December 29, 1995
Securities and Exchange Commission
450 Fifth Street NW
Washington, DC 20549
RE: Madison Opportunity Fund, Inc.
Gentlemen:
I am pleased to file the Notification of Registration and initial
registration statement for the Madison Opportunity Fund, Inc., and open-ended
diversified management investment company. It is our request that the effective
date registration for this fund be January 1, 1996 pursuant to Section 8
paragraph b of the Investment Company Act of 1940.
FORM N-8A: Notification of Registration filed pursuant to Section 8(a) of
- ----------
the Investment Company Act of 1940.
FORM N-1A: Registration Statement under the Investment Company Act of 1940.
- ----------
FILING FEES: In order to file the Registration Statement under the Investment
- ------------
Company Act of 1940, funds in the amount of $1,000 have been paid via Fedwire.
If there is any difficulty in completing this filing under the Investment
Company Act of 1940, please telephone the undersigned at 800/767-0300. We would
appreciate receiving a receipt for the enclosed fees and an acknowledgement of
the receipt of the enclosed registration documents.
Sincerely,
Katherine L. Frank
Vice president
KLF:baf
SECURITIES AND EXCHANGE COMMISSION
Washington D.C.
Form N-8A
NOTIFICATION OF REGISTRATION
FILED PURSUANT TO SECTION 8(a) OF THE
INVESTMENT COMPANY ACT OF 1940
The undersigned investment company hereby notifies the Securities and
Exchange Commission that it registers under and pursuant to the provisions of
Section 8(a) of the Investment Company Act of 1940 and in connection with such
notification of registration submits the following information:
Name: MADISON OPPORTUNITY FUND, INC.
Address of Principal Business Office (No. & Street, City, State, Zip Code)
6411 MINERAL POINT ROAD
MADISON, WI 53705
Telephone Number: (608) 273-2020
Name and Address of agent for service of process:
JAY R. SEKELSKY
6411 MINERAL POINT ROAD
MADISON, WI 53705
Check Appropriate Box:
Registrant is filing a Registration Statement pursuant to Section 8(b) of
the Investment Company Act of 1940 concurrently with the filing of Form N-8A:
X YES NO
---- -----
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has caused this notification of registration to be duly signed on its
behalf in the City of Madison and State of Wisconsin on the 29th day of
December, 1995.
MADISON OPPORTUNITY FUND, INC.
ATTEST: (Name of Registrant)
By:
- ------------------------- ----------------------
Katherine L. Frank Jay R. Sekelsky, President
Vice President and a Director
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Madison Opportunity Fund, Inc.
-------------------------------------
(Exact Name of Registrant as Specified in Charter)
6411 Mineral Point Rd. Madison, WI 53705
----------------------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (608) 273-2020
---------------
Jay R. Sekelsky, 6411 Mineral Point Rd. Madison, WI 53705
--------------------------------------------------------------
(Name and Address of Agent or Service)
Copy to : John Rashke, Esq.
Ross & Stevens, S.C.
8000 Excelsior Drive Suite 401
Madison, Wisconsin 53717-1914
It is proposed that this filing will become effective
x on January 1, 1996 pursuant to paragraph (b) of Section 8.
- ---
MADISON OPPORTUNITY FUND, INC.
Form N-1A
Cross Reference Sheet
- --------------------------------------------------------------------------------
Form N-1A
Item No. Prospectus Heading
- --------------- ------------------------
PART A:
1. Cover Page........................... Not Applicable
2. Synopsis............................. Not Applicable
3. Condensed Financial
Information..................... Not Applicable
4. General Description of
Registrant........................... Introduction to the Fund
Investment Objectives and Policies;
Description of Fund Shares
5. Management of the Fund............... Management of the Fund
5A. Management's Discussion of Fund Perf. Not Applicable
6. Capital Stock and Other Securities... Description of Fund Shares
7. Purchase of Securities Being Offered. Purchase of Shares
8. Redemption or Repurchase............. Redemption of Shares
9. Pending Legal Proceedings............ None
PART B:
10. Cover Page........................... Cover Page
11. Table of Contents.................... Table of Contents
12. General Information and History...... General Information and
History
13. Investment Objectives and Policies... Investment Objectives and
Policies; Investment Selection and Limitations
14. Management of the Fund............... Management of the Fund
15. Control Persons and Principal Holders
of Securities................... Principal Shareholders
16. Investment Advisory and Other
Services........................ Investment Advisory and
Other Services
17. Brokerage Allocation and Other
Practices....................... Brokerage
18. Capital Stock and Other Securities... Description of Fund Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered.......... Purchase and Redemption of
Common Stock; Transfer of Common
Stock; Determination of Net Asset
Value
20. Tax Status........................... Tax Status
21. Underwriters......................... Purchase and Redemption of
Common Stock
22. Calculations of Yield Quotations..... Not Applicable
23. Financial Statements................. Financial Statements
PART A
MADISON OPPORTUNITY FUND, INC.
PROSPECTUS - JANUARY 1, 1996
INTRODUCTION TO THE FUND
Madison Opportunity Fund, Inc. (the `Fund'') is a no-load diversified
open-end investment company. As an open-end company, the Fund continuously
offers its shares to investors and stands ready to redeem shares at the current
net asset value per share. The Fund is managed by Madison Investment Advisors,
Inc., of Madison, Wisconsin. Shares purchased are not subject to a sales charge.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is long-term growth of capital.
Production of current income is incidental. The Fund's management believes that
capital growth can best be achieved through investing in common stocks of
companies that have the potential to produce above average earnings growth. A
significant portion of the Fund's assets may be invested in securities of
companies with relatively medium- or small-sized equity market capitalization.
The Fund may also invest in established companies whose earnings growth is
expected to accelerate. Not more than 5% of the total net assets, at time of
purchase, will be invested in the securities of any one issuer (not including
U.S. Government securities). Also, not more than 25% of the Fund's total net
assets will be concentrated in any one industry or group of related industries.
Under normal market conditions, the Fund strives to be fully invested in
common stocks. However, in order to reduce the downside risk of market
declines, the Fund will be permitted to raise cash, invest in puts and calls,
and/or enter into futures and options contracts to a limited extent. The Fund
may also invest in investment-grade corporate debt obligations and U.S.
Government and Agency securities for temporary defensive purposes.
The value of the Fund's shares will fluctuate because the value of the
securities in which it invests fluctuates. The Fund may purchase common stock of
medium- and small-sized companies, the value of which may fluctuate more than
the general stock market. The Fund is suitable for the more sophisticated
investor who understands and accepts the risks associated with an aggressive
investment style. There is, of course, no assurance that the Fund will be
successful in meeting its objective.
INVESTMENT SELECTION AND LIMITATIONS
The purpose of the Fund is to make available to investors an investment
program under continuous supervision of experienced investment management. By
purchasing shares of the Fund, investors obtain in a single investment an
interest in a diversified investment portfolio drawn from the fastest growing
section of American industries. It should be recognized that such
diversification does not eliminate the risk involved in all securities
investments. The Fund will employ aggressive invesment strategies that have the
potential to produce higher returns while increasing the overall volatility.
Accordingly, the Fund is suitable for the more sophisticated investor who
understands and accepts the risks associated with an aggressive investment
style. The Fund is not designed for investors seeking short-term profits.
Through ownership of shares of the Fund, as contrasted with ownership of a
number of individual securities, investors are relieved of many details in the
management of their investments while their bookkeeping and income tax records
are greatly simplified. Ownership of shares in the Fund does not constitute a
complete financial program.
EQUITY SECURITIES. In order to achieve its investment objective, the Fund
will strive to be fully invested most of the time. The Fund will invest
primarily in common stocks, although the Fund may also purchase convertible
bonds and convertible preferred stocks. A significant portion of the Fund's
assets may be invested in securities of companies with relatively medium- or
small- sized market capitalization. Small or unseasoned companies often have
some speculative risk characteristics. Dividend income paid by such securities,
if any, will ordinarily be negligable.
The Fund's Advisor follows a stock selection process that (1) screens the
universe of common stocks for companies possessing above average quality, growth
and profitability characteristics (such as earnings and revenue growth, return
of equity and balance sheet quality), then (2) examines each company's
fundamental economic outlook and industry position, and (3) reviews stocks'
recent trading history including momentum and price strength relative to the
general market.
The Fund may also utilize convertible bonds and convertible preferred
stocks. Securities convertible into common stocks have equity characteristics.
Convertible bonds are convertible into a specific number of shares of the common
stock of the issuer either at any time or usually at a specific future date at a
determined price per share of common stock. The Fund anticipates that
convertible securities will represent less than 25% of the Fund's portfolio. The
risks involved in investing in convertible securities are similar to the risks
of investing in the underlying common stock. There can be no assurance that the
Fund's shareholders can be protected from the risk of loss inherent in common
stock investing.
FIXED INCOME SECURITIES. Although the Fund invests primarily in equity
securities, it may, for defensive purposes, invest in corporate debt securities
and U.S. Government and Agency bonds. Eligible corporate debt securities must be
accorded one of the four highest quality ratings by Standard & Poor's or Moody's
or, if unrated, judged by the Advisor to be a comparable quality. Bonds rated
A, AA, or AAA by Standard & Poor's indicate strong to high capacity of the
company to pay interest and repay principal. However, the fourth highest
rating, BBB, indicates adequate capacity to pay interest and repay principal but
suggests that adverse economic conditions may weaken the company's ability to
meet these obligations, thus is more speculative and reflects a higher level of
risk. The Fund may also invest in direct obligations of the United States
government, its agencies and instrumentalities. Mere investment in government or
corporate bonds provides no assurance that the Fund's shareholders can be
protected from certain risks in bond investing including increasing price
fluctuation as bond maturities become longer.
OPTIONS AND FUTURES CONTRACTS. The Fund may attempt to reduce the overall
risk of its investments by using options and futures contracts. The decision to
invest in these instruments will be based on market conditions, regulatory
limits and tax considerations.
There can be no assurance that engaging in options,futures, or any other
defensive strategy will be successful. While defensive strategies are designed
to protect the Fund from potential declines, if the advisor misgauges market
values or other economic factors, the Fund may be worse off than had it not
employed the defensive strategy. While defensive strategies can reduce the risk
of loss, they can also reduce the opportunity for gain since they offset
favorable price movements. The use of defensive strategies may result in a
disadvantage to the Fund if the Fund is not able to purchase or sell a portfolio
holding at an optimal time due to the need to cover its position or due to the
inability of the Fund to liquidate its postion because of its relative
illiquidity.
LIMITATIONS. The Fund has adopted other investment limitations, which like
its investment objectives and the fundamental policies mentioned above, may not
be changed without the approval of a majority of its shareholders. These
limitations generally prohibit (1) investing more than 5% of total net assets in
the securities of any one issuer (except U.S. Government and Agency Securities),
(2) investing more than 25% of total net assets in any one industry, (3)
borrowing money except in amounts up to 5% of its assets only for temporary
extraordinary purposes, (4) purchasing real estate, (5) investing in oil, gas or
mineral exploration programs, (6) the pledge, mortgage or hypothecation of its
assets, except for temporary or emergency purposes and then to an extent not
greater than 10% of its assets at current value, and (7) more than 10% of total
net assets invested in repurchase agreements with maturities of greater than
seven days or in other illiquid securities. A complete list of all investment
restrictions is found in the Fund's Statement of Additional Information.
BROKERAGE PRACTICES. In valuing brokerage services, the Advisor makes a
judgement of the usefulness of research and other information provided to the
Advisor in managing the Fund's investment portfolio. In some cases, the
information relates to a specific transaction placed with the broker, but for
the greater part, the research consists of a wide variety of investment
strategy, economic, financial and political information, useful to the Advisor
in advising the Fund and its other clients.
It is the policy of the Advisor to seek the best possible security price
available with respect to each transaction at the best available commission
rate. In selecting brokers, the Advisor considers the broker's reliability, the
quality of its execution services and its financial strength. However, the
Advisor also takes into account the value of research information received for
use in advising the Fund. It is understood by the Fund that other clients of the
advisor might also benefit from the information obtained. Where the Funds and
one or more clients of the Advisor are simultaneously engaged in the purchase or
sale of the same security, the transactions may be averaged as to price and
allocated equitably. In most cases, it is believed that coordination and the
ability to participate in volume transactions will be to the benefit of the
Fund.
MANAGEMENT OF THE FUND
Under an investment advisory agreement with the Fund, Madison Investment
Advisors, Inc., 6411 Mineral Point Road, Madison, Wisconsin, furnishes
continuous investment service and management to the Fund. Madison Investment
Advisors, Inc., a licensed investment advisory firm since 1974, provides
professional portfolio management services to a number of other clients besides
the Fund and has approximately $2.3 billion under management. The Advisor
manages Bascom Hill BALANCED Fund, Inc., another investment company with total
assets of $10.8 million on December 1, 1995, Bascom Hill Investors, Inc. with
total assets of $12.3 million on December 1, 1995 and Madison Bond Fund, Inc.
with total net assets of $5.8 million on December 1, 1995. Subject to the
authority of the Board of Directors, Madison Investment Advisors, Inc. is
responsible for the overall management of the Fund's business affairs besides
primary responsibility for the investment decisions affecting the Fund's
portfolio. All investment decisions for the Fund are made by the Investment
Policy Committee. The Advisor will receive an annual fee, paid quarterly, of .75
of 1% of the average daily net assets of the Fund beginning on July 1, 1996. No
advisory fees will be charged prior to that time.
DESCRIPTION OF COMMON STOCK
The Fund has an authorized capital of 500,000 shares of common stock, $.01
par value. All shares are of the same class with equal rights and privileges.
Each share is entitled to one vote and participates equally in dividends and
distributions declared by the Fund, and on liquidation, in its net assets
remaining after satisfaction of outstanding liabilities. Fractional shares enjoy
the same rights as do full shares.
PURCHASE INFORMATION
As set by the Board of Directors, the minimum initial purchase in the Fund
is $1,000 and any subsequent purchases must be a minimum of $100 except through
dividend or capital gain reinvestment. The shares will not be offered to the
public at this time.
REDEMPTION OF SHARES
At any time, a shareholder may require the Fund to redeem his/her shares in
whole or in part. Shares may be redeemed by mailing a signed written request for
redemption addressed to Madison Opportunity Fund, Inc., c/o Firstar Trust
Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. The written request must
be signed exactly as the account is registered. The redemption price is the net
asset value next computed after the time of receipt by the Firstar Trust Company
of the certificates and/or written request. Payment for shares redeemed will be
made within seven days after redemption and redemption will be paid in cash
only. There is no redemption charge.
INCOME DIVIDENDS, CAPITAL GAIN
DISTRIBUTIONS, AND TAXES
The Fund distributes to its shareholders substantially all of its net
income and realized capital gain. As a result, the Fund does not pay income tax.
It is the Fund's intention to continue this practice. The income dividends are
generally paid twice a year in July and December, while the long-term capital
gains distribution, if any, is paid in December.
Capital gain distributions will be taxable to shareholders as long-term
gains, regardless of the length of time shares of the Fund have been held.
Currently, the maximum long-term capital gains tax rate is 28%.
The federal tax treatment of the income dividends or capital gain
distributions will be the same whether made in cash or reinvested in additional
shares of the Fund.
REINVESTMENT PLAN FOR DISTRIBUTIONS
Shareholders may elect to receive either or both the income dividends and
capital gain distributions in cash. The election to receive cash is made on the
shareholder application form. If the election to receive cash is not made, all
income dividends and capital gain distributions will be reinvested in additional
shares of the Fund. Shareholders may change their participation in the
reinvestment plan by notifying the Fund in writing. Written notification of a
change must be received prior to the record date of a distribution to be
effective for that distribution.
SHAREHOLDER INQUIRIES & REPORTS
Shareholders who wish information concerning the Fund's investments and
daily net asset value per share may contact Madison Opportunity Fund, Inc., 6411
Mineral Point Road, Madison, Wisconsin 53705, or phone (608) 273-2020 or (800)
767-0300.
Share applications, redemption letters, inquiries, or notifications
concerning a shareholder's account should be directed to the Fund's transfer
agent at Madison Opportunity Fund, Inc., c/o Firstar Trust Company, P.O. Box
701, Milwaukee, Wisconsin 53201-0701, or phone (414) 765-4124.
Shareholders receive quarterly reports on the Fund. These reports usually
contain information on the Fund's net assets along with management's discussion
of the current investment outlook and strategy. Shareholders are notified of any
dividend and capital gain distributions as well as yearly tax information
regarding their distributions.
No person has been authorized to give any information or to make any
representations not contained in the Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Fund. This Prospectus does not constitute an offering by the Fund in any
jurisdiction in which such offering may not lawfully be made.
PART B
MADISON OPPORTUNITY FUND, INC.
6411 Mineral Point Road
Madison, Wisconsin 53705
(608) 273-2020
(800) 767-0300
STATEMENT OF ADDITIONAL INFORMATION
January 1, 1996
Investors should read the Prospectus, dated January 1, 1996 in
conjunction with the Statement of Additional Information. Investors
may obtain a Prospectus, without charge, from the Fund's office as
listed above.
TABLE OF CONTENTS
-----------------
Page
----
General Information and History . . . . . . . . . . . . . . . . 1
Investment Objectives and Policies. . . . . . . . . . . . . . . 1
Investment Restrictions . . . . . . . . . . . . . . . . . . . . 2
Principal Shareholders. . . . . . . . . . . . . . . . . . . . . 3
Description of Fund Shares. . . . . . . . . . . . . . . . . . . 3
Management of the Fund. . . . . . . . . . . . . . . . . . . . . 4
Investment Advisory and Other Services. . . . . . . . . . . . . 5
Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Purchase and Redemption of Fund Shares. . . . . . . . . . . . . 6
Determination of Net Asset Value. . . . . . . . . . . . . . . . 7
Tax Status. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Financial Statements. . . . . . . . . . . . . . . . . . . . . . 8
GENERAL INFORMATION AND HISTORY
-------------------------------
Madison Opportunity Fund, Inc. (the "Fund") was incorporated in Madison,
Wisconsin as an investment company on December 27, 1995 and began its limited
private offering of shares on January 1, 1996. The Fund's sponsor, investment
advisor and distributor of its shares is Madison Investment Advisors, Inc. of
Madison, Wisconsin. The Fund is designed to provide investors with a
diversified, professionally managed portfolio.
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
This information supplements the discussion of the Fund's investment
objectives and policies as discussed in the Prospectus. As highlighted in the
Prospectus, the Fund's objective is long-term growth of capital. Production of
current income is incidental. These objectives are matters of fundamental
policy and cannot be changed without the approval of a majority of
shareholders.
The Fund's management believes that capital growth can best be achieved
through investing in common stocks of companies that have the potential to
produce above average earnings growth. A significant portion of the Fund's
assets may be invested in securities of companies with relatively medium- or
small-sized market capitalization. The Fund may also invest in established
companies whose earnings growth is expected to accelerate. Not more than 5% of
the total net assets, at time of purchase, will be invested in the securities
of any one issuer (not including U.S. Government securities). Also, not more
than 25% of the Fund's total net assets will be concentrated in any one
industry or group of related industries.
Under normal market conditions, the Fund strives to be fully invested.
However, in order to reduce the downside risk of market declines, the Fund
will be permitted to raise cash, invest in puts and calls, and/or enter into
futures and options contracts to a limited extent. The Fund may also invest
in investment-grade corporate debt obligations and U.S. Government and Agency
securities for temporary defensive purposes.
The value of the Fund's shares will fluctuate because the value of the
securities in which it invests fluctuates. The Fund may purchase common stock
of medium- and small-sized companies, the value of which may fluctuate more
than the general stock market. The Fund is suitable for the more
sophisticated investor who understands and accepts the risks associated with
an aggressive investment style. There is, of course, no assurance that the
Fund will be successful in meeting its objective.
The Fund may hold repurchase agreements which are fully collateralized by
a U.S. government security. Repurchase agreements may be entered into with a
member bank of the Federal Reserve System or primary dealer in U.S. government
securities under which the bank or dealer agrees to repurchase the security
from the Fund at a mutually agreed upon time and price, thereby determining
the yield during the term of the agreement. This results in a fixed rate of
return insulated from market fluctuations during such periods. While the
underlying obligation is a U.S. government security, the obligation of the
seller to repurchase the security is not guaranteed by the U.S. government
and there is the risk that the seller may fail to repurchase the security.
Such agreements usually cover short periods, such as under one week. In
general, the Fund will usually purchase overnight repurchase agreements which
mature the following day. Not more than 10% of total net assets will be
invested in repurchase agreements and other illiquid securities with
maturities of greater than seven days. The Fund may require the seller to
provide additional collateral if the market value of the securities falls
below the repurchase price at any time during the term of the repurchase
agreement. In the event of default by the seller under a repurchase agreement,
the underlying securities are not owned by the Fund but only constitute
collateral for the seller's obligation to pay the repurchase price. Therefore,
the Fund may suffer time delays and incur costs or losses in connection with
the disposition of the collateral.
The Fund may attempt to reduce the overall risk of its investments by using
options and futures contracts. The decision to invest in these instruments
will be based on market conditions, regulatory limits and tax considerations.
There can be no assurance that engaging in options,futures, or any other
defensive strategy will be successful. While defensive strategies are
designed to protect the Fund from potential declines, if the advisor
misgauges market values or other economic factors, the Fund may be worse
off than had it not employed the defensive strategy. While defensive
strategies can reduce the risk of loss, they can also reduce the opportunity
for gain since they offset favorable price movements. The use of defensive
strategies may result in a disadvantage to the Fund if the Fund is not able
to purchase or sell a portfolio holding at an optimal time due to the need to
cover its position or due to the inability of the Fund to liquidate its
postion because of its relative illiquidity.
INVESTMENT RESTRICTIONS
-----------------------
The Fund has adopted the following restrictions which are matters of
fundamental policy and cannot be changed without the approval of the holders
of the majority of its outstanding shares:
1. The Fund will not purchase securities on margin, participate in a
joint trading account, sell securities short, or act as an underwriter or
distributor of securities. The Fund will be acting as an underwriter when it
purchases or sells its own securities.
2. The Fund will not purchase or sell real estate or interest in real
estate, commodities or commodity futures.
3. The Fund may make temporary bank borrowings (not in excess of 5% of
the lower of cost or market value of the Fund's total assets) for emergency
or extraordinary purposes, and not for the purchase of investment securities.
4. The Fund may not pledge, mortgage or hypothecate its assets, except
for temporary or emergency purposes and then to an extent not greater than
10% of its assets at current value.
5. Securities of other investment companies will not be purchased.
6. Investments will not be made for the purpose of exercising control or
management of any company. The Fund will not purchase securities of any
issuer if, as a result of such purchase, the Fund would hold more than 10% of
the voting securities of such issuer or more than 10% of all or any class of
securities of such issuer.
7. Not more than 5% of the total net assets will be invested in the
securities of any one issuer (not including United States government
securities.)
8. Not more than 25% of the Fund's total net assets will be concentrated
in companies of any one industry or group of related industries.
9. The Fund will not acquire or retain any security issued by a company,
an officer or director of which is an officer or director of the Fund or
officer, director, shareholder or interested person of its investment advisor.
10. The Fund will not acquire or retain any security issued by a company
if one or more directors, shareholders or affiliated persons of its investment
advisor beneficially own more than one-half of one percent (0.5%) of such
company's securities, and all of the foregoing persons owning more than
one-half of one percent (0.5%) together own more than 5% of such security.
11. The Fund will not purchase securities of companies which, together
with predecessors, have a record of less than two years continuous operation.
12. The Fund will not invest in oil, gas or other mineral exploration
leases, or development programs, provided, however, this shall not prohibit
the Fund from purchasing publicly traded securities or companies engaging,
in whole or in part in such activities.
13. The Fund will not purchase securities from or sell securities to any
of its officers or directors, except with respect to its own shares.
14. The Fund will not invest in restricted securities.
15. The Fund will not make loans to any person (except that the Fund may,
in fulfillment of its policies and objectives, purchase a portion of an issue
of publicly distributed bonds, debentures or other debt securities including
commercial paper, bank certificates of deposit, repurchase agreements or U.S.
Treasury securities).
16. The Fund will not purchase or issue any warrants.
17. All percentage limitations apply to the market value on the date of
investment by the Fund.
18. Not more than 10% of total net assets will be invested in repurchase
agreements with maturities of greater than seven days or in other illiquid
securities.
19. Not more than 20% of total net assets may be invested in foreign
equity securities, including shares of foreign companies traded as American
Depository Receipts (known as "ADRs"). The Fund will not effect transactions
in foreign securities markets.
Securities are not purchased with a view to rapid turnover, although it is
expected short-term capital gains may be realized from time to time from the
sale of assets held less than one year. Securities are purchased which are
believed to have potential for capital appreciation. Securities will be sold
if the Fund's management believes that such potential has been reached, is no
longer feasible, or if the risk of a decline in the market price is too great.
PRINCIPAL SHAREHOLDERS
On the date of its initial private offering, the Fund's principal
shareholders include officers and directors of the Fund and its Advisor, and
the Advisor itself. As of that date, 50% of the Fund's initial capitalization
was owned by Madison Investment Advisors, Inc.; 25% by Frank E. Burgess,
President
of the advisor; 12.5% by Michael J. Schlageter, Vice President of the advisor;
and 12.5% by John F. McClure, Vice President of the advisor.
DESCRIPTION OF FUND SHARES
The Fund was incorporated in Wisconsin on December 27, 1995. The Fund has
authorized common stock of 500,000 shares, $0.01 par value per share. All
shares are of the same class with equal rights and privileges. Each share has
one vote and participates equally in dividends and distributions declared by
the Fund, and on liquidation, in its net assets remaining after satisfaction
of outstanding liabilities. Madison Investment Advisors, Inc. and its
principal officers have provided the initial capitalization for the Fund and
have received all the original issue of Fund shares.
MANAGEMENT OF THE FUND
Position(s) held Principal occupations
Name and Address with the fund during the past 5 years
---------------- --------------- -----------------------
Chris Berberet Vice President, Vice President of
6411 Mineral Point Road Treasurer Madison Investment
Madison, WI 53705 Advisors, Inc.
Prior to joining
Advisor, he was
associated with ELCA
Board of Pensions in
Minneapolis, MN.
Frank E. Burgess* Vice President, President and Director
6411 Mineral Point Director of Madison Investment
Madison, WI 53705 Advisors, Inc. He is
a member of the State
Bar of Wisconsin and
Dane County Bar
Association.
Katherine L. Frank Vice President Vice President of
6411 Mineral Point Secretary Madison Investment
Madison, WI 53705 Advisors, Inc.
since 1986.
Jay R. Sekelsky* President, Vice President of
6411 Mineral Point Road Director Madison Investment
Madison, WI 53705 Investment Advisors,
Inc. He holds an M.B.A.
from the University of
Wisconsin.
Jacqueline Stoppleworth Asst. Secretary Controller of Madison
6411 Mineral Point Investment Advisors,
Madison, WI 53705 Inc.
James R. Imhoff Jr. Director President of First
429 Gammon Place Realty Group, Inc. of
Madison, WI 53719 Madison, WI
Lorence D. Wheeler Director President of Credit
P.O. Box 431 Union Benefits
Madison, WI 53701 Services, Inc.
To date, the Fund has not paid any directors' fees to those Directors who
are considered disinterested persons as defined by the Investment Company Act
of 1940.
* Director of the Fund: Is an "interested person" in the Fund and in the
Advisor, as defined by the Investment Company Act of 1940.
INVESTMENT ADVISORY AND OTHER SERVICES
Under an investment advisory agreement with the Fund, Madison Investment
Advisors, Inc., 6411 Mineral Point Road., Madison, Wisconsin, furnishes
continuous investment service and management to the Fund, for which it
receives an annual fee, paid quarterly, based on the average net asset value
of the Fund, as determined by valuations made at the close of each business
day. The annual fee is .75 of 1% of total net assets of the Fund beginning
July 1, 1996. No advisory fees will be charged prior to that time. The fee
is higher than most other funds. Personnel of the Advisor are primarily
responsible for investment decisions affecting the Fund's portfolio.
Under the investment advisory agreement, the Advisor, at its own expense
and without reimbursement from the Fund, furnishes office space, office
facilities, equipment, executive officers and executive expenses of the Fund.
The Advisor will also pay all expenses related to the cost of preparing and
printing its registration statements required under the Investment Company Act
of 1940, and the expense of registering its shares with the Securities and
Exchange Commission. The Fund will pay all operating expenses including but
not limited to the cost of prospectuses for existing shareholders, reports to
shareholders, taxes, and legal expenses. Also included are fees to Directors
who are not interested persons of the Advisor or officers or employees of the
Fund, salaries of administrative and clerical personnel, auditing and
accounting services, fees and expenses of any custodian, printing and mailing
expenses, postage, and charges and expenses of dividend disbursing agents,
registrars and stock transfer agents, including the cost of keeping all
necessary shareholder records and accounts and handling.
The Advisor has undertaken to reimburse the Fund to the extent that the
aggregate annual operating expenses, including the investment advisory fee
but excluding interest, taxes, and brokerage commissions, exceeds 2% of
average daily net assets. The Advisor shall, on an annual basis, reimburse
the Fund for all expenses in excess of these amounts.
The agreement with the Advisor is not assignable and may be terminated by
either party, without penalty, on sixty days' notice. Otherwise, the
agreement continues in effect as long as it is approved annually by (a) the
Board of Directors or by a vote of a majority of the outstanding shares of
the Fund, and (b) in either case, by the affirmative vote of a majority of
directors, who are not parties to the agreement or "interested persons" of
the Advisor, as defined in the Investment Company Act of 1940, as amended,
cast in person at a meeting called for the purpose of voting for such
approval.
The Advisor may act as an investment advisor to other persons, firms or
corporations, including investment companies. Madison Investment Advisors,
Inc., is a registered investment advisor and has numerous advisory clients
of its own, including Bascom Hill BALANCED Fund, Inc., Bascom Hill Investors,
Inc., and Madison Bond Fund, Inc. all registered investment companies. The
Advisor was founded in 1973 and has never been controlled by or affiliated
with any other business entity or person.
Jay R. Sekelsky, President and a Director of the Fund is also Vice
President of the Advisor. Frank E. Burgess, Vice President and a Director
of the Fund, is also President and Director of the Advisor. Chris Berberet,
Vice President and Treasurer of the Fund, is Vice President of the Advisor.
Katherine Frank, Vice President and Secretary of the Fund is Vice President
of the Advisor. Jacqueline Stoppleworth is Assistant Secretary of the Fund and
Controller of the Advisor. Mr. Burgess owns a majority of the controlling
interest in the Advisor. All investment decisions are made by the Investment
Policy Committee.
The Advisor relies upon information supplied by the analytical staffs of
major brokerage firms as well as other publications and research services. A
discussion of how the Advisor allocates investment opportunities among
clients, how the Advisor decides which client should purchase certain
securities and how portfolio transactions are allocated among brokers is found
under "BROKERAGE" below.
Williams, Young and Associates, P.O. Box 8700, Madison, Wisconsin, 53708 is
the Fund's independent public accountant.
The custodian for the Fund's assets is the Firstar Trust Company, P.O. Box
701, Milwaukee, Wisconsin, 53201-0701. The Firstar Trust Company also serves
as the transfer agent for the Fund.
BROKERAGE
Portfolio brokerage transactions of the Fund are placed with those
securities brokers which the Advisor believes will provide the best value in
brokerage and research services for the Fund, either in a particular
transaction or over a period of time. Although some transactions involve only
brokerage services, many involve research services as well.
In valuing brokerage services, the Advisor makes a judgment of the
usefulness of research and other information provided by a broker to the
Advisor in managing the Fund's investment portfolio. In some cases, the
information, e.g. data or recommendations concerning particular securities,
relates to the specific transaction placed with the broker, but, for the
greater part, the research consists of a wide variety of information
concerning companies, industries, investment strategy and economic, financial
and political conditions and prospects, useful to the Advisor in advising the
Fund and other clients of the Advisor.
In compensating brokers for their services, the Advisor takes into account
the value of the information received for use in advising the Fund. It is
understood by the Fund that other clients of the advisor might also benefit
from the information obtained. Where the Fund and one or more clients of the
Advisor are simultaneously engaged in the purchase or sale of the same
security, the transactions will, to the extent possible, be averaged as to
price and allocated equitably. In most cases, it is believed that
coordination and the ability to participate in volume transactions will be to
the benefit of the Fund.
When feasible and practical, over-the-counter purchases and sales are
transacted directly with principal market makers. Principal market makers are
not paid a direct commission. They receive in payment the difference between
the bid and asked prices for a particular security.
PURCHASE AND REDEMPTION OF FUND SHARES
The Board of Directors of the Fund is authorized from time to time to fix
upper and lower limits on the number of shares which may be purchased.
Pursuant to this authority, the Board of Directors has established $1,000 as
the minimum initial purchase and $100 as the minimum for any subsequent
purchase, except through dividend or capital gain reinvestment. Purchase of
Fund shares will be made in full and fractional shares, computed to three
decimal places, unless the investor specifies full shares only. Shares will
not be offered to the public at this time.
A shareholder may require the Fund at any time to redeem his or her shares
in whole or in part. Redemption is accomplished by delivering to the Fund,
c/o The Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin, 53201-0701,
a signed written request for redemption. The written redemption request must
be signed exactly as the shares are registered. The redemption price is the
net asset value next computed after receipt of written request in the proper
form set out above.
All redemptions will be processed immediately upon receipt and the fund
will return redemption requests that contain restrictions as to the time or
date redemptions are to be affected. The redemption price will depend on the
market value of the investments in the Fund's portfolio at the time of
redemption, (see "DETERMINATION OF NET ASSET VALUE") and may be more or less
than the cost of shares redeemed. Payments for shares redeemed will be made
within seven days after redemption and redemption will be made in cash only.
The right of redemption may be suspended for any period during which the
New York Stock Exchange is closed other than customary and weekend and
holiday closings, and may be suspended for any period during which trading on
the Exchange is restricted as determined that an emergency exists and,
therefore, it is not reasonably practical for the Fund to dispose of its
securities nor to fairly determine the value of its net assets.
DETERMINATION OF NET ASSET VALUE
The net asset value of a share of common stock is determined by dividing
the net asset value of the Fund by the total number of full and fractional
shares outstanding at that time. The net assets of the Fund are determined
by deducting the liabilities of the Fund from the total asset value. The net
asset value is determined as of the close of trading on the New York Stock
Exchange exclusive of federal holidays.
Securities traded on a stock exchange will ordinarily be valued on the
basis of the last sale price on the date of valuation, or in the absence of
any sale on that day, the closing bid price. Securities not listed on an
exchange or securities in which there were no transactions are valued at the
most recent reported bid prices. Any securities for which market quotations
are not readily available are valued at fair value as is determined in good
faith by the Board of Directors. Short-term securities with over 60 days to
maturity are valued at market value; those under 60 days to maturity are
valued at amortized cost. Odd lot differentials and brokerage commissions
will be excluded in calculating value. All assets other than securities will
be valued at their then current fair value as determined in good faith by the
Board of Directors.
TAX STATUS
During the current taxable year and in future years, the Fund intends to
qualify under the provisions of Sections 851-855 of the Internal Revenue Code
(Subchapter M) applicable to investment companies.
Upon qualifying under the federal tax laws related to investment companies,
the Fund will not be subject to federal taxes on income or capital gains
distributed to the shareholders. Distributions designated as "capital gains
distributions" (meaning the excess of net long-term capital gains over net
short-term capital losses) will be taxable to shareholders as long-term gains,
regardless of the length of time shares of the Fund have been held. Currently,
the maximum long-term capital gains tax rate is 28%. Distributions of the
excess of net short-term gains over the net long-term capital losses and
income dividend distributions are made in cash or reinvested in additional
shares of the Fund.
If the Fund does not qualify for preferential tax treatment in any fiscal
year, it will be taxed as an ordinary corporation. The net asset value per
share may be adversely affected as a result.
Since at the time of purchase of Fund shares the Fund may have
undistributed income or capital gains, distributions received shortly after
such purchase by a shareholder may be taxable to the shareholder, although it
is, in whole or in part, a return of capital and may have the effect of
reducing the net asset value per share.
Distributions from net investment income are taxable as ordinary income to
shareholders. Distributions may be subject to state income tax in states
having such a tax. It is recommended that investors consult with their
personal tax advisor in evaluating their individual tax situation.
Under the Interest and Dividend Tax Compliance Act of 1983, effective
January 1, 1984, the Fund is required to deduct and withhold income tax from
a distribution payment at a 20 percent rate if:
(1) The shareholder fails to furnish his/her taxpayer identification
number to the Fund;
(2) The IRS notifies the Fund that the taxpayer identification number
furnished by the shareholder is incorrect;
(3) The IRS notifies the Fund that backup withholding should be commenced
because the shareholder has failed to properly report interest or
dividend income; or
(4) When required to do so, the shareholder fails to certify, under
penalties of perjury, that he/she is not subject to backup
withholdings.
Currently, capital gains are taxable at ordinary income rates. Each
investor should consult with his or her tax advisor regarding the income tax
treatment of income and capital gain distributions and expense deductions
from the Fund in future years.
MADISON OPPORTUNITY FUND, INC.
(A Development Stage Company)
Madison, Wisconsin
STATEMENT OF NET ASSETS
December 27, 1995
ASSETS
Cash $400,000
LIABILITIES -0-
--------
NET ASSETS $400,000
--------
Net Asset Value and Redemption Price per share
($.01 par value; 500,000 shares authorized,
$400,000/20,000 shares outstanding) $ 20.00
--------
The accompanying notes are an integral part of this statement.
MADISON OPPORTUNITY FUND, INC.
(A Development Stage Company)
Madison, Wisconsin
NOTES TO FINANCIAL STATEMENT
December 27, 1995
NOTE 1 - INCORPORATION
The Fund was incorporated on December 27, 1995 and has had no operations to
date other than those relating to organizational matters and the sale of 20,000
shares of its Common Stock at $20.00 per share on December 22, 1995 to its
original shareholders. See `Persons Controlled by or under Common Control with
Registrant''set forth elsewhere in the Statement of Other Information. Madison
Investment Advisors, Inc. is the Fund's distributor and investment advisor.
NOTE 2 - CONTINGENT ORGANIZATIONAL EXPENSES
Organizational expenses are being paid for by the investment advisor.
NOTE 3 - AGREEMENTS
The Investment Advisory Agreement is described elsewhere in this Prospectus.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
of Madison Opportunity Fund, Inc.
We have audited the accompanying statement of net assets of Madison Opportunity
Fund, Inc. (a Development State Company) as of December 27, 1995. This
financial statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the statement of net assets referred to above present fairly, in
all material respects, the net assets of Madison Opportunity Fund, Inc. at
December 27, 1995, in conformity with generally accepted accounting principles.
WILLIAMS, YOUNG & ASSOCIATES, LLC
Madison, Wisconsin
December 27, 1995
PART C: OTHER INFORMATION
Form N-1A
Item No.
- --------
24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements Included in Part B:
(1) Statement of Net Assets
(2) Report of Independent Public Accountants
(b) Exhibits:
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
------- ---------------------------
1. Articles of Incorporation
2. Bylaws
3. N/A
4. N/A
5. Investment Advisory Agreement
6. N/A
7. N/A
8. Custodian Agreement
9. Transfer/Dividend Disbursing Agent Agreement
10. Opinion and Consent of Counsel
11. Consent of Independent Public Accountant
12. N/A
13. Subscription of Purchase Agreement
14. N/A
15. N/A
16. N/A
17. N/A
25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
As of December 27, 1995, Madison Investment Advisors, Inc., the
investment advisor to Registrant, owned beneficially and of record 10,000 shares
of Registrant's common stock, comprising 50% of the shares outstanding to date.
Frank E. Burgess, individually, President of Madison Investment Advisors, Inc.,
owned beneficially and of record 5,000 shares of common stock, comprising 25% of
the outstanding shares on that date. John F. McClure, individually, Vice
President of Madison Investment Advisors, Inc., owned beneficially and of record
2,500 shares of common stock, comprising 12.5% of the outstanding shares on that
date. Michael J. Schlageter, individually, Vice President of Madison Investment
Advisors, Inc., owned beneficially and of record 2,500 shares of common stock,
comprising 12.5% of the outstanding shares on that date.
26. Number of Holders of Securities as of December 27, 1995
-------------------------------------------------------
On December 22, 1995, the number of record holders of each class of
securities of Registrant was:
Title of Class Number of Record Holders
-------------- ------------------------
Common Stock 4
27. Indemnification
---------------
Article VIII of the Registrant's Bylaws provides for the
indemnification of its directors and officers and, therefore, is
incorporated herein by reference.
28. Business and Other Connections of Investment Advisor
----------------------------------------------------
Madison Investment Advisors, Inc., is the only investment advisor to
the Registrant.
Set forth below is a list of the officers and directors of Madison
Investment Advisors, Inc. as of December 31, 1995, together with
information as to any other business, profession, vocation or
employment of a substantial nature of those officers and directors
during the past two years:
Position with Madison
Name Investment Advisors, Inc. Other
---- ------------------------- -----
Frank E. Burgess President, Treasurer and (1)
Director
Christopher C. Berberet Vice President (1)
Richard L. Ford Vice President
Katherine L. Frank Vice President (1)
L. Louis LeGoullon Vice President (2)
John F. McClure Vice President, Secretary,
Director
Michael J. Schlageter Vice President, Director
Jay R. Sekelsky Vice President (1)
Michael R. Yaktus Vice President
Note (1): Certain of the indicated persons are officers and directors of
Bascom Hill Investors, Bascom Hill BALANCED Fund and Madison Bond Fund, all
open-ended, diversified investment companies for which Madison Investment
Advisors, Inc. also acts as investment advisor.
Note (2): Formerly associated with Stein Roe & Farnham
29. Principal Underwriters
----------------------
Not Applicable
30. Location of Accounts and Records
--------------------------------
All accounts, books, and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the rules
thereunder will be maintained at the offices of the Registrant at 6411
Mineral Point Road, Madison, WI 53705-4341 and at the offices of the
Registrant's transfer agent and custodian, Firstar Trust Company
located at 615 East Michigan Avenue, Milwaukee, WI 53201.
31. Management Services
-------------------
Registrant is not a party to any management-related service contract
other than set forth in Part A or Part B of this Form.
32. Undertakings
------------
Registrant is filing under the 1940 Act only.
SIGNATURES
----------
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant, Madison Opportunity Fund, Inc., has duly caused this Registration
Statement to be signed on its behalf by the undersigned, as duly authorized, in
the City of Madison, State of Wisconsin, on the 29th day of December, 1995.
MADISON OPPORTUNITY FUND, INC.
BY:
------------------------
Jay R. Sekelsky, President
EXHIBIT INDEX
-------------
1. Articles of Incorporation
2. Bylaws
5. Investment Advisory Agreement
8. Custodian Agreement
9. Transfer/Dividend Disbursing Agent Agreement
10. Opinion and Consent of Counsel
11. Consent of Independent Public Accountant
13. Subscription or Purchase Agreement
EXHIBIT 1
ARTICLES OF INCORPORATION
ARTICLES OF INCORPORATION
OF
Madison Opportunity Fund, Inc.
I, the undersigned natural person, being more than eighteen (18) years of
age, acting as incorporator of a corporation under the Wisconsin Business
Corporation Law, Chapter 180, Wisconsin Statutes, adopt in duplicate the
following Articles of Incorporation for such corporation.
FIRST: The name of the corporation (which is hereinafter called the
-----
`Corporation'') is Madison Opportunity Fund, Inc.
SECOND: The period of existence is perpetual.
------
THIRD: The purpose or purposes for which the Corporation is
-----
organized are:
A. 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, or rights or
warrants to acquire securities, of any private or public company,
corporation, association, trust or syndicate however organized.
C. To purchase or acquire, hold for investment, and to sell, exchange, or
otherwise dispose of, securities issued or guaranteed by the United
States of America, by any state thereof, by any political subdivision
of any state thereof, by any public instrumentality of a state.
D. To deposit its funds in such checking accounts as may reasonably be
required, and to deposit its funds at interest in any bank, savings
and loan association or trust company organized under the laws of the
United States of America or any state thereof.
E. To conduct research and investigation with respect to securities,
organizations and business conditions in the United States and
elsewhere; to secure information and advice pertaining to the
investment of the assets and funds of the Corporation and to pay
compensation to others for the furnishing of any or all of the
foregoing.
F. Subject to any restrictions contained in the Investment Company Act of
1940, as amended, hereinafter referred to as the Investment Company
Act of 1940, in any applicable state securities or `blue sky'' laws,
or in any rules or regulations issued pursuant to any of the
foregoing, to exercise in respect of all securities, property and
assets owned by it all rights, powers and privileges which could be
exercised by any natural person owning the same securities, property
or assets.
G. To acquire all or any part of the business of any person, association
or corporation engaged in any similar business and to hold, utilize,
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 business.
H. Without the vote or consent of the shareholders of the Corporation, to
purchase, acquire, hold, dispose of, transfer and reissue or cancel
shares of its own common stock in any manner or to any extent now or
hereafter permitted by the laws of the State of Wisconsin and by these
Articles of Incorporation.
I. To carry out the aforesaid purposes and to conduct its business in all
states, territories and possessions of the United States of America
and in foreign countries.
The foregoing purposes shall, except when otherwise expressed, be in no way
limited or restricted by reference to or inference from the terms of any clause
of this or any other Section of these Articles of Incorporation, or of any
amendment thereto, and shall each be regarded as independent and construed as
powers as well as objets and purposes.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights, and privileges granted to or conferred upon corporations of a
similar character by the Laws of the State of Wisconsin, and enumeration of the
foregoing powers shall not be deemed to exclude any powers, rights or privileges
so granted or conferred.
FOURTH: The aggregate number of shares which the Corporation shall have
------
authority to issues is 500,000, consisting of one class only,
designated as `Common Stock,'' of the par value of $.01 per
share and of the aggregate par value of $5000.
The Corporation shall have the right to acquire its own shares to
the greatest extent permitted under Chapter 180 of the Wisconsin
Statutes including acquisitions in excess of the unrestricted and
unreserved earned surplus of the Corporation.
FIFTH: No holder of any of the shares of this Corporation shall, as
-----
such holder, have any preemptive or other right to purchase or
subscribe for any shares which this Corporation may issue or sell
other than such rights, if any, as the Board of Directors, in its
discretion, may from time to time determine to offer to
shareholders of this Corporation.
SIXTH: The number of initial directors is four, and the names of the
-----
initial directors are:
Frank E. Burgess
Lorence D. Wheeler
James R. Imhoff, Jr.
Jay R. Sekelsky
Thereafter, the number of directors shall be such number (not
less than three nor more than ten) as is fixed from time to time
by the Bylaws.
SEVENTH: The post office address of the registered office of the
-------
Corporation in this State is 6411 Mineral Point Road, Madison,
Wisconsin 53705. The name of the registered agent of the
Corporation in this State is Frank E. Burgess, and the post
office address of the registered agent is 6411 Mineral Point
Road, Madison, Wisconsin 53705.
EIGHTH: The name and address of the incorporator is:
------
John Rashke
8000 Excelsior Dr. Suite 401
Madison, WI 53717-1914
NINTH: The following provisions are hereby adopted for the purpose of
-----
defining, limiting and regulating the powers of the Corporation
and of the directors and shareholders.
A. The Board of Directors of the Corporation shall authorize an initial
issuance of shares of the common stock of the Corporation for such consideration
not less than the aggregate par value of the shares included in the issuance as
the Board of Directors shall determine. After such initial issuance, the Board
of Directors may authorize the issuance (and reissuance) from time to time of
shares of common stock of any class, whether now or hereafter authorized, for
such consideration, not less than the aggregate par value of the shares so
issued, as said Board of Directors may deem advisable, provided that, except
with respect to shares issued as a share dividend or distribution, such
consideration shall be not less than the net asset value of such shares computed
in accordance with this Article NINTH. That portion of the consideration
received by the Corporation for shares issued (or reissued) which is equal to
the aggregate par value of such shares shall be capital and any consideration
received in excess of said aggregate par value shall be capital surplus. The
Board of Directors may, in its sole and absolute discretion, reject in whole or
in part orders for the purchase of shares of common stock, and may, in addition,
require such orders to be in such minimum amounts as it shall determine.
B. The holders of any fractional shares of the common stock of the
Corporation shall be entitled to the payment of dividends on such fractional
shares; to receive the net asset value thereof upon redemption, to share in the
assets of the Corporation upon liquidation and to exercise any voting rights
with respect to any fractional share.
C. 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 receipts 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) shall be charged to or paid from principal or income cash
or both; and (ii) to apportion any and all of said expenses and outlays,
including taxes, between principal and income.
D. Each holder of record of stock of this Corporation shall be entitled
to the same number of votes as the number of shares (including fractions
thereof) standing registered in his or her name on the books of the Corporation.
At all elections of directors of the Corporation, each shareholder shall be
entitled to vote the shares owned of record by him or her for as many persons as
there are directors to be elected, but shall not be entitled to exercise any
right of cumulative voting.
E. The Board of Directors shall have power to determine from time to time
whether and to what extent and at what time and places and under what conditions
and regulations the books, accounts and documents of this Corporation, or any of
them, shall be open to the inspection of shareholders, except as otherwise
provided by statute or by law; and except as so provided, no shareholder shall
have any right to inspect any books, account or document of the Corporation
unless authorized to do so by resolution of the Board of Directors.
F. When the total assets of the Corporation shall for the first time have
amounted to $100,000 or more, a fact which shall be conclusively evidenced by a
resolution of the Board of Directors of the Corporation specifying the date and
time when such assets first amounted to $100,000, or more, each holder of shares
of the capital stock of the Corporation shall be entitled at any time thereafter
to require the Corporation to redeem all or any part of the shares standing in
the name of such holder on the books of the Corporation at the net asset value
of such shares as determined in accordance with the provisions of the Article
NINTH, subject to the provisions of Section K. of this Article.
G. The net asset value to which a holder of shares of capital stock of
the Corporation shall be entitled upon redemption of shares held by him or her
is the net asset value applicable at the time when instructions in a form
acceptable to the Board of Directors to redeem the stock shall have been
received by the Corporation as such place as the Board of Directors may from
time to time designate.
H. The time of payment for shares redeemed shall be within seven (7) days
after receipt of proper instructions by the Corporation or its transfer agent in
accordance with Section G. of this Article NINTH.
I. The net asset value of each share of the Corporation shall be
determined as of the close of trading on the New York Stock Exchange each day
that said Exchange is open for trading and any such net asset value shall be
applicable to all transactions in the common stock of the Corporation occurring
at or before the close of business on that day and after the close of business
on the last preceding day on which said Exchange was open for trading, subject
to adjustment for declared dividends or distributions, or in accordance with any
controlling provisions of the Investment Company Act of 1940 or any rule or
regulation thereunder.
J. The net asset value of each share of the common stock of the
Corporation at any particular time shall be the quotient obtained by dividing
the value 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) at such
time by the total number of shares (including fractional shares) outstanding at
such time, all determined and computed as follows:
(1) The value of any cash on hand or on deposit, bills and demand notes
and accounts receivable, prepaid expenses, dividends receivable (from and after
the ex-dividend date) and interest declared or accrued 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.
(2) Securities listed or commonly dealt in on the New York Stock Exchange
or the American Stock Exchange shall be valued at the last sale price on such
Exchange on the day on which such value is being computed (or, lacking any such
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 be 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.
(3) Other securities as to which market quotations are readily available
shall be valued in the same manner as securities listed or commonly dealt in on
the New York or American Stock Exchanges.
(4) In the case of all other securities and assets, the value thereof
shall be the fair value as determined in good faith by the Board of Directors
(but no value shall be assigned to good will of the Corporation).
(5) The liabilities of the Corporation shall be deemed to include all
bills and accounts payable; all administrative expenses payable and/or fees
accrued, including the estimated amount of any fees payable under an investment
advisory agreement, all contractual obligations for the payment of money or
property, including the amount of any unpaid dividends upon the shares of the
Corporation, declared 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 of
whatsoever kind and nature, except liabilities represented by outstanding shares
and surplus of the Corporation.
(6) Securities purchased shall be included among the assets of the
Corporation, and the cost thereof shall simultaneously be regarded as a
liability not later than the day following the date of purchase; and securities
sold shall be excluded from such assets, and the amount receivable shall
simultaneously be included as an asset not later than the day following the date
of sale.
(7) Shares of the common stock of the Corporation for which purchase
orders have been accepted shall be considered as issued and outstanding as soon
as the net asset value thereof can reasonably be ascertained pursuant to the
provisions of this article NINTH; and the amount receivable therefore shall
simultaneously become an asset of the Corporation.
(8) Shares of the common stock of the Corporation delivered for redemption
or repurchase shall be considered as no longer outstanding as soon as the net
asset value thereof can reasonably be ascertained pursuant to the provisions of
this Article NINTH, and the amount payable on such redemption or repurchase
shall simultaneously become a liability of the Corporation.
K. In the event that the New York Stock Exchange shall be closed at any
time because of then existing financial conditions or for any other unusual or
extraordinary reason, the right of a holder of shares of the common stock of the
corporation to have his or her shares redeemed by the Corporation shall be
suspended for a period from and including the day on which the action is taken
for the closing of said Exchange and the day on which said Exchange is reopened.
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 also 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 assets; or (c) for such periods as the Commission
may by order permit for the protection of shareholders of the Corporation.
L. The Corporation may purchase in the open market or otherwise acquire
from any owner or holder thereof any shares of its common stock, in which case
the consideration paid therefore (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 (determined in accordance with the provisions of this
Article NINTH) at the time of the purchase or acquisition by the Corporation
thereof.
In respect of all powers, duties and authorities conferred by the preceding
Sections J. and K. and this Section L., 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 by
said Sections.
TENTH: The Corporation reserves the right to enter into, from time to
-----
time, investment advisory agreements providing for the management
and supervision of the investments of the Corporation and the
furnishing of advice to the Corporation with respect to the
desirability of investing in, purchasing or selling securities or
other property. Such agreements shall contain such other terms,
provisions and conditions as the Board of Directors of the
Corporation may deem advisable.
The Corporation may designate custodians, transfer agents,
registrars and/or disbursing agents for the stock and assets of
the Corporation and employ and fix the powers, rights, duties,
responsibilities and compensation of each such custodian,
transfer agent, registrar and/or disbursing agent.
ELEVENTH: The Corporation reserves the right from time to time to make any
--------
amendment of these Articles of Incorporation now or hereafter
authorized by law, including any amendments which alters the
contract rights as expressly set forth in these Articles of
Incorporation of any outstanding stock. The Corporation may take
or authorize such action upon the concurrence of a majority of
the aggregate number of the votes entitled to be cast thereon.
TWELFTH: This document shall become effective at 12:01 a.m. on December
-------
27, 1995
Executed in duplicate this 26th day of December, 1995
----
John Rashke, Incorporator
These Articles drafted by
Attorney John Rashke
DeWitt Ross & Stevens, S.C.
8000 Excelsior Drive, Suite 401
Madison, WI 53717-1914
EXHIBIT 2
BY-LAWS
MADISON OPPORTUNITY FUND, INC.
Bylaws
ARTICLE I
Shareholders' Meetings
----------------------
Section 1. Place of Meetings. All meetings of shareholders shall be
---------- ------------------
held at such place, within the State of Wisconsin, as the Board of Directors may
designate.
Section 2. Annual Meeting. The annual meeting of shareholders for the
---------- ---------------
election of directors and the transaction of such other business as may properly
come before it shall be held on such day and at such time as the board of
directors shall designate. Any business of the corporation may be transacted at
the annual meeting without being specifically designated in the notice, except
such business as is specifically required by law to be stated in the notice.
Section 3. Special Meetings. Special meeting of the shareholders may
---------- -----------------
be called by the board of directors or the president, and shall be called by the
secretary upon the written request of the holders of share entitled to not less
than twenty-five percent (25%) of all the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of such meeting and
the matters proposed to be acted on thereat. The secretary shall inform such
shareholders of the reasonably estimated cost of preparing and mailing such
notice of the meeting, and upon payment to the corporation of such costs the
secretary shall give notice stating the purpose or purposes of the meeting to
all shareholders entitled to vote at such meeting. No special meeting need be
called to consider any matter which is substantially the same as a matter voted
upon at the annual meeting or any special meeting of the shareholders held
during the preceding twelve months, except upon written request of the holders
of more than fifty percent (50%) of the shares entitled to vote. The business
transacted at any purposes stated in the notice.
Section 4. Notice of Meeting. Not less than ten days nor more than
---------- ------------------
sixty days before the date of every shareholders' meeting, the secretary shall
give to each shareholder entitled to vote at such meeting, written or printed
notice stating the time and place of the meeting, and in the case of a special
meeting the purpose or purposes for which the meeting is called, either by mail
or by presenting it to him or her personally or by leaving it at his or her
residence or place of business. If mailed, such notice shall be deemed to be
given when deposited in the United States mail addressed to the shareholder at
his or her post office address as it appears on the records of the corporation,
with postage thereon prepaid.
Section 5. Quorum. At any meeting of shareholders the presence in
---------- -------
person or by proxy of shareholders entitled to cast a majority of the votes
thereat shall constitute a quorum; but this section shall not affect any
requirement under the statute or under the charter for the vote necessary for
the adoption of any measure. If at any meeting a quorum is not present or
represented, the chairman of the meeting or the holders of a majority of the
stock present or represented may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present or
represented. At such adjourned meeting at which a quorum is present or
represented, any business may be transacted which might have been transacted at
the meeting as originally called.
Section 6. Stock Entitled to Vote. Each issued full and fractional
---------- -----------------------
share of stock shall be entitled to vote at any meeting of shareholders except
shares of which payment thereon is overdue or unpaid.
Section 7. Voting. Each outstanding share of stock, or fraction
---------- -------
thereof, entitled to vote at a meeting of shareholders shall be entitled to one
vote, or fraction thereof, on each matter submitted to a vote. In all elections
for directors every shareholder shall have the right to vote the shares owned of
record by him or her for as many persons as there are directors to be elected.
A shareholder may vote the shares owned of record by him or her either in person
or by proxy executed in writing by the shareholder or by the shareholders' duly
authorized attorney-in-fact. No proxy shall be valid after eleven months from
its date unless otherwise provided in the proxy. At all meetings of
shareholders, all questions relating to the qualification of voters, the
validity of proxies and the acceptance or rejection of votes shall be decided by
the president of the corporation in his role as chairman of the meeting. A
majority of the votes cast at a meeting of shareholders, duly called and at
which a quorum is present, shall be sufficient to take or authorize any action
which may properly come before the meeting, unless a greater number is required
by the statute or by the charter. No vote upon any matter need be by ballot
unless demanded by the holders of at least ten percent (10%) of the shares of
stock present or represented at the meeting.
Section 8. Informal Action. Any action required or permitted to be
---------- ----------------
taken at any meeting of shareholders may be taken without a meeting, if a
consent in writing, setting forth such action, is signed by all the shareholders
entitled to vote on the subject matter thereof and such consent is filed with
the records of the corporation.
ARTICLE II
Directors
---------
Section 1. Number. The number of directors of the corporation shall be
---------- ------
four. By vote of at least seventy-five percent (75%) of the entire board of
directors, the number of directors fixed by the articles of incorporation or by
these bylaws may be increased or decreased from time to time to not exceeding
ten nor less than three, but the tenure or office of a director shall not be
affected by any decrease in the number of directors so made by the board.
Section 2. Election and Qualification. Until the first meeting of
---------- ---------------------------
shareholders or until successors are duly elected and qualify, the board of
directors shall consist of the persons named as such in the articles of
incorporation. At the first meeting of shareholders and at each annual meeting
thereafter, the shareholders shall elect directors to hold office until the next
annual meeting or until their successors are elected and qualify. A director
need not be a shareholder of the corporation, but must be eligible to serve as a
director of a registered investment company under the Investment Company Act of
1940, as amended, hereinafter referred to as the Investment Company of 1940. No
more than sixty percent (60%) of the members of the board of directors may be
interested or affiliated persons of the investment adviser of the corporation,
as such terms are defined in the Investment Company Act of 1940.
Section 3. Vacancies. Any vacancy on the board of directors occurring
---------- ----------
between shareholders' meetings called for the purpose of electing directors may
be filled, if immediately after filling any such vacancy at least two-thirds of
the directors then holding office shall have been elected to such office at an
annual or special meeting of shareholders, in the following manner: (i) for a
vacancy occurring other than by reason of an increase in directors, by a
majority of the remaining members of the board, although such majority is less
than a quorum; (ii) for a vacancy occurring by reason of an increase in the
number of directors, by action of a majority of the entire board. A director
elected by the board to fill a vacancy shall be elected to hold office until the
next annual meeting of shareholders or until his or her successor is elected and
qualifies. If by reason of death, disqualification or bona fide resignation of
any director or directors, there is an insufficient number of members of the
board who are not affiliated or interested persons of the investment adviser of
the corporation, as defined in the Investment Company Act of 1940, such vacancy
shall be filled within thirty days if it may be filled by the board, or within
sixty days if a vote of shareholders is required to fill such vacancy; provided
that such vacancy may be filled within such longer period as the Securities and
Exchange Commission may prescribe, by rules and regulations upon its own motion
or by order upon application. In the event that at any time less than a
majority of the directors were elected by the shareholders, the board or proper
officer shall forthwith cause to be held as promptly as possible, and in any
event within sixty days, a meeting of shareholders for the purpose of electing
directors to fill any existing vacancies in the board unless the Securities and
Exchange Commission shall by order extend such period.
Section 4. Selection of Non-Interested Directors. In order to comply
---------- --------------------------------------
with SEC Regulation S270.12b-1, no director of the corporation, other than one
named in the Articles of Incorporation, who is not an affiliated or interested
person of the investment adviser of the corporation, as defined in the
Investment Company Act of 1940, shall be elected unless such person was selected
and nominated for such position by those directors who are also not affiliated
or interested persons.
Section 5. Powers. The business and affairs of the corporation shall
---------- -------
be managed by the board of directors, which may exercise all of the powers of
the corporation, except such as are by law or by the articles of incorporation
or by these bylaws conferred upon or reserved to the shareholders.
Section 6. Removal. At any meeting of shareholders, duly called on at
---------- --------
which a quorum is present, the shareholders may, by the affirmative vote of the
holders of a majority of the votes entitled to be cast thereon, remove any
director or directors from office and may elect a successor or successors to
fill any resulting vacancies for the unexpired terms of removed directors.
Section 7. Place of Meeting. Meetings of the board of directors,
---------- -----------------
regular or special, may be held at any place as the board may from time to time
determine or as may be specified in the call of any meeting.
Section 8. First Meeting of Newly Elected Board. The first meeting of
---------- -------------------------------------
each newly elected board of directors shall be held within sixty days after the
annual meeting of the shareholders, for the purpose of organizing the board,
electing officers and transacting any other business that may properly come
before the meeting.
Section 9. Regular Meetings. Regular meetings of the board of
---------- -----------------
directors may be held without notice at such time and place as shall from time
to time be determined by the board.
Section 10. Special Meetings. Special meetings of the board of
----------- -----------------
directors may be called at any time either by the board, the president or a
majority of the directors in writing with or without a meeting. Notice of
special meetings shall be mailed by the secretary or personally delivered to
each director at least three days before the meeting. Such notice shall set
forth the time and place of such meeting but need not, unless otherwise required
by law, state the purposes of the meeting.
Section 11. Quorum and Vote Required for Action. At all meetings of the
----------- ------------------------------------
board of directors a majority of the entire board shall constitute a quorum for
the transaction of business, and the action of a majority of the directors
present at any meeting at which a quorum is present shall be the action of the
board of directors unless the concurrence of a great proportion is required for
such action by statute, the articles of incorporation or these bylaws. If at
any meeting a quorum is not present, a majority of the directors present may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum is present.
Section 12. Informal Action. Any action required or permitted to be
----------- ----------------
taken at any meeting of the board of directors may be taken without a meeting,
if a written consent to such action is signed by all members of the board and
such written consent is filed with the minutes of proceedings of the board.
ARTICLE III
Officers and Employees
----------------------
Section 1. Election and Qualification. At the first meeting of each
---------- ---------------------------
newly elected board of directors there shall be elected a president, one or more
vice presidents, a secretary and a treasurer. The board may also elect one or
more assistant secretaries and assistant treasurers. No officer except the
president need be a director. Two or more offices, except those of president
and vice president or president and secretary, may be held by the same person
but no officer shall execute, acknowledge or verify any instrument in more than
one capacity, if such instrument is required by law, the articles of
incorporation or these bylaws to be executed, acknowledged or verified by two or
more officers. Each officer must be eligible to serve as an officer of a
registered investment company under the Investment Company Act of 1940. Nothing
herein shall preclude the employment of other employees or agents by the
corporation from time to time without action by the board.
Section 2. Term, Removal and Vacancies. The officers shall be elected
---------- ----------------------------
to serve until the next first meeting of a newly elected board of directors and
until their successors are elected and qualify. Any officer may be removed by
the board, with or without cause, whenever in its judgment the best interest of
the corporation will be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed. A
vacancy in any office shall be filled by the board for the unexpired term.
Section 3. Bonding. Each officer and employee of the corporation who
---------- --------
singly or jointly with others has access to securities or funds of the
corporation, either directly or through authority to draw such funds or to
direct generally the disposition of such securities shall be bonded against
larceny and embezzlement by a reputable fidelity insurance company authorized to
do business in Wisconsin. Each such bond, which may be in the form of an
individual bond or a schedule or blanket bond covering all such officers and
employees, shall be in such form and for such amount (determined at least
annually) as the board of directors shall determine in compliance with the
requirements of Section 17(g) of the Investment Company Act of 1940 and the
rules, regulations or orders of the Securities and Exchange Commission
thereunder.
Section 4. President. The president shall be the principal executive
---------- ----------
officer of the corporation. He or she shall preside at all meetings of the
shareholders and directors, have general and active management of the business
of the corporation, see that all orders and resolutions of the board of
directors are carried into effect, and execute in the name of the corporation
all authorized instruments of the corporation, except where the signing shall be
expressly delegated by the board or the president to some other office or agent
of the corporation.
Section 5. Vice Presidents. The vice president, or if there be more
---------- ----------------
than one, the vice presidents in the order determined by the board of directors,
shall, in the absence or disability of the president, perform the duties and
exercise the powers of the president, and shall have such other duties and
powers as the board may from time to time prescribe or the president delegate.
Section 6. Secretary and Assistant Secretary. The secretary shall give
---------- ----------------------------------
notice of, attend and record the minutes of meetings of shareholders and
directors, keep the corporate seal and, when authorized by the board, affix the
same to any instrument requiring it, attesting to the same by his or her
signature, and shall have such further duties and powers as are incident to his
or her office or as the board may from time to time prescribe. The assistant
secretary, if any, or if there be more than one, the assistant secretaries, in
the order determined by the board, shall, in the absence of the secretary,
perform the duties of the secretary, and shall have such other duties and powers
as the board may prescribe or the secretary delegate.
Section 7. Treasurer and Assistant Treasurers. The treasurer shall be
---------- -----------------------------------
the principal financial and accounting officer of the corporation. He or she
shall be responsible for the custody and supervision of the corporation's books
of account and subsidiary accounting records, and shall have such further duties
and powers as are incident to the office or as the board of directors may from
time to time prescribe. The assistant treasurer, if any, or if there be more
than one, the assistant treasurers, in the order determined by the board of
directors, shall, in the absence of the treasurer, perform the duties of the
treasurer, and shall have such other duties and powers as the board may from
time to time prescribe or the treasurer delegates.
ARTICLE IV
Restrictions on Compensation, Transactions and Investments
----------------------------------------------------------
Section 1. Salary and Expenses. Directors, officers and employees as
---------- --------------------
such shall not receive any salary for their services or reimbursement for
expenses from the corporation, provided that the corporation may pay fees in
such amount and at such times as the board of directors shall determine to
directors who are not affiliated persons of the investment adviser for
attendance at meetings of the board of directors.
Section 2. Compensation and Profit from Purchases and Sales. No
---------- -------------------------------------------------
affiliated person of the corporation, as defined in the Investment Company Act
of 1940, or affiliated person of such person, shall (i) acting as agent, accept
from any source any compensation for the purchase or sale of any property or
securities to or for the corporation or any controlled company of the
corporation, as defined in the Act, or (ii) receive from any source a
commission, fee or other remuneration for effecting such transaction. The
investment adviser or the corporation shall not profit directly or indirectly
from sales of securities to or from the corporation.
Section 3. Transactions with Affiliated Persons. No affiliated person
---------- -------------------------------------
of the corporation, as defined in the Investment Company Act of 1940, or
affiliated person of such person shall knowingly (i) sell any security or other
property to the corporation or to any company controlled by the corporation, as
defined in the Act, except shares of stock of the corporation or securities of
which such person is the issuer and which are part of a general offering to the
holders of a class of its securities, (ii) purchase from the corporation or any
such controlled company any security or property, other than shares of stock of
the corporation, (iii) acting as principal, effect any transaction in which the
corporation or controlled company is a joint or joint and several participant
with such person; provided, however, that this section shall not apply to any
transaction permitted by Sections 17(b), (c) or (d) of the Act or the rules,
regulations or orders of the Securities and Exchange Commission thereunder.
Section 4. Investment Adviser. The corporation shall engage only one
---------- -------------------
investment adviser, which engagement shall be pursuant to a written agreement in
accordance with Section 15 of the Investment Company Act of 1940.
Section 5. Ownership of Stock by Officers and Directors. No officer or
---------- ---------------------------------------------
director shall take a long or short position in the stock of the corporation,
provided, however, that officers or directors may purchase stock of the
corporation for investment purposes at the same price as that available to the
public at the time of purchase, or in connection with the original
capitalization of the corporation.
Section 6. Portfolio Transactions. The corporation shall not purchase,
---------- -----------------------
acquire or retain:
(a) any security of an issuer, any of whose officers or directors is an
officer, director or investment adviser of the corporation or affiliated
person as defined in the Investment Company Act of 1940, of such investment
adviser;
(b) any security issued by or any interest in the business of an
investment company, broker, dealer, underwriter or investment adviser,
except as permitted under Sections 12(d), (e) and (g) of the Act or the
rules, regulations or orders of the Securities and Exchange Commissions
thereunder;
(c) voting securities of another issuer, the acquisition or retention
of which would result in circular or cross ownership, as defined in Section
20(c) of the Act, or
(d) during the existence of any underwriting or selling syndicate, any
security, except stock of the corporation, a principal underwriter of which
is an officer, director, investment advisor or employee of the corporation,
or is a person (other than a company of the character described in Section
12(d) 3(A) and (B) of the Act) of which any such officer, director,
investment adviser or employee is an affiliated person, as defined in the
Act, unless in acquiring such security the corporation is itself acting as
a principal underwriter for the issue, except as the Securities and
Exchange Commission, by rules, regulations or order shall permit.
Section 7. General Business and Investment Activities. The Corporation
---------- -------------------------------------------
shall not:
(a) purchase any security on margin, except such short-term credits as
are necessary for the clearance of transactions;
(b) participate on a joint or joint and several basis in any trading
account in securities;
(c) effect a short sale of any security;
(d) act as an underwriter in the distribution of any security other
than the capital stock of this corporation;
(e) lend money to any person, except that the Fund may purchase
publicly distributed bonds, debentures or other debt securities, prime
quality commercial paper, bank certificates of deposit or U.S. Treasury
securities;
(f) borrow money, except for temporary purposes only, not in excess of
5% of the lower of cost or market value of the Fund's total net assets, for
emergency of extraordinary purposes only and not for the purchase of
investment securities;
(g) purchase or sell real estate or interests in real estate,
commodities or commodities futures;
(h) purchase any warrants or issue any warrants;
(i) deviate from its policy in respect to concentration of investments
in any particular industry or group of industries as reported in its
registration statement under the Investment Company Act of 1940 or deviate
from any fundamental policy recited in such registration statement pursuant
to Section 8(b) (2) of the Investment Company Act of 1940;
(j) change the nature of its business so as to cease to be an
investment company;
(k) purchase securities from or sell securities to any of its officers,
directors or employees, except with respect to its own capital stock;
(l) invest in oil, gas or other mineral exploration or development
programs, provided, however, this shall not prohibit the Fund from
purchasing publicly traded securities of companies engaging in whole or in
part in such activities;
(m) purchase securities of companies which, together with predecessors,
have a record of less than two years continuous operation;
(n) acquire or retain any security issued by a company if one or more
directors or shareholders or other affiliated persons of the investment
adviser beneficially own more than one-half (1/2) of 1% of such company's
stock or other securities, and all the foregoing persons owning more than
one-half (1/2) of 1% together own more than 5% of such stock of security;
(o) acquire or retain any security issued by a company, an officer or
director of which is an officer or director of the Fund, or any officer or
director or shareholder or other interested person of the investment
adviser;
(p) invest in restricted securities;
(q) pledge, mortgage or hypothecate its assets, except for temporary or
emergency purposes and then not to an extent greater than 10% of its total
net assets at that time;
(r) purchase securities of other investment companies;
(s) invest for the purpose of exercising control or management of any
company; the Fund will not purchase securities of any issuer if, as a
result of such purchase, the Fund would hold more than 10% of the voting of
all or any class of securities of such issuer or more than 10% of all or
any class of securities of such issuer;
(t) invest more than 25% of the Fund's total net assets in companies of
any one industry or group of related industries;
(u) invest more than 5% of the total net assets of the Fund, taken at
market value, in the securities of any one issuer, not including U.S.
Government securities;
(v) invest more than 10% of the total net assets of the Fund in
repurchase agreements with maturities of more than 7 days, or other
illiquid securities;
(w) Not more than 20% of total net assets may be invested in foreign
equity securities, including shares of foreign companies traded as American
Depository Receipts (APR's). The Fund will not effect transactions in
foreign securities markets.
All percentage limitations apply to the market value on the date of
investment by the Fund.
ARTICLE V
Stock Ledgers and Transfer Books
--------------------------------
Section 1. Stock Ledger. The corporation shall maintain at its office
---------- -------------
in Madison, Wisconsin, or at the office of its principal transfer agent, if
any, an original or duplicate stock ledger containing the names and
addresses of all shareholders and the number of shares held by each
shareholder. No shareholder shall be entitled to a certificate to evidence
the shares of stock he or she owns.
Section 2. Transfer Agent and Registrar. The corporation may maintain
---------- -----------------------------
one or more transfer offices or agencies, each in charge of a transfer
agent designated by the board of directors, where the shares of stock of
the corporation shall be transferable. The corporation may also maintain
one or more registry offices, each in charge of a registrar designated by
the board, where such shares of stock shall be registered. The same person
or entity may be both a transfer agent and registrar.
Section 3. Fixing of Record Dates and Closing of Transfer Books. The
---------- -----------------------------------------------------
board of directors may fix, in advance, a date as the record date for the
purpose of determining shareholders entitled to notice of, or to vote at,
any meeting of shareholders, or shareholders entitled to receive payment of
any dividend or the allotment of any rights, or in order to make a
determination of shareholder for any other proper purpose. Such date, in
any case, shall be not more than sixty days, and, in the case of a meeting
of shareholders, no less than ten days, prior to the date on which the
particular action requiring such determination of shareholders is to be
taken. In lieu of fixing a record date, the board may provide that the
stock transfer books shall be closed for a stated period but not to exceed,
in any case, fifty days. If the stock transfer books are closed for the
purpose of determining shareholders entitled to vote at a meeting of
shareholders, such books shall be closed for at least ten days immediately
preceding such action.
ARTICLE VI
Accounts, Reports and Custodian
-------------------------------
Section 1. Inspection of Books. The board of directors shall determine
---------- --------------------
from time to time whether, and, if allowed, when and under what conditions
and regulations the accounts and books of the corporation (except such as
may by statute be specifically open to inspection) or any of them, shall be
open to the inspection of the shareholders and the shareholders' rights in
this respect are and shall be limited accordingly.
Section 2. Reliance on Records. Each director and officer shall, in
---------- --------------------
the performance of his or her duties, be fully protected in relying in good
faith on the books of account or reports made to the corporation by any of
its officials, by an independent public accountant, or by any appraiser
selected with reasonable care by the board, and in relying in good faith
upon other records of the corporation.
Section 3. Preparation and Maintenance of Accounts, Records and
---------- ----------------------------------------------------
Statements. The president, a vice president or the treasurer shall
-----------
prepare, or cause to be prepared annually, a full and correct statement of
the affairs of the corporation, including a balanced sheet or statement of
financial condition and a financial statement of operations for the
preceding fiscal year, which shall be submitted at the annual meeting of
the shareholders and filed within twenty days thereafter at the principal
office of the corporation in the State of Wisconsin. The proper officers
of the corporation shall also prepare, maintain and preserve or cause to be
prepared, maintained and preserved the accounts, books and other documents
required by Section 31 of the Investment Company Act of 1940 and shall
prepare and file or cause to be prepared and filed the reports shall be
filed with the Securities and Exchange Commission unless any officer or
employee who prepared or participated in the preparation for such financial
statement has been specifically designated for such purpose by the board of
directors.
Section 4. Auditors. No independent public accountant shall be
---------- ---------
retained or employed by the corporation to examine, certify or report on
its financial statements for any fiscal year unless such selection (i)
shall have been approved by a majority of the entire board of directors
within thirty days before or after the beginning of such fiscal year; (ii)
shall have been ratified at the next succeeding annual meeting of
shareholders, provided that any vacancy occurring between annual meetings
due to the death or resignation of such accountant may be filled by the
board; and (iii) shall otherwise meet the requirements of Section 32 of the
Investment Company Act of 1940.
Section 5. Custodian. All assets of the corporation shall be held by
---------- ----------
one or more custodian banks or trust companies meeting the requirements of
the Investment Company Act of 1940, and having capital, surplus and
undivided profits of at least $2,000,000 and may be registered in the Name
of the corporation, or any such custodian, or a nominee of either of them.
The terms of any custodian agreement shall be determined by the board of
directors, which terms shall be in accordance with the provisions of the
Investment Company Act of 1940.
Subject to such rules, regulations and orders as the Securities and
Exchange Commission may adopt, the corporation may direct a custodian to
deposit all or any part of the securities owned by the corporation in a
system for the central handling of securities established by a national
securities exchange or a national securities association registered with
the Securities and Exchange Commission, or otherwise in accordance with the
Investment Company Act of 1940, pursuant to which system all securities of
any issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of
such securities, provided that all such deposits shall be subject to
withdrawal only upon the order of the corporation, a custodian, or pursuant
to an agreement between a custodian and a futures commission merchant to
meet the margin requirements of a registered securities exchange or
contract market and in accordance with the Investment Company Act of 1940.
Section 6. Checks and Requisitions. Except as otherwise authorized by
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the board of directors, all checks and drafts for the payment of money
shall be signed in the name of the corporation by a custodian, and all
requisitions or orders for the payment of money by a custodian or for the
issue of checks and drafts therefor, all promissory notes, all assignments,
of stock or securities standing in the name of the corporation, and all
requisitions or orders for the assignment of stock or securities standing
in the name of a custodian or its nominee, or for the execution of powers
to transfer the same, shall be signed in the name of the corporation by not
less than two persons (who shall be among those persons, not in excess of
five, designated for this purpose by the board of directors) at least one
of which shall be an officer. Promissory notes, checks or drafts payable
to the corporation may be endorsed only to the order of a custodian or its
nominee by the treasurer or president or by such other person or persons as
shall be thereto authorized by the board of directors.
ARTICLE VII
General Provisions
------------------
Section 1. Offices. The principal office of the corporation in the
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State of Wisconsin shall be in the City of Madison or such other place as
the board of directors may from time to time determine. The corporation
may also have offices at such other places within and without the State of
Wisconsin as the board of directors may from time to time designate.
Section 2. Seal. The corporate seal shall have inscribed thereon the
---------- -----
name of the corporation, and the words `Corporate Seal'' and ``Wisconsin.''
The seal may be used by causing it or a facsimile thereof to be impressed,
affixed, reproduced or otherwise.
Section 3. Fiscal Year. The fiscal year of the corporation shall be
---------- ------------
fixed by the board of directors. Initially, the corporation shall adopt a
fiscal year ending December 31.
Section 4. Notice and Waiver of Notice. Whenever any notice of the
---------- ----------------------------
time, place or purpose of any meeting of shareholders or directors is
required to be given under the statute, the articles of incorporation or
these bylaws, a waiver thereof in writing, signed by the person or persons
entitled to such notice and filed with the records of the meeting, either
before or after the holding thereof, or actual attendance at the meeting of
directors in person, shall be deemed equivalent to the giving of such
notice to such persons. No notice need be given to any person with whom
communication is made unlawful by any law of the United States or any rule,
regulation, proclamation or executive order issued under any such law.
Section 5. Voting of Stock. Unless otherwise ordered by the board of
---------- ----------------
directors, the president shall have full power and authority, in the name
and on behalf of the corporation, (i) to attend, act and vote at any
meeting of shareholders of any company in which the corporation may own
shares of stock of record, beneficially (as the proxy or attorney-in-fact
of the record holder) or of record and beneficially, and (ii) to give
voting direction to the record shareholder of any such stock beneficially
owned. At any such meeting, the president shall possess and may exercise
any and all rights and powers incident to the ownership of such shares and
which, as the holder or beneficial owner and proxy of the holder thereof,
the corporation might possess and exercise if personally present, and may
exercise such power and authority through the execution of proxies. The
president, unless restricted by the board of directors, may delegate the
power and authority set forth in this section to any other officer, agent
or employee of the corporation.
Section 6. Dividends. Dividends upon the stock of the corporation,
---------- ----------
subject to the provisions of the articles of incorporation, if any, may be
declared by the board of directors at any regular or special meeting,
pursuant to law. The source of each dividend payment shall be disclosed to
the shareholders receiving such dividend, to the extent required by the
laws of the State of Wisconsin, and by Section 19 of the Investment Company
Act of 1940 and the rules and regulations of the Securities and Exchange
Commission thereunder. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum
or sums as the directors from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation,
or for such other purpose as the directors shall think conducive to the
interests of the corporation, and the directors may modify or abolish any
such reserve in the manner in which it was created.
Section 7. Amendments. The board of directors shall have the power to
---------- -----------
alter or repeal any bylaws of the corporation and to make new bylaws,
except that the board shall not alter or repeal Section 3 of ARTICLE III,
Sections 2, 3, 5, 6 and 7 of ARTICLE IV, Sections 3 through 6 of ARTICLE
VI, Section 6 or 7 of ARTICLE VII or any part of ARTICLE VIII. The
shareholders shall have the power at any meeting, to alter or repeal any
bylaws of the corporation and to make new bylaws.
ARTICLE VIII
Indemnification of Directors, Officers, Emloyees and Agents
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Section 1. Definition of Terms.
---------- --------------------
(a) `Director,'' ``Officer,'' `Employee'' and ``Agent'' means any of
the following:
(1) A natural person who is or was a Director, Officer, Employee or
Agent of the corporation.
(2) A natural person who, while a Director, Officer, Employee or
Agent of the corporation, is or was serving at the corporation's request
as a director, officer, partner, trustee, member of any governing or
decision-making committee, employee or agent of another corporation or
foreign corporation, partnership, joint venture, trust or other
enterprise.
(3) A natural person who, while a Director, Officer, Employee or
Agent of the corporation is or was serving an employee benefit plan because
his or her duties to the corporation also imposed duties on, or otherwise
involved services by, the person to the plan or to participants in or
beneficiaries of the plan.
(4) Unless the context requires otherwise, the estate or personal
representative of a Director, Officer, Employee or Agent.
(b) `Expenses'' include fees, costs, charges, disbursements,
attorney fees and any other expenses incurred in connection with a
proceeding.
(c) `Liability'' includes the obligation to pay a judgment,
settlement, penalty, assessment, forfeiture or fine, including any excise
tax assessed with respect to an employee benefit plan, and reasonable
expenses.
(d) `Party'' means a natural person who was or is, or who threatened
to be made, a named defendant or respondent in a proceeding.
(e) `Proceeding'' means any threatened, pending or completed civil,
criminal, administrative or investigative action, suit, arbitration or
other proceeding, whether formal or informal, which involves foreign,
federal, state or local law and which is brought by or in the right of the
corporation or by any other person.
Section 2. Mandatory Indemnification for Directors and Officers.
---------- -----------------------------------------------------
(a) The corporation shall indemnify a Director or Officer to the
extent he or she has been successful on the merits or otherwise in the
defense of a proceeding, for all reasonable expenses incurred in the
proceeding if the Director or Officer was a party because he or she is a
Director or Officer of the corporation.
(b) (1) In cases not included under sub (a) above, the corporation
shall indemnify a Director or Officer against liability incurred by the
Director or Officer in a proceeding to which the Director or Officer was a
party because he or she is a Director or Officer of the corporation, unless
liability was incurred because the person breached or failed to perform a
duty he or she owes to the corporation and the breach or failure to perform
constitutes any of the following:
a. A willful failure to deal fairly with the corporation in
connection with a matter in which the Director or Officer has a material
conflict of interest.
b. A violation of criminal law, unless the Director or Officer had
reasonable cause to believe his or her conduct was lawful or no
reasonable cause to believe his or her conduct was unlawful.
c. A transaction from which the Director or Officer derived an
improper personal profit.
d. Willful misconduct.
(2) Determination of whether indemnification is required under this
subsection shall be made pursuant to the procedure provided for in Article
VIII, Section 3 of these bylaws.
(3) The termination of a proceeding by judgment, order, settlement or
conviction, or upon a plea of no contest or an equivalent plea, does not,
by itself, create a presumption that indemnification is not required under
these bylaws.
(c) A Director or Officer who seeks indemnification under these
bylaws shall make a written request to the corporation.
(d) (1) Indemnification under these bylaws is not required to the
extent limited by the articles of incorporation.
(2) Indemnification under these bylaws is not required to the extent
the Director or Officer has previously received indemnification or
allowance of expenses from any person, including the corporation, in
connection with the same proceeding.
Section 3. Allowance of Expenses as Incurred. Upon written request by
---------- ----------------------------------
a Director or Officer who is a party to a proceeding, the corporation may
pay or reimburse his or her reasonable expenses as incurred if the Director
or Officer provides the corporation with all of the following:
(a) A written affirmation of his or her good faith belief that he or
she has not breached or failed to perform his or her duties to the
corporation.
(b) A written undertaking, executed personally or on his or her
behalf, to repay the allowance and, if required by the corporation, to pay
reasonable interest on the allowance to the extent that it is ultimately
determined that indemnification is not required by this Article and that
indemnification is not ordered by a court under applicable Wisconsin
Statutes. The undertaking under this subsection shall be an unlimited
general obligation of the Director or Officer and may be accepted without
reference to his or her ability to repay the allowance. The corporation
may, however, require the Director or Officer to secure the undertaking in
any reasonable manner.
Section 4. Optional Indemnification and Allowance of Expenses for
---------- ------------------------------------------------------
Employees and Agents.
---------------------
(a) The Board of Directors of the corporation may from time to time,
by resolution, authorize the corporation to indemnify and allow payment of
expenses for Employees or Agents of the corporation. The indemnification
and allowance of expenses for Employees and Agents shall be in accordance
with the standards and procedures contained in Sections 2, 3 and 5 of this
Article VIII.
(b) The resolution of the Board of Directors authorizing
indemnification of Employees and Agents may be specific as to particular
Employees and Agents or may be general as to all Employees and Agents.
(c) The resolution of the Board of Directors may authorize the
corporation to enter into written contracts with an Employee or Agent
providing for indemnification and allowance of expenses as provided for in
this Article VIII.
Section 5. Determination of Right to Indemnification. Except for court
---------- ------------------------------------------
ordered indemnification of Directors and Officers provided for in Sections
180.046(5) and 180.051 of the Wisconsin Statutes, the right of a Director,
Officer, Employee or Agent to indemnification under these bylaws shall be
determined by one of the three methods set forth below. The determination
of which method will be used shall be by a majority vote of the Board of
Directors.
(a) By majority vote of a quorum of the Board of Directors consisting
of Directors not at the time parties to the same related proceedings. If a
quorum of disinterested Directors cannot be obtained, by majority vote of a
committee duly appointed by the Board of Directors and consisting solely of
2 or more directors not at the time parties to the same or related
proceedings. Directors who are parties to the same or related proceedings
may participate in the designation of members of the committee.
(b) By independent legal counsel selected by a quorum of the Board of
Directors or its committee in the manner prescribed in Section 5, sub. (a)
of this bylaw or, if unable to obtain such a quorum or committee, by a
majority vote of the full Board of Directors, including Directors who are
parties to the same or related proceedings.
(c) By a panel of 3 arbitrators consisting of one arbitrator selected
by those Directors entitled under Section 5, sub. (b) of this bylaw to
select independent legal counsel, one arbitrator selected by person seeking
indemnification and one arbitrator selected by the 2 arbitrators previously
selected.
Section 6. Insurance. The corporation may purchase and maintain
---------- ----------
insurance on behalf of an individual who is a Director, Officer, Employee
or Agent of the corporation against liability asserted against and incurred
by the individual in his or her capacity as an Employee, Agent, Director or
Officer, or arising from his or her status as an Employee, Agent, director
or Officer, regardless of whether the corporation is required or authorized
to indemnify or allow expenses to the individual against the same liability
under these bylaws or applicable Wisconsin Statutes.
Section 7. Miscellaneous.
---------- --------------
(a) The Board of Directors, by resolution, may authorize rights to
indemnification and payment of expenses for Directors, Officers, Employees
and Agents, which are in addition to those provided for in Sections 2 and 4
of this bylaw, provided that such authorization is determined by
independent legal counsel to be permissible under Section 180.049 of the
Wisconsin Statutes.
(b) It is acknowledged that a Director or Officer of the corporation
has the right under Sections 180.046(5) and 180.051 of the Wisconsin
Statutes to apply to a court of competent jurisdiction for a judicial
determination of the right of a Director or Officer to be indemnified by
the corporation.
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 27th day of December, 1995, between Madison
------
Opportunity Fund, Inc., a Wisconsin corporation (the "Fund"), and Madison
Investment Advisors, Inc., a Wisconsin corporation (the "Adviser"):
1. The Fund hereby employs the Adviser to manage the investment and
reinvestment of the assets of the Fund as set forth in this Agreement. The
Adviser hereby agrees to render the services and to assume obligations herein
set forth. The Adviser is engaged in the business of rendering investment
supervisory services and is so registered under the Investment Advisors Act of
1940. The Adviser shall continuously provide such complete investment advisory,
statistical research facilities as the Fund may require.
2. Discretionary Authority. Adviser is to have full and complete
authority and discretion as to all investment decisions. Adviser shall have full
authority to purchase, sell, exchange, transfer or otherwise trade in common
stocks, preferred stocks, bonds, money market instruments and such other
securities it may select, all within the investment restrictions set forth in
the Fund's By-Laws or limited by other actions of the Fund's Board of Directors.
Adviser may select securities brokerage firms to effect such transactions and
may establish and maintain an account with such firms for these purposes. It is
understood that the nature of transactions, portfolio holdings, timing and
strategy employed for the Fund may differ from those actions taken or strategies
employed for other clients of Adviser. Adviser is authorized to give
instructions relating to the settlement of transactions, exchange or delivery of
securities for the account to the Fund's custodian. Adviser shall not be
responsible for any loss incurred which results from the act or omission of any
broker, custodian or depository. Adviser may rely upon information supplied to
it by the Fund, the attorney or accountant representing the Fund, or the Fund's
custodian, and shall be under no duty or responsibility to verify this
information.
3. The Adviser shall be deemed to be an independent contractor and
shall, unless otherwise expressly authorized, have no authority to represent the
Fund or otherwise be deemed an agent of the Fund. However, one or more
shareholders, officers, directors or employees of the Adviser may serve as
directors and/or officers of the Fund, but without compensation or reimbursement
of expenses for such services from the Fund. Nothing contained herein shall be
deemed to require the Fund to take any action contrary to its Articles of
Incorporation or any applicable statute or regulation, or to relieve or deprive
the Board of Directors of the Fund of its responsibility for and control of the
conduct of the affairs of the Fund.
4. The Adviser, at its own expense and without reimbursement from the
Fund, shall furnish office facilities, and executive officers and overhead
expenses for managing the assets of the Fund. The Adviser shall not bear
expenses incurred in complying with laws regulating the issue or sale of the
Fund's securities. However, fees paid for attendance at meetings of the Fund's
Board of Directors to Directors of the Fund who are not interested persons of
the Adviser or the Fund, as defined in the Investment Company Act of 1940, as
amended, or officers or employees of the Fund, shall be borne by the Fund. The
Fund shall bear all other expenses of its operations, and shall reimburse the
Adviser for such other expenses initially incurred by it, provided that the
total expenses borne by the Fund, including the Adviser's fee but excluding all
Federal, State and local taxes, and interest charges shall not in any year
exceed 2% of the Fund's average net assets, for such year as determined by
appraisals made as of the close of each business day of the year. The expenses
of the Fund's operation borne by the Fund include, but are not limited to, the
costs of preparing and printing its registration statements required under the
Securities Act of 1933 and the Investment Company Act of 1940 (and amendments
thereto), the expenses of registering its shares with the Securities and
Exchange Commission and in the various states, the cost of prospectuses, the
cost of stock certificates, reports to shareholders, interest charges, taxes,
legal expenses, non-interested Directors' fees, salaries of administrative and
clerical personnel, auditing and accounting services, fees and expenses of the
Custodian of the Fund's assets, printing and mailing expenses, postage, charges
and expenses of dividend disbursing agents, registrars and stock transfer agents
and cost of keeping all necessary shareholder records and accounts.
The Fund shall monitor its expense ratio on a regular basis. At such
times as it appears that the expenses of the Fund will exceed the expense
limitation established herein, the Fund shall create an account receivable from
the Adviser for the amount of such excess. The Adviser is deemed indebted to
the Fund as of the last day of the Fund's fiscal year and shall pay to the Fund
the amount shown on such account receivable no later than the last day of the
first month following the end of the Fund's fiscal year.
5. For the services to be rendered and the charges and expenses to be
assumed by the Adviser hereunder, the Fund shall pay to the Adviser a quarterly
fee, computed daily on the total net asset value of the Fund. On an annual
basis, the fee shall be .75 of one percent (.75%) of the total net assets of the
Fund beginning July 1, 1996. No investment advisory fees will be charged prior
to that time.
6. The Adviser shall not take, and shall not permit any of its
shareholders, officers, directors or employees to take long or short positions
in the shares of the Fund, except for the purchase of shares of the Fund for
investment purposes at the same price as that available to the public at the
time of purchase, or in connection with the original capitalization of the Fund.
In connection with purchases or sales of portfolio securities for the account of
the Fund neither the Adviser nor any officer, director or employee of the
Adviser shall act as a principal or receive any commission therefor.
7. The services of the Adviser to the Fund hereunder are not to be
deemed exclusive and the Adviser shall be free to furnish similar services to
others so long as the services hereunder are not impaired thereby.
8. This Agreement may not be amended without the approval of the Board
of Directors of the Fund in the manner required by the Investment Company Act of
1940, and by the vote of a majority of the outstanding voting securities of the
Fund, as defined in the Investment Company Act of 1940.
9. This Agreement may be terminated at any time, without the payment of
any penalty, by the vote of a majority of the Board of Directors of the Fund or
by the vote of a majority of the outstanding voting securities of the Fund, as
defined in the Investment Company Act of 1940, upon giving sixty (60) days
written notice to the Adviser. This Agreement may be terminated by the Adviser
at any time upon the giving of sixty (60) days written notice to the Fund. This
Agreement shall terminate automatically in the event of its assignment (as
defined in the Investment Company Act of 1940). Until terminated, this
Agreement shall continue in effect so long as such continuance is specifically
approved annually by (i) the vote of a majority of the Board of Directors of the
Fund or by a vote of a majority of the outstanding voting securities of the
Fund, as defined in the Investment Company Act of 1940, and (ii) by vote of a
majority of those Directors of the Fund that are not interested persons of the
Fund cast in person at a meeting called for that purpose. This Agreement shall
be submitted for approval by a vote of a majority of the shareholders within 180
days of the date of effective registration of the Fund with the Securities and
Exchange Commission.
MADISON OPPORTUNITY FUND, INC.
Attest:
By:
======================= ------------------------
Director MADISON INVESTMENT ADVISORS, INC.
By:
----------------------- ------------------------
Vice President President
EXHIBIT 8
CUSTODIAN AGREEMENT
CUSTODIAN AGREEMENT
THIS AGREEMENT made on December 27 , 1995, between Madison
----------------------
Opportunity Fund, Inc., a Wisconsin Corporation (hereinafter called the
(`Fund''), and FIRSTAR TRUST COMPANY, a corporation organized under the laws of
the State of Wisconsin (hereinafter called `Custodian''),
WHEREAS, the Fund desires that its securities and cash shall be hereafter
held and administered by Custodian pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund and Custodian agree as follows:
1. DEFINITIONS
The word `securities'' as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words `officers' certificate'' shall mean a request or direction or
certification in writing signed in the name of the Fund by any two of the
President, a Vice President, the Secretary and the Treasurer of the Fund, or any
other persons duly authorized to sign by the Board of Directors.
The word `Board'' shall mean Board of Directors of Madison Opportunity
Fund, Inc.
2. NAMES, TITLES AND SIGNATURES OF THE FUND'S OFFICERS
An officer of the Fund will certify to Custodian the names and signatures
of those persons authorized to sign the officers' certificates described in
Section 1 hereof, and the names of the members of the Board of Directors,
together with any changes which may occur from time to time.
3. RECEIPT AND DISBURSEMENT OF MONEY
A. Custodian shall open and maintain a separate account or accounts in
the name of the Fund, subject only to draft or order by Custodian acting
pursuant to the terms of this Agreement. Custodian shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it from or
for the account of the Fund. Custodian shall make payments of cash to, or for
the account of, the Fund from such cash only:
(a) For the purchase of securities for the portfolio of the Fund upon the
delivery of such securities to Custodian, registered in the name of the
Fund or of the nominee of Custodian referred to in Section 7 or in proper
form for transfer;
(b) for the purchase or redemption of shares of the common stock of the
Fund upon delivery thereof to Custodian, or upon proper instructions from
the Madison Opportunity Fund, Inc.;
(c) for the payment of interest, dividends, taxes, investment adviser's
fees or operating expenses (including, without limitation thereto, fees for
legal, accounting, auditing and custodian services and expenses for
printing and postage);
(d) for payments in connection with the conversion, exchange or surrender
of securities owned or subscribed to by the Fund held by or to be delivered
to Custodian; or
(e) for other proper corporate purposes certified by resolution of the
Board of Directors of the Fund.
Before making any such payment, Custodian shall receive (and may rely upon)
an officers' certificate requesting such payment and stating that it is for a
purpose permitted under the terms of items (a), (b), (c), or (d) of this
Subsection A, and also, in respect of item (e), upon receipt of an officers'
certificate specifying the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such payment is to
be made, provided, however, that an officers' certificate need not precede the
disbursement of cash for the purpose of purchasing a money market instrument, or
any other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Fund issues appropriate oral or
facsimile instructions to Custodian and an appropriate officers' certificate is
received by Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of the Fund.
C. Custodian shall, upon receipt of proper instructions, make federal
funds available to the Fund as of specified times agreed upon from time to time
by the Fund and the custodian in the amount of checks received in payment for
shares of the Fund which are deposited into the Fund's account.
4. SEGREGATED ACCOUNTS
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account(s) for and on behalf of the portfolio, into which
account(s) may be transferred cash and/or securities.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES
Custodian shall have sole power to release or deliver any securities of the
Fund held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the Fund upon receipt
by
Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or otherwise
become
payable;
(c) for examination by any broker selling any such securities in
accordance with
`street delivery'' custom;
(d) in exchange for, or upon conversion into, other securities alone or
other securities and cash whether pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment, or
otherwise;
(e) upon conversion of such securities pursuant to their terms into other
securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary securities
for definitive securities;
(h) for the purpose of redeeming in kind shares of common stock of the
Fund upon delivery thereof to Custodian; or
(i) for the proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a), (b), (d),
(e), (f), and (g), securities or cash receivable in exchange therefore shall be
deliverable to Custodian.
Before making any such transfer, exchange or deliver, Custodian shall
receive (and may rely upon) an officers' certificate requesting such transfer,
exchange or delivery, and stating that it is for a purpose permitted under the
terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this section 5 and
also, in respect of item (i), upon receipt of an officers' certificate
specifying the securities to be delivered, setting forth the purpose of which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made, provided, however, that an officers' certificate need not precede
any such transfer, exchange or delivery of a money market instrument, or any
other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Fund issues appropriate oral or
facsimile instructions to Custodian and an appropriate officers' certificate is
received by Custodian within two business days thereafter.
6. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other income
items held by it for the account of the Fund, which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of the Fund; (b) collect interest and cash dividends received, with notice to
the Fund, for the account of the Fund; (c) hold for the account of the Fund
hereunder all stock dividends, rights and similar securities issued with respect
to any securities held by it hereunder; and (d) execute, as agent on behalf of
the Fund, all necessary ownership certificates required by the Internal Revenue
Code or the Income Tax Regulations of the United States Treasury Department or
under the laws of any state now or hereafter in effect, inserting the Fund's
name on such certificates as the owner of the securities covered thereby, to the
extent it may lawfully do so.
7. REGISTRATION OF SECURITIES
Except as otherwise directed by an officers' certificate, Custodian shall
register all securities, except such as are in bearer form, in the name of a
registered nominee of Custodian as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued hereunder or in any provision of
any subsequent federal tax law exempting such transaction from liability for
stock transfer taxes, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under the
laws of any state. Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times identifiable in
its records.
The Fund shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register in the name of its registered nominee, any securities which it
may hold for the account of the Fund and which may from time to time be
registered in the name of the Fund.
8. VOTING AND OTHER ACTION
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Fund, except in
accordance with the instructions contained in an officer's certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with relation to
such securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of the Fund), but without
indicating the manner in which such proxies are to be voted.
9. TRANSFER TAX AND OTHER DISBURSEMENTS
The Fund shall pay or reimburse Custodian from time to time for any
transfer taxes payable upon transfers of securities made hereunder, and for all
other necessary and proper disbursements and expenses made or incurred by
Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection
with securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any state, to exempt
from taxation any exemptable transfers and/or deliveries of any such securities.
10. CONCERNING CUSTODIAN
Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such compensation
shall be as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith upon
any certificate herein described or certified copy of any resolution of the
Board, and may rely on the genuiness of any such document which it may in good
faith believe to have been validly executed.
The Fund agrees to indemnify and hold harmless Custodian and its
nominee from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or by its nominee in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to charge any account of the Fund for such
items.
In the event of any advance of cash for any purpose made by Custodian resulting
from orders or instructions of the Fund, or in the event that Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Agreement,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the Fund shall be security therefore.
Custodian agrees to indemnify and hold harmless Fund from all charges, expenses,
assessments, and claims/liabilities (including counsel fees) incurred or
assessed against it in connection with the performance of this agreement,
except such as may arise from the Fund's own negligent action, negligent failure
to act, or willful misconduct.
11. SUBCUSTODIANS
Custodian is hereby authorized to engage another bank or trust company
as a Subcustodian for all or any part of the Fund's assets, so long as any such
bank or trust company is a bank or trust company organized under the laws of any
state of the United States, having an aggregate capital, surplus and undivided
profit, as shown by its last published report, of not less than Two Million
Dollars ($2,000,000) and provided further that, if the Custodian utilizes the
services of a Subcustodian, the Custodian shall remain fully liable and
responsible for any losses caused to the Fund by the Subcustodian as fully as if
the Custodian was directly responsible for any such losses under the terms of
the Custodian Agreement.
Notwithstanding anything contained herein, if the Fund requires the
Custodian to engage specific Subcustodians for the safekeeping and/or clearing
of assets, the Fund agrees to indemnify and hold harmless Custodian from all
claims, expenses and liabilities incurred or assessed against it in connection
with the use of such Subcustodian in regard to the Funds' assets, except as may
arise from its own negligent action, negligent failure to act or willful
misconduct.
12. REPORTS BY CUSTODIAN
Custodian shall furnish the Fund periodically as agreed upon with a
statement summarizing all transactions and entries for the account of Fund.
Custodian shall furnish to the Fund, at the end of every month, a list of the
portfolio securities showing the aggregate cost of each issue. The books and
records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of auditors
employed by, the Fund.
13. TERMINATING OR ASSIGNMENT
This agreement may be terminated by the Fund, or by Custodian, on
ninety (90)
days notice, given in writing and sent by registered mail to Custodian at P.O.
Box 2054, Milwaukee, Wisconsin 53201, or to the Fund at 6411 Mineral Point Road,
Madison, Wisconsin 53705, as the case may be. Upon any termination of this
Agreement, pending appointment of a successor to Custodian or a vote of the
shareholders of the Fund to dissolve or to function without a custodian of its
cash, securities and other property, Custodian shall not deliver cash,
securities or other property of the Fund to the Fund, but may deliver them to a
bank or trust company of its own selection, having an aggregate capital, surplus
and undivided profits, as shown by its last published report of not less than
Two Million Dollars ($2,000,000) as a Custodian for the Fund to be held under
terms similar to those of this Agreement, provided, however, that Custodian
shall not be required to make any such delivery or payment until full payment
shall have been made by the Fund of all liabilities constituting a charge on or
against the properties then held by Custodian or on or against Custodian, and
until full payment shall have been made to Custodian of all its fees,
compensation, costs and expenses, subject to the provisions of Section 10 of
this Agreement.
This Agreement may not be assigned by Custodian without the consent of
the Fund, authorized or approved by a resolution of its Board of Directors.
14. DEPOSITS OF SECURITIES IN SECURITIES DEPOSITORIES
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board of Directors of the Fund approves by resolution the
use of such central securities clearing agency or securities depository.
15. RECORDS
To the extent that Custodian in any capacity prepares or maintains any
records required to be maintained and preserved by the Fund pursuant to the
provisions of the Investment Company Act of
1940, as amended, or the rules and regulations promulgated thereunder, Custodian
agrees to make any such records available to the Fund upon request and to
preserve such records for the periods prescribed in Rule 31a-2 under the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and their respective corporate seals to be affixed hereto as of the
date first above-written by their respective officers thereunto duly authorized.
Executed in several counterparts, each of which is an original.
Attest: FIRSTAR TRUST COMPANY
By
- -------------------- -----------------------
Assistant Secretary Vice President
Attest: Madison Opportunity Fund, Inc.
By
- -------------------- -----------------------
EXHIBIT 9
TRANSFER/DIVIDEND DISBURSING AGENT AGREEMENT
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this 27th day of December, 1995,
by and between Madison Opportunity Fund, Inc. (hereinafter referred to as the
`Fund'') and Firstar Trust Company, a corporation organized under the laws of
the State of Wisconsin (hereinafter referred to as the `Agent'').
WHEREAS, the Fund is an open-ended management investment company which is
registered under the Investment Company Act of 1940; and
WHEREAS, the Agent is a trust company and, among other things, is in the
business of administering transfer and dividend disbursing agent functions for
the benefit of its customers;
NOW, THEREFORE, the Fund and the Agent do mutually promise and agree as
follows:
1. TERMS OF APPOINTMENT; DUTIES OF THE AGENT
Subject to the terms and conditions set forth in this Agreement, the Fund
hereby employs and appoints the Agent to act as transfer agent and dividend
disbursing agent.
The Agent shall perform all of the customary services of a transfer agent
and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated shares
being held in the appropriate shareholder account;
B. Process transfers of shares in accordance with the shareowner's
instructions;
C. Process exchanges between funds within the same family of funds;
D. Issue and/or cancel certificates as instructed; replace lost, stolen
or destroyed certificates upon receipt of satisfactory indemnification
or surety bond;
E. Prepare and transmit payments for dividends and distributions
declared by the Fund;
F. Make changes to shareholder records, including, but not limited to,
address changes in plans (i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
G. Record the issuance of shares of the Fund and maintain, pursuant to
Section Rule 17ad-10(e), a record of the total number of shares of the
Fund which are authorized, issued and outstanding;
H. Prepare shareholder meeting lists and, if applicable, mail, receive
and tabulate proxies;
I. Mail shareholder reports and prospectuses to current shareholders;
J. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to dividends and
distributions for all shareholders;
K. Provide shareholder account information upon request and prepare and
mail confirmations and statements of account to shareholders for all
purchases, redemptions and other confirmable transactions as agreed upon
with the Fund; and
L. Provide a Blue Sky System which will enable the Fund to monitor the
total number of shares sold in each state. In addition, the Fund shall
identify the Agent in writing those transactions and assets to be
treated as exempt from the Blue Sky reporting to the fund for each state.
The responsibility of the Agent for the Fund's Blue Sky state registration
status is solely limited to the initial compliance by the Fund and the
reporting of such transactions to the Fund.
2. COMPENSATION
The Fund agrees to pay the Agent for performance of the duties listed in
this Agreement; the fees and out-of-pocket expenses include, but are not
limited to the following: printing, postage, forms, stationery, record
retention, mailing, insertion, programming, labels, shareholder lists and proxy
expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Fund and the Agent.
The Fund agrees to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
3. REPRESENTATIONS OF AGENT
The Agent represents and warrants to the Fund that:
A. It is a trust company duly organized, existing and in good standing
under the laws of Wisconsin;
B. It is a registered transfer agent under the Securities Exchange Act of
1934 as amended.
C. It is duly qualified to carry on its business in the state of
Wisconsin;
D. It is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize it to
enter and perform this Agreement; and
F. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
G. It will comply with all applicable requirements of the Securities and
Exchange Acts of 1933 and 1934, as amended, the Investment Company Act
of 1940, as amended, and any laws, rules and regulations of
governmental authorities having jurisdiction.
4. REPRESENTATIONS OF THE FUND
The Fund represents and warrants to the Agent that:
A. The Fund is an open-ended diversified investment company under the
Investment Company Act of 1940;
B. The Fund is a corporation or business trust organized, existing, and
in good standing under the laws of Wisconsin;
C. The Fund is empowered under applicable laws and by its Corporate
Charter and bylaws to enter into and perform this Agreement;
D. All necessary proceedings required by the Corporate Charter have been
taken to authorize it to enter into and perform this Agreement;
E. The Fund will comply with all applicable requirements of the
Securities and Exchange Acts of 1933 and 1934, as amended, the
Investment Company Act of 1940, as amended, and any laws, rules and
regulations of governmental authorities having jurisdiction; and
F. A registration statement under the Securities Act of 1933 is currently
effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect
to all shares of the Fund being offered for sale.
5. COVENANTS OF FUND AND AGENT
The Fund shall furnish the Agent a certified copy of the resolution of the
Board of Directors of the Fund authorizing the appointment of the Agent and the
execution of this Agreement. The fund shall provide to the Agent a copy of the
Corporate Charter, bylaws of the Corporation, and all amendments.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the rules thereunder, the Agent agrees that all such records prepared or
maintained by the Agent relating to the services to be performed by the Agent
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such section and rules and will be surrendered
to the Fund on and in accordance with its request.
6. INDEMNIFICATION; REMEDIES UPON BREACH
The Agent shall exercise reasonable care in the performance of its duties
under this Agreement. The Agent shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund in connection with
matters to which this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power supplies beyond
the Agent's control, except a loss resulting from the Agent's refusal or failure
to comply with the terms of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of its duties under this
Agreement. Notwithstanding any other provision of this Agreement, the Fund
shall indemnify and hold harmless the Agent from and against any and all claims,
demands, losses, expenses, and liabilities (whether with or without basis in
fact or law) of any and every nature (including reasonable attorneys' fees)
which the Agent may sustain or incur or which may be asserted against the Agent
by any person arising out of any action taken or omitted to be taken by it in
performing the services hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction provided to
the Agent by any duly authorized officer of the Fund, such duly authorized
officer to be included in a list of authorized officers furnished to the Agent
and as amended from time to time in writing by resolution of the Board of
Directors of the Fund.
Further, the Fund will indemnify and hold the Agent harmless against any
and all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action, or suit
as a result of the negligence of the Fund or the principal underwriter (unless
contributed to by the Agent's breach of this Agreement or other Agreements
between the Fund and the Agent, or the Agent's own negligence or bad faith); or
as a result of the Agent acting upon telephone instructions relating to the
exchange or redemption of shares received by the Agent and reasonably believed
by the Agent under a standard of care customarily used in the industry to have
originated from the record owner of the subject shares; or as a result of acting
in reliance upon any genuine instrument or stock certificate signed,
countersigned, or executed by any person or persons authorized to sign,
countersign, or execute the same.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, the Agent shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond the Agent's control. The Agent will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from such a
breakdown at the expense of the Agent. The Agent agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing equipment
to the extent appropriate equipment is available. Representatives of the Fund
shall be entitled to inspect the Agent's premises and operating capabilities at
any time during regular business hours of the Agent, upon reasonable notice to
the Agent.
Regardless of the above, the Agent reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Fund may be asked to
indemnify or hold the Agent harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Agent will use all reasonable care to notify the
Fund promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against the Fund.
The Fund shall have the option to defend the Agent against any claim which may
be the subject of this indemnification. In the event that the Fund so elects,
it will so notify the Agent and thereupon the Fund shall take over complete
defense of the claim, and the Agent shall in such situation initiate no further
legal or other expenses for which it shall seek indemnification under this
section. The Agent shall in no case confess any claim or make any compromise
in any case in which the Fund will be asked to indemnify the Agent except with
the Fund's prior written consent.
The Agent shall indemnify and hold the Fund harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which may be asserted against the Fund by any person arising
out of any action taken or omitted to be taken by the Agent as a result of the
Agent's
refusal or failure to comply with the terms of this Agreement, its bad faith,
negligence, or willful misconduct.
7. CONFIDENTIALITY
The Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Fund and its/
their shareholders and shall not be disclosed to any other party, except after
prior notification to and approval in writing by the Fund, which approval shall
not be unreasonably withheld and may not be withheld where the Agent may be
exposed to civil or criminal contempt proceedings for failure to comply after
being requested to divulge such information by duly constituted authorities.
8. RECORDS
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Fund but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act of 1940 as amended (the `Investment Company Act''),
and the rules thereunder. The Agent agrees that all such records prepared or
maintained by The Agent relating to the services to be performed by The Agent
hereunder are the property of the Fund and will be preserved, maintained, and
made available with such section and rules of the Investment Company Act and
will be promptly surrendered to the Fund on and in accordance with its request.
9. WISCONSIN LAW TO APPLY
This agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the state of Wisconsin.
10. AMENDMENT, ASSIGNMENT, TERMINATION AND NOTICE
A. This Agreement may be amended by the mutual written consent of the
parties.
B. This Agreement may be terminated upon ninety (90) day's written
notice given by one party to the other.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of the
other party.
D. Any notice required to be given by the parties to each other under
the terms of this Agreement shall be in writing, addressed and delivered,
or mailed to the principal place of business of the other party. If to the
agent, such notice should to be sent toMichael McVoy. If to the Fund, such
notice should be sent to Jay R. Sekelsky.
E. In the event that the Fund gives to the Agent its written intention
to terminate and appoint a successor transfer agent, the Agent agrees to
cooperate in the transfer of its duties and responsibilities to the
successor, including any and all relevant books, records and other data
established or maintained by the Agent under this Agreement.
F. Should the Fund exercise its right to terminate, all out-of-pocket
expenses associates with the movement of records and material will be paid
by the Fund.
Madison Opportunity Fund, Inc. Firstar Trust Company
By: By:
-------------------------------- -----------------------------
Attests: Attest:
----------------------------- ---------------------------
Assistant Secretary
EXHIBIT 10
OPINION AND CONSENT OF COUNSEL
DEWITT ROSS & STEVENS, S.C. LAW FIRM
Firstar Financial Centre
8000 Excelsior Drive, Suite 401
Madison, WI 53717-1914
TEL (608) 831-2100
FAX (608) 831-2106
Direct Line (608) 828-0781
December 27, 1995
Madison Opportunity Fund, Inc.
6411 Mineral Point Road
Madison, WI 53705
Gentlemen:
This opinion relates to 500,000 shares of Common Stock, par value $.01 per
share, of Madison Opportunity Fund, Inc. (the `Fund'') which are being
registered, initially, only under the Investment Company Act of 1940 and
pursuant to a Registration Statement of the Fund on Form N-1A. It is our
understanding, based upon a December 21, 1995 letter from Jay R. Sekelsky, Vice
President of Madison Investment Advisors, Inc. (the `Advisor''), that
registration under the Securities Act of 1933 will occur at a later date. Until
such date, only the Advisor and its officers are eligible investors.
We have examined the Articles of Incorporation and the Bylaws of the Fund, each
as amended to date, the Registration Statement and such other records and
documents as we deemed necessary for the purpose of this opinion.
Based upon the foregoing, we are of the opinion that when and as said 500,000
shares of Common Stock are sold by the Fund pursuant to the Prospectus contained
in the Registration Statement, and any amendments thereto, and when said 500,000
shares of Common Stock have been issued and paid for in accordance with such
Prospectus (provided that the price paid for said shares of Common Stock is at
least equal to the par value thereof) such 500,000 shares of Common Stock will
have been validly issued, fully paid and nonassessable.
The foregoing assumes that all steps necessary to comply with the registration
requirements of the Investment Company Act of 1940 and the Securities Act of
1933 and with applicable requirements of state laws regulating the sale of
securities will have been duly taken.
We understand that this opinion is to be used in connection with said
Registration Statement and we consent to the filing of this opinion with said
Registration Statement and to reference this firm in said Prospectus. This
opinion is to be in force only so long as the Registration Statement is in
effect.
Sincerely,
DeWitt Ross & Stevens, S.C.
XXXX XXXXXX
John Rashke
JR:pje
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated
December 27, 1995, and to all references to our firm included in or made a part
of the
Registration Statement on Form N-1A.
WILLIAMS, YOUNG & ASSOCIATES, LLC
Madison, Wisconsin
EXHIBIT 13
SUBSCRIPTION OR PURCHASE AGREEMENT
MADISON OPPORTUNITY FUND, INC.
SUBSCRIPTION AGREEMENT
The undersigned (the `Subscribers'') hereby deposit certain funds with
Madison Opportunity Fund, Inc. (the `Fund'') for the purpose of subscribing to
purchase shares of the Fund at $20.00 per share, or its initial net asset value
per share if different. The Subscribers will not withdraw these monies during
the time prior to the initial public offering of the Fund's shares,
understanding that the total of these subscriptions must exceed $100,000 for the
Fund to complete its registration under the Investment Company Act of 1940. The
Fund agrees to invest these monies in short-term money market instruments until
the date of the initial private offering of its shares, then pay all interest
earnings on such monies, on a pro-rata basis, to the Subscribers. The original
purchase principal amounts of subscriptions will then purchase shares of the
Fund at its initial net asset value per share. The Subscribers agree that,
after the date of the initial public offering, their purchase of shares shall be
made for long-term investment purposes only and not with a view to short-term
trading or near term profit. The following schedule represents the initial
Subscribers, the amount of each respective subscription, and the presumed number
of shares to be purchased:
Amount of Number of
Name of Subscriber Subscription Shares
- ------------------ ------------ ------
Madison Investment Advisors, Inc. $ 200,000 10,000
Frank E. Burgess $ 100,000 5,000
John F. McClure $ 50,000 2,500
Michael J. Schlageter $ 50,000 2,500
----------- --------
$ 400,000 20,000
Madison Opportunity Fund, Inc.
Subscription Agreement
cont.
Dated this 22st day of December, 1995.
SUBSCRIBERS:
Michael J. Schlageter
John F. McClure
Frank E. Burgess
MADISON INVESTMENT ADVISORS, INC.
By:
----------------------
John F. McClure, Principal
MADISON OPPORTUNITY FUND, INC.
(The `Fund'')
By:
----------------------
Katherine L. Frank, Vice President
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
"This schedule contains summary financial information extracted from Madison
Opportunity Fund, Inc. December 27, 1995 financial statements and is qualified
in its entirety by reference to such report."
</LEGEND>
<CIK> 0001005463
<NAME> MADISON OPPORTUNITY FUND, INC.
<MULTIPLIER> 1000
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-27-1995
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