payment demand, commence a
judicial proceeding and petition the court to determine the fair value of the
shares and accrued interest. If the Fund does not commence the proceeding
within the 60 day period, it must pay to each dissenter whose demand remains
unsettled the amount demanded. Such suit is to be brought in state District
Court in Douglas County, Nebraska. Costs of court are generally charged to the
Fund, except in cases where court finds that the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding additional payment.
23
The foregoing summary does not purport to be a complete statement of the
rights of dissenting shareholders, such summary is qualified in its entirety by
reference to Sections 21-20,137 through 21-20,150 of the NBCA, which sections
are set forth in their entirety as Appendix C attached hereto.
Other Matters Which May Come Before the Meeting
It is not anticipated that any action will be asked of the shareholders
other than the matters previously indicated, but if other matters are properly
brought before the Annual Meeting, the persons named in the Proxy will vote on
such matters in accordance with their best judgment.
Supplementary Comments and Information
Disclosure of Election Results
Rule 30e-1 of the General Rules and Regulations promulgated under the
Investment Company Act of 1940 requires that a brief description of each matter
voted upon at a meeting of shareholders be made in the Annual Shareholder
Report and/or in a semi-annual report following the shareholder meeting. This
description shall include the number of votes cast for, against, or withheld as
well as the number of abstentions including an apparent tabulation with respect
to each matter or nominee for office. Please consult Exhibit 3 in the First
Quarter Shareholder Report for the matters and the results acted upon at the
March 22, 2005, Annual Meeting of Shareholders.
In the event shareholders holding five percent (5%) or more of the total
shares voted at the Annual Meeting withhold authority to vote for any nominee
for election to the Board of Directors, a post-meeting disclosure of the
name(s) of the nominee(s) will be made by the Fund indicating a list of all
directors by name, the number of shares voted for and the number of shares for
which authority was withheld, and the total number of shares voted at the
meeting for directors. Such report will be made in the next quarterly
shareholder letter following the shareholder meeting at which a vote is taken.
This information will be provided in addition to the results to be disclosed
under Rule 30e-1 under the Investment Company Act of 1940.
Limitation of Exemption from the Proxy Rules for Certain Non-Issuer
Solicitations
The issuer of the enclosed Proxy is the Fund. The Board of Directors of
the Fund is not aware of solicitations for Proxies by persons other than the
Board of Directors. In the event non-issuer solicitations for Proxies do occur,
any statements contained therein will be the responsibility of the solicitors
that have made such filing. Such a filing of non-issuer solicitation material
with the Securities and Exchange Commission does not constitute a finding by
the Commission that such solicitation material is accurate or complete.
Deadline for Proposals for Next Annual Meeting
Shareholders who wish to have a proposal included in the business agenda
for the next Annual Meeting of Shareholders to be held in 2007 must have their
proposal filed at the office of the Fund by October 16, 2006, which date is
estimated to be approximately 120 days prior to date of the release of the Fund
Proxy Statement to shareholders for the 2007 annual meeting.
A shareholder who wishes to make a proposal at the next Annual Meeting of
Shareholders without including the proposal in the Fund's proxy statement must
notify the Fund by December 30, 2006. If a shareholder fails to give notice by
this date, then the persons named as proxies in the proxy solicitation for the
next annual meeting will have discretionary authority to vote on the proposal.
Shareholder Communication with Board Members
The Fund's Annual Meeting of Shareholders provides an opportunity each
year for shareholders to ask questions of or otherwise communicate directly
with members of the Fund's Board of Directors on appropriate matters. Each of
the Fund's directors is encouraged to attend the Annual Meeting in person.
Three directors attended last year's Annual Meeting, and the Fund anticipates
that a similar number of its directors will attend the 2006 Annual Meeting. In
addition, shareholders may, at any time, communicate in writing with any
particular director or directors who are not "interested persons" of the Fund
as defined in Section 2(a)(19) of the Investment Company Act of 1940 as a
group, by sending such written communications to the attention of the Fund's
Secretary at 246 Durham Plaza,
24
8401 West Dodge Road, Omaha, Nebraska 68114. Copies of written communications
received at such address will be provided to the relevant director or directors
as a group unless such communications are considered, in the reasonable
judgment of the Fund's Secretary, to be improper for submission to the intended
recipient(s). Examples of shareholder communications that would be considered
improper for submission include, without limitation, solicitations,
communications that do not relate directly or indirectly to the Fund or
communications that relate to improper or irrelevant topics.
Fund's Board of Directors Meetings
In accordance with the Fund's By-Laws, the Fund's Board of Directors has
set the size of the Fund's Board of Directors at ten (10) directors. The Board
currently is scheduled to meet five times this year. The scheduled dates for
2006 are January 17, February 23, May 16, August 22 and November 21, 2006.
Board meetings are normally held at 4:00 p.m. at the offices of the Fund. The
Board addresses all policy matters in relation to the operation of the Fund,
and it reviews and acts upon subjects involving federal and state laws and
regulations governing the Fund.
Associations
There is no nominee or director who is a member or employee or associated
with a law firm which the Fund has used during the past two fiscal years or
proposes to retain in the current year.
Mr. Bridges II also serves as a director of N.P. Dodge Company, of which
Mr. N. Phillips Dodge, Jr. is a CEO. Mr. Dodge has been CEO of N.P. Dodge
Company since 1997, and Mr. Bridges has served as a director of N.P. Dodge
Company since 1971. In addition, Mr. Bridges serves as a director and Vice
Chairman of the Nebraska Methodist Health System, of which Mr. L. B. Thomas
also is a director. Mr. Thomas has been a director of Nebraska Methodist Health
System since 1992, and Mr. Bridges has served as a director of Nebraska
Methodist Health System since 1981.
Committees
The Fund has an Administration and Nominating Committee and an Audit
Committee, which are comprised solely of independent directors of the Fund. The
director members on each committee are identified below. No member of either
committee is an "interested person" of the Fund as defined in Section 2(a)(19)
of the Investment Company Act of 1940.
The Administration and Nominating Committee evaluates candidates'
qualifications for Board membership, including such candidates' independence
from the Fund's investment manager, and makes nominations for independent
director membership on the Board. A copy of the Administration and Nominating
Committee's charter was included as Exhibit C to the Fund's 2004 Proxy
Statement. The Administration and Nominating Committee will consider nominees
recommended by Fund shareholders. Such recommendations should be in writing and
addressed to the Fund, Attention: Administration and Nominating Committee, with
the name, address, biographical information and telephone number of the person
recommended and of the recommending person. As set forth in its charter, the
Administration and Nominating Committee periodically reviews the composition of
the Board of Directors to determine whether it may be appropriate to add
individuals with different backgrounds or skills sets from those already on the
Board. To date, the Administration and Nominating Committee has not set any
specific, minimum qualifications that the Administration and Nominating
Committee believes must be met by a committee-recommended nominee for a
position on the Fund's Board, nor has the Administration and Nominating
Committee determined a specific process for identifying and evaluating nominees
for director beyond the general criteria regarding board composition discussed
above.
In April, 2003, the Fund's Administration and Nominating Committee adopted
a retirement policy whereby directors of the Board will not stand for
reelection in the year in which that director becomes 72 unless the
Administration and Nominating Committee determines that an exception is
applicable to an individual that continues to be employed in an executive
position with a service provider of the Fund or an individual that has a
significant portion of his or her net worth invested in the Fund.
The Administration and Nominating Committee also periodically reviews and
makes recommendations with respect to Board governance procedures and
compensation. The Administration and Nominating Committee also reviews the Fund
investment advisory agreement and makes recommendations to the independent
directors and the Fund's Board of Directors concerning such agreement.
25
The Audit Committee establishes the scope of review for the annual audit
by the independent auditor, and its members work with representatives of the
independent auditor to establish such guidelines and tests for the audit which
are deemed appropriate and necessary. The Audit Committee has adopted
pre-approval policies and procedures. Prior to engaging the independent public
accountant to render audit or non-audit services, the engagement is approved by
the Fund's Audit Committee.
The specific assignments to committees of the Board of Directors appear in
the two tables set forth below:
ADMINISTRATION AND
NOMINATING COMMITTEE AUDIT COMMITTEE
------------------------------ ----------------------------
N. P. Dodge, Jr. John W. Estabrook
Gary L. Petersen, Chairman Jon D. Hoffmaster, Chairman
Roy A. Smith John T. Reed(2)
Janice D. Stoney(1) L.B. Thomas
John K. Wilson
- ------------
(1) Mrs. Stoney has elected not to stand for re-election as a Board member
after the 2006 Annual Meeting of Shareholders and on such date, Mrs. Stoney
will no longer be a member of the Board or the Administration and
Nominating Committee.
(2) Mr. Reed has elected not to stand for re-election as a Board member after
the 2006 Annual Meeting of Shareholders and on such date, Mr. Reed will no
longer be a member of the Board or the Audit Committee.
Mr. John J. Koraleski is the Lead Independent Director of the Fund, and,
in that capacity, Mr. Koraleski coordinates the activities of these two
committees with the management of the Fund.
Other Services Provided to the Fund
U.S. Bank National Association, an affiliate of U.S. Bancorp Fund
Services, LLC, 425 Walnut Street, M.L. CN-OH-W6TC, Cincinnati, Ohio 45202,
serves as custodian of the Fund's assets pursuant to a Custody Agreement. Under
the Custody Agreement, U.S. Bank National Association's duties include (i)
holding securities of the Fund in a separate account in the name of the Fund,
(ii) making receipts and disbursements of money on behalf of the Fund, (iii)
collecting and receiving all income and other payments and distributions on
account of the Fund's portfolio investments, (iv) maintaining books and records
in accordance with applicable laws, and (v) making periodic reports to the Fund
concerning the Fund's operations. U.S. Bank National Association does not
exercise any supervisory function in management matters such as the purchase
and sale of portfolio securities. The Fund pays the fees and costs of U.S. Bank
National Association for its services as Fund Custodian.
As of October 11, 2004, U.S. Bancorp Fund Services, LLC, 615 East Michigan
Street, Milwaukee, Wisconsin 53202, is the Dividend Disbursing and Transfer
Agent for the Fund under a Transfer Agent Servicing Agreement. As transfer and
dividend disbursing agent, U.S. Bancorp Fund Services, LLC's duties include (i)
issuance and redemption of Fund shares, (ii) making dividend and other
distributions to shareholders of the Fund, (iii) responding to correspondence
by Fund shareholders and others relating to its duties, (iv) maintaining
shareholder accounts, and (v) issuing Form 1099 and 5498 information to Fund
shareholders each year. The Fund paid U.S. Bancorp Fund Services $9,392 and
$30,278 for the periods of October 12, 2004 through December 31, 2004, and
January 1, 2005 through November 30, 2005, respectively, for these services.
In addition, Bridges Investment Management, Inc. has entered into a
separate Fund Accounting Servicing Agreement and Fund Sub-Administration
Servicing Agreement with U.S. Bancorp Fund Services, LLC. Under the Fund
Accounting Servicing Agreement, U.S. Bancorp Fund Services, LLC's duties
include (i) portfolio accounting services, (ii) expense accrual and payment
services, (iii) fund valuation and financial reporting services, (iv) tax
accounting services, (v) compliance control services, and (vi) daily accounting
functions. For these services, U.S. Bancorp Fund Services, LLC is entitled to
receive fees, payable monthly based on the total annual rate of $26,000 for the
first $25 million of Fund assets, .03% of the next $25 million of Fund assets,
..02% of the next $50 million of Fund assets, and .01% of assets exceeding $100
million, in addition to reimbursement of certain out of pocket expenses,
including pricing expenses.
Under the Fund's Sub-Administration Servicing Agreement with Bridges
Investment Management, Inc., U.S. Bancorp Fund Services, LLC's duties include
blue sky preparation, filing and compliance, and SEC document
26
preparation, filing and compliance. For these services, U.S. Bancorp Fund
Services, LLC is entitled to receive fees, payable monthly based on the total
annual rate of 0.04% of assets on the first $50 million of Fund assets, 0.03%
on the next $50 million of Fund assets, and 0.02% of Fund assets exceeding $100
million, in addition to reimbursement for certain out of pocket expenses. These
expenses are the contracted obligation of, and will be paid by, Bridges
Investment Management, Inc. Accordingly, these sub-contracted services will not
be a part of the operating costs of the Fund.
Distributor -- Quasar Distributors, LLC (the "Distributor") serves as the
Fund's distributor. The principal executive offices of the Distributor are
located at 615 East Michigan Street, Milwaukee, Wisconsin 53202. The
Distributor is registered with the SEC as a broker-dealer under the Securities
Exchange Act of 1934 and is a member of the NASD.
The Fund may enter into distribution agreements or shareholder servicing
agreements with certain financial institutions ("Servicing Organizations") to
perform certain distribution, shareholder servicing, administrative and
accounting services for their customers ("Customers") who are beneficial owners
of shares of the Fund.
A Service Organization may charge a Customer one or more of the following
types of fees, as agreed upon by the Service Organization and the Customer,
with respect to the cash management or other services provided by the Service
Organization: (1) account fees (a fixed amount per month or per year); (2)
transaction fees (a fixed amount per transaction processed); (3) compensating
balance requirements (a minimum dollar amount a Customer must maintain in order
to obtain the services offered); or (4) account maintenance fees (a periodic
charge based upon the percentage of assets in the account or of the dividend
paid on those assets).
Professional Appointments and Fees
SEC rules require our Audit Committee to pre-approve all audit and
permissible non-audit services provided by our independent public accountant,
Deloitte & Touche LLP, with certain limited exceptions. The Audit Committee
annually approves the engagement of the Fund's independent public accountant
and the scope of such engagement for audit and non-audit fees and services. Our
Audit Committee has concluded that the provision of services by Deloitte &
Touche LLP not related to the audit of the financial statements is compatible
with maintaining Deloitte & Touche's independence.
Aggregate fees for which we have been or expect to be billed for services
rendered by Deloitte & Touche LLP for the fiscal years ended December 31, 2005
and 2004 are presented below.
For the fiscal year ended December 31,
------------------------------------------------
2005 2004
----------------------- ----------------------
Deloitte & Touche LLP Deloitte & Touche LLP
----------------------- ----------------------
Audit fees(1) .............. $21,500 $22,500
Audit related fees ......... -- --
Tax fees(2) ................ 2,800 3,000
All other fees ............. -- --
------- -------
Total ..................... $24,300 $25,500
======= =======
- ------------
(1) Audit fees consisted of services that would normally be provided in
connection with statutory and regulatory filings or engagements, including
services that generally only the independent accountant can reasonably
provide.
(2) Tax services consisted of fees for tax consultation and tax compliance
services.
The Fund will reimburse out of pocket expenses in addition to the fees
above that will be stated separately on invoices from Deloitte & Touche LLP. To
this date, Deloitte & Touche LLP's has not provided any consulting services to
the Fund.
Legal fees and services performed on behalf of the Fund have been paid by
the investment adviser in accordance with the terms of the agreement between
the Fund and the investment adviser. The investment adviser will continue to
pay those legal expenses in accordance with the agreement between the Fund and
the investment adviser. The appointment of attorneys for the Fund is a matter
that is reviewed annually by the Board of Directors at its first quarter
meeting.
27
There are three categories of legal expenses related to the conduct of the
business affairs of Bridges Investment Fund, Inc.: (1) all amounts spent for
registering the Fund under the Investment Company Act of 1940, of initially
registering and maintaining the registration of shares of the Fund under the
Securities Act of 1933, and of initially qualifying and maintaining the
qualification of shares of the Fund in whole or in part under the Securities
Law of such states as the Fund may from time to time designate; (2) billings
for services to operate all areas of activities and needs for the independent
director members of the Board of Directors; and (3) the costs of a special
counsel for Securities and Exchange Commission and other regulatory matters. In
2005, the Fund paid the legal expenses in category (2) as described above. The
cost amounts for these legal expenses are reported in Exhibit 1 of the Annual
Report.
The expenditures for legal services paid for by the Fund during the fiscal
years ended December 31, 2005 and 2004 are summarized in the table below:
From Purpose 2005 2004
---- ------- --------- ---------
Koley, Jessen, P.C. ........... For Independent Directors $17,823 $12,325
Ballard, Spahr, Andrews, &
Ingersoll, LLP .............. Special Counsel Regulation Matters $ 0 $ 3,759
Payments for legal services by the investment advisers in support of the
Fund paid from the investment management fee earned by that Firm were $64,757
in 2004 and $65,994 in 2005. These expenditures are related heavily to new laws
and regulations related to anti-money laundering, the drafting of the
Prospectus, amending the Articles of Incorporation, corporate governance,
privacy policies, and responses to the Sarbanes Oxley Act of 2002. The
investment advisers devoted 19.3% and 17.4% of their fees from the Fund in 2004
and 2005 for those various legal initiatives.
ALL SHAREHOLDERS ARE REQUESTED TO SIGN AND MAIL PROXIES PROMPTLY.
Your attendance at the Annual Meeting is desired whether your holdings are
large or small. We encourage shareholders to take an active interest in the
Fund, and we would appreciate a phone call or letter on or before March 17,
2006 to indicate that you expect to be in attendance on March 22, 2006.
By Order of the Board of Directors.
Mary Ann Mason
Secretary
28
APPENDIX A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
BRIDGES INVESTMENT FUND, INC.
ARTICLE I
---------
NAME
----
(Note: No change from current Articles)
The name of the Corporation is BRIDGES INVESTMENT FUND, INC.
ARTICLE II
----------
PLACE OF BUSINESS/REGISTERED AGENT
----------------------------------
(Note: No change from current Articles)
The principal place of business of the Corporation is located at 256
Durham Plaza, 8401 West Dodge Road, Omaha, Nebraska 68114. The registered agent
for the Corporation is Edson L. Bridges III, and the address of said agent is
256 Durham Plaza, 8401 West Dodge Road, Omaha, Nebraska 68114.
ARTICLE III
-----------
DIRECTORS
---------
(Note: Follows current Article III)
The Corporation shall have not less than three (3) nor more than fifteen
(15) directors as determined from time to time by the Board of Directors or the
shareholders. The Board members shall serve until their successors are elected
and qualified.
ARTICLE IV
----------
EXISTENCE
---------
(Note: No change from current Articles)
The Corporation shall have perpetual existence.
ARTICLE V
---------
PROPERTY OF SHAREHOLDERS
------------------------
(Note: No change from current Articles)
The private property of the shareholders shall not be subject to the
payment of corporate debts to any extent whatsoever.
A-1
ARTICLE VI
----------
PURPOSES
--------
(Note: New Article replacing former Article IX; Drafted to set forth broad and
simple purposes.)
The purposes for which the Corporation is formed are to:
(a) conduct, operate and carry on the business of an investment company
registered pursuant to the Investment Company Act of 1940, as amended
("Investment Company Act"), and exercise all the powers necessary and
appropriate to the conduct of such operations; and
(b) engage in any other business permitted to corporations by the laws of
the State of Nebraska and to have and exercise all powers conferred upon or
permitted to corporations by the Nebraska Business Corporation Act, as amended
(the "Nebraska Business Corporation Act") and any other laws of the State of
Nebraska; provided, however, that the Corporation shall be restricted from
engaging in any activities or taking any actions which would preclude its
compliance with applicable provisions of the Investment Company Act applicable
to open-end management type investment companies or applicable rules
promulgated thereunder.
The enumeration herein of the objects and purposes of the Corporation
shall be construed as powers as well as objects and purposes and shall not be
deemed to exclude by inference any powers, objects or purposes which the
Corporation is empowered to exercise, whether expressly by force of the laws of
the State of Nebraska now or hereafter in effect, or impliedly by the
reasonable construction of such laws.
ARTICLE VII
-----------
CAPITALIZATION
--------------
(Note: New Article increasing authorized capital stock from 6 million shares to
100 million shares, including 50 million shares reserved for issuance as
additional series.)
(a) The total number of shares of stock of all classes and series that the
Corporation has authority to issue is one hundred million (100,000,000) shares
of common stock (par value of One Thousandth of One Cent, ($0.00001) per
share), amounting in aggregate par value of Ten Thousand Dollars ($10,000). Of
said common shares, 50,000,000 shares may be issued in the series of common
shares hereby designated Bridges Investment Fund shares.
(b) The balance of 50,000,000 shares may be issued in such series with
such designations, preferences and relative, participating, optional or other
special rights, or qualifications, limitations or restrictions thereof, or may
be authorized for issuance as additional shares of any existing series or
portfolio as and to the extent stated or expressed in a resolution or
resolutions providing for the issue of any such series or shares of common
shares adopted from time to time by the Board of Directors pursuant to the
authority hereby vested in said Board and the Nebraska Business Corporation
Act.
(c) The Corporation may issue and sell any of its shares in fractional
denominations to the same extent as its whole shares, and shares and fractional
denominations shall have, in proportion to the relative fractions represented
thereby, all the rights of whole shares, including, without limitation, the
right to vote, the right to receive dividends and distributions, and the right
to participate upon liquidation of the Corporation. The Bridges Investment Fund
shares and each other series of common shares which the Board may establish, as
provided herein, evidence an interest in a separate and distinct portion of the
Corporation's assets, which shall take the form of a separate portfolio of
investment securities, cash and other assets. Authority to establish such
additional series representing separate portfolios is hereby vested in the
Board of Directors of this Corporation, and such separate portfolios may be
established by the Board without the authorization or approval of the holders
of any other series of shares of this Corporation.
A-2
ARTICLE VIII
------------
NO PREEMPTIVE RIGHTS
--------------------
(Note: Consistent with current Article X(B))
The shareholders of Bridges Investment Fund shares and each other series
of common shares of this Corporation shall have no preemptive right to
subscribe to any issue of shares of any class or series of this Corporation now
or hereafter made.
ARTICLE IX
----------
RIGHTS AND PREFERENCES OF SHAREHOLDERS
--------------------------------------
(Note: New Article; Provisions added relating to issuance of additional series)
The shareholders of the Bridges Investment Fund shares and all future
series of shares authorized by the Board of Directors which evidence a separate
portfolio of investment securities shall have the following rights and
preferences:
(a) On any matter submitted to a vote of shareholders of this Corporation,
all common shares of this Corporation then issued and outstanding and entitled
to vote, irrespective of series, shall be voted in the aggregate and not by
series, except: (i) when otherwise required by the Nebraska Business
Corporation Act in which case shares will be voted by individual series; (ii)
when otherwise required by the Investment Company Act, or the rules adopted
thereunder, in which case shares shall be voted by individual series; and (iii)
when the matter does not affect the interests of a particular series, in which
case only shareholders of the series affected shall be entitled to vote thereon
and shall vote by individual series.
At all elections of directors of the Corporation, each shareholder shall
be entitled to as many votes as shall equal the number of his or her shares of
stock multiplied by the number of directors to be elected, and he or she may
cast all of such votes for a single director or may distribute them among the
number to be voted for, or any two or more of them, as he or she may see fit.
(b) All consideration received by this Corporation for the issue or sale
of shares of any series, together with all assets, income, earnings, profits
and proceeds derived therefrom (including all proceeds derived from the sale,
exchange or liquidation thereof and, if applicable, any assets derived from any
reinvestment of such proceeds in whatever form the same may be) shall become
part of the assets of the portfolio to which the shares of that series relate,
for all purposes, subject only to the rights of creditors, and shall be so
treated upon the books of account of this Corporation. Such assets, income,
earnings, profits and proceeds (including any proceeds derived from the sale,
exchange or liquidation thereof and, if applicable, any assets derived from any
reinvestment of such proceeds in whatever form the same may be) are herein
referred to as "assets belonging to" a series of the common shares of this
Corporation.
(c) Assets of this Corporation not belonging to any particular series are
referred to herein as "General Assets." General Assets shall be allocated to
each series in proportion to the respective net assets belonging to such
series. The determination of the Board shall be conclusive as to the amount of
assets, as to the characterization of assets as those belonging to a series or
as General Assets, and as to the allocation of General Assets.
(d) The assets belonging to a particular series of common shares shall be
charged with the liabilities incurred specifically on behalf of such series of
common shares ("Special Liabilities"). Such assets shall also be charged with a
share of the general liabilities of this Corporation ("General Liabilities") in
proportion to the respective net assets belonging to such series of common
shares. The determination of the Board shall be conclusive as to the amount of
liabilities, including accrued expenses and reserves, as to the
characterization of any liability as a Special Liability or General Liability,
and as to the allocation of General Liabilities.
(e) The Board may, to the extent permitted by the Nebraska Business
Corporation Act and the Investment Company Act and in the manner provided
herein, declare and pay dividends or distributions in shares or cash on any or
all series of common shares, the amount of such dividends and the payment
thereof being wholly in the discretion of the Board of Directors. Dividends or
distributions on shares of any series of common shares shall be paid only out
of the earnings, surplus, or other lawfully available assets belonging to such
series (including, for this purpose, any General Assets allocated to such
series).
A-3
(f) In the event of the liquidation or dissolution of the Corporation,
holders of the shares of any series shall have priority over the holders of any
other series with respect to, and shall be entitled to receive, out of the
assets of this Corporation available for distribution to holders of shares, the
assets belonging to such series of common shares and the General Assets
allocated to such series of common shares, and the assets so distributable to
the holders of the shares of any series shall be distributed among such holders
in proportion to the number of shares of such series held by them and recorded
on the books of this Corporation.
(g) With the approval of a majority of the shareholders of each of the
affected series of common shares or as otherwise required by the Investment
Company Act, the Board of Directors may transfer the assets of any portfolio to
any other portfolio. Upon such a transfer, the Corporation shall issue common
shares representing interests in the portfolio to which the assets were
transferred in exchange for all common shares representing interests in the
portfolio from which the assets were transferred. Such shares shall be
exchanged at their respective Net Asset Values (as defined in Article X).
ARTICLE X
---------
DESIGNATION AND REGULATION OF POWERS
------------------------------------
(Note: Revision of former Article X)
The following provisions are adopted for the purpose of defining, limiting
and regulating the powers of the Corporation, the Board of Directors and the
shareholders.
(a) Board of Directors. The business and affairs of the Corporation shall
be managed under the direction of the Board of Directors which shall have and
may exercise all powers of the Corporation except those powers which are by
law, by these Articles of Incorporation or by the By-Laws conferred upon or
reserved to the shareholders. In furtherance and not in limitation of the
powers conferred by law, the Board of Directors shall have power:
(1) to issue and sell, from time to time, shares of any class or
series of the Corporation's stock in such amounts and on such terms and
conditions, and for such amount and kind of consideration, as the Board of
Directors shall determine; provided, that the consideration per share to be
received by the Corporation shall be not less than the Net Asset Value per
share of that class of stock at such time computed in accordance with
subsection (d) hereof;
(2) to determine from time to time whether and to what extent and at
what time and place and under what conditions and regulations the books,
accounts and documents of the Corporation, or any of them, shall be open to
the inspection of shareholders, except as otherwise provided by statute or
By-Laws; and, except as so provided, no shareholder shall have any right to
inspect any book, account or document of the Corporation unless authorized
to do so by resolution of the Board of Directors; and
(3) in accordance with the Investment Company Act and generally
accepted accounting principles, (A) to determine what receipts of the
Corporation shall constitute income available for payment of dividends and
what shall constitute principal, and to make such allocation of any
particular receipt between principal and income as it may deem proper; (B)
from time to time, in its discretion (i) to determine whether any and all
expenses and other outlays paid or incurred (including any and all taxes,
assessments or governmental charges which the Corporation may be required
to pay or hold under any present or future law or of any other taxing
authority therein) shall be charged to or paid from principal or income or
both; and (ii) to apportion any and all of said expenses and outlays,
including taxes, between principal and income.
(b) Redemption by Shareholders. Each holder of shares of a particular
class or series shall have the right at such times as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his, her or
its shares of that class or series, at a redemption price per share equal to
the Net Asset Value per share of that class or series next determined after the
shares are properly tendered for redemption, less such redemption fee or sales
charge, if any, as may be established from time to time by the Board of
Directors in its sole discretion; provided, that such redemption fee or sales
charges shall not exceed one percent (1%) of the aggregate redemption price.
Payment of the redemption price shall be in cash; provided, however, that if
the Board of Directors determines, which determination shall be conclusive,
that conditions exist which make payment wholly in cash unwise or undesirable,
the Corporation may, to the extent and in the manner permitted by the
Investment Company Act, make
A-4
payment wholly or partly in securities or other assets belonging to the series
or class of which the shares being redeemed are a part, at the value of such
securities or assets used in such determination of Net Asset Value.
(c) Payment for Shares. Payment by the Corporation for shares of stock of
the Corporation surrendered to it for redemption shall be made by the
Corporation within such period from surrender as may be required under the
Investment Company Act and the rules and regulations thereunder.
Notwithstanding the foregoing, the Corporation may postpone payment of the
redemption price and may suspend the right of the holders of shares of any
class or series to require the Corporation to redeem shares of that class or
series during any period or at any time when and to the extent permissible
under the Investment Company Act.
(d) Definition of Net Asset Value. The "Net Asset Value" per share of any
class or series shall be the quotient obtained by dividing the value of the net
assets of that class or series (being the value of the assets belonging to that
class or series less the liabilities of that class or series) by the total
number of shares of that class or series outstanding, all as determined by or
under the direction of the Board of Directors in accordance with generally
accepted accounting principles and the Investment Company Act. Subject to the
applicable provisions of the Investment Company Act, the Board of Directors, in
its sole discretion, may prescribe and set forth in a duly adopted resolution
of the Board of Directors such bases and times for determining the value of the
assets belonging to, and the Net Asset Value per share of outstanding shares
of, each class or series, or the net income attributable to such shares, as the
Board of Directors deems necessary or desirable. The Board of Directors shall
have full discretion, to the extent not inconsistent with the Nebraska Business
Corporation Act and the Investment Company Act, to determine which items shall
be treated as income and which items as capital and whether any item of expense
shall be charged to income or capital. Each such determination and allocation
shall be conclusive and binding for all purposes.
Any determination made in good faith and in accordance with the Investment
Company Act and, so far as accounting matters are involved, in accordance with
generally accepted accounting principles, by or pursuant to the discretion of
the Board of Directors, as to the amount of the assets, debts, obligations, or
liabilities of the Corporation, as to the amount of any reserves or charges set
up and the propriety thereof, as to the time of or purposes for creating such
reserves or charges, as to the use, alteration or cancellation of any reserves
or charges (whether or not any debt, obligation or liability for which such
reserves or charges shall have been created shall have been paid or discharged
or shall by then or thereafter required to be paid or discharged), as to the
value of or the method of valuing any investment owned or held by the
Corporation, as to the market value or fair value of any investment or fair
value of any other asset of the Corporation, as to the allocation of any asset
of the Corporation to a particular class or classes or series of the
Corporation's stock, as to the charging of any liability of the Corporation to
a particular class or classes or series of the Corporation's stock, as to the
number of shares of the Corporation or of any class or series outstanding, as
to the estimated expense to the Corporation in connection with purchases of its
shares, as to the ability to liquidate investments in orderly fashion, or as to
any other matters relating to the issue, sale, purchase and/or other
acquisition or disposition of investments or shares of the Corporation, shall
be final and conclusive and shall be binding upon the Corporation and all
holders of its shares, past, present and future, and shares of the Corporation
are issued and sold on the condition and understanding that any and all such
determinations shall be binding as aforesaid.
(e) Purchases by the Corporation. The Corporation may purchase in the open
market or otherwise acquire from any owner or holder thereof any common shares
then issued and outstanding, in which case the consideration paid therefor (in
cash or in securities in which the funds of the Corporation shall then be
invested) shall not exceed the Net Asset Value thereof as determined in
accordance with subsection (d) above, less such withdrawal charge, if any, as
may have been established by the Board of Directors. The Corporation to the
extent necessary may sell or cause to be sold any securities held by it to
provide cash for the purchase of its shares hereunder.
A-5
ARTICLE XI
----------
INVESTMENT ADVISORY AGREEMENT
-----------------------------
(Note: Follows former Article XII)
The Corporation reserves the right to enter into an investment advisory
agreement providing for the management and supervision of the investments of
the Corporation with respect to the desirability of investing in, purchasing or
selling securities or other property. Such agreement shall contain such other
terms, provisions and conditions as the Board of Directors of the Corporation
may deem advisable and in accordance with the Investment Company Act.
The Corporation may designate transfer agents, disbursing agents,
registrars or other agents to act on behalf of the Corporation and employ and
fix the powers, rights, duties, responsibilities and compensation of each such
transfer agent, registrar, disbursing agent or other agent.
ARTICLE XII
-----------
AMENDMENTS TO ARTICLES
----------------------
(Note: Follows former Article XIV, except for deletion of 51% vote)
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation in accordance with the
Nebraska Business Corporation Act, including, without limitation, any amendment
which would alter the contract rights of any series or class of outstanding
stock as expressly set forth in these Articles and all rights conferred upon
shareholders herein are granted subject to this reservation.
ARTICLE XIII
------------
AMENDMENTS TO BY-LAWS
---------------------
(Note: No change from current Article XV)
The Board of Directors shall have the power to alter or repeal the By-Laws
except those sections which specifically provide that they shall not be amended
or repealed by the Board of Directors. However, no By-Laws shall be adopted by
the Directors which shall require more than a majority of the voting shares for
a quorum at a meeting of shareholders, or more than a majority of the votes
cast to constitute action by the shareholders, except where higher percentages
are required by these Articles of Incorporation or by applicable law.
ARTICLE XIV
-----------
INDEMNIFICATION
---------------
(Note: New Article)
To the fullest extent required or permitted by Nebraska law and the
Investment Company Act, the Corporation shall indemnify (i) its currently
acting and former directors and officers, whether serving the Corporation or at
its request any other entity, including the advancement of expenses, and (ii)
other employees and agents to such extent as shall be authorized by the Board
of Directors or the By-Laws. Nothing contained herein shall be construed to
protect any director or officer of the Corporation against any liability to the
Corporation or its shareholders 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. The
foregoing rights of indemnification shall not be exclusive of any other rights
to which those seeking indemnification may be entitled. The Board of Directors
may take such action as is necessary to carry out these indemnification
provisions and is expressly empowered to adopt, approve and amend from time to
time such By-laws, resolutions or contracts implementing such provisions or
such indemnification arrangements as may be permitted by law.
No amendment to or repeal of this Article XIV shall limit or eliminate the
right of indemnification of any director or officer of the Corporation provided
hereunder with respect to any acts or omissions of such director or officer
occurring prior to such amendment or repeal.
A-6
ARTICLE XV
----------
LIMITATION OF LIABILITY
-----------------------
(Note: New Article)
To the fullest extent permitted by Nebraska law and the Investment Company
Act, a director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for any action taken, or
for any failure to take action as a director except for liability (i) for the
amount of a financial benefit received by a director to which he or she is not
entitled; (ii) for intentional infliction of harm on the Corporation or its
shareholders; (iii) for a violation of Neb. Rev. Stat. ss. 21-2096; and (iv)
for an intentional violation of criminal law. Nothing contained herein shall be
construed to protect any director of the Corporation against any liability to
the Corporation or its shareholders to which he or she would otherwise by
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.
No amendment to or repeal of this Article XV shall apply to or have any
effect on the liability or alleged liability of any director of the Corporation
for or with respect to any acts or omissions of such director occurring prior
to such amendment or repeal. If the Nebraska Business Corporation Act is
hereafter amended to authorize the further elimination or limitation of
liability of directors, then the liability of directors shall be eliminated or
limited to the full extent authorized by the Nebraska Business Corporation Act
as so amended.
ARTICLE XVI
-----------
ANNUAL MEETING
--------------
(Note: New Article)
Pursuant to Neb. Rev. Stat. Section 21-2051(4) as it presently exists or
is hereafter amended, the Corporation shall not be required to hold annual
meetings of shareholders pursuant to Neb. Rev. Stat. Section 21-2051(1) unless
the holding of an annual meeting of shareholders is otherwise required by these
Articles of Incorporation or the Investment Company Act and the rules and
regulations thereunder.
*****
These Amended and Restated Articles of Incorporation of the Corporation
have been unanimously approved by the Board of Directors of the Corporation at
a meeting of the Board of Directors held on November 15, 2005, and approved by
the shareholders of the Corporation at its annual meeting held on ___________,
2006.
A-7
APPENDIX B
PROVISIONS
OF THE FUND'S
ARTICLES OF INCORPORATION
CURRENTLY IN EFFECT
The following set forth the provisions of the designated articles of the
Fund's current Articles of Incorporation.
For proposed amendments to Articles VI and VII, see Proposal 4.
ARTICLE VI
The total authorized capital stock of the corporation is 6,000,000 shares
with a par value of one dollar ($1.00) per share.
ARTICLE VII
The minimum amount of capital and surplus with which this corporation
shall commence business shall be $100,000.00.
For proposed amendment to Article X, see Proposal 5.
ARTICLE X
The following provisions are hereby adopted for the purpose of defining,
limiting and regulating the powers of the Corporation and of the directors and
stockholders:
A. the board of directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of its stock of any class
whether now or hereafter authorized for such consideration as said board of
directors may deem advisable, subject to the provisions, limitations, and
restrictions set forth in Article XI hereof.
B. No holder of any of the stock of this Corporation shall, as such
holder, have any preemptive or other right to purchase or subscribe for any
stock which this Corporation may issue or sell, other than such, if any, as the
board of directors in its discretion may from time to time determine to offer
to stockholders of this Corporation, it being the purpose and intent of these
Articles that the board of directors shall have the full right, power and
authority to offer for subscription or sale or to make any disposal of any or
all unissued shares of the capital stock of this Corporation to such persons,
firms, associations or corporations and upon such considerations in money or
property (subject to the limitations and restrictions set forth in Article XI
hereof), as the board of directors may determine and as may be permitted by
law.
C. Each holder of record of stock of this Corporation shall be entitled to
one (1) vote for each share thereof standing registered in his name on the
books of the Corporation. At all elections of directors of the Corporation,
each stockholder shall be entitled to as many votes as shall equal the number
of his shares of stock multiplied by the number of directors to be elected, and
he may cast all of such votes for a single director or may distribute them
among the number to be voted for, or any two or more of them, as he may see
fit.
D. The board of directors shall have power to determine from time to time
whether and to what extent and at what time and place and under what conditions
and regulations the books, accounts and documents of the Corporation, or any of
them, shall be open to the inspection of stockholders, except as otherwise
provided by statute or by the bylaws; and, except as so provided, no
stockholder shall have any right to inspect any book, account or document of
the Corporation unless authorized to do so by resolution of the board of
directors.
E. (1) Each holder of the capital stock of the Corporation shall be
entitled at any time to require the Corporation to redeem all or any part of
the shares of capital stock standing in the name of such holder on the books of
the Corporation at the Net Asset Value of such shares, less such withdrawal
charge of not to exceed one per centum (1%) of such Net Asset Value as may from
time to time be established by resolution of the board of directors, except
insofar as such right of redemption may be suspended pursuant to the provisions
of subsection (4) of this Section E.
(2) The time as of which such Net Asset Value shall be determined for the
purpose of redemption of shares under this Section E shall be, subject to the
exceptions created by subsection (4) of this Section E,
B-1
(a) as of the close of trading upon the New York Stock Exchange on the day
on which certificates evidencing such shares are delivered to and received
by the Corporation, if such delivery and receipt take place prior to the
close of the New York Stock Exchange on any day (not including Saturday or
Sunday) on which said Exchange is open for trading; or
(b) as of the close of trading upon the New York Stock Exchange on the
first day on which such Exchange is open for trading (not including
Saturday and not including any day on which such Exchange is closed for any
period of time for the reasons stated in subsection (4) of this Section E)
next succeeding the day on which such certificates are delivered to and
received by the Corporation, if such delivery and receipt take place at any
time other than that specified in (a) above.
The time of payment therefor shall be within seven (7) business days after
proper request for redemption and tender has been made pursuant to this Section
E. The Corporation shall to the extent necessary sell or cause to be sold any
securities held by it to provide cash for the redemption of its shares as
provided for in subsection (1). Any stockholder whose shares are redeemed
pursuant to subsection (1) may obtain without charge a statement showing in
reasonable detail the computation of the Net Asset Value of such shares.
(3) The Net Asset Value of each share of the Corporation as of any
particular time shall be the quotient obtained by dividing the value, as at
such time, of the net assets of the Corporation (i.e., the value of the assets
of the Corporation less its liabilities exclusive of capital and surplus) by
the total number of shares outstanding at such time, all determined and
computed as follows:
(a) The assets of the Corporation shall be deemed to include all cash on
hand or on deposit, including any interest accrued thereon; all bills,
demand notes, and accounts receivable; all bonds, time notes, shares of
stock, subscription rights, and other securities, owned or contracted for
by the Corporation, other than its own shares; all stock and cash dividends
and cash distributions to be received by the Corporation and not yet
received by it, at the time as of which the Net Asset Value is being
determined as of the record date (or the ex-dividend date if different from
the record date) therefor or a date subsequent thereto; all interest
accrued on any interest bearing securities owned by the Corporation (except
interest accrued on securities in default which is included in the quoted
price); and all other property of every kind and nature, including prepaid
expenses, the value of such assets to be determined as follows:
(i) The value of any cash on hand or on deposit, bills and demand
notes and accounts receivable, prepaid expenses, cash dividends
and interest declared or accrued as aforesaid and not yet
received shall be deemed to be the full amount thereof unless
the board of directors shall have determined that any such
deposit, bill, demand note or account receivable is not worth
the full amount thereof, in which event such value shall be the
fair value thereof as determined in good faith by the board of
directors;
(ii) The value of any bond, time note, share of stock, subscription
right or other security which is listed or dealt in upon the New
York Stock Exchange shall be determined by taking the last sale
price (or lacking any sales, the last bid price) unless it
appears to the board of directors that some other price reflects
more closely the true market value, but in no case shall such
other price be lower than the last bid price or higher than the
last asked price at the time as of which the Net Asset Value is
being determined, all as reported by any means in common use;
provided, however, that the board of directors may by resolution
permit over-the-counter rather than stock exchange quotations to
be used when they appear to the board of directors to reflect
more closely the true market value of any particular security in
the portfolio;
(iii) The value of any bond, time note, share of stock, subscription
right, or other security which shall not be listed or dealt in
on the New York Stock Exchange, shall be determined as nearly as
possible in the manner described in subparagraph (a) (ii) above,
if listed or dealt in on any other exchange, unless the board of
directors shall determine that some other form of quotation
better reflects its value, in which event that form of quotation
shall be used; and
(iv) In the case of any bond, time note, share of stock, subscription
right, other security or other property for which no price
quotations are available as above provided, the value thereof
shall be the fair value as determined in good faith by the board
of directors.
B-2
(b) The liabilities of the Corporation shall be deemed to include all bills
and accounts payable; all administrative expenses payable and/or accrued;
all contractual obligations for the payment of money or property, including
the amount of any unpaid dividends upon the shares of the Corporation,
declared to shareholders of record at or before the time as of which the
Net Asset Value is being determined; all reserves authorized or approved by
the board of directors for taxes or contingencies, including such reserves,
if any, for taxes based on any unrealized appreciation in the value of the
assets of the Corporation; and all other liabilities of the Corporation of
whatsoever kind and nature, except liabilities represented by outstanding
shares and surplus of the Corporation.
(4) In the event, that at any time the New York Stock Exchange shall be
closed for any period of time because of the then existing financial conditions
or for any other unusual or extraordinary condition then existing, the
provisions of the foregoing subsection (1) of this Section E relative to the
redemption of shares of the Corporation shall be suspended and ineffective for
the period from the date of closing to the date of reopening of said Exchange,
including in such period the day on which the action is taken for the closing
of said Exchange and the day on which said Exchange is reopened; provided,
also, that in such case the Corporation shall not be required to redeem any
shares offered and deposited for redemption during the day on which the action
is taken for closing the said Exchange, and may return or cause to be returned
to the stockholder in such case the shares deposited for redemption; and
further provided, that in accordance with the provisions of the Investment
Company Act of 1940 and the rules and regulations promulgated thereunder by the
Securities and Exchange Commission, the Corporation may suspend such right of
redemption (a) for any period during which trading on the New York Stock
Exchange is restricted; (b) for any period during which an emergency exists as
a result of which (i) disposal by the Corporation of securities owned by it is
not reasonably practicable or (ii) it is not reasonably practicable for the
Corporation fairly to determine the value of its net assets; or (c) for such
other periods as the Commission may by order permit for the protection of
stockholders of the Corporation.
(5) Certificates evidencing shares tendered for redemption pursuant to
subsection (1) of this Section E shall be deemed actually to have been
delivered to and received by the Corporation only when said certificates duly
endorsed in blank, or accompanied by instruments or assignment executed in
blank with proper stock transfer stamps affixed, and accompanied by irrevocable
instructions in writing in form acceptable to the board of directors to redeem
the stock represented thereby to the Corporation at Net Asset Value thereof as
defined herein, less such withdrawal charge as many have been established by
the board of directors, shall have been deposited physically at such office or
other place of deposit as the board of directors shall from time to time
designate.
In respect of all powers, duties and authorities conferred by the
preceding subsections (1), (2), (3) and (4), this subsection (5) and the next
succeeding subsection (6), the Corporation may act by and through agents from
time to time designated and appointed by the board of directors and the board
of directors may delegate to any such agent any and all powers, duties and
authorities conferred upon the Corporation or upon the board of directors
thereof by said subsections.
(6) The Corporation may purchase in the open market or otherwise acquire
from any owner or holder thereof any shares of its capital stock, in which case
the consideration paid therefor (in cash or in securities in which the funds of
the Corporation shall then be invested) shall not exceed the Net Asset Value
thereof, determined or estimated in accordance with any method deemed proper by
the board of directors and producing an amount approximately equal to the Net
Asset Value of said shares at the time of the purchase of acquisition by the
Corporation thereof, less such withdrawal charge as may have been established
by the board of directors. The Corporation to the extent necessary may sell or
cause to be sold any securities held by it to provide cash for the purchase of
its shares.
(7) The board of directors shall have full power in accordance with good
accounting practice: (a) to determine what receipts of the Corporation shall
constitute income available for payment of dividends and what shall constitute
principal, and to make such allocation of any particular receipt between
principal and income as it may deem proper; and (b) from time to time, in its
discretion (i) to determine whether any and all expenses and other outlays paid
or incurred (including any and all taxes, assessments or governmental charges
which the Corporation may be required to pay or hold under any present or
future law of the United States of America or of any other taxing authority
therein) shall be charged to or paid from principal or income or both; and (ii)
to apportion any and all of said expenses and outlays, including taxes, between
principal and income.
B-3
For proposed amendments to Article IX and XIV, see Proposal 9.
ARTICLE IX
The purposes for which the Corporation is formed and the business and
objects to be carried on and promoted by it are as follows:
A. To purchase or otherwise acquire, hold for investment or otherwise, and
to sell exchange or otherwise dispose of securities of any class, however
evidenced, or rights or warrants to acquire such securities, of any private or
public company, corporation, association, trust or syndicate, however
organized, and to engage in the business of a diversified, open-end management
investment company.
B. To purchase or otherwise acquire, hold for investment or otherwise, and
to sell, exchange or otherwise dispose of securities issued or guaranteed by
the United States of America, by any state of the United States of America, by
any political subdivision of any state, by any public instrumentality of a
state, or by any person controlled or supervised by and acting as an
instrumentality of the United States of America.
C. To invest its funds from time to time by deposit at interest in any
bank, savings bank, savings and loan association, or trust company in good
standing, organized under the laws of the United States of America or any state
thereof or of the District of Columbia.
D. To conduct researches and investigations in respect of securities,
organizations, business and general business conditions in the United States
and elsewhere; to secure information pertaining to the investment and
employment of the assets and funds of the Corporation; and to procure any or
all of the foregoing and to pay compensation therefor.
E. To consent to the reorganization, merger or consolidation of any of the
companies whose securities are held by it or to the sale or lease of all or
substantially all of the property and assets of any of such companies to any
person, corporation, trust or association, and to exchange any of the shares of
stock or other securities of any such company for the shares of stock or other
securities issued therefor upon such reorganization, merger, consolidation,
sale or lease; to deposit any securities of any such company with, or pursuant
to the request or direction of, any protective, reorganization or readjustment
committee or other agency.
F. To pay all assessments, subscriptions and other sums of money or other
considerations as it may deem expedient for the protection of its interests as
holder of any stocks or other securities of any company whose securities are
held by it; and to exercise any right or option contained in, appertaining to,
or granted or issued to holders of any stocks or other securities for
conversion into, or exchange for, or purchase of, other stocks or securities.
G. To borrow money as a temporary measure; provided that the aggregate
borrowing outstanding at any one time shall not exceed ten per centum (10%) of
the value of its net assets.
H. Generally to exercise in respect of all property and assets owned by it
all rights, powers and privileges which are or may be exercised by any natural
person owning similar property or assets in his own right, except that it shall
not have any power
(1) to purchase any security on margin, except such short-term credits as
are necessary for the clearance of transaction; or
(2) to effect a short sale of any security.
I. To acquire all or any part of the good will, rights, property and
business of any person, firm, association or corporation heretofore or
hereafter engaged in any business similar to any business which it has the
power to conduct, and to hold, utilize, enjoy and in any manner dispose of, the
whole or any part of the rights, property and business so acquired, and to
assume in connection therewith any liabilities of any such person, firm,
association or corporation.
J. Without the vote or consent of the holders of stock of the Corporation,
to purchase, acquire, hold, dispose of, transfer and reissue or cancel its own
securities (including shares of its capital stock) in any manner and to any
extent now or hereafter permitted by the laws of Nebraska and by these Articles
of Incorporation.
B-4
K. To carry out all or any part of the aforesaid objects and purposes, and
to conduct its business in all or any of its branches, in any or all states,
territories, districts and possessions of the United States of America and in
foreign countries; and to maintain offices and agencies in any or all states,
territories, districts and possessions of the United States of America and in
foreign countries.
The foregoing objects and purposes shall, except when otherwise expressed,
be in no way limited or restricted by reference to, or inference from, the
terms of any other clause of this or any other article of these Articles of
Incorporation, or of any amendment thereto, and shall each be regarded as
independent and construed as powers as well as objects and purposes.
ARTICLE XIV
------------
The Corporation reserves the right from time to time to make any amendment
of its Articles of Incorporation now or hereafter authorized by law, including
any amendment which alters the contract rights as expressly set forth in its
Articles of Incorporation of any outstanding stock.
Except as otherwise limited by law, the Corporation may take or authorize
any action upon the concurrence of fifty-one per centum (51%) of the aggregate
number of votes entitled to be cast thereon by the stockholders.
B-5
APPENDIX C
NEBRASKA REVISED STATUTES OF 1943
CHAPTER 21. CORPORATIONS AND OTHER COMPANIES
ARTICLE 20. BUSINESS CORPORATION ACT.
(L) DISSENTERS' RIGHTS
ss. 21-20,137. Dissenters' rights; terms, defined.
For purposes of sections 21-20,137 to 21-20,150:
(1) Beneficial shareholder shall mean the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder;
(2) Corporation shall mean the issuer of the shares held by a dissenter before
the corporate action or the surviving or acquiring corporation by merger or
share exchange of that issuer;
(3) Dissenter shall mean a shareholder who is entitled to dissent from
corporate action under section 21-20,138 and who exercises that right when and
in the manner required by sections 21-20,140 to 21-20,148;
(4) Fair value, with respect to a dissenter's shares, shall mean the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable;
(5) Interest shall mean interest from the effective date of the corporate
action until the date of payment at the rate specified in section 45-104, as
such rate may from time to time be adjusted by the Legislature;
(6) Record shareholder shall mean the person in whose name shares are
registered in the records of a corporation or the beneficial shareholder to the
extent of the rights granted by a nominee certificate on file with a
corporation; and
(7) Shareholder shall mean the record shareholder or the beneficial
shareholder.
ss. 21-20,138. Right to dissent.
(1) A shareholder shall be entitled to dissent from, and obtain payment of the
fair value of his or her shares in the event of, any of the following corporate
actions:
(a) Consummation of a plan of merger to which the corporation is a party:
(i) If shareholder approval is required for the merger by section
21-20,130 or the articles of incorporation and the shareholder is
entitled to vote on the merger; or
(ii) If the corporation is a subsidiary that is merged with its parent
under section 21-20,131;
(b) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course of
business if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all
of the net proceeds of the sale will be distributed to the shareholders within
one year after the date of sale;
(d) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) Alters or abolishes a preferential right of the shares;
(ii) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase of the shares;
(iii) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
C-1
(iv) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or
(v) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be
acquired for cash under section 21-2038; or
(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, the bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for his or her shares
under sections 21-20,137 to 21-20,150 may not challenge the corporate action
creating his or her entitlement unless the action is unlawful or fraudulent
with respect to the shareholder or the corporation.
(3) The right to dissent and obtain payment under sections 21-20,137 to
21-20,150 shall not apply to the shareholders of a bank, trust company,
stock-owned savings and loan association, or the holding company of any such
bank, trust company, or stock-owned savings and loan association.
ss. 21-20,139. Dissent by nominees and beneficial owners.
(1) A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his or her name only if he or she dissents with respect to
all shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he or she
asserts dissenters' rights. The rights of a partial dissenter under this
subsection shall be determined as if the shares as to which he or she dissents
and his or her other shares were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares held on
his or her behalf only if:
(a) He or she submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(b) He or she does so with respect to all shares of which he or she is the
beneficial shareholder or over which he or she has power to direct the vote.
ss. 21-20,140. Notice of dissenters' rights.
(1) If proposed corporate action creating dissenters' rights under section
21-20,138 is submitted to a vote at a shareholders' meeting, the meeting notice
shall state that shareholders are or may be entitled to assert dissenters'
rights under sections 21-20,137 to 21-20,150 and be accompanied by a copy of
such sections.
(2) If corporate action creating dissenters' rights under section 21-20,138 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was
taken and send those shareholders the dissenters' notice described in section
21-20,142.
ss. 21-20,141. Dissenters' rights; notice of intent to demand payment.
(1) If proposed corporate action creating dissenters' rights under section
21-20,138 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights (a) shall deliver to the corporation before
the vote is taken written notice of his or her intent to demand payment for his
or her shares if the proposed action is effectuated and (b) shall not vote his
or her shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1) of
this section shall not be entitled to payment for his or her shares under
sections 21-20,137 to 21-20,150.
ss. 21-20,142. Dissenters' notice.
(1) If proposed corporate action creating dissenters' rights under section
21-20,138 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of section 21-20,141.
(2) The dissenters' notice shall be sent no later than ten days after the
corporate action was taken and shall:
(a) State where the payment demand shall be sent and where and when
certificates for certificated shares shall be deposited;
C-2
(b) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not he or she acquired beneficial ownership of the
shares before that date;
(d) Set a date by which the corporation shall receive the payment demand
which date may not be fewer than thirty nor more than sixty days after the date
the notice required by subsection (1) of this section is delivered; and
(e) Be accompanied by a copy of sections 21-20,137 to 21-20,150.
ss. 21-20,143. Dissenters' rights; duty to demand payment.
(1) A shareholder who was sent a dissenters' notice described in section
21-20,142 shall demand payment, certify whether he or she acquired beneficial
ownership of the shares before the date required to be set forth in the
dissenters' notice pursuant to subdivision (2)(c) of section 21-20,142, and
deposit his or her certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits his or her shares under
subsection (1) of this section shall retain all other rights of a shareholder
until such rights are canceled or modified by the taking of the proposed
corporate action.
(3) A shareholder who does not demand payment or does not deposit his or her
share certificates where required, each by the date set in the dissenters'
notice, shall not be entitled to payment for his or her shares under sections
21-20,137 to 21-20,150.
ss. 21-20,144. Dissenters' rights; share restrictions.
(1) The corporation may restrict the transfer of uncertificated shares from the
date the demand for their payment is received until the proposed corporate
action is taken or the restrictions are released under section 21-20,146.
(2) The person for whom dissenters' rights are asserted as to uncertificated
shares shall retain all other rights of a shareholder until such rights are
canceled or modified by the taking of the proposed corporate action.
ss. 21-20,145. Dissenters' rights; payment.
(1) Except as provided in section 21-20,147, as soon as the proposed corporate
action is taken, or upon receipt of a payment demand, the corporation shall pay
each dissenter who complied with section 21-20,143 the amount the corporation
estimates to be the fair value of his or her shares, plus accrued interest.
(2) The payment shall be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year ending
not more than sixteen months before the date of payment, an income statement
for that year, a statement of changes in shareholders' equity for that year,
and the latest available interim financial statements, if any;
(b) A statement of the corporation's estimate of the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under section
21-20,148; and
(e) A copy of sections 21-20,137 to 21-20,150.
ss. 21-20,146. Dissenters' rights; failure to take action.
(1) If the corporation does not take the proposed action within sixty days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(2) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it shall send a new
dissenters' notice under section 21-20,142 and repeat the payment demand
procedure.
C-3
ss. 21-20,147. Dissenters' rights; after-acquired shares.
(1) A corporation may elect to withhold payment required by section 21- 20,145
from a dissenter unless he or she was the beneficial shareholder before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the terms of the proposed corporate action.
(2) To the extent the corporation elects to withhold payment under subsection
(1) of this section after taking the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interest, and shall pay
this amount to each dissenter who agrees to accept it in full satisfaction of
his or her demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest
was calculated, and a statement of the dissenters' right to demand payment
under section 21-20,148.
ss. 21-20,148. Dissenters' rights; procedure if shareholder dissatisfied with
payment or offer.
(1) A dissenter may notify the corporation in writing of his or her own
estimate of the fair value of his or her shares and amount of interest due, and
demand payment of his or her estimate, less any payment under section 21-
20,145, or reject the corporation's offer under section 21-20,147 and demand
payment of the fair value of his or her shares and interest due if:
(a) The dissenter believes that the amount paid under section 21-20,145 or
offered under section 21-20,147 is less than the fair value of his or her
shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under section 21-20,145 within
sixty days after the date set for demanding payment; or
(c) The corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions imposed
on uncertificated shares within sixty days after the date set for demanding
payment.
(2) A dissenter waives his or her right to demand payment under this section
unless he or she notifies the corporation of his or her demand in writing under
subsection (1) of this section within thirty days after the corporation made or
offered payment for his or her shares.
ss. 21-20,149. Dissenters' rights; court action.
(1) If a demand for payment under section 21-20,148 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding
within the sixty-day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the district court of the
county where a corporation's principal office, or, if none in this state, its
registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the district court of the county in this state where the registered office of
the domestic corporation merged with or whose shares were acquired by the
foreign corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of this
state, whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties shall be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section shall be plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. Appraisers shall have the powers
described in the order appointing them or in any amendment to such order. The
dissenters shall be entitled to the same discovery rights as parties in other
civil proceedings.
(5) Each dissenter made a party to the proceeding shall be entitled to judgment
(a) for the amount, if any, by which the court finds the fair value of his or
her shares, plus interest, exceeds the amount paid by the corporation or (b)
for the fair value, plus accrued interest, of his or her after-acquired shares
for which the corporation elected to withhold payment under section 21-20,147.
C-4
ss. 21-20,150. Dissenters' rights; court costs and attorney's fees.
(1) The court in an appraisal proceeding commenced under section 21-20,149
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess
costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under section 21-
20,148.
(2) The court may also assess the attorney's fees and expenses and the fees and
expenses of experts for the respective parties in amounts the court finds
equitable:
(a) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of sections 21-20,140 to 21-20,148; or
(b) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by sections 21-20,137 to 21-20,150.
(3) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated and that the fees for
those services should not be assessed against the corporation, the court may
award to counsel reasonable fees to be paid out of the amounts awarded to the
dissenters who were benefited.
C-5
BRIDGES INVESTMENT FUND, INC.
C/O PROXY TABULATOR
P. O. BOX 9112
FARMINGDALE, NEW YORK 11735
YOUR VOTE IS IMPORTANT
TO CAST YOUR VOTE:
1) Read the Proxy Statement.
2) Check the appropriate boxes on the reverse side.
3) Sign and date the Proxy Card.
4) Return the Proxy Card in the envelope provided.
BRIDGES INVESTMENT FUND, INC.
8401 WEST DODGE ROAD
SUITE 256
OMAHA, NE 68114
BRIDGES INVESTMENT FUND, INC. PROXY - ANNUAL MEETING OF MARCH 22, 2006
The undersigned hereby appoints Edson L. Bridges II, John W. Estabrook, and
Edson L. Bridges III, and each or any of them, with power of substitution,
attorneys and proxies, for and in the name and place of the undersigned, to vote
at the Annual Meeting of Shareholders of Bridges Investment Fund, Inc. (the
Fund) to be held at Happy Hollow Country Club, 1701 South 105th Street, in the
City of Omaha, State of Nebraska, on Wednesday, March 22, 2006, at 7:00 p.m.,
Central Standard Time, or at any adjournment thereof, upon the matters as set
forth in the Notice of such Meeting and the Proxy Statement.
DATED: ______________________, 2006
--------------------------------------------
Signature(s) (Joint Owners) (PLEASE SIGN IN BOX)
NOTE: Please sign name or names as imprinted
hereon. Where stock is registered in joint
tenancy, all tenants should sign. Persons
signing as Executors, Administrators, Trustees,
etc. should so indicate.
PLEASE FILL IN BOX(ES) AS SHOWN USING BLACK OR BLUE INK OR NUMBER 2 PENCIL. [X]
PLEASE DO NOT USE FINE POINT PENS.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, 3, 4, 5, 6, 7, 8, 9, AND 10.
1. For the Election of Ten Directors:
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT*
(01) Edson L. Bridges II (06) John J. Koraleski
(02) Edson L. Bridges III (07) Gary L. Petersen [ ] [ ] [ ] 1.
(03) N.P. Dodge, Jr. (08) Roy A. Smith
(04) John W. Estabrook (09) L.B. Thomas
(05) Jon D. Hoffmaster (10) John K. Wilson
* INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR PARTICULAR NOMINEE(S),
MARK "FOR ALL EXCEPT" AND WRITE THE NUMBER(S) OF EACH NOMINEE(S) ON THE
LINE BELOW.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. For a proposed investment advisory contract which
continues the employment of Bridges Investment Management,
Inc. as investment adviser to the Fund for the year ending
April 17, 2007. [ ] [ ] [ ] 2.
3. For the ratification of the selection of Deloitte & Touche
LLP as independent public accountants of the Fund for fiscal year
ending December 31, 2006. [ ] [ ] [ ] 3.
4. For new Articles VII and IX of the Fund's Articles of Incorporation to
increase capitalization and authorize new series. [ ] [ ] [ ] 4.
5. For the amendment of Article X of the Fund's Articles of Incorporation
relating to the determination of the net asset value of the Fund. [ ] [ ] [ ] 5.
6. For new Article XIV of the Fund's Articles of Incorporation
providing indemnification for directors and officers. [ ] [ ] [ ] 6.
7. For new Article XV of the Fund's Articles of Incorporation
providing limitation of liability for directors. [ ] [ ] [ ] 7.
8. For new Article XVI of the Fund's Articles of
Incorporation to permit in certain circumstances the
elimination of the annual meeting requirement. [ ] [ ] [ ] 8.
9. For all other amendments to and the restatement of
the Fund's Articles of Incorporation. [ ] [ ] [ ] 9.
10. On any other business which may properly come before the Meeting.
ALL SHAREHOLDERS ARE REQUESTED TO SIGN AND MAIL PROXIES PROMPTLY. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. DISCRETIONARY AUTHORITY TO
CUMULATE VOTES FOR THE ELECTION OF DIRECTORS IS NOT SOLICITED.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
DOCS/713101.9