<PAGE>
As filed with the Securities and Exchange Commission on January 9, 1998.
Securities Act Registration No. 333- _______
Investment Company Act file No. 811- _______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
---------------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
---------------------------------
PAPP FOCUS FUND, INC.
(Registrant)
4400 North 32nd Street
Suite #280
Phoenix, Arizona 85018
Telephone number: 602/956-1115
---------------------------------
Robert L. Mueller Janet D. Olsen
Papp Focus Fund, Inc. Bell, Boyd & Lloyd
4400 North 32nd Street, #280 70 West Madison Street
Phoenix, Arizona 85018 Suite #3300
Chicago, Illinois 60602
(Agents for service)
Approximate date of proposed public offering: As soon as practicable after
effectiveness of the registration statement.
Registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933, or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
-----------------------------------------------------------------------
<PAGE>
Papp Focus Fund, Inc.
Cross-reference sheet pursuant to rule 495(a) of Regulation C
Part A (Prospectus)
<TABLE>
<CAPTION>
Item Location or Caption*
- ---- -------------------
<S> <C>
1(a) & (b) Front Cover
2(a) Fund Expenses
(b) - (c) Not Applicable
3(a) Not Applicable
(b) Not Applicable
(c) Other Information
(d) Not Applicable
4(a)(i) The Fund
(ii) Front Cover
Investment Objective
Investment Methods
(b) Investment Restrictions
(c) Risk Factors
5(a) Management of the Fund
(b) Management of the Fund
Investment Adviser
(c) Investment Adviser
(d) Not Applicable
(e) Final Page
(f) Fund Expenses; Investment Advisory Agreement
(g) Not Applicable
5A Not Applicable
6(a) The Fund
(b) - (d) Not Applicable
(e) The Fund
(f) Distributions
(g) Federal Income Tax
(h) Not Applicable
7 Purchasing Shares
(a) Not Applicable
(b) Determination of Net Asset Value
Purchasing Shares
(c) Not Applicable
(d) Front Cover
(e) & (f) Not Applicable
8(a) Redeeming Shares
(b) Purchasing Shares
(c) & (d) Redeeming Shares
9 Not Applicable
</TABLE>
<PAGE>
Part B (Additional Information Statement)
<TABLE>
<CAPTION>
Item Location or Caption*
- ---- -------------------
<S> <C>
10(a) & (b) Front Cover
11 Front Cover
12 Not Applicable
13(a) - (c) Investment Policies and Restrictions
(d) Investment Methods (in the prospectus)
Portfolio Transactions
14(a) & (b) Directors and Officers
Management of the Fund (in the prospectus)
(c) (1) Directors and Officers
(c) (2) Not Applicable
15(a) - (c) Management of the Fund
16(a) & (b) Investment Adviser
(c) - (g) Not Applicable
(h) Final page of prospectus
(i) Transfer Agent
17(a) Portfolio Transactions
(b) Not Applicable
(c) - (e) Portfolio Transactions
Not Applicable
18(a) & (b) Not Applicable
19(a) Purchasing and Redeeming Shares
(b) Purchasing and Redeeming Shares; Additional
Information
(c) Purchasing and Redeeming Shares
20 Additional Tax Information
21 Not Applicable
22(a) Not Applicable
(b)(i) Performance Information
(ii) & (iii) Not Applicable
(iv) Performance Information
23 Additional Information
</TABLE>
- ------------
* References are to captions within the part of the registration statement to
which the particular item relates except as otherwise indicated.
<PAGE>
[LOGO]
Prospectus
, 1998
PAPP FOCUS FUND, INC.
4400 North 32nd Street, Suite 280
Phoenix, Arizona 85018
(602)956-1115
(800)421-4004
Email: [email protected]
Internet: http://www.roypapp.com
Investment Objective: Long-Term Capital Growth
The Fund is a non-diversified investment company. It intends to make
substantial investments in a relatively small number of companies, all selected
for the possibility of long-term capital growth (see Investment Methods and Risk
Factors).
- Minimum Investment -
Initial Purchase $ 5,000
Subsequent Purchases and
Individual Retirement Accounts (IRAs) $ 1,000
No sales or redemption charges
(A pure no-load fund)
This prospectus sets forth concisely information a prospective investor should
know before investing in Papp Focus Fund, Inc. (the "Fund"). Please retain it
for future reference. A Statement of Additional Information regarding the Fund
dated the date of this prospectus has been filed with the Securities and
Exchange Commission and (together with any supplement to it) is incorporated by
reference. The Statement of Additional Information may be obtained at no charge
by writing or telephoning the Fund at its address or telephone number shown
above. You may also obtain the Statement of Additional Information and other
information that has been electronically filed from the Securities and Exchange
Commission Internet web site: http://www.sec.gov.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
Table of Contents
-----------------
<TABLE>
<CAPTION>
Page
<S> <C>
Fund Expenses 3
Investment Objective 4
Investment Methods 4
Risk Factors 5
Investment Restrictions 5
Purchasing Shares 6
Redeeming Shares 6
Determination of Net Asset Value 7
Management of the Fund 8
Investment Adviser 9
Distributions 10
Federal Income Tax 10
The Fund 10
</TABLE>
<PAGE>
Fund Expenses
- -------------
The following table illustrates all expenses and fees that a shareholder of the
Fund will bear, directly or indirectly.
Shareholder Transaction Expenses
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases........................ None
Maximum Sales Load Imposed on Reinvested Dividends............. None
Deferred Sales Load............................................ None
Redemption Fees................................................ None
Exchange Fees.................................................. None
</TABLE>
Annual Fund Operating Expenses
(as percentages of average daily net assets)
<TABLE>
<S> <C>
Management Fee................................................. 1.0%
12b-1 Fees..................................................... None
Other Expenses (see note below)................................ 0.25%
-----
Total Fund Operating Expenses (after any expense
reimbursement)................................................. 1.25%
</TABLE>
Note: In the absence of an operating history, the amount shown for "other
expenses" is the maximum amount that may be incurred by the Fund, since
the investment adviser has obligated itself to reimburse the Fund to the
extent the Fund's regular operating expenses during any of its fiscal
years exceed 1.25% of its average daily net asset value in such year. The
investment adviser has agreed to pay all organizational expenses, and such
expenses will not be reimbursed by the Fund. Absent that expense
limitation, other expenses and total Fund operating expenses for the
Fund's initial fiscal year are estimated to be approximately 1.50% and
2.50%, respectively.
Example:
The investor would pay the following expenses on a $1,000 investment in the Fund
assuming (1) a 5% annual rate of return, (2) continuance of the operating
expense percentage shown in the table above, (3) reinvestment of all
distributions to shareholders, and (4) redemption at the end of each period.
<TABLE>
<CAPTION>
One Year Three Years
-------- -----------
<S> <C>
$12.50 $41.00
</TABLE>
This example should not be considered a representation of past or future
expenses or performance. Actual expenses and return may be greater or less than
those shown.
3
<PAGE>
Investment Objective
- --------------------
The Fund's investment objective is long-term capital growth. The Fund's
investment objective is a fundamental policy that may not be changed without
shareholder approval.
Investment Methods
- ------------------
As a non-diversified investment company, the Fund invests in a relatively
small number of companies selected for the possibility of long-term capital
growth. The Fund seeks to purchase the shares of companies that it regards as
having excellent prospects for capital appreciation (measured on an overall
basis by such considerations as earnings growth over extended periods of time,
long-term dividend growth, above-average profitability created through operating
efficiency rather than financial leverage, and cash flows that appear to confirm
the sustainability of growth) at a price, relative to the market as a whole,
that does not fully reflect the superiority of a particular company. The
production of current income is not a determinative factor in the selection of
portfolio securities, and the Fund is not designed for investors seeking income
rather than capital appreciation. Investments are not limited by ratings or
other external criteria of quality, and investments may vary in quality measured
by such criteria, and may include speculative securities. Once purchased, the
shares of such companies are ordinarily retained so long as the investment
adviser believes that the prospects for appreciation continue to be favorable
and that the securities are not overvalued in the marketplace. Accordingly,
although the Fund's annual portfolio turnover rate will vary from year to year,
it is not expected to exceed 25% under normal market conditions.
The Fund is a non-diversified investment company. As such, it intends to
make substantial investments in a relatively small number of companies. While
there is no limitation on the number of stocks it may own, it is expected that
under normal market conditions the Fund will own 16 or fewer securities (other
than cash equivalents and U.S. Government securities).
The Fund may invest a maximum of 30% of its common stock assets (valued at
the time of each investment) in common stocks of foreign domiciled companies
provided that they are traded, either directly or in the form of American
Depository Receipts (ADRs), on a United States stock exchange or in the Nasdaq
Stock Market.
As a non-diversified fund, Papp Focus Fund is not limited under the
Investment Company Act of 1940 in the percentage of its assets that it may
invest in any one issuer. However, the Fund intends to comply with the
diversification standards applicable to regulated investment companies under the
Internal Revenue Code of 1986. In order to meet those standards, among other
requirements, at the close of each quarter of its taxable year (a) at least 50%
of the value of the Fund's total assets must be represented by one or more of
the following: (i) cash and cash items, including receivables; (ii) U.S.
Government securities; (iii) securities of other regulated investment companies;
and (iv) securities (other than those in items (ii) and (iii) above) of any one
or more issuers as to which the Fund's investment in an issuer does not exceed
5% of the value of the Fund's total assets (valued at the time of investment);
and (b) not more than 25% of its total assets (valued at the time of investment)
may be invested in the securities of any one issuer (other than U.S. Government
securities or securities of other regulated investment companies).
Under normal market conditions, substantially all of the Fund's assets are
invested in common stocks, other than cash and cash equivalents anticipated to
be needed for payment of the Fund's obligations. However, if a temporary
defensive position should be considered by the investment adviser to be
advisable in view of market conditions, the Fund may hold cash and may invest up
to 100% of its
4
<PAGE>
assets in United States government, agency and instrumentality obligations, and
in other domestic debt rated in one of the two highest grades by one or more of
the nationally recognized statistical ratings organizations or, if unrated,
believed by the investment adviser to be comparable in quality, are readily
salable, and mature or are redeemable by the Fund not more than one year from
the time of investment.
Risk Factors
- ------------
While the Fund's investment adviser believes that a strategy of investing
in a limited number of securities has the potential for higher total returns
than an investment strategy of investing in a larger number of securities, this
may increase the volatility of the Fund's investment performance. Also, if the
securities in which the Fund invests perform poorly, the Fund could incur
greater losses than it might have had it invested in a larger number of
securities.
Investment in foreign business interests (either in United States
enterprises with substantial international activities, or in shares, or ADRs for
shares, of foreign companies), may be riskier in some ways than domestic
investment because of possibilities of: foreign controls over currency exchange;
restrictions on monetary repatriation; oppressive regulation; differing tax
systems among countries, with differing consequences to portfolio companies;
heavy or confiscatory taxation; less liquidity and more price volatility of some
foreign securities and ADRs; less governmental supervision of issuers of
securities; limited publicly available corporate information; varying
accounting, auditing and financial reporting standards and financial statements
among countries; difficulties in obtaining legal recourse and enforcing
judgments abroad; nationalization or expropriation of assets; and political,
economic or social instability. Also, risk may be increased to the extent of
commitments by portfolio companies in developing countries, contrasted with
developed countries.
The Fund is not intended to present a balanced investment program. It is
not intended to be a vehicle for short-term trading, but is intended for
investment for the long-term. The securities in which the Fund invests are
subject to the risks inherent in the respective portfolio companies and to
market fluctuations, and there can be no assurance that the Fund will achieve
its investment objective.
Investment Restrictions
- -----------------------
The Fund will not:
1. Acquire securities of any one issuer that at time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have
a value greater than 10% of the value of the outstanding securities of the
issuer;
2. Invest more than 25% of its assets (valued at time of investment) in
securities of companies in any one industry.
These restrictions cannot be changed without the approval of the holders of a
"majority of the outstanding voting securities" as defined in the Investment
Company Act. All of the Fund's investment restrictions are set forth in the
Statement of Additional Information.
5
<PAGE>
Purchasing Shares (see New Account Purchase Application accompanying this
- -----------------
prospectus)
Shares of the Fund are purchased at the net asset value per share next
determined after receipt of the purchase order, as described under
"Determination of Net Asset Value." There are no sales commissions or
underwriting discounts. The minimum initial investment is $5,000, except for
Individual Retirement Accounts (IRAs) where the minimum is $1,000. Minimum
subsequent investments in all cases are $1,000, excluding reinvestments of
dividends and capital gains distributions.
To make an initial purchase of shares, complete and sign the New Account
Purchase Application and mail it, together with a check for the total purchase
price, to Papp Focus Fund, Inc., 4400 North 32nd Street, Suite 280, Phoenix, AZ
85018. The purchase price is the net asset value per share as described under
"Determination of Net Asset Value."
Each investment in shares of the Fund, including dividends and capital
gains distributions reinvested in Fund shares, is acknowledged by a statement
showing the number of shares purchased, the net asset value at which the shares
are purchased, and the new balance of Fund shares owned. The Fund does not issue
stock certificates for the shares purchased. All full and fractional shares will
be carried on the books of the Fund without the issuance of certificates.
The Fund may from time to time authorize certain financial services
companies, broker-dealers or their designees ("authorized agents") to accept
share purchase and redemption orders on the Fund's behalf. For purchase orders
placed through an authorized agent, a shareholder will pay the Fund's net asset
value per share next computed after the receipt by the authorized agent of such
purchase order, plus any applicable transaction charge imposed by the agent.
For redemption orders placed through an authorized agent, a shareholder will
receive redemption proceeds which reflect the net asset value per share next
computed after the receipt by the authorized agent of the redemption order, less
any redemption fees imposed by the agent. Charges imposed by the authorized
agent, if any, could constitute a significant portion of a smaller account, and
might not be in a shareholder's best interest. Shares of the Fund may be
purchased or redeemed directly from the Fund without imposition of any charges
other than those described in the prospectus.
In some instances, an authorized agent or other financial services company
may not charge any transaction fees directly to investors in the Fund. However,
for accounting and shareholder services provided by such company with respect to
Fund shares held by that company for its customers, the company may charge a fee
(currently up to 0.35%) of the annual average value of those accounts. Those
fees are paid by the Adviser.
The Fund reserves the right not to accept purchase orders under
circumstances or in amounts considered disadvantageous to existing shareholders.
Redeeming Shares
- ----------------
The Fund will redeem all or any part of shares owned upon written request
delivered to the Fund at 4400 North 32nd Street, Suite 280, Phoenix, AZ 85018.
The redemption request must:
(1) specify the number of shares or dollar amount to be redeemed, if less
than all shares are to be redeemed;
(2) be signed by all owners exactly as their names appear on the account;
and
6
<PAGE>
(3) include a signature guarantee from an "eligible guarantor institution"
as defined by the rules under the Securities Exchange Act of 1934.
Eligible guarantor institutions include banks, brokers, dealers, credit
unions (if authorized by applicable state law), national securities
exchanges, registered securities associations, clearing agencies and
savings associations. A notary public is not an eligible guarantor
institution.
In the case of shares registered in the name of a corporation, the
redemption request must be signed in the name of the corporation by an officer
whose title must be stated, and a certified bylaw provision or resolution of the
board of directors authorizing the officer to so act must be furnished. In the
case of a trust or a partnership, the redemption request must be signed in the
name of the trust or partnership by a trustee or general partner, and must
include a signature guarantee. If the trustee or general partner is not named in
the account registration, the redemption request must also include evidence of
the trustee's or general partner's appointment as such (for example, a certified
copy of the partnership or trust instrument). Under certain circumstances,
before the shares can be redeemed, additional documents may be required in order
to verify the authority of the person seeking to redeem. Call 1-800-421-4004
before submitting a redemption request if you have any questions about the
documents required.
The redemption price per share is net asset value determined as described
under "Determination of Net Asset Value." There is no redemption charge if
shares are redeemed directly by the Fund. See "Purchasing Shares" for
information on charges that may be imposed by dealers. The redemption value of
the shares may be more or less than the cost, depending upon the value of the
Fund's portfolio securities at the time of redemption. If the net asset value of
the shares in an account is less than $1,000 as a result of previous redemptions
and not market price declines, the Fund may notify the registered holder that
unless the account value is increased to at least the minimum within 60 days the
Fund will redeem all shares in the account and pay the redemption price to the
registered holder.
Payment for shares redeemed is made within seven days after receipt by the
Fund of a request for redemption in good order. However, if shares are redeemed
immediately after they are purchased, the Fund may delay paying the redemption
proceeds only until the shareholder's check for the purchase price has been
cleared, which may take up to 15 days. The Fund reserves the right to suspend or
postpone redemptions during any period when (a) trading on the New York Stock
Exchange is restricted, as determined by the Securities and Exchange Commission,
or that Exchange is closed for other than customary weekend and holiday
closings, (b) the Commission has by order permitted such suspension, or (c) an
emergency, as determined by the Commission, exists making disposal of portfolio
securities or valuation of net assets of the Fund not reasonably practicable.
Determination of Net Asset Value
- --------------------------------
For purposes of computing the net asset value of a share of the Fund,
securities traded on securities exchanges, or in the over-the-counter market in
which transaction prices are reported, are valued at the last sales prices at
the time of valuation or, lacking any reported sales on that day, at the most
recent bid quotations. Other securities traded over-the-counter are also valued
at the most recent bid quotations. Securities for which quotations are not
available and any other assets are valued at a fair value as determined in good
faith by the board of directors. The price per share for a purchase order or
redemption request is the net asset value next determined after receipt of the
order.
The net asset value of a share of the Fund is determined as of the close of
regular session trading on the New York Stock Exchange, currently 4:00 p.m. New
York City time, on any day on which that Exchange is open for trading, by
dividing the market value of the Fund's assets, less its liabilities, by the
number of shares outstanding, and rounding the result to the nearest full cent.
7
<PAGE>
Management of the Fund
- ----------------------
The board of directors has overall responsibility for the conduct of the
Fund's affairs. The directors of the Fund, including those directors who are
also officers, and their principal business activities during the past five
years, are:
L. Roy Papp, Chairman and director. Age 70.
Partner, L. Roy Papp & Associates (investment manager).
Harry A. Papp, CFA, President and director. Age 43.
Partner, L. Roy Papp & Associates.
Robert L. Mueller, Vice President, Secretary and director. Age 69.
Partner, L. Roy Papp & Associates.
Rosellen C. Papp, CFA, Vice President, Treasurer and director. Age 43.
Partner, L. Roy Papp & Associates.
Bruce C. Williams, CFA, Vice President and director. Age 44.
Partner, L. Roy Papp & Associates.
James K. Ballinger, director. Age 48. The Director of the Phoenix Art
Museum.
Amy S. Clague, director. Age 65. Partner, Boyd and Clague (bookkeeping
services for small companies).
Carolyn P. O'Malley, director. Age 50. The Director of the Desert Botanical
Garden since 1994. Prior thereto, Assistant Director of the Garden and
Director of Public Relations of The Volunteer Center of Maricopa County,
Phoenix, Arizona.
Each of the following is an "interested person" of the Fund (as defined in
the Investment Company Act): L. Roy Papp as an officer of the Fund and a partner
of its investment adviser, L. Roy Papp & Associates; Harry A. Papp and Rosellen
C. Papp, as officers of the Fund, partners of the investment adviser and as the
son and daughter-in-law, respectively, of L. Roy Papp; Robert L. Mueller and
Bruce C. Williams as partners of the investment adviser and as officers of the
Fund. All but Mrs. Clague, Mr. Ballinger, and Mrs. O'Malley are also personnel
of the investment adviser.
The address of Messrs. L. Roy Papp, Harry A. Papp, Robert L. Mueller, Bruce
C. Williams, and Ms. Rosellen C. Papp, is 4400 North 32nd Street - Suite 280,
Phoenix, Arizona 85018; the address of Mr. Ballinger is 1625 North Central
Avenue, Phoenix, Arizona 85004; the address of Mrs. Clague is 326 East Kaler
Drive, Phoenix, Arizona 85020; and the address of Mrs. O'Malley is 1201 N.
Galvin Parkway, Phoenix, Arizona 85008.
L. Roy Papp, Harry A. Papp, and Robert L. Mueller are the members of the
executive committee, which has authority during intervals between meetings of
the board of directors to exercise the powers of the Board, with certain
exceptions. Directors not affiliated with the investment adviser and not
officers of the Fund receive from the Fund an attendance fee of $100 for each
meeting of the board of directors attended.
8
<PAGE>
The following are Vice Presidents of the Fund: George D. Clark, Jr.,
Jeffrey N. Edwards, Robert L. Hawley and Victoria S. Cavallero. Julie A. Hein is
Vice President and Assistant Treasurer and Barbara D. Perleberg is Assistant
Secretary of the Fund. Mr. Clark has been a partner or associate of L. Roy Papp
& Associates since 1987. Mr. Edwards has been a partner or associate of L. Roy
Papp & Associates since 1987. Ms. Cavallero has been a partner or associate of
L. Roy Papp & Associates since 1987. Mr. Hawley has been a partner or associate
of L. Roy Papp & Associates since 1993. Ms. Hein has been a partner or associate
of L. Roy Papp & Associates since 1989. Ms. Perleberg has been an associate of
L. Roy Papp & Associates since 1993. The address of all of the officers is L.
Roy Papp & Associates, 4400 North 32nd Street, Suite 280, Phoenix, Arizona
85018.
Investment Adviser
- ------------------
L. Roy Papp & Associates serves as investment adviser to the Fund. L. Roy
Papp and Rosellen C. Papp, partners of that firm, manage the portfolio of the
Fund. Except for two years when he was United States director of, and ambassador
to, the Asian Development Bank, Manila, Philippines, Mr. Papp has been in the
money management field since 1955. He has been either sole proprietor of or a
partner of L. Roy Papp & Associates since 1978. Rosellen C. Papp has been the
Director of Research of L. Roy Papp & Associates since 1981.
The firm of L. Roy Papp & Associates is also investment adviser to
individuals, trusts, retirement plans, endowments, and foundations. Assets under
management exceed $1 billion. The firm also acts as investment adviser to The L.
Roy Papp Stock Fund, Inc. which commenced operations in 1989 and whose assets
approximate $80 million, Papp America-Abroad Fund, Inc. which commenced
operations in 1991 and whose assets approximate $290 million, and Papp America-
Pacific Rim Fund, Inc. which commenced operations in 1997 and whose assets
approximate $14 million.
Subject to the overall authority of the Fund's board of directors, the
adviser furnishes continuous investment supervision and management to the Fund
under an investment advisory agreement.
The investment adviser receives from the Fund, as compensation for its
services, a fee, accrued daily and payable monthly, at an annual rate of 1% of
the Fund's net assets. On days for which the values of the Fund's net assets are
not determined, the fee is accrued on the most recently determined net assets
adjusted for subsequent daily income and expense accruals. The adviser has
obligated itself to reimburse the Fund to the extent the Fund's total annual
expenses, excluding taxes, interest and extraordinary litigation expenses,
during any of its fiscal years, exceed 1.25% of its average daily net asset
value in such year.
Under the agreement, the investment adviser furnishes at its own expense
office space to the Fund and all necessary office facilities, equipment, and
personnel for managing the assets of the Fund. The investment adviser also pays
all expenses of marketing shares of the Fund, all expenses in determination of
daily price computations, placement of securities orders and related
bookkeeping.
The Fund pays all expenses incident to its operations and business not
specifically assumed by the investment adviser, including expenses relating to
custodial, legal, and auditing charges; printing and mailing reports and
prospectuses to existing shareholders; taxes and corporate fees; maintaining
registration of the Fund under the Investment Company Act and registration of
its shares under the Securities Act of 1933; and complying with the securities
laws of certain states.
9
<PAGE>
Distributions
- -------------
The Fund intends to distribute to shareholders substantially all net
investment income and any net capital gains realized from sales of the Fund's
portfolio securities.
Dividends from net investment income and distributions from any net
realized capital gains are reinvested in additional shares of the Fund unless
the shareholder has requested in writing to have them paid by check.
Federal Income Tax
- ------------------
The Fund intends to qualify to be taxed as a regulated investment company
under the Internal Revenue Code so as to be relieved of federal income tax on
its capital gains and net investment income currently distributed to its
shareholders. Dividends from investment income and net short-term capital gains
are taxable as ordinary income. Distributions of long-term capital gains are
taxable as long-term capital gains regardless of the length of time shares in
the Fund have been held. Distributions are taxable, whether received in cash or
reinvested in shares of the Fund.
Each shareholder is advised annually of the source or sources of
distributions for federal income tax purposes. A shareholder who is not subject
to federal income taxation will not be required to pay tax on distributions
received.
If shares are purchased shortly before a record date for a distribution,
the shareholder will, in effect, receive a return of a portion of his
investment, but the distribution will be taxable to him even if the net asset
value of the shares is reduced below the shareholder's cost. However, for
federal income tax purposes the original cost would continue as the tax basis.
If shares are redeemed within six months, any loss on the sale of those shares
would be long-term capital loss to the extent of any distributions of long-term
capital gains that the shareholder has received on those shares.
If a shareholder fails to furnish his social security or other tax
identification number or to certify properly that it is correct, the Fund may be
required to withhold federal income tax at the rate of 31% ("backup
withholding") from dividend, capital gain and redemption payments to him.
Dividend and capital gain payments may also be subject to backup withholding if
the shareholder fails to certify properly that he is not subject to backup
withholding due to the under-reporting of certain income. These certifications
are contained in the New Account Purchase Application which should be completed
and returned to the Fund when the initial investment is made.
The Fund
- --------
The Fund was incorporated in Maryland on December 16, 1997 and commenced
operations as an open-end non-diversified management investment company on
______________. Each share of capital stock, $.01 par value, is entitled to
share pro rata in any dividends and other distributions on shares declared by
the board of directors, to one vote per share in elections of directors and
other matters presented to shareholders, and to equal rights per share in the
event of liquidation.
The Fund issues annual reports to shareholders containing financial
statements audited by its independent auditors, Arthur Andersen LLP. The Fund
also issues interim quarterly reports containing lists of securities owned by
the Fund.
10
<PAGE>
The Fund may provide information about its total return and average annual
total return in letters to shareholders or in sales materials. Total return is
the percentage change in value during the period of an investment in the Fund,
including the value of shares acquired through reinvestment of all dividend and
capital gains distributions. Average annual total return is the average annual
compounded rate of change in value represented by the total return for the
period. Performance quotations for any period when an expense limitation is in
effect will be greater than if the limitation had not been in effect. The Fund's
performance may also be compared to various indices. See the Statement of
Additional Information for a more complete explanation.
All performance data is based on the Fund's past investment results and
does not predict future performance. Investment performance, which will vary, is
based on many factors, including market conditions, the composition of the
Fund's portfolio, and the Fund's operating expenses. Investment performance also
reflects the risks associated with the Fund's investment objective and policies.
These factors should be considered when comparing the Fund's investment results
to those of other mutual funds and other investment vehicles.
According to the law of Maryland, under which the Fund is incorporated, and
the Fund's bylaws, the Fund is not required to hold an annual meeting of
shareholders unless required to do so under the Investment Company Act.
Inquiries regarding the Fund should be directed to the Fund at its address or
telephone number shown on the front cover.
The Fund will call a meeting of shareholders for the purpose of voting upon
the question of removal of a director or directors when requested in writing to
do so by record holders of at least 10% of the Fund's outstanding common shares,
and in connection with such meeting will comply with the provisions of section
16(c) of the Investment Company Act concerning assistance with a record
shareholder communication asking other record shareholders to join in that
request.
11
<PAGE>
Papp Focus Fund, Inc.
(a pure no-load fund)
Investment Adviser
L. Roy Papp & Associates
4400 North 32nd Street
Suite 280
Phoenix, AZ 85018
Telephone: (602) 956-0980
Custodian
Founders Bank of Arizona
7335 E. Doubletree Ranch Rd.
Scottsdale, AZ 85258
Transfer and Dividend Disbursing Agent
L. Roy Papp & Associates
4400 North 32nd Street
Suite 280
Phoenix, AZ 85018
Independent Auditors
Arthur Andersen LLP
Two North Central Avenue
Phoenix, AZ 85004
Legal Counsel
Bell, Boyd & Lloyd
70 West Madison Street
Chicago, IL 60602
<PAGE>
[LOGO APPEARS HERE]
PAPP FOCUS FUND, INC.
Statement of Additional Information
-----------------------------------
, 1998
4400 North 32nd Street - Suite #280
Phoenix, Arizona 85018
(602) 956-1115
(800) 421-4004
Email: [email protected]
Internet: http://www.roypapp.com
________________________________
Table of Contents
<TABLE>
<S> <C>
Additional Information................ 1
Investment Policies and Restrictions.. 2
Investment Adviser.................... 3
Directors and Officers................ 4
Performance Information............... 4
Purchasing and Redeeming Shares....... 5
Additional Tax Information............ 6
Portfolio Transactions................ 6
Custodian............................. 7
Transfer Agent........................ 7
Independent Auditors Report........... 8
Statement of Assets and Liabilities... 9
</TABLE>
_______________________________
Additional Information
- ----------------------
This Statement of Additional Information is not a prospectus, but
provides information that should be read in conjunction with the Fund's
prospectus dated ____________ , 1998 and any supplement thereto.
The prospectus may be obtained from the Fund at no charge by writing
or telephoning the Fund at its address or telephone number shown above. If you
have access to the Internet, you may also obtain the prospectus by visiting our
web site (http://www.roypapp.com).
B-1
<PAGE>
Investment Policies and Restrictions
- ------------------------------------
The Fund's investment objective is stated in the prospectus on the
front cover and under "Investment Objective." The manner in which the Fund
pursues its investment objective is discussed in the prospectus under the
captions "Investment Methods" and "Risk Factors." The investment restrictions
are set forth in full immediately below.
The Fund will not:
1. Acquire securities of any one issuer that at time of investment
(a) represent more than 10% of the voting securities of the issuer or
(b) have a value greater than 10% of the value of the outstanding
securities of the issuer;
2. Invest more than 25% of its assets (valued at time of investment)
in securities of companies in any one industry;
3. Borrow money except from banks for temporary or emergency purposes
in amounts not exceeding 10% of the value of the Fund's assets at the
time of borrowing (the Fund will not purchase additional securities
when its borrowings exceed 5% of the value of its assets);
4. Underwrite the distribution of securities of other issuers, or
acquire "restricted" securities that, in the event of a resale, might
be required to be registered under the Securities Act of 1933 on the
ground that the Fund could be regarded as an underwriter as defined by
that Act with respect to such resale;
5. Purchase or sell commodities, commodity contracts or options;
6. Make margin purchases or short sales of securities;
7. Invest in companies for the purpose of management or the
exercise of control;
8. Make loans (but this restriction shall not prevent the Fund from
investing in debt securities);
9. Issue any senior security except to the extent permitted under the
Investment Company Act of 1940.
Restrictions 1 through 9 listed above are fundamental policies, and may be
changed only with the approval of a "majority of the outstanding voting
securities" as defined in the Investment Company Act.
B-2
<PAGE>
The Fund has also adopted the following restrictions that may be changed by the
Board of Directors without shareholder approval:
The Fund will not:
a. Invest more than 5% of its assets (valued at time of investment)
in securities of issuers with less than three years' operation
(including predecessors);
b. Invest more than 5% of its assets (valued at time of investment)
in securities that are not readily marketable;
c. Acquire securities of other investment companies except (a) by
purchase in the open market, where no commission or profit to a
sponsor or dealer results from such purchase other than the customary
broker's commission and (b) where the acquisition results from a
dividend or a merger, consolidation or other reorganization [in
addition to this investment restriction, the Investment Company Act of
1940 provides that the Fund may neither purchase more than 3% of the
voting securities of any one investment company nor invest more than
10% of the Fund's assets (valued at time of investment) in all
investment company securities purchased by the Fund];
Investment Adviser
- ------------------
Information on the Fund's investment adviser, L. Roy Papp &
Associates, is set forth in the prospectus under "Management of the Fund" and
"Investment Adviser," and is incorporated herein by reference.
The adviser is an Arizona general partnership owned and controlled by
its partners, of whom there were 10 at the date of this Statement of Additional
Information: L. Roy Papp, Harry A. Papp, Robert L. Mueller, Rosellen C. Papp,
Bruce C. Williams, George D. Clark, Jr., Jeffrey N. Edwards, Robert L. Hawley,
Victoria S. Cavallero, and Julie A. Hein.
The Advisory Agreement provides that the adviser shall not be liable
for any loss suffered by the Fund or its shareholders as a consequence of any
act or omission in connection with services under the Agreement, except by
reason of the adviser's willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties under the Advisory Agreement.
The Advisory Agreement expires on September 24, 1999, but may be
continued from year to year only so long as the continuance is approved annually
(a) by the vote of a majority of the Directors of the Fund who are not
"interested persons" of the Fund or the adviser cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Board of
Directors or by the vote of a majority (as defined in the 1940 Act) of the
outstanding shares of the Fund. The Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act).
B-3
<PAGE>
Directors and Officers
- ----------------------
Information about the directors and officers of the Fund and their
principal business activities during the past five years is set forth in the
prospectus under "Management of the Fund", and is incorporated herein by
reference.
All of the directors, except James K. Ballinger, Amy S. Clague, and
Carolyn P. O'Malley are partners of L. Roy Papp & Associates, the Fund's
investment adviser, and serve without any compensation from the Fund. The
following table sets forth compensation expected to be paid by the Fund and by
all of the Papp Funds (the Fund, The L. Roy Papp Stock Fund, Papp America-Abroad
Fund, and Papp America-Pacific Rim Fund) to Mr. Ballinger, Mrs. Clague, and Mrs.
O'Malley during the fiscal year ending December 31, 1998. Neither the Fund nor
any of the Papp funds has any pension or retirement plan.
<TABLE>
<CAPTION>
Estimated Total Compensation from the
Estimated Aggregate Fund, The L. Roy Papp Stock Fund, Papp
Compensation America-Abroad Fund and Papp America-
Name of Director From the Fund Pacific Rim Fund Paid to Directors
- ----------------- -------------------- ----------------------------------------
<S> <C> <C>
James K. Ballinger $400.00 $6400.00
Amy S. Clague $400.00 $6400.00
Carolyn P. O'Malley $400.00 $ 800.00
</TABLE>
At the date of this Statement of Additional Information, L. Roy Papp, who
provided the Fund's organizational capital, owned 100% of the Fund's outstanding
common stock and therefore controlled the Fund.
Performance Information
- -----------------------
From time to time the Fund may quote total return figures. "Total
Return" for a period is the percentage change in value during the period of an
investment in Fund shares, including the value of shares acquired through
reinvestment of all dividends and capital gains distributions. "Average Annual
Total Return" is the average annual compounded rate of change in value
represented by the Total Return Percentage for the period.
Average Annual Total Return is computed as follows:
ERV = P(1 + T)/n/
Where: P = the amount of an assumed initial investment in Fund shares
T = average annual total return
n = number of years from initial investment to the end
of the period
ERV = ending redeemable value of shares held at the end
of the period
The Fund imposes no sales charge and pays no distribution expenses.
Income taxes are not taken into account. The Fund's performance is a function of
conditions in the securities markets, portfolio management, and operating
expenses. Although information such as that shown above is useful in reviewing
the Fund's performance and in providing some basis for comparison with other
investment alternatives, it should not be used for comparison with other
investments using different reinvestment assumptions or time periods.
B-4
<PAGE>
In advertising and sales literature, the Fund's performance may be
compared with that of market indices and other mutual funds. In addition to the
above computations, the Fund might use comparative performance as computed in a
ranking determined by Lipper Analytical Services, Inc., Morningstar, Inc., or
that of another service.
Purchasing and Redeeming Shares
- -------------------------------
Purchases and redemptions are discussed in the Fund's prospectus under
the headings "Purchasing Shares" and "Redeeming Shares." All of that information
is incorporated herein by reference.
The Fund's net asset value is determined on days on which the New York
Stock Exchange is open for trading, which regularly is every day except Saturday
and Sunday. However, that Exchange is also closed on New Year's Day, the third
Monday in January, the third Monday in February, Good Friday, the last Monday in
May, Independence Day, Labor Day, Thanksgiving Day and Christmas Day, and if one
of those holidays should fall on a Saturday or a Sunday, on the preceding Friday
or the following Monday, respectively. Net asset value will not be computed on
the days of observance of those holidays, unless, in the judgment of the board
of directors, it should be determined on any such day, in which case the
determination will be made as of 1:00 p.m., Phoenix time.
The Fund has elected to be governed by rule 18f-1 under the Investment
Company Act pursuant to which it is obligated to redeem shares solely in cash up
to the lesser of $250,000 or 1% of the net asset value of the Fund during any
90 day period for any one shareholder. Redemptions in excess of the above
amount will normally be paid in cash, but may be paid wholly or partly by a
distribution in kind of securities.
Redemptions will be made at net asset value. See "Determination of Net
Asset Value" in the prospectus, which information is incorporated herein by
reference.
Additional Tax Information
- -------------------------
See "Federal Income Tax" in the prospectus. All that information is
incorporated herein by reference.
Portfolio Transactions
- ----------------------
The Fund expects that its annual portfolio turnover rate will not
exceed 25% under normal conditions, a turnover rate less than that of most
mutual funds that invest primarily in common stocks. However, there can be no
assurance that the Fund will not exceed this rate, and the portfolio turnover
rate may vary from year to year.
The investment adviser places portfolio transactions of the Fund with
those securities brokers and dealers that it believes will provide the best
value in transaction and research services for the Fund, either in a particular
transaction or over a period of time. Although some transactions involve only
brokerage services, some involve research services as well.
In valuing brokerage services, the investment adviser makes a judgment
as to which brokers are capable of providing the most favorable net price (not
necessarily the lowest commission considered alone) and the best execution in a
particular transaction. Best execution connotes not only general competence and
reliability of a broker, but specific expertise and
B-5
<PAGE>
effort of a broker in overcoming the anticipated difficulties in fulfilling the
requirements of particular transactions, because the problems of execution and
the required skills and effort vary greatly among transactions.
In valuing research services, the investment adviser makes a judgment of
the usefulness of research and other information provided by a broker to the
investment adviser in managing the Fund's investment portfolio. The information,
e.g., data or recommendations concerning particular securities, relates to the
specific transaction placed with the broker. The extent, if any, to which the
obtaining of such information may reduce the expenses of the adviser in
providing management services to the Fund is not determinable. In addition, it
is understood by the Board of Directors that other clients of the investment
adviser might also benefit from the information obtained for the Fund, in the
same manner that the Fund might also benefit from information obtained by the
investment adviser in performing services to others.
The reasonableness of brokerage commissions paid by the Fund in relation to
transaction and research services received is evaluated by the staff of the
investment adviser on an ongoing basis. The general level of brokerage charges
and other aspects of the Fund's portfolio transactions are reviewed periodically
by the Board of Directors.
Transactions of the Fund in the over-the-counter market are executed with
primary market makers acting as principal except where it is believed that
better prices and execution may be obtained otherwise.
Subject to the overriding objective of seeking the best value in
transaction and research services for the Fund, the adviser may select those
brokers and dealers who have made recommendations resulting in sales of Fund
shares.
Although investment decisions for the Fund are made independently from
those for other investment advisory clients of L. Roy Papp & Associates, it may
develop that the same investment decision is made for both the Fund and one or
more other advisory clients. If both the Fund and other clients purchase or sell
the same class of securities on the same day, the transactions will be allocated
as to amount and price in a manner considered equitable to each.
Custodian
- ---------
Founders Bank of Arizona, 7335 E. Doubletree Ranch Road, Scottsdale, AZ
85258, is the custodian for the Fund. It is responsible for holding all
securities and cash of the Fund, receiving and paying for securities purchased,
delivering against payment securities sold, receiving and collecting income from
investments, making all payments covering expenses of the Fund, and performing
other administrative duties, all as directed by authorized persons of the Fund.
The custodian does not exercise any supervisory function in such matters as
purchase and sale of portfolio securities, payment of dividends, or payment of
expenses of the Fund. The Fund has authorized the custodian to deposit certain
portfolio securities in central depository systems as permitted under federal
law. The Fund may invest in obligations of the custodian and may purchase or
sell securities from or to the custodian.
B-6
<PAGE>
Transfer Agent
- --------------
L. Roy Papp & Associates, the investment adviser to the Fund, also acts as
transfer, dividend disbursing, and shareholder servicing agent for the Fund
pursuant to a written agreement with the Fund. Under the agreement, L. Roy Papp
& Associates is responsible for administering and performing transfer agent
functions, for acting as service agent in connection with dividend and
distribution functions, for performing shareholder account administration agent
functions in connection with the issuance, transfer and redemption of the Fund's
shares, and maintaining necessary records in accordance with applicable laws,
rules and regulations.
For its services L. Roy Papp & Associates receives from the Fund a monthly
fee of $.75 for each shareholder account of the Fund, $.50 for each dividend
paid on a shareholder account, and $1.00 for each purchase (other than by
reinvestment, transfer or redemption) of shares of the Fund. The Board of
Directors of the Fund has determined the charges by L. Roy Papp & Associates to
the Fund are comparable to the charges of others performing similar services. L.
Roy Papp & Associates has agreed to make no charges for the provision of these
services until January 1, 2000.
Independent Auditors
- --------------------
Arthur Andersen LLP, Two North Central, Suite 1000, Phoenix, Arizona
85004-2344, audits and reports on the Fund's annual financial statements,
reviews certain regulatory reports and the Fund's tax returns, and performs
other professional accounting, auditing, tax and advisory services when engaged
to do so by the Fund.
Financial Statements
- --------------------
[to be added by amendment]
B-7
<PAGE>
Part C
------
Other Information
-----------------
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial Statements included in Part B (there are none in part A):
Independent auditor's report*
Statement of assets and liabilities, _____________, 1998*
(2) Financial statements included in Part C.
None
(b) Exhibits
1. Articles of Incorporation
2. Bylaws
3. None
4. None
5. Investment Advisory Agreement
6. None
7. None
8. Custodian Agreement
9. Transfer Agency Agreement
10. Opinion and consent of Bell, Boyd & Lloyd*
11. Consent of independent auditors*
12. None
13. Initial Subscription Agreement
14. None
15. None
16. None
17. Financial Data Schedule*
18. None
19. New Account Purchase Application
- ------------------------------------------------------
* To be filed by amendment
<PAGE>
Item 25. Persons Controlled By or Under Common Control with Registrant
The registrant does not consider that there are any persons directly or
indirectly controlling, controlled by, or under common control with, the
registrant within the meaning of this item. The information in the prospectus
under the captions "Management of the Fund" and "Investment Adviser" and in the
Additional Information Statement under the captions "Directors and Officers" and
"Investment Adviser" is incorporated by reference.
Item 26. Number of Holders of Securities
As of the date of filing of this registration statement there were no
record holders of capital stock of registrant. The registrant has no other class
of securities.
Item 27. Indemnification
Section 2-418 of the General Corporation Law of Maryland authorizes the
registrant to indemnify its directors and officers under specified
circumstances. Section 9.01 of Article IX of the bylaws of the registrant
(exhibit 2 to the registration statement, which is incorporated herein by
reference) provides in effect that the registrant shall provide certain
indemnification of its directors and officers. In accordance with section 17(h)
of the Investment Company Act, this provision of the bylaws shall not protect
any person against any liability to the registrant or its shareholders to which
he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issuer.
Item 28. Business and Other Connections of Investment Adviser
The information in the prospectus under the captions "Management of the
Fund" and "Investment Adviser" is incorporated by reference. Neither L. Roy
Papp & Associates nor any of its partners has at any time during the past two
years been engaged in any other business, profession, vocation or employment of
a substantial nature either for its, his or her own account or in the capacity
of director, officer, employee, partner or trustee.
Item 29. Principal Underwriters
None
C-2
<PAGE>
Item 30. Location of Accounts and Records
Rosellen C. Papp, Treasurer
Papp Focus Fund, Inc.
4400 North 32nd Street, Suite 280
Phoenix, AZ 85018
Item 31. Management Services
None
Item 32. Undertakings
The registrant undertakes to file a post-effective amendment
containing financial statements, which need not be certified, within 60 days of
the end of the four to six month period from the effective date of this
registration statement.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Phoenix, Arizona on December 30, 1997.
Papp Focus Fund, Inc.
By: /s/ L. Roy Papp
--------------------------
L. Roy Papp, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ L. Roy Papp Director and Chairman )
- --------------------------- (principal executive and )
L. Roy Papp financial officer) )
)
)
/s/ Harry A. Papp Director and President )
- --------------------------- )
Harry A. Papp )
)
)
/s/ Robert L. Mueller Director, Vice President )
- --------------------------- and Secretary )
Robert L. Mueller )
)
) December 30, 1997
/s/ Bruce C. Williams Director and Vice President )
- --------------------------- )
Bruce C. Williams )
)
)
/s/ Rosellen C. Papp Director, Vice President and )
- --------------------------- Treasurer (principal accounting )
Rosellen C. Papp officer) )
)
)
/s/ James K. Ballinger Director )
- --------------------------- )
James K. Ballinger )
)
)
/s/ Amy S. Clague Director )
- --------------------------- )
Amy S. Clague )
)
)
/s/ Carolyn P. O'Malley Director )
- --------------------------- )
Carolyn P. O'Malley )
</TABLE>
<PAGE>
INDEX FOR EXHIBITS
<TABLE>
<CAPTION>
EDGAR N-1A ITEM 23
EXHIBIT NO. EXHIBIT NO. DESCRIPTION PAGE NUMBER
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
EX-99.B1 1. Articles of Incorporation
EX-99.B2 2. Bylaws
EX-99.B3 3. None
EX-99.B4 4. None
EX-99.B5 5. Investment Advisory Agreement
EX-99.B6 6. None
EX-99.B7 7. None
EX-99.B8 8. Custodian Agreement
EX-99.B9 9. Transfer Agency Agreement
EX-99.B10 10. Opinion and consent of Bell, Boyd & Lloyd*
EX-99.B11 11. Consent of independent auditors*
EX-99.B12 12. None
EX-99.B13 13. Initial Subscription Agreement
EX-99.B14 14. None
EX-99.B15 15. None
EX-99.B16 16. None
EX-99.B17 17. Financial Data Schedule*
EX-99.B18 18. None
EX-99.B19 19. New Account Purchase Application
</TABLE>
- ----------------------------------
* To be filed by amendment.
<PAGE>
EXHIBIT 1
PAPP FOCUS FUND, INC.
ARTICLES OF INCORPORATION
FIRST: THE UNDERSIGNED, Janet D. Olsen, whose address is Three First
National Plaza, 70 West Madison Street, Suite 3300, Chicago, Illinois, 60602,
being at least eighteen years of age, acting as incorporator, does hereby form a
corporation under the General Laws of the State of Maryland.
SECOND: (a) The name of the corporation (which is hereinafter called the
"Corporation") is:
Papp Focus Fund, Inc.
(b) The Corporation acknowledges that it is adopting its corporate name
through permission of L. Roy Papp & Associates, an Arizona partnership ("Papp &
Associates"), and acknowledges that Papp & Associates has the sole and exclusive
right to use or license the use of the names "L. Roy Papp" or "Papp" or
"Papp . . . Fund" in commerce. The Corporation agrees that if, at any time and
for any cause, the investment adviser or distributor of the Corporation ceases
to be Papp & Associates or an affiliate of Papp & Associates, the Corporation
shall at the written request of Papp & Associates take all requisite action to
amend its Charter to eliminate the names "L. Roy Papp" or "Papp" or
"Papp . . . Fund" from the Corporation's corporate name. The Corporation further
acknowledges that Papp & Associates reserves the right to grant the non-
exclusive right to use the name "L. Roy Papp" or "Papp" or "Papp . . . Fund" to
any other corporation, including other investment companies, whether now in
existence or hereafter created.
THIRD: (a) The purposes for which and any of which the Corporation is
formed and the business and objects to be carried on and promoted by it are:
(1) To engage primarily in the business of investing, reinvesting or
trading in securities as an investment company classified under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, management
company.
(2) To engage in any one or more businesses or transactions, or to
acquire all or any portion of any entity engaged in any one or more
businesses or transactions which the Board of Directors may from time to
time authorize or approve, whether or not related to the business described
elsewhere in this Article or to any other business at the time or
theretofore engaged in by the Corporation.
(b) The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the terms of any other
clause of this or any other Article of the Charter of the Corporation, and each
shall be regarded as independent; and they are intended to be and shall be
construed as powers as well as purposes and objects of the
<PAGE>
Corporation and shall be in addition to and not in limitation of the general
powers of corporations under the General Laws of the State of Maryland.
FOURTH: The present address of the principal office of the Corporation in
this State is c/o The Corporation Trust Incorporated, 300 East Lombard Street,
Baltimore, Maryland 21202.
FIFTH: The name and address of the resident agent of the Corporation in
this State is The Corporation Trust Incorporated, 300 East Lombard Street,
Baltimore, Maryland 21202. Said resident agent is a Maryland corporation.
SIXTH: (a) The total number of shares of capital stock of all classes
which the Corporation has authority to issue is 25,000,000 shares of capital
stock (par value $0.01 per share), amounting in aggregate par value to $250,000.
All of such shares are classified as "Common Stock".
(b) Unless otherwise prohibited by law, so long as the Corporation is
registered as an open-end company under the 1940 Act, the Board of Directors
shall have the power and authority, without the approval of the holders of any
outstanding shares, to increase or decrease the number of shares of capital
stock that the Corporation has authority to issue.
(c) The following is a description of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the Common Stock of the
Corporation:
(1) Each share of Common Stock shall have one vote, and the exclusive
voting power for all purposes shall be vested in the holders of the Common
Stock.
(2) Subject to the provisions of law, dividends, including dividends
payable in shares of Common Stock, may be paid on the Common Stock of the
Corporation at such times and in such amounts as the Board of Directors may
deem advisable.
(3) In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of the Common
Stock shall be entitled, after payment or provision for payment of the
debts and other liabilities of the Corporation, shall be entitled to share
ratably in the remaining net assets of the Corporation.
(4) Each holder of Common Stock shall have the right to require the
Corporation to redeem all or any part of the holder's shares at a
redemption price equal to the net asset value per share which is next
computed after receipt of a tender of such shares for redemption, less such
redemption fee, if any, as the Board of Directors may from time to time
establish in accordance with the 1940 Act and
2
<PAGE>
the Rules of Fair Practice adopted by the National Association of
Securities Dealers, Inc. The redemption price shall be paid in cash;
provided, however, that if the Board of Directors determines, which
determination shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Corporation may, to the extent
and in the manner permitted by law, make payment wholly or partly in
securities or other assets, at the value of such securities or other assets
used in such determination of current net asset value. Notwithstanding the
foregoing, the Corporation may suspend the right of holders of Common Stock
to require the Corporation to redeem their shares, or postpone the date of
payment or satisfaction upon such redemption during any period or at any
time when and to the extent permitted under the 1940 Act.
(5) To the extent and in the manner permitted by the 1940 Act and the
Maryland General Corporation Law ("MGCL"), the Board of Directors may cause
the Corporation to redeem, at their current net asset value, the shares of
Common Stock held in the account of any stockholder having, because of
redemptions or exchanges, an aggregate net asset value specified by the
Board of Directors from time to time in its sole discretion which is less
than the minimum initial investment specified by the Board of Directors
from time to time in its sole discretion.
(6) The net asset value per share of the Common Stock shall be the
quotient obtained by dividing the value of the net assets of the
Corporation (being the value of the assets of the Corporation less the
liabilities of the Corporation) by the total number of shares of Common
Stock outstanding, all as determined by or under the direction of the Board
of Directors in accordance with generally accepted accounting principles
and the 1940 Act. Subject to the applicable provisions of the 1940 Act, the
Board of Directors, in its sole discretion, may prescribe and shall set
forth in the By-Laws of the Corporation, or in a duly adopted resolution of
the Board of Directors, such bases and times for determining the current
net asset value per share of the Common Stock, and the net income
attributable to the Common Stock, as the Board of Directors deems necessary
or desirable.
(d) The Corporation may issue and sell fractions of shares of capital
stock having pro rata all the rights of full shares, including, without
limitation, the right to vote and to receive dividends, and wherever the words
"share" or "shares" are used in the Charter or By-Laws of the Corporation, they
shall be deemed to include fractions of shares where the context does not
clearly indicate that only full shares are intended.
(e) The Corporation shall not be obligated to issue certificates
representing shares of capital stock. At the time of issue or transfer of shares
without certificates, the Corporation shall provide the stockholder with such
information as may be required under the MGCL and the Maryland Uniform
Commercial Code - Investment Securities.
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SEVENTH: The number of directors of the Corporation shall be eight, which
number may be increased or decreased pursuant to the By-Laws of the Corporation,
but shall never be less than the minimum number permitted by the General Laws of
the State of Maryland now or hereafter in force nor greater than 15. The names
of the directors who will serve until the first annual meeting and until their
successors are elected and qualify are as follows:
James K. Ballinger Amy S. Clague
Carolyn P. O'Malley Robert L. Mueller
Harry A. Papp L. Roy Papp
Rosellen C. Papp Bruce C. Williams
EIGHTH: (a) The following provisions are hereby adopted for the purpose
of defining, limiting, and regulating the powers of the Corporation and of the
directors and stockholders:
(1) The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of its capital stock, whether now or
hereafter authorized, or securities convertible into shares of its capital
stock, whether now or hereafter authorized, for such consideration as may be
deemed advisable by the Board of Directors and without any action by the
stockholders.
(2) No holder of any capital stock or any other securities of the
Corporation, whether now or hereafter authorized, shall have any preemptive
right to subscribe for or purchase any capital stock or any other securities
of the Corporation other than such, if any, as the Board of Directors, in
its sole discretion, may determine and at such price or prices and upon such
other terms as the Board of Directors, in its sole discretion, may fix; and
any capital stock or other securities which the Board of Directors may
determine to offer for subscription may, as the Board of Directors in its
sole discretion shall determine, be offered to the holders of any capital
stock or other securities at the time outstanding to the exclusion of the
holders of any or all other capital stock or other securities at the time
outstanding.
(3) The Board of Directors of the Corporation shall, consistent with
applicable law (including, without limitation, the 1940 Act), have power in
its sole discretion to determine from time to time in accordance with sound
accounting practice or other reasonable valuation methods what constitutes
annual or other net profits, earnings, surplus, net assets in excess of
capital, net asset value, or net asset value per share; to determine that
retained earnings or surplus shall remain in the hands of the Corporation;
to set apart out of any funds of the Corporation such reserve or reserves in
such amount or amounts and for such proper purpose or purposes as it shall
determine and to abolish any such reserve or any part thereof; to
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distribute and pay distributions or dividends in stock, cash or other
securities or property, out of surplus or any other funds or amounts legally
available therefor, at such times and to the stockholders of record on such
dates as it may, from time to time, determine; and to determine whether and
to what extent and at what times and places and under what conditions and
regulations the books, accounts and documents of the Corporation, or any of
them, shall be open to the inspection of stockholders, except as otherwise
provided by statute or by the By-Laws, and, except as so provided, no
stockholder shall have any right to inspect any book, account or document of
the Corporation unless authorized so to do by resolution of the Board of
Directors.
(4) Notwithstanding any provision of law requiring the authorization of
any action by a greater proportion than a majority of the total number of
shares of capital stock, such action shall be valid and effective if
authorized by the affirmative vote of the holders of a majority of the total
number of shares outstanding and entitled to vote thereon, except as
otherwise provided in the Charter.
(5) The Corporation shall indemnify (A) its directors and officers,
whether serving the Corporation or at its request any other entity, to the
full extent required or permitted by the General Laws of the State of
Maryland now or hereafter in force (as limited by the 1940 Act now or
hereafter in force), including the advance of expenses under the procedures
and to the full extent permitted by law and (B) other employees and agents
to such extent as shall be authorized by the Board of Directors or the
Corporation's By-Laws and be permitted by law. The foregoing rights of
indemnification shall not be exclusive of any other rights to which those
seeking indemnification may be entitled. The Board of Directors may take
such action as is necessary to carry out these indemnification provisions
and is expressly empowered to adopt, approve and amend from time to time
such by-laws, resolutions or contracts implementing such provisions or such
further indemnification arrangements as may be permitted by law. No
amendment of the Charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the right to indemnification provided
hereunder with respect to acts or omissions occurring prior to such
amendment or repeal.
(6) To the fullest extent permitted by Maryland statutory or decisional
law, as amended or interpreted (as limited by the 1940 Act now or hereafter
in force), no director or officer of the Corporation shall be personally
liable to the Corporation or its stockholders for money damages. No
amendment of the Charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the limitation on liability provided to
directors and officers hereunder with respect to any act or omission
occurring prior to such amendment or repeal.
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(7) The Corporation reserves the right from time to time to make any
amendments of its Charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly
set forth in its Charter, of any of its outstanding capital stock.
(8) For any stockholder proposal to be presented in connection with an
annual meeting of stockholders of the Corporation, including any proposal
relating to the nomination of a director to be elected to the Board of
Directors of the Corporation, the stockholders must have given timely
written notice thereof in writing to the Secretary of the Corporation in the
manner and containing the information required by the By-Laws. Stockholder
proposals to be presented in connection with a special meeting of
stockholders will be presented by the Corporation only to the extent
required by Section 2-502 of the MGCL and the By-Laws.
(b) The enumeration and definition of particular powers of the Board of
Directors included in the foregoing shall in no way be limited or restricted by
reference to or inference from the terms of any other clause of this or any
other Article of the Charter of the Corporation, or construed as or deemed by
inference or otherwise in any manner to exclude or limit any powers conferred
upon the Board of Directors under the General Laws of the State of Maryland now
or hereafter in force.
NINTH: The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation,
acknowledging the same to be my act, on December 16, 1997.
Witness:
/s/ Sarah A. Johnson /s/ Janet D. Olsen
- -------------------- ------------------
Janet D. Olsen
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EXHIBIT 2
PAPP FOCUS FUND, INC.
BY-LAWS
ARTICLE I.
STOCKHOLDERS
SECTION 1.01. Annual Meeting. The Corporation is not required to hold an
annual meeting of its stockholders in any year in which the election of
directors is not required to be acted upon under the Investment Company Act of
1940 (the "1940 Act"). If the Corporation is required by the 1940 Act to hold a
meeting of stockholders to elect directors, such meeting shall be held at a date
and time set by the Board Of Directors in accordance with the 1940 Act and no
later than 120 days after the occurrence of the event requiring the meeting.
Any stockholders' meeting held in accordance with the preceding sentence shall
for all purposes constitute the annual meeting of stockholders for the fiscal
year of the Corporation in which the meeting is held. Except as the Charter or
statute provides otherwise, any business may be considered at an annual meeting
without the purpose of the meeting having been specified in the notice. Failure
to hold an annual meeting does not invalidate the Corporation's existence or
affect any otherwise valid corporate acts.
SECTION 1.02. Special Meeting. At any time in the interval between annual
meetings, a special meeting of stockholders may be called by the Chairman or the
President or by a majority of the Board of Directors by vote at a meeting or in
writing (addressed to the Secretary of the Corporation) with or without a
meeting. Special meetings of the stockholders shall be called by the Secretary
at the request of stockholders only on the written request of stockholders
entitled to cast at least 25 percent of all the votes entitled to be cast at the
meeting. A request for a special meeting shall state the purpose of the meeting
and the matters proposed to be acted on at it. The Secretary shall inform the
stockholders who make the request of the reasonably estimated costs of preparing
and mailing a notice of the meeting and, on payment of these costs to the
Corporation, notify each stockholder entitled to notice of the meeting. Unless
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting, a special meeting need not be called to consider any
matter which is substantially the same as a matter voted on at any special
meeting of stockholders held in the preceding 12 months.
SECTION 1.03. Place of Meetings. Meetings of stockholders shall be held
at such place in the United States as is set from time to time by the Board of
Directors.
SECTION 1.04. Notice of Meetings; Waiver of Notice. Not less than ten nor
more than 90 days before each stockholders' meeting, the Secretary shall give
written notice of the meeting to each stockholder entitled to vote at the
meeting and each other stockholder entitled to notice of the meeting. The
notice shall state the time and place of the meeting and, if the meeting is a
special meeting or notice of the purpose is required by statute, the purpose of
the meeting. Notice is given to a stockholder when it is personally delivered
to him or her, left at his or her residence or usual place of business, or
mailed to him or her at his or her address as it appears on
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the records of the Corporation. Notwithstanding the foregoing provisions, each
person who is entitled to notice waives notice if he or she before or after the
meeting signs a waiver of the notice which is filed with the records of
stockholders' meetings, or is present at the meeting in person or by proxy.
SECTION 1.05. Quorum; Voting. Unless statute or the Charter provides
otherwise, at a meeting of stockholders the presence in person or by proxy of
stockholders entitled to cast a majority of all the votes entitled to be cast at
the meeting constitutes a quorum, and a majority of all the votes cast at a
meeting at which a quorum is present is sufficient to approve any matter which
properly comes before the meeting, except that a plurality of all the votes cast
at a meeting at which a quorum is present is sufficient to elect a director.
SECTION 1.06. Adjournments. Whether or not a quorum is present, a meeting
of stockholders convened on the date for which it was called may be adjourned
from time to time without further notice by a majority vote of the stockholders
present in person or by proxy to a date not more than 120 days after the
original record date. Any business which might have been transacted at the
meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
SECTION 1.07. General Right to Vote; Proxies. Unless the Charter provides
for a greater or lesser number of votes per share or limits or denies voting
rights, each outstanding share of stock is entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. In all elections for
directors, each share of stock may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted, and cumulative voting in the election of directors is not permitted. A
stockholder may vote the stock the stockholder owns of record either in person
or by proxy. A stockholder may sign a writing authorizing another person to act
as proxy. Signing may be accomplished by the stockholder or the stockholder's
authorized agent signing the writing or causing the stockholder's signature to
be affixed to the writing by any reasonable means, including facsimile
signature. A stockholder may authorize another person to act as proxy by
transmitting, or authorizing the transmission of, a telegram, cablegram,
datagram, or other means of electronic transmission to the person authorized to
act as proxy or to a proxy solicitation firm, proxy support service
organization, or other person authorized by the person who will act as proxy to
receive the transmission. Unless a proxy provides otherwise, it is not valid
more than 11 months after its date. A proxy is revocable by a stockholder at
any time without condition or qualification unless the proxy states that it is
irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted under
the proxy or another general interest in the Corporation or its assets or
liabilities.
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SECTION 1.08. List of Stockholders. At each meeting of stockholders, a
full, true and complete list of all stockholders entitled to vote at such
meeting, showing the number of shares held by each and certified by the transfer
agent or by the Secretary, shall be furnished by the Secretary.
SECTION 1.09. Conduct of Business. Nominations of persons for election to
the Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who was a stockholder of
record at the time of giving notice provided for in Section 1.11, who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in Section 1.11. The chairman of the meeting shall have the power and
duty to determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set forth in this
Section and Section 1.11 and, if any proposed nomination or business is not in
compliance with this Section and Section 1.11, to declare that such defective
nomination or proposal be disregarded.
SECTION 1.10. Conduct of Voting. At all meetings of stockholders, unless
the voting is conducted by inspectors, the proxies and ballots shall be
received, and all questions touching the qualification of voters and the
validity of proxies, the acceptance or rejection of votes and procedures for the
conduct of business not otherwise specified by these By-Laws, the Charter or
law, shall be decided or determined by the chairman of the meeting. If demanded
by stockholders, present in person or by proxy, entitled to cast 10 percent in
number of votes entitled to be cast, or if ordered by the chairman, the vote
upon any election or question shall be taken by ballot and, upon like demand or
order, the voting shall be conducted by two inspectors, in which event the
proxies and ballots shall be received, and all questions touching the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided, by such inspectors. Unless so demanded or
ordered, no vote need be by ballot and voting need not be conducted by
inspectors. The stockholders at any meeting may choose an inspector or
inspectors to act at such meeting, and in default of such election the chairman
of the meeting may appoint an inspector or inspectors. No candidate for
election as a director at a meeting shall serve as an inspector thereat.
SECTION 1.11. Stockholder Proposals. For any stockholder proposal to be
presented in connection with an annual meeting of stockholders of the
Corporation (other than proposals made under Rule 14a-8 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), including any proposal
relating to the nomination of a director to be elected to the Board of Directors
of the Corporation, the stockholders must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not later than 10 days following the day on which public
announcement of the date of such meeting is first made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including such person's written consent
to
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being named in the proxy statement as a nominee and to serving as a director if
elected); (b) as to any other business that the stockholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and of the beneficial
owner, if any, on whose behalf the proposal is made; and (c) as to the
stockholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made, (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (ii) the number of shares of stock of the Corporation which are owned
beneficially and of record by such stockholders and such beneficial owner.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.01. Function of Directors. The business and affairs of the
Corporation shall be managed under the direction of its Board of Directors. All
powers of the Corporation may be exercised by or under authority of the Board of
Directors, except as conferred on or reserved to the stockholders by statute or
by the Charter or By-Laws. The Board may delegate the duty of management of the
assets and the administration of the day-to-day operations of the Corporation to
one or more entities or individuals pursuant to a written contract or contracts
which have obtained the approvals, including the approval of renewals thereof,
required by the 1940 Act.
SECTION 2.02. Number of Directors. The Corporation shall have at least
three directors; provided that, if there is no stock outstanding, the number of
Directors may be less than three but not less than one, and, if there is stock
outstanding and so long as there are less than three stockholders, the number of
Directors may be less than three but not less than the number of stockholders.
The Corporation shall have the number of directors provided in the Charter until
changed as herein provided. A majority of the entire Board of Directors may
alter the number of directors set by the Charter to not exceeding 15 nor less
than the minimum number then permitted herein, but the action may not affect the
tenure of office of any director.
SECTION 2.03. Election and Tenure of Directors. At each annual meeting,
the stockholders shall elect directors to hold office until the next annual
meeting and until their successors are elected and qualify.
SECTION 2.04. Removal of Director. Unless statute or the Charter provides
otherwise, the stockholders may remove any director, with or without cause, by
the affirmative vote of a majority of all the votes entitled to be cast for the
election of directors.
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SECTION 2.05. Vacancy on Board. The stockholders may elect a successor to
fill a vacancy on the Board of Directors which results from the removal of a
director. A director elected by the stockholders to fill a vacancy which
results from the removal of a director serves for the balance of the term of the
removed director. A majority of the remaining directors, whether or not
sufficient to constitute a quorum, may fill a vacancy on the Board of Directors
which results from any cause except an increase in the number of directors;
provided, however, that no vacancy shall be so filled unless immediately
thereafter at least two-thirds of the directors then holding office shall have
been elected to such office by the stockholders, and provided further that if at
any time (other than prior to the first annual meeting of stockholders) less
than a majority of the directors holding office at that time were elected by the
stockholders, a meeting of the stockholders shall be held promptly and in any
event within 60 days for the purpose of elected directors to fill any existing
vacancy in the board of directors, unless the Securities and Exchange Commission
(the "Commission") shall by order extend such period under the authority granted
by Section 16(a) of the 1940 Act. The Board of Directors may not fill a vacancy
which results from an increase in the number of directors. A director elected
by the Board of Directors to fill a vacancy serves until the next annual meeting
of stockholders and until his or her successor is elected and qualifies.
SECTION 2.06. Regular Meetings. After each meeting of stockholders at
which directors shall have been elected, the Board of Directors shall meet as
soon as practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified by resolution
of the Board, the President or the Chairman, with notice in accordance with
Section 2.08, the Board of Directors shall meet immediately following the close
of, and at the place of, such stockholders' meeting. Any other regular meeting
of the Board of Directors shall be held on such date and at any place as may be
designated from time to time by the Board of Directors.
SECTION 2.07. Special Meetings. Special meetings of the Board of
Directors may be called at any time by the Chairman or the President or by a
majority of the Board of Directors by vote at a meeting, or in writing with or
without a meeting. A special meeting of the Board of Directors shall be held on
such date and at any place as may be designated from time to time by the Board
of Directors. In the absence of designation such meeting shall be held at such
place as may be designated in the call.
SECTION 2.08. Notice of Meeting. Except as provided in Section 2.06, the
Secretary shall give notice to each director of each regular and special meeting
of the Board of Directors. The notice shall state the time and place of the
meeting. Notice is given to a director when it is delivered personally to him
or her, left at his or her residence or usual place of business, or sent by
telegraph, facsimile transmission or telephone, at least 24 hours before the
time of the meeting or, in the alternative by mail to his or her address as it
shall appear on the records of the Corporation, at least 72 hours before the
time of the meeting. Unless these By-Laws or a resolution of the Board of
Directors provides otherwise, the notice need not state the business to be
transacted at or the purposes of any regular or special meeting of the Board of
Directors. No notice of any meeting of the Board of Directors need be given to
any director who attends except where a
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director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened, or to any director who, in writing executed and filed with the records
of the meeting either before or after the holding thereof, waives such notice.
Any meeting of the Board of Directors, regular or special, may adjourn from time
to time to reconvene at the same or some other place, and no notice need be
given of any such adjourned meeting other than by announcement.
Section 2.09. Quorum; Action by Directors. One-third of the entire Board of
Directors shall constitute a quorum for the transaction of business. In the
absence of a quorum, the directors present by majority vote and without notice
other than by announcement may adjourn the meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally notified. Unless statute or the Charter or By-Laws
requires a greater proportion, the action of a majority of the directors present
at a meeting at which a quorum is present is action of the Board of Directors.
Any action required or permitted to be taken at a meeting of the Board of
Directors may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the Board and filed with the
minutes of proceedings of the board.
Section 2.10. Meeting by Conference Telephone. Members of the Board of
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
constitutes presence in person at a meeting.
Section 2.11. Compensation. By resolution of the Board of Directors a fixed
sum and expenses, if any, for attendance at each regular or special meeting of
the Board of Directors or of committees thereof, and other compensation for
their services as such or on committees of the Board of Directors, may be paid
to directors. Directors who are full-time employees of the Corporation need not
be paid for attendance at meetings of the board or committees thereof for which
fees are paid to other directors. A director who serves the Corporation in any
other capacity also may receive compensation for such other services, pursuant
to a resolution of the directors.
Section 2.12. Resignation. Any director may resign at any time by sending a
written notice of such resignation to the home office of the Corporation
addressed to the Chairman of the Board or the President. Unless otherwise
specified therein such resignation shall take effect upon receipt thereof by the
Chairman of the Board or the President.
Section 2.13. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent or abstention shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately
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after the adjournment of the meeting. Such right to dissent shall not apply to a
director who votes in favor of such action.
Article III.
Committees
Section 3.01. Committees. The Board of Directors may appoint from among its
members an Executive Committee, an Audit Committee, and other committees
composed of one or more directors and delegate to these committees any of the
powers of the Board of Directors, except the power to authorize dividends on
stock, elect directors, issue stock other than as provided in the next sentence,
recommend to the stockholders any action which requires stockholder approval,
amend these By-Laws, or approve any merger or share exchange which does not
require stockholder approval. If the Board of Directors has given general
authorization for the issuance of stock providing for or establishing a method
or procedure for determining the maximum number of shares to be issued, a
committee of the Board, in accordance with that general authorization or any
stock option or other plan or program adopted by the Board of Directors, may
authorize the terms on which any stock may be issued, including all terms and
conditions required or permitted to be established or authorized by the Board of
Directors.
Section 3.02. Committee Procedure. Each committee may fix rules of
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of the
committee. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a director to act in the place of an
absent member. Any action required or permitted to be taken at a meeting of a
committee may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the committee and filed with
the minutes of the committee. The members of a committee may conduct any meeting
thereof by conference telephone in accordance with the provisions of Section
2.10.
Section 3.03. Emergency. In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Corporation by its directors and officers as contemplated by the Charter and
these By-Laws, any two or more available members of the then incumbent Executive
Committee shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Corporation in accordance with the
provisions of Section 3.01. In the event of the unavailability, at such time, of
a minimum of two members of the then incumbent Executive Committee, the
available directors shall elect an Executive Committee consisting of any two
members of the Board of Directors, whether or not they be officers of the
corporation, which two members shall constitute the executive committee for the
full conduct and management of the affairs of the Corporation in accordance with
the foregoing provisions of this Section. This section shall be subject to
implementation by resolution of the Board of Directors passed from time to time
for that purpose, and any provisions of these By-Laws (other than this section)
and any resolutions which are
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contrary to the provisions of this section or to the provisions of any such
implementary resolutions shall be suspended until it shall be determined by any
interim Executive Committee acting under this Section that it shall be to the
advantage of the Corporation to resume the conduct and management of its affairs
and business under all the other provisions of these By-Laws.
Article IV.
Officers
Section 4.01. Executive and Other Officers. The Corporation shall have a
Chairman, a President, a Secretary, and a Treasurer. The Board of Directors
shall designate who shall serve as chief executive officer, who shall have
general supervision of the business and affairs of the Corporation, and may
designate a chief operating officer, who shall have supervision of the
operations of the Corporation. In the absence of any designation by the Board of
Directors, the Chairman shall serve as chief executive officer, and the
President shall serve as chief operating officer. In the absence of the
Chairman, the President shall be the chief executive officer. The same person
may hold both offices. The Corporation may also have one or more Vice-
Presidents, assistant officers, and subordinate officers as may be established
by the Board of Directors. A person may hold more than one office in the
Corporation except that no person may serve concurrently as both President and
Vice-President of the Corporation. The Chairman shall be a director, and the
other officers may be directors.
Section 4.02. Chairman. The Chairman shall preside at all meetings of the
Board of Directors and of the stockholders at which he or she shall be present.
Unless otherwise specified by the Board of Directors, he or she shall be the
chief executive officer of the Corporation. In general, he or she shall perform
such duties as are customarily performed by the chief executive officer of a
corporation and may perform any duties of the President and shall perform such
other duties and have such other powers as are from time to time assigned to him
or her by the Board of Directors.
Section 4.03. President. Unless otherwise provided by resolution of the
Board of Directors, the President, in the absence of the Chairman, shall preside
at all meetings of the Board of Directors and of the stockholders at which he or
she shall be present. Unless otherwise specified by the Board of Directors, the
President shall be the chief operating officer of the Corporation and perform
the duties customarily performed by chief operating officers. He or she may
execute, in the name of the Corporation, all authorized deeds, mortgages, bonds,
contracts or other instruments, except in cases in which the signing and
execution thereof shall have been expressly delegated to some other officer or
agent of the Corporation. In general, he or she shall perform such other duties
customarily performed by a president of a corporation and shall perform such
other duties and have such other powers as are from time to time assigned to him
or her by the Board of Directors or the chief executive officer of the
Corporation.
Section 4.04. Vice-Presidents. The Vice-President or Vice-Presidents, at
the request of the chief executive officer or the President, or in the
President's absence or during his or her
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inability to act, shall perform the duties and exercise the functions of the
President, and when so acting shall have the powers of the President. If there
be more than one Vice-President, the Board of Directors may determine which one
or more of the Vice-Presidents shall perform any of such duties or exercise any
of such functions, or if such determination is not made by the Board of
Directors, the chief executive officer, or the President may make such
determination; otherwise any of the Vice-Presidents may perform any of such
duties or exercise any of such functions. Each Vice-President shall perform such
other duties and have such other powers, and have such additional descriptive
designations in their titles (if any), as are from time to time assigned to them
by the Board of Directors, the chief executive officer, or the President.
Section 4.05. Secretary. The Secretary shall keep the minutes of the
meetings of the stockholders, of the Board of Directors and of any committees,
in books provided for the purpose; he or she shall see that all notices are duly
given in accordance with the provisions of these By-Laws or as required by law;
he or she shall be custodian of the records of the Corporation; he or she may
witness any document on behalf of the Corporation, the execution of which is
duly authorized, see that the corporate seal is affixed where such document is
required or desired to be under its seal, and, when so affixed, may attest the
same. In general, he or she shall perform such other duties customarily
performed by a secretary of a corporation, and shall perform such other duties
and have such other powers as are from time to time assigned to him or her by
the Board of Directors, the chief executive officer, or the President.
Section 4.06. Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by the Board of
Directors; he or she shall render to the President and to the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation. In general, he or she shall perform such other duties customarily
performed by a treasurer of a corporation, and shall perform such other duties
and have such other powers as are from time to time assigned to him or her by
the Board of Directors, the chief executive officer, or the President.
Section 4.07. Assistant and Subordinate Officers. The assistant and
subordinate officers of the Corporation are all officers below the office of
Vice-President, Secretary, or Treasurer. The assistant or subordinate officers
shall have such duties as are from time to time assigned to them by the Board of
Directors, the chief executive officer, or the President.
Section 4.08. Election, Tenure and Removal of Officers. The Board of
Directors shall elect the officers of the Corporation. The Board of Directors
may from time to time authorize any committee or officer to appoint assistant
and subordinate officers. election or appointment of an officer, employee or
agent shall not of itself create contract rights. All officers shall be
appointed to hold their offices, respectively, during the pleasure of the board.
the Board of Directors (or, as to any assistant or subordinate officer, any
committee or officer authorized by the board) may remove an officer at any time.
the removal of an officer does not prejudice any of his or her contract rights.
the Board of Directors (or, as to any assistant or subordinate
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officer, any committee or officer authorized by the Board) may fill a vacancy
which occurs in any office for the unexpired portion of the term.
SECTION 4.09. Compensation. The Board of Directors shall have power to fix
the salaries and other compensation and remuneration, of whatever kind, of all
officers of the Corporation. No officer shall be prevented from receiving such
salary by reason of the fact that he or she is also a director of the
Corporation. The Board of Directors may authorize any committee or officer, upon
whom the power of appointing assistant and subordinate officers may have been
conferred, to fix the salaries, compensation and remuneration of such assistant
and subordinate officers.
ARTICLE V.
STOCK
SECTION 5.01. Certificates for Stock. The Board of Directors may determine
to issue certificated or uncertificated shares of capital stock and other
securities of the Corporation. For certificated stock, each stockholder is
entitled to certificates which represent and certify the shares of stock he or
she holds in the Corporation. Each stock certificate shall include on its face
the name of the Corporation, the name of the stockholder or other person to whom
it is issued, and the class of stock and number of shares it represents. It
shall also include on its face or back (a) a statement of any restrictions on
transferability and (b) a statement which provides in substance that the
Corporation will furnish to any stockholder on request and without charge a full
statement of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of the stock of each class which the
corporation is authorized to issue, of the differences in the relative rights
and preferences between the shares of each series of a preferred or special
class in series which the corporation is authorized to issue, to the extent they
have been set, and of the authority of the Board of Directors to set the
relative rights and preferences of subsequent series of a preferred or special
class of stock and any restrictions on transferability. Such request may be made
to the Secretary or to its transfer agent. Upon the issuance of uncertificated
shares of capital stock, the Corporation shall send the stockholder a written
statement of the same information required above on the certificate and by the
Maryland Uniform Commercial Code - Investment Securities. It shall be in such
form, not inconsistent with law or with the charter, as shall be approved by the
Board of Directors or any officer or officers designated for such purpose by
resolution of the Board of Directors. Each stock certificate shall be signed by
the Chairman, the President, or a Vice-President, and countersigned by the
Secretary, an Assistant Secretary, the Treasurer, or an Assistant Treasurer.
Each certificate may be sealed with the actual corporate seal or a facsimile of
it or in any other form and the signatures may be either manual or facsimile
signatures. A certificate is valid and may be issued whether or not an officer
who signed it is still an officer when it is issued. A certificate may not be
issued until the stock represented by it is fully paid, except in the case of
stock purchased under a plan, agreement, or transaction as provided by law and
with such statement on future payments as required by law.
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SECTION 5.02. Transfers. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of stock; and may appoint transfer agents
and registrars thereof. The duties of transfer agent and registrar may be
combined.
SECTION 5.03. Record Dates or Closing of Transfer Books. The Board Of
Directors may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of making any proper determination
with respect to stockholders, including which stockholders are entitled to
notice of a meeting, vote at a meeting, receive a dividend, or be allotted other
rights. The record date may not be prior to the close of business on the day
the record date is fixed nor, subject to Section 1.06, more than 90 days before
the date on which the action requiring the determination will be taken; the
transfer books may not be closed for a period longer than 20 days; and, in the
case of a meeting of stockholders, the record date or the closing of the
transfer books shall be at least ten days before the date of the meeting.
SECTION 5.04. Stock Ledger. The Corporation shall maintain a stock ledger
which contains the name and address of each stockholder and the number of shares
of stock which the stockholder holds. The stock ledger may be in written form
or in any other form which can be converted within a reasonable time into
written form for visual inspection. The original or a duplicate of the stock
ledger shall be kept at the offices of a transfer agent, or, if none, at the
principal office in the State of Maryland or the principal executive offices of
the Corporation.
SECTION 5.05. Lost Stock Certificates. The Board of Directors of the
Corporation may determine the conditions for issuing a new stock certificate in
place of one which is alleged to have been lost, stolen, or destroyed, or the
Board of Directors may delegate such power to any officer or officers of the
Corporation. In their discretion, the Board of Directors or such officer or
officers may require the owner of the certificate to give bond, with sufficient
surety, to indemnify the Corporation against any loss or claim arising as a
result of the issuance of a new certificate. In their discretion, the Board of
Directors or such officer or officers may refuse to issue such new certificate
save upon the order of some court having jurisdiction in the premises.
ARTICLE VI.
FINANCE
SECTION 6.01. Checks, Drafts, Etc. All checks, drafts and orders for the
payment of money, notes and other evidences of indebtedness, issued in the name
of the Corporation, shall, unless otherwise provided by resolution of the Board
of Directors, be signed by any two of the Chairman, the President, a Vice-
President, an Assistant Vice-President, the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary.
SECTION 6.02. Annual Statement Of Affairs. The President or chief
accounting officer shall prepare annually a full and correct statement of the
affairs of the Corporation, to include a balance sheet and a financial statement
of operations for the preceding fiscal year. The
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statement of affairs shall be placed on file at the Corporation's principal
office within 120 days after the end of the fiscal year.
SECTION 6.03. Fiscal Year. The fiscal year of the Corporation shall be
the 12 calendar months period ending December 31st in each year, unless
otherwise provided by the Board Of Directors.
SECTION 6.04. Dividends. If declared by the Board of Directors at any
meeting thereof, the Corporation may pay dividends on its shares in cash,
property, or in shares of the capital stock of the Corporation, unless such
dividend is contrary to law or to a restriction contained in the Charter.
ARTICLE VII.
INDEMNIFICATION
SECTION 7.01. Procedure. Any indemnification by the Corporation for a
specific action, suit or proceeding shall (unless ordered by a court) be made by
the Corporation only upon (a) a final decision on the merits by a court or other
body before whom the action, suit or proceeding was brought that a person
permitted by the Charter to seek indemnification (the "Covered Person") was not
liable by reason of Disabling Conduct (hereafter defined), (b) dismissal of the
proceeding against the Covered Person for insufficiency of evidence of any
Disabling Conduct, or (c) a reasonable determination, based upon a review of the
facts, by a majority of a quorum of the directors who are neither "interested
persons" of the Corporation as defined in the 1940 Act nor parties to the
proceeding ("Disinterested, Non-Party Directors"), or an independent legal
counsel in a written opinion, that the Covered Person was not liable by reason
of Disabling Conduct. Disabling Conduct includes (a) liability in connection
with any proceeding in which it is determined that (i) the act or omission of
the Covered Person was material to the matter giving rise to the proceeding, and
was committed in bad faith or was the result of active and deliberate
dishonesty, or (ii) the Covered Person actually received an improper personal
benefit in money, property or services, or (iii) in the case of any criminal
proceeding, the Covered Person had reasonable cause to believe that the act or
omission was unlawful, and (b) liability to the Corporation or its stockholders
to which the Covered Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. The termination of any proceeding
by judgment, order or settlement shall not create a presumption that the covered
person did not meet the required standard of conduct; the termination of any
proceeding by conviction, or a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment, shall create a rebuttable
presumption that the Covered Person did not meet the required standard of
conduct. Any determination pursuant to this Section 7.01 shall not prevent
recovery from any Covered Person of any amount paid to him in accordance with
this By-Law as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction to be liable by reason of
Disabling Conduct.
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SECTION 7.02. Enforcement of Indemnification Right. Any indemnification,
or payment of expenses in advance of the final disposition of any action, suit
or proceeding, shall be made promptly, and in any event within 60 days, upon the
written request of the Covered Person. The right to indemnification and
advances hereunder shall be enforceable by the Covered Person in any court of
competent jurisdiction, if (i) the Corporation denies such request, in whole or
in part, or (ii) no disposition thereof is made within 60 days. The Covered
Person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be reimbursed by the Corporation. It shall be a defense
to any action for advance for expenses that (a) a determination has been made
that the facts then known to those making the determination would preclude
indemnification or (b) the Corporation has not received both (i) an undertaking
as required by law to repay such advances in the event it shall ultimately be
determined that the standard of conduct has not been met and (ii) a written
affirmation by the Covered Person of such Covered Person's good faith belief
that the standard of conduct necessary for indemnification by the Corporation
has been met.
SECTION 7.03. Advance Payment of Expenses. Reasonable expenses (including
attorney's fees) incurred by a Covered Person may be paid or reimbursed by the
Corporation in advance of the final disposition of an action, suit or proceeding
upon receipt by the Corporation of (a) a written affirmation by the Covered
Person of his or her good faith belief that the standard of conduct necessary
for indemnification under this By-Law has been met and (b) a written undertaking
by or on behalf of the Covered Person to repay the amount if it is ultimately
determined that such standard of conduct has not been met, so long as either (i)
the Covered Person has provided a security for his or her undertaking, (ii) the
Corporation is insured against losses arising by reason of any lawful advances,
or (iii) a majority of a quorum of the Disinterested, Non-Party Directors or an
independent legal counsel in a written opinion has determined, based on a review
of readily available facts (as opposed to a full trial-type inquiry), that there
is reason to believe that the Covered Person ultimately will be found entitled
to indemnification.
SECTION 7.04. Insurance. The Corporation may purchase and maintain
insurance on behalf of any Covered Person against any liability asserted against
him and incurred by him in any such capacity, or arising out of his or her
status as such; provided, however, that the Corporation shall not purchase
insurance to indemnify any Covered Person against liability for Disabling
Conduct.
SECTION 7.05. Exclusivity, Etc. The indemnification and advance of
expenses provided by the Charter and this By-Law shall not be deemed exclusive
of any other rights to which a Covered Person seeking indemnification or advance
of expenses may be entitled under any law (common or statutory), or any
agreement, vote of stockholders or disinterested directors, or other provision
that is consistent with law, both as to action in an official capacity and as to
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action in another capacity while holding office or while employed by or acting
as agent for the Corporation, shall continue in respect of all events occurring
while the Covered Person was a director or officer after such Covered Person has
ceased to be a director or officer, and shall inure to the benefit of the
estate, heirs, executors and administrators of such Covered Person. The
Corporation shall not be liable for any payment under this By-Law in connection
with a claim made by a director or officer to the extent such director or
officer has otherwise actually received payment under an insurance policy,
agreement, vote or otherwise, of the amounts otherwise indemnifiable hereunder.
All rights to indemnification and advance of expenses under the Charter and
hereunder shall be deemed to be a contract between the Corporation and each
director or officer of the Corporation who serves or served in such capacity at
any time while this By-Law is in effect. Nothing herein shall prevent the
amendment of this By-Law, provided that no such amendment shall diminish the
rights of any Covered Person hereunder with respect to events occurring or
claims made before its adoption or as to claims made after its adoption in
respect of events occurring before its adoption. Any repeal or modification of
this By-Law shall not in any way diminish any rights to indemnification or
advance of expenses of a Covered Person or the obligations of the Corporation
arising hereunder with respect to events occurring, or claims made, while this
By-Law or any provision hereof is in force.
SECTION 7.06. Severability; Definitions. The invalidity or
unenforceability of any provision of this Article VII shall not affect the
validity or enforceability of any other provision hereof. The phrase "this By-
Law" in this Article VII means this Article VII in its entirety.
ARTICLE VIII.
SUNDRY PROVISIONS
SECTION 8.01. Books And Records. The Corporation shall keep correct and
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors.
The books and records of the Corporation may be in written form or in any other
form which can be converted within a reasonable time into written form for
visual inspection. Minutes shall be recorded in written form but may be
maintained in the form of a reproduction. The original or a certified copy of
these By-Laws shall be kept at the principal office of the Corporation.
SECTION 8.02. Corporate Seal. The Board of Directors shall provide a
suitable seal, bearing the name of the Corporation, which shall be in the charge
of the Secretary. The Board of Directors may authorize one or more duplicate
seals and provide for the custody thereof. If the Corporation is required to
place its corporate seal to a document, it is sufficient to meet the requirement
of any law, rule, or regulation relating to a corporate seal to place the word
"(seal)" adjacent to the signature of the person authorized to sign the document
on behalf of the Corporation.
SECTION 8.03. Bonds. The Board of Directors may require any officer,
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful
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discharge of his or her duties, with one or more sureties and in such amount as
may be satisfactory to the Board of Directors.
SECTION 8.04. Voting Stock in Other Corporations. Stock of other
corporations or associations, registered in the name of the Corporation, may be
voted by the Chairman, the President, a Vice-President, the Treasurer or a proxy
appointed by any of them. The Board of Directors, however, may by resolution
appoint some other person to vote such shares, in which case such person shall
be entitled to vote such shares upon the production of a certified copy of such
resolution.
SECTION 8.05. Mail. Any notice or other document which is required by
these By-Laws to be mailed shall be deposited in the United States mails,
postage prepaid.
SECTION 8.06. Contracts and Agreements. To the extent permitted by
applicable law, and except as otherwise prescribed by the charter or these by-
laws, the Board of Directors may authorize any officer, employee or agent of the
Corporation to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation. Such authority may be general or
confined to specific instances. A person who holds more than one office in the
Corporation may not act in more than one capacity to execute, acknowledge, or
verify an instrument required by law to be executed, acknowledged, or verified
by more than one officer.
SECTION 8.07. Reliance. Each director, officer, employee and agent of the
Corporation shall, in the performance of his or her duties with respect to the
Corporation, be fully justified and protected with regard to any act or failure
to act in reliance in good faith upon the books of account or other records of
the Corporation, upon an opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the adviser, accountants,
appraisers or other experts or consultants selected by the Board of Directors or
officers of the Corporation, regardless of whether such counsel or expert may
also be a director.
SECTION 8.08. Certain Rights of Directors, Officers, Employees and Agents.
The directors shall have no responsibility to devote their full time to the
affairs of the Corporation. Any director or officer, employee or agent of the
Corporation, in his or her personal capacity or in a capacity as an affiliate,
employee, or agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in addition to those
of or relating to the Corporation.
SECTION 8.09. Employment of Custodian. The Corporation shall place and
maintain its securities and similar investments in the custody of one or more
custodians meeting the requirements of the 1940 Act, or may serve as its own
custodian in accordance with such rules and regulations or orders as the
Commission may from time to time prescribe for the protection of investors.
Securities held by a custodian may be registered in the name of the Corporation
or any such custodian, or the nominee of either of them. Subject to such rules,
regulations, and orders as the Commission may adopt as necessary or appropriate
for the protection of investors, the Corporation or any custodian, with the
consent of the Corporation, may deposit all or any part of the securities owned
by the Corporation in a system for the central handling of securities, pursuant
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to which system all securities of a particular class or series 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.
SECTION 8.10. Amendments. Subject to the special provisions of Section
2.02, (a) any and all provisions of these By-Laws may be altered or repealed and
new by-laws may be adopted at any annual meeting of the stockholders, or at any
special meeting called for that purpose, and (b) the Board of Directors shall
have the power, at any regular or special meeting thereof, to make and adopt new
By-Laws, or to amend, alter or repeal any of these By-Laws of the Corporation.
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EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
PAPP FOCUS FUND, INC., a Maryland corporation registered under the Investment
Company Act of 1940 (1940 Act) as an open-end non-diversified management
investment company (Fund), and L. Roy Papp & Associates, an Arizona partnership
registered under the Investment Advisers Act of 1940 as an investment adviser
(Manager), agree that:
1. Engagement of Manager. Manager shall manage the investment and
reinvestment of the assets, and the other operations, of Fund, subject to the
supervision of the Board of Directors of Fund, for the period and on the terms
set forth in this agreement. Manager shall give due consideration to the
investment objectives, policies and restrictions and the other statements
concerning Fund in Fund's articles of incorporation, bylaws, and registration
statements under the 1940 Act and the Securities Act of 1933 (1933 Act), and to
the provisions of the Internal Revenue Code applicable to Fund as a regulated
investment company. Manager shall be deemed for all purposes to be an
independent contractor and not an agent of Fund, and unless otherwise expressly
provided or authorized, shall have no authority to act or represent Fund in any
way.
Manager is authorized to make decisions to buy and sell securities for
Fund, to place Fund's portfolio transactions with broker-dealers, and to
negotiate the terms of such transactions, including brokerage commissions on
brokerage transactions, on behalf of Fund.
Manager is authorized to exercise discretion within Fund's policy
concerning allocation of the Fund's portfolio brokerage as permitted by law,
including but not limited to section 28(e) of the Securities Exchange Act of
1934, and in so doing shall not be required to make any reduction in its
investment advisory fees.
2. Expenses to be paid by Manager. Manager shall furnish, at its own
expense, office space to Fund and all necessary office facilities, equipment and
personnel for managing the assets of Fund. Manager shall also assume and pay all
other expenses incurred by it in connection with managing the assets of Fund,
all expenses of marketing shares of Fund, all expenses in determination of daily
price computations, placement of securities orders and related bookkeeping, and
one-half of all fees, dues and other expenses related to membership of Fund in
any trade association or other investment company organization.
3. Expenses to be paid by Fund. Fund shall pay all expenses incident to
its operations and business not specifically assumed by Manager pursuant to
paragraphs 2 and 5, including without limitation: the fees of Manager pursuant
to paragraph 4; all charges of depositories, custodians, and other agencies for
the safekeeping and servicing of its cash, securities, and other property and of
its transfer agents and registrars and its dividend disbursing and redemption
agents, if any; all charges of legal counsel and of independent auditors; all
compensation of directors other than those affiliated with Manager, and all
expenses incurred in connection with their services to Fund; all expenses of
publication of notices and reports to its shareholders and to governmental
bodies or regulatory agencies; all expenses of proxy solicitations of Fund or
its board of directors; all expenses of shareholder meetings; all expenses
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of typesetting of Fund's prospectus and of printing and mailing copies of the
prospectus furnished to each then-existing shareholder or beneficial owner; all
taxes and corporate fees payable to federal, state or other governmental
agencies, domestic or foreign; all stamp or other transfer taxes; all expenses
of printing and mailing certificates for shares of Fund; all expenses of bond
and insurance coverage required by law or deemed advisable by Fund's board of
directors; all expenses of maintaining the registration of Fund under the 1940
Act; all expenses of maintaining the registration of shares of Fund under the
1933 Act and of qualifying and maintaining qualification of shares of Fund under
the securities laws of such United States jurisdictions as Fund may from time to
time reasonably designate; and one-half of all fees, dues and other expenses
related to membership of Fund in any trade association or other investment
company organization. In addition to the payment of expenses, Fund shall also
pay all brokers' commissions and other charges relative to the purchase and sale
of portfolio securities.
4. Compensation of Manager. For the services to be rendered and the
charges and expenses to be assumed and to be paid by Manager hereunder, Fund
shall pay to Manager a monthly fee out of Fund assets, which is computed and
accrued daily of 1/12 of 1% of the average net assets of Fund as determined as
of the close of each day in the monthly period.
5. Limitation of expenses of Fund. The total expenses of Fund, excluding
taxes, interest and extraordinary litigation expenses, but including fees paid
to Manager, during any of the Fund's fiscal years, shall not exceed 1.25% of its
average daily net asset value in such year and Manager agrees to reimburse Fund
for any sums expended for such expenses in excess of that amount. Brokers'
commissions and other charges relative to the purchase and sale of portfolio
securities shall not be regarded as expenses.
6. Services of Manager not exclusive. The services of Manager to Fund
hereunder are not to be deemed exclusive, and Manager shall be free to render
similar services to others so long as its services under this agreement are not
impaired by such other activities.
7. Limitation of liability of Manager. Manager shall not be liable to Fund
or its shareholders for any loss suffered by Fund or its shareholders from or as
a consequence of any act or omission of Manager, or of any of the partners,
employees or agents of Manager, in connection with or pursuant to this
agreement, except by reason of willful misfeasance, bad faith or gross
negligence on the part of Manager in the performance of its duties or by reason
of reckless disregard by Manager of its obligations and duties under this
agreement.
8. Duration and renewal. Unless terminated as provided in section 9, this
agreement shall continue in effect until September 24, 1999, and thereafter from
year to year only so long as such continuance is specifically approved at least
annually (a) by a majority of those directors who are not interested persons of
Fund or of Manager, voting in person at a meeting called for the purpose of
voting on such approval, and (b) by either the board of directors of Fund or
vote of the holders of a "majority of the outstanding shares of Fund" (which
term as used throughout this agreement shall be construed in accordance with the
definition of "vote of a majority of the outstanding voting securities of a
company" in section 2(a)(42) of the 1940 Act).
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9. Termination. This agreement may be terminated at any time, without
payment of any penalty, by the board of directors of Fund, or by a vote of the
holders of a majority of the outstanding shares of Fund, upon 60 days' written
notice to Manager. This agreement may be terminated by Manager at any time upon
60 days' written notice to Fund. This agreement shall terminate automatically in
the event of its assignment (as defined in section 2(a)(4) of the 1940 Act).
10. Use of Manager's name. Fund may use the name Papp Focus Fund, Inc. or
any other name using or derived from the name "L. Roy Papp" only for so long as
this agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the business of Manager as investment adviser. At such time as this agreement
or any extension, renewal or amendment hereof, or such other similar agreement
shall no longer be in effect, Fund will (by corporate action, if necessary)
cease to use any name using or derived from the name "L. Roy Papp," any name
similar thereto or otherwise connected with Manager, or with any organization
that shall have succeeded to Manager's business as investment adviser. Manager
may at any time permit other investment companies and other enterprises to use
such name, or any name derived from "L. Roy Papp".
11. Amendment. This agreement may not be amended without the affirmative
vote (a) of a majority of those directors who are not "interested persons" (as
defined in section 2(a)(19) of the 1940 Act) of Fund or of Manager, voting in
person at a meeting called for the purpose of voting on such approval, and (b)
of the holders of a majority of the outstanding shares of Fund.
Dated December 17, 1997
Papp Focus Fund, Inc.
By /s/ Harry A. Papp
----------------------
President
L. Roy Papp & Associates
By /s/ Robert L. Mueller
---------------------------
A General Partner
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EXHIBIT 8
CUSTODIAN AGREEMENT
-------------------
Agreement made as of the 1st day of January, 1998, between Papp Focus Fund,
Inc., a corporation organized and existing under the laws of the State of
Maryland, and registered under the Investment Company Act of 1940 as an
investment company, having its principal office and place of business at 4400
North 32nd Street, Suite 280, Phoenix, Arizona 85018 (hereinafter called the
"Fund"), and Founders Bank of Arizona, authorized to do a banking business,
whose mailing address is 7335 E. Doubletree Ranch Road, Scottsdale, Arizona
85258 (hereinafter called the "Custodian").
WITNESSETH
WHEREAS, the Fund desires to engage the Custodian to hold assets of the
Fund; and
WHEREAS, the Custodian is willing to hold and administer assets of the Fund
in accordance with this Agreement;
NOW, THEREFORE, the Fund and the Custodian in consideration of the mutual
promises hereinafter set forth do hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1. "Authorized Persons" shall be deemed to include the Treasurer, the
Controller or any other person, whether or not any such person is an Officer or
employee of the Fund, duly authorized by the Board of Directors of the Fund to
give Oral Instructions or Written Instructions on behalf of the Fund and listed
in the Certificate annexed hereto as Appendix A or such other Certificate as may
be received by the Custodian from time to time.
2. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry
system for United States and federal agency securities, its successor or
successors and its nominee or nominees.
3. "Certificate" shall mean any notice, instruction, or other instrument
in writing, authorized or required by this Agreement to be given to the
Custodian which is actually received by the Custodian and signed on behalf of
the Fund by any two Officers of the Fund.
4. "Depository" shall mean The Depository Trust Company ("DTC"), a
clearing agency registered with the Securities and Exchange Commission, its
successor or successors and its nominee or nominees, provided the Custodian has
received a certified copy of a resolution of the Fund's Board of Directors
specifically approving deposits in DTC. The term "Depository" shall further mean
and include any other person authorized to act as a depository under the
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Investment Company Act of 1940, its successor or successors and its nominee or
nominees, specifically identified in a certified copy of a resolution of the
Fund's Board of Directors specifically approving deposits therein by the
Custodian.
5. "Money Market Security" shall be deemed to include, without limitation,
debt obligations issued or guaranteed as to principal and interest by the
government of the United States or agencies or instrumentalities thereof,
commercial paper, certificates of deposit and bankers' acceptances, repurchase
and reverse repurchase agreements with respect to the same and bank time
deposits, where the purchase and sale of such securities normally requires
settlement in federal funds on the same day as such purchase or sale.
6. "Officers" shall be deemed to include the Chairman, President, any Vice
President, the Secretary, the Treasurer, the Controller, any Assistant
Secretary, any Assistant Treasurer or any other person or persons duly
authorized by the Board of Directors of the Fund to execute any Certificate,
instruction, notice or other instrument on behalf of the Fund and listed in the
Certificate annexed hereto as Appendix B or such other Certificate as may be
received by the Custodian from time to time.
7. "Oral Instructions" shall mean verbal instructions actually received by
the Custodian from an Authorized Person or from a person reasonably believed by
the Custodian to be an Authorized Person.
8. "Security" shall be deemed to include, without limitation, Money Market
Securities, bonds, debentures, corporate debt securities, notes, common stock,
securities convertible into common stock, preferred stock, 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 interest therein, or any property
or assets.
9. "Written Instructions" shall mean written communications actually
received by the Custodian from an Authorized Person or from a person reasonably
believed by the Custodian to be an Authorized Person by telex or any other such
system whereby the recipient of such communications is able to verify by codes
or otherwise with a reasonable degree of certainty the authenticity of the
sender of such communication.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian as custodian of
Securities and moneys owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such custodian and agrees
to perform the duties thereof as hereinafter set forth.
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ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. The Fund will deliver or cause to be delivered to the Custodian all
Securities and all moneys owned by it, including cash received for the issuance
of its shares, at any time during the period of this Agreement except for such
moneys as may be deposited by the Fund from time to time in a checking account
maintained by the Fund in accordance with the rules and regulations of the
Securities and Exchange Commission under the Investment Company Act of 1940. The
Custodian will not be responsible for such Securities and such moneys until
actually received by it. The Custodian will be entitled to reverse any credits
made on the Fund's behalf, where such credits have been previously made and
moneys are not finally collected. The Fund shall deliver to the Custodian a
certified resolution of the Board of Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and ongoing basis to
deposit in the Book-Entry System all Securities eligible for deposit therein and
to utilize the Book-Entry System to the extent possible in connection with its
performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral. Prior to a deposit of
Securities of the Fund in a Depository the Fund shall deliver to the Custodian a
certified resolution of the Board of Directors of the Fund approving,
authorizing and instructing the Custodian on a continuous and ongoing basis
until instructed to the contrary by a Certificate actually received by the
Custodian to deposit in the Depository all Securities eligible for deposit
therein and to utilize the Depository to the extent possible in connection with
its performance hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities, and
deliveries and returns of Securities collateral, provided however, that the
Custodian shall not deposit any Securities of the Fund with a Depository, or
leave on deposit any Securities so deposited, unless the Custodian's rights
against the Depository include the right to recover from the Depository, for the
benefit of the Fund, any loss sustained in connection with the Securities of the
Fund deposited by the Custodian with the Depository, as a result of negligence
or willful misconduct on the part of the Depository or any agent or custodian of
it. Securities and moneys of the Fund deposited in either the Book-Entry System
or a Depository will be represented in accounts which include only assets held
by the Custodian for customers, including, but not limited to, accounts in which
the Custodian acts in a fiduciary or representative capacity.
2. The Custodian shall credit to a separate account in the name of the
Fund all moneys received by it for the account of the Fund, and shall disburse
the same only:
(a) In payment for Securities purchased, as provided in Article IV
hereof;
(b) In payment of dividends or distributions as provided in Article V
hereof;
(c) In payment of original issue or other taxes, as provided in
Article VI hereof;
(d) In payment for capital stock of the Fund redeemed by it, as
provided in Article VI hereof;
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(e) Pursuant to Certificates setting forth the name and address of the
person to whom the payment is to be made, and the purpose for which payment is
to be made, or
(f) In payment of the fees and in reimbursement of the expenses and
liabilities of the Custodian, as provided in Article IX hereof.
3. On each business day the Custodian shall furnish the Fund with
confirmations and a summary of all transfers to or from the account of the Fund
during the preceding business day. Where Securities are transferred to the
account of the Fund, the Custodian shall also by book entry or otherwise
identify as belonging to the Fund a quantity of Securities in a fungible bulk of
Securities registered in the name of the Custodian (or its nominee) or shown on
the Custodian's account on the books of the Book-Entry System or the Depository.
At least monthly and from time to time, the Custodian shall furnish the Fund
with a detailed statement of the Securities and moneys held for the Fund under
this Agreement.
4. All Securities held for the Fund, which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System, shall
be held by the Custodian in that form; all other Securities held for the Fund
may be registered in the name of the Fund, in the name of any duly appointed
registered nominee of the Custodian as the Custodian may from time to time
determine, or in the name of the Book-Entry System or the Depository or their
successor or successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the Custodian to hold
or deliver in proper form for transfer, or to register in the name of its
registered nominee or in the name of the Book-Entry System or the Depository 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. The Custodian shall hold all such
Securities which are not held in the Book-Entry System or in the Depository in a
separate account in the name of the Fund physically segregated at all times from
those of any other person or persons.
5. Unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System or the
Depository with respect to Securities therein deposited, shall with respect to
all Securities held for the Fund in accordance with this Agreement:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable upon all
Securities which may mature or be called redeemed, or retired, or otherwise
become payable;
(c) Surrender Securities in temporary form for definitive Securities;
(d) Execute, as custodian, any necessary declarations or certificates
of ownership under the Federal Income Tax Laws or the laws or regulations of any
other taxing authority now or hereafter in effect; and
(e) Hold directly, or through the Book-Entry System or the Depository
with respect to Securities therein deposited, for the account of the Fund all
rights and similar securities issued with respect to any Securities held by the
Custodian hereunder.
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6. Upon receipt of a Certificate and not otherwise, the Custodian,
directly or through the use of the Book-Entry System or the Depository shall:
(a) Execute and deliver to such persons as may be designated in such
Certificate proxies, consents, authorizations, and any other instruments whereby
the authority of the Fund as owner of any Securities may be exercised;
(b) Deliver any Securities held for the Fund in exchange for other
Securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) Deliver any Securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement such certificate of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery; and
(d) Make such transfers or exchanges of the assets of the Fund and
take such other steps as shall be stated in said order to be for the purpose of
effectuating any duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Fund.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
1. Promptly after each purchase of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each purchase of Securities which
are not Money Market Securities, a Certificate, and (ii) with respect to each
purchase of Money Market Securities, a Certificate, Oral Instructions, or
Written Instructions, specifying with respect to each such purchase: (a) the
name of the issuer and the title of the Securities, (b) the number of shares or
the principal amount purchased and accrued interest, if any, (c) the date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, and (f) the name of the person from whom or the
broker through whom the purchase was made. The Custodian shall upon receipt of
Securities purchased by or for the Fund pay out of the moneys held for the
account of the Fund the total amount payable to the person from whom or the
broker through whom the purchase was made, provided that the same conforms to
the total amount payable as set forth in such Certificate, Oral Instructions, or
Written Instructions.
2. Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, a Certificate, and (ii) with respect to each sale
of Money Market Securities, a Certificate, Oral Instructions, or Written
Instructions, specifying with respect to each such sale: (a) the name of the
issuer and the title of the Security, (b) the number of shares or principal
amount sold, and accrued interest, if any, (c) the date of sale, (d) the sale
price per unit, (e) the total amount payable to the Fund upon such sale, and (f)
the name of the broker through whom or the person
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to whom the sale was made. The Custodian shall deliver the Securities upon
receipt of the total amount payable to the Fund upon such sale, provided that
the same conforms to the total amount payable as set forth in such Certificate,
Oral Instructions, or Written Instructions. Subject to the foregoing, the
Custodian may accept payment, and may deliver Securities and arrange for
payment, in accordance with the customs prevailing in the principal United
States financial centers among dealers in Securities.
ARTICLE V
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. In connection with any dividend or distribution declared with respect
to shares of capital stock of the Fund, the Fund shall furnish to the Custodian
a copy of the resolution of the Board of Directors, certified by the Secretary
or any Assistant Secretary, either (i) setting forth the date of the declaration
of such dividend or distribution, the date of payment thereof, the record date
as of which shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of that date and the total
amount payable to the Dividend Agent of the Fund on the payment date, or (ii)
authorizing the declaration of dividends and distribution on a daily basis and
authorizing the Custodian to rely on a Certificate, Oral Instructions or Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount payable per
share to the shareholders of record as of that date and the total amount payable
to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Certificate, Oral
Instructions, or Written Instructions, as the case may be, the Custodian shall
pay out of the moneys held for the account of the Fund the total amount payable
to the Dividend Agent of the Fund.
ARTICLE VI
SALE AND REDEMPTION OF SHARES OF CAPITAL STOCK OF THE FUND
1. Whenever the Fund shall sell any shares of its capital stock, it shall
deliver to the Custodian a Certificate specifying:
(a) The number of shares sold, trade date, and price; and
(b) The amount of money to be received by the Custodian for the sale
of such shares.
2. Upon receipt of such money from the Transfer Agent, the Custodian shall
credit such money to the account of the Fund.
3. Upon issuance of any shares of the capital stock of the Fund in
accordance with the foregoing provisions of this Article, the Custodian shall
pay, out of the money held for the account of the Fund, all original issue or
other taxes required to be paid by the Fund in connection with such issuance
upon the receipt of a Certificate specifying the amount to be paid.
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4. Except as provided hereinafter, whenever the Fund shall redeem any
shares of its capital stock, it shall furnish to the Custodian a Certificate
specifying:
(a) The number of shares of capital stock redeemed; and
(b) The amount to be paid for the shares of capital stock redeemed.
5. Upon receipt from the Transfer Agent of an advice setting forth the
number of shares of capital stock received by the Transfer Agent for redemption
and that such shares are valid and in good form for redemption, the Custodian
shall make payment to the Transfer Agent out of the moneys held for the account
of the Fund of the total amount specified in the Certificate issued pursuant to
the foregoing paragraph 4 of this Article.
6. Notwithstanding the above provisions regarding the redemption of any
shares of the capital stock of the Fund, whenever shares of the capital stock of
the Fund are redeemed pursuant to any check redemption privilege which may from
time to time be offered by the Fund, the Custodian, unless otherwise instructed
by a Certificate, shall, upon receipt of an advice from the Fund or its agent
setting forth that the redemption is in good form for redemption in accordance
with the check redemption procedure, honor the check presented as part of such
check redemption privilege out of the money held in the account of the Fund for
such purposes.
ARTICLE VII
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian should in its sole discretion advance funds on behalf
of the Fund which results in an overdraft because the moneys held by the
Custodian for the account of the Fund shall be insufficient to pay the total
amount payable upon a purchase of Securities as set forth in a Certificate or
Oral Instructions issued pursuant to Article IV, or which results in an
overdraft for some other reason, or if the Fund is for any other reason indebted
to the Custodian, (except a borrowing for investment or for temporary or
emergency purpose using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this Article VII),
such overdraft or indebtedness shall be deemed to be a loan made by the
Custodian to the Fund payable on demand and shall bear interest from the date
incurred at the rate per annum (based on a 360-day year for the actual number of
days involved) equal to 1/2% over the prime commercial lending rate of Founders
Bank of Arizona in effect from time to time, such rate to be adjusted on the
effective date of any change in such prime commercial lending rate but in no
event to be less than 6% per annum. Any such overdraft or indebtedness shall be
reduced by an amount equal to the total of all amounts due the Fund which have
not been collected by the Custodian on behalf of the Fund when due because of
the failure of the Custodian to timely make demand or presentment for payment.
In addition, the Fund hereby agrees that the Custodian shall have a continuing
lien and security interest in and to any property at any time held by it for the
benefit of the Fund or in which the Fund may have an interest which is then in
the Custodian's possession or control or in possession or control of any third
party acting in the Custodian's behalf. The Fund authorizes the Custodian, in
its sole discretion, at any time to charge any such
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overdraft or indebtedness together with interest due thereon against any balance
of account standing to the Fund's credit on the Custodian's books.
2. The Fund will cause to be delivered to the Custodian by any bank
(including, if the borrowing is pursuant to a separate agreement, the Custodian)
from which it borrows money for investment or for temporary or emergency
purposes using Securities as collateral for such borrowings, a notice or
undertaking on the form currently employed by any such bank setting forth the
amount which such bank will loan to the Fund against delivery of a stated amount
of collateral. The Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such borrowing: (a) the name of the bank, (b)
the amount and terms of the borrowing, which may be set forth by incorporating
by reference an attached promissory note, duly endorsed by the Fund, or other
loan agreement, (c) the time and date, if known, on which the loan is to be
entered into, (d) the date on which the loan becomes due and payable, (e) the
total amount payable to the Fund on the borrowing date, (f) the market value of
Securities to be delivered as collateral for such loan, including the name of
the issuer, the title and the number of shares or the principal amount of any
particular Securities, and (g) a statement specifying whether such loan is for
investment purposes or for temporary or emergency purposes and that such loan is
in conformance with the Investment Company Act of 1940 and the Fund's
prospectus. The Custodian shall deliver on the borrowing date specified in a
Certificate the specified collateral and the executed promissory note, if any,
against delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set forth in the
Certificate. The Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver such Securities as additional collateral
as may be specified in a Certificate to collateralize further any transaction
described in this paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it. In the event that the Fund fails to specify in a Certificate the name of the
issuer, the title and number of shares or the principal amount or any particular
Securities to be delivered as collateral by the Custodian, the Custodian shall
not be under any obligation to deliver any Securities.
ARTICLE VIII
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. If the Fund is permitted by the terms of its Articles of Incorporation
and as disclosed in its most recent and currently effective prospectus to lend
its portfolio Securities, within 24 hours after each loan of portfolio
Securities the Fund shall deliver or cause to be delivered to the Custodian a
Certificate specifying with respect to each such loan: (a) the name of the
issuer and the title of the Securities, (b) the number of shares or the
principal amount loaned, (c) the date of loan and delivery, (d) the total amount
to be delivered to the Custodian against the loan of the Securities, including
the amount of cash collateral and the premium, if any, separately identified,
and (e) the name of the broker, dealer, or financial institution to which the
loan was made. The Custodian shall deliver the Securities thus designated to the
broker, dealer or financial institution to which the loan was made upon receipt
of the total amount designated as to be
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delivered against the loan of Securities. The Custodian may accept payment in
connection with a delivery otherwise than through the Book-Entry System or
Depository only in the form of a certified or bank cashier's check payable to
the order of the Fund or the Custodian drawn on New York Clearing House funds
and may deliver Securities in accordance with the customs prevailing among
dealers in securities.
2. Promptly after each termination of the loan of Securities by the Fund,
the Fund shall deliver or cause to be delivered to the Custodian a Certificate
specifying with respect to each such loan termination and return of securities:
(a) the name of the issuer and the title of the Securities to be returned, (b)
the number of shares or the principal amount to be returned, (c) the date of
termination, (d) the total amount to be delivered by the Custodian (including
the cash collateral for such Securities minus any offsetting credits as
described in said Certificate), and (e) the name of the broker, dealer, or
financial institution from which the Securities will be returned. The Custodian
shall receive all Securities returned from the broker, dealer, or financial
institution to which such Securities were loaned and upon receipt thereof shall
pay, out of the moneys held for the account of the Fund, the total amount
payable upon such return of Securities as set forth in the Certificate.
ARTICLE IX
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, neither the Custodian nor its nominee
shall be liable for any loss or damage, including counsel fees, resulting from
its action or omission to act or otherwise, except for any such loss or damage
arising out of its own negligence or willful misconduct. The Custodian may, with
respect to questions of law, apply for and obtain the advice and opinion of
counsel to the Fund or of its own counsel, at the expense of the Fund, and shall
be fully protected with respect to anything done or omitted by it in good faith
in conformity with such advice or opinion. The Custodian shall promptly notify
the Fund whenever it intends to apply for and obtain advice or an opinion of
counsel at the expense of the Fund. The Custodian shall be liable to the Fund
for any loss or damage resulting from the use of the Book-Entry System or any
Depository arising by reason of any negligence, misfeasance or willful
misconduct on the part of the Custodian or any of its employees or agents. In
the event that the Custodian should determine that there has been any loss or
damage involving Securities of the Fund deposited with any Depository, the
Custodian will enforce, for the benefit of the Fund, the Custodian's rights
against the Depository in connection with any of the Securities of the Fund
deposited by the Custodian with the Depository. The Custodian shall credit to
the Fund's account hereunder the amount, if any, recovered by the Custodian from
or for the account of, any Depository as reimbursement for the loss of, or
damage to, any Securities deposited by the Custodian hereunder with said
Depository.
2. Without limiting the generality of the foregoing, the Custodian shall
be under no obligation to inquire into, and shall not be liable for:
(a) The validity of the issue of any Securities purchased by or for
the Fund, the legality of the purchase thereof, or the propriety of the amount
paid therefor;
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(b) The legality of the sale of any Securities by or for the Fund, or
the propriety of the amount for which the same are sold;
(c) The legality of the issue or sale of any shares of the capital
stock of the Fund, or the sufficiency of the amount to be received therefor;
(d) The legality of the redemption of any shares of capital stock of
the Fund, or the propriety of the amount to be paid therefor;
(e) The legality of the declaration or payment of any dividend by the
Fund;
(f) The legality of any borrowing by the Fund using Securities as
collateral; or
(g) The legality of any loan of portfolio Securities pursuant to
Article VIII of this Agreement, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it by a broker,
dealer, or financial institution or held by it at any time as a result of such
loan of portfolio Securities of the Fund is adequate collateral for the Fund
against any loss it might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under any duty or
obligation periodically to check or notify the Fund that the amount of such cash
collateral held by it for the Fund is sufficient collateral for the Fund, but
such duty or obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to see that any
broker, dealer or financial institution to which portfolio Securities of the
fund are lent pursuant to Article VIII of this Agreement makes payment to it of
any dividends or interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such loan, provided,
however, that the Custodian shall promptly notify the Fund in the event that
such dividends or interest are not paid and received when due.
3. The Custodian shall not be liable for, or considered to be the
Custodian of, any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the Fund
until the Custodian actually receives and collects such money directly or by the
final crediting of the account representing the Fund's interest at the Book-
Entry System or the Depository.
4. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount due to the Fund from the Transfer Agent of
the Fund nor to take any action to effect payment or distribution by the
Transfer Agent of the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
5. The Custodian shall not be under any duty or obligation to take action
to effect collection of any amount, if the Securities upon which such amount is
payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of reimbursement of
its costs and expenses in connection with any such action.
6. The Custodian may appoint one or more banking institutions as
Depository or Depositories or as Sub-Custodian or Sub-Custodians, including, but
not limited to, banking
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institutions located in foreign countries, of Securities and moneys at any time
owned by the Fund, upon terms and conditions approved in a Certificate.
7. The Custodian shall not be under any duty or obligation to ascertain
whether any Securities at any time delivered to or held by it for the account of
the Fund are such as properly may be held by the Fund under the provisions of
its Articles of Incorporation.
8. The Custodian shall be entitled to receive and the Fund agrees to pay
to the Custodian all out-of-pocket expenses and such compensation as may be
agreed upon from time to time between the Custodian and the Fund. The Custodian
may charge such compensation and any expenses incurred by the Custodian in the
performance of its duties pursuant to such agreement against any money held by
it for the account of the Fund. The Custodian shall also be entitled to charge
against any money held by it for the account of the Fund the amount of any loss,
damage, liability or expense, including counsel fees, for which it shall be
entitled to reimbursement under the provisions of this Agreement. The expenses
which the Custodian may charge against the account of the Fund include, but are
not limited to, the expenses of Sub-Custodians and foreign branches of the
Custodian incurred in settling outside of New York City transactions involving
the purchase and sale of Securities of the Fund.
9. The Custodian shall be entitled to rely upon any Certificate, notice
or other instrument in writing received by the Custodian and reasonably believed
by the Custodian to be a Certificate. The Custodian shall be entitled to rely
upon any Oral Instructions and any Written Instructions actually received by the
Custodian pursuant to Articles IV or V hereof. The Fund agrees to forward to the
Custodian a Certificate or facsimile thereof confirming such Oral Instructions
or Written Instructions in such manner so that such Certificate or facsimile
thereof is received by the Custodian, whether by hand delivery, telecopier or
other similar device, or otherwise, by the close of business of the same day
that such Oral Instructions or Written Instructions are given to the Custodian.
The Fund agrees that the fact that such confirming Certificate or facsimile
thereof is not received by the Custodian shall in no way affect the validity of
the transactions or enforceability of the transactions hereby authorized by the
Fund. The Fund agrees that the Custodian shall incur no liability to the Fund in
acting upon Oral Instructions or Written Instructions given to the Custodian
hereunder concerning such transactions provided such instructions reasonably
appear to have been received from an Authorized Person.
10. The books and records pertaining to the Fund which are in the
possession of the Custodian shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the Investment Company
Act of 1940, as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives, shall have
access to such books and records during the Custodian's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Custodian to the Fund or the Fund's authorized
representative at the Fund's expense.
11. The Custodian shall promptly provide the Fund with any report obtained
by the Custodian on the system of internal accounting control of the Book-Entry
System or the Depository and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time to time.
11
<PAGE>
12. The Fund agrees to indemnify the Custodian against and save the
Custodian harmless from all liability, claims, losses and demands whatsoever,
including attorney's fees, howsoever arising or incurred because of or in
connection with the Custodian's payment or non-payment of checks pursuant to
paragraph 6 of Article VI as part of any check redemption privilege program of
the Fund, except for any such liability, claim, loss and demand arising out of
the Custodian's own negligence or willful misconduct.
13. The Custodian shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set forth in this
Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE X
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to
the other party a notice in writing specifying the date of such termination,
which shall be not less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it shall be accompanied
by a copy of a resolution of the board of Directors of the Fund, certified by
the Secretary or any Assistant Secretary, electing to terminate this Agreement
and designating a successor custodian or custodians, each of which shall be a
bank or trust company having not less than $2,000,000 aggregate capital, surplus
and undivided profits. In the event such notice is given by the Custodian, the
Fund shall, on or before the termination date, deliver to the Custodian a copy
of a resolution of its Board of Directors, certified by the Secretary or any
Assistant Secretary, designating a successor custodian or custodians. In the
absence of such designation by the Fund, the Custodian may designate a successor
custodian which shall be a bank or trust company having not less than $2,000,000
aggregate capital, surplus and undivided profits. Upon the date set forth in
such notice this Agreement shall terminate, and the Custodian shall upon receipt
of a notice of acceptance by the successor custodian on that date deliver
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian, after deducting all fees, expenses and other
amounts for the payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or the
Custodian in accordance with the preceding paragraph, the Fund shall upon the
date specified in the notice of termination of this Agreement and upon the
delivery by the Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and moneys then owned
by the Fund be deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement, other
than the duty with respect to Securities held in the Book Entry System which
cannot be delivered to the Fund to hold such Securities hereunder in accordance
with this Agreement.
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ARTICLE XI
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed by two of the
present Officers of the Fund under its corporate seal, setting forth the names
and the signatures of certain present Authorized Persons. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event that any
such present Authorized Person ceases to be an Authorized Person or in the event
that other or additional Authorized Persons are elected or appointed. Until such
new Certificate shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the present Authorized Persons as set forth in the last delivered
Certificate.
2. Annexed hereto as Appendix B is a Certificate signed by two of the
present Officers of the Fund under its corporate seal, setting forth the names
and the signatures of the present Officers of the Fund. The Fund agrees to
furnish to the Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an Officer of the Fund, or in the event that other
or additional Officers are elected or appointed. Until such new Certificate
shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon the signatures of the Officers as set forth in
the last delivered Certificate.
3. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the custodian and mailed to it at its offices at 7335 E. Doubletree
Ranch Road, Scottsdale, Arizona 85258, or at such other place as the Custodian
may from time to time designate in writing.
4. Any notice or other instrument in writing, authorized or required by
this Agreement to be given to the Fund shall be sufficiently given if addressed
to the Fund and mailed or delivered to it at its office at 4400 North 32nd
Street, Suite 280, Phoenix, Arizona 85018 or at such other place as the Fund may
from time to time designate in writing.
5. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties with the same formality as this
Agreement and approved by a resolution of the Board of Directors of the Fund.
6. This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns; provided, however, that
this Agreement shall not be assignable by the Fund without the written consent
of the Custodian, or by the Custodian without the written consent of the Fund,
authorized or approved by a resolution of its Board of Directors.
7. This Agreement shall be construed in accordance with the laws of the
State of Arizona.
8. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate Officers, thereunto duly authorized and
their respective corporate seals to be hereunto affixed, as of the day and year
first above written.
Papp Focus Fund, Inc.
By /s/ L. Roy Papp
---------------------------------
L. Roy Papp
Chairman
Attest:
/s/ Robert L. Mueller
- ----------------------------
Secretary
Founders Bank of Arizona
By /s/ William J. Foy
---------------------------------
William J. Foy
Sr. Vice President
Attest:
/s/ [Signature Illegible]
- ------------------------------
Vice President
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<PAGE>
APPENDIX A
We, L. Roy Papp, Chairman, and Robert L. Mueller, Secretary, of Papp Focus
Fund, Inc., a Maryland corporation (the "Fund"), do hereby certify that the
following individuals have been duly authorized by the Board of Directors of the
Fund, in conformity with the Fund's Articles of Incorporation and Bylaws, to
give Oral Instructions and Written Instructions on behalf of the Fund, and the
signatures set forth opposite their respective names are their true and correct
signatures:
Name Signatures
- ---------------------------- ----------------------------
L. Roy Papp /s/ L. Roy Papp
----------------------------
Harry A. Papp /s/ Harry A. Papp
----------------------------
Robert L. Mueller /s/ Robert L. Mueller
---------------------------
Rosellen C. Papp /s/ Rosellen C. Papp
----------------------------
Bruce C. Williams /s/ Bruce C. Williams
----------------------------
Julie A. Hein /s/ Julie A. Hein
----------------------------
/s/ L. Roy Papp
----------------------------
L. Roy Papp, Chairman
/s/ Robert L. Mueller
----------------------------
Robert L. Mueller, Secretary
15
<PAGE>
APPENDIX B
We, L. Roy Papp, chairman, and Robert L. Mueller, secretary, of Papp Focus
Fund, Inc., a Maryland corporation ("the Fund") do hereby certify that the
following individuals serve in the positions with the Fund set forth below their
respective names and have been duly elected by the Board of Directors of the
Fund to such positions and qualified therefor in conformity with the Fund's
Articles of Incorporation and Bylaws, and the signatures set forth opposite
their respective names are their true and correct signatures:
Name Signatures
- ------------------------------------ ----------------------------
L. Roy Papp /s/ L. Roy Papp
Chairman ----------------------------
Harry A. Papp /s/ Harry A. Papp
President ----------------------------
Robert L. Mueller /s/ Robert L. Mueller
Vice President and Secretary ----------------------------
Rosellen C. Papp /s/ Rosellen C. Papp
Vice President and Treasurer ----------------------------
Bruce C. Williams /s/ Bruce C. Williams
Vice President ----------------------------
Julie A. Hein /s/ Julie A. Hein
Vice President & Assistant Treasurer ----------------------------
/s/ L. Roy Papp
----------------------------
L. Roy Papp, Chairman
/s/ Robert L. Mueller
----------------------------
Robert L. Mueller, Secretary
16
<PAGE>
FEE SCHEDULE
Effective on the date of this Agreement, compensation payable by the Fund
to Founders Bank of Arizona (the "Custodian") pursuant to Article IX-8 of the
Custody Agreement between the Fund and the Custodian dated as of January 1, 1998
shall be as follows:
ANNUAL BASE FEE $1,750.00
PLUS:
Annual charge for each issue held $ 25.00
Charge for each transaction $ 50.00
Charge for each outgoing wire transfer
directed by a Fund authorized person,
and for each incoming wire transfer
received for the account of the Fund $ 4.00
Transactions are defined as a purchase, a sale, a call or a maturity.
It is understood that additional fees, as agreed to between Custodian and
Fund, may become payable by Fund should Fund engage in certain activities,
including but not limited to, the lending of portfolio securities of the Fund,
which result in the incurring of additional expenses by the Custodian.
Approved:
Papp Focus Fund, Inc.
By: /s/ Robert L. Mueller
---------------------------
Vice President
Founders Bank of Arizona
By: /s/ William J. Foy
------------------------
Sr. Vice President
<PAGE>
EXHIBIT 9
TRANSFER AGENCY AGREEMENT
L. ROY PAPP & ASSOCIATES, an Arizona partnership (The "Transfer Agent"),
and PAPP FOCUS FUND, INC., a Maryland corporation registered with the Securities
and Exchange Commission as an open-end investment company (the "Fund"), agree
that:
1. Definitions. Whenever used in this agreement, the following words and
phrases, unless the context otherwise requires, have the following meanings:
(a) "Articles of Incorporation" means the Articles of Incorporation of the
Fund as they may be amended from time to time;
(b) "Authorized Person" includes the Chairman, the President, any Vice
President, the Secretary or any Assistant Secretary, the Treasurer or any
Assistant Treasurer, of the Fund, or any other person, whether or not such
person is an Officer or employee of the Fund, duly authorized to give Oral
Instructions and Written Instructions on behalf of the Fund as indicated in a
certification pursuant to Section 6(d) or 6(e) as may be received by the
Transfer Agent from time to time;
(c) "Certificate" means any notice, instruction or other instrument in
writing, authorized or required by this agreement to be given to the Transfer
Agent, which is actually received by the Transfer Agent and signed on behalf of
the Fund by any two Officers thereof;
(d) "Commission" means the Securities and Exchange Commission;
(e) "Custodian" means the custodian of the securities and moneys owned by
the Fund, which is to be Founders Bank of Arizona unless and until the Transfer
Agent shall receive a certificate otherwise;
(f) "Directors" means the duly elected Directors of the Fund; "Board of
Directors" means the Board of Directors of the Fund;
(g) "Fund" means Papp Focus Fund, Inc., a Maryland corporation;
(h) The "1940 Act" means the Investment Company Act of 1940 and the Rules
and Regulations of the Commission thereunder;
(i) "Officer" means the Chairman, the President, and Vice President, the
Secretary and the Treasurer of the Fund;
(j) "Oral Instructions" means instructions orally communicated and actually
received by the Transfer Agent from an Authorized Person or from a person
reasonably believed by the Transfer Agent to be an Authorized Person;
(k) "Prospectus" means the prospectus of the Fund relating to the Fund's
Shares that became effective most recently under the Securities Act of 1933, and
as it may subsequently have been supplemented;
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(l) "Shares" means capital stock, $.01 par value per share, of the Fund;
(m) "Shareholder" means registered owner of Shares;
(n) "Written Instruction" means a written communication actually received
by the Transfer Agent from an Authorized Person or from a person reasonably
believed by the Transfer Agent to be an Authorized Person by telex or any other
such system whereby the receiver of such communication is able to verify through
codes or otherwise with a reasonable degree of certainty the authenticity of the
sender of such communication;
2. Representation of Transfer Agent. The Transfer Agent does hereby
represent and warrant to the Fund that it is duly registered as a transfer agent
as provided in section 17A(c) of the Securities Exchange Act of 1934, as
amended.
3. Appointment of the Transfer Agent. The Fund appoints the Transfer Agent
as transfer agent for all of the Shares and as shareholder servicing agent for
the Fund. The Transfer Agent accepts such appointments and agrees to perform
the duties herein set forth.
4. Compensation.
(a) The Fund shall compensate the Transfer Agent for its services rendered
under this agreement in accordance with the fees set forth in the fee schedule
annexed hereto and incorporated herein.
(b) The compensation agreed to hereunder may be adjusted from time to time
by attaching a revised fee schedule, dated and signed by an Officer of each
party hereto, to this agreement.
(c) The Transfer Agent shall present a bill to the Fund as soon as
practicable after the end of each calendar month, detailed in accordance with
the fee schedule. The Fund shall promptly pay to the Transfer Agent the amount
of such billing.
5. Documents. In connection with the appointment of the Transfer Agent,
the Fund shall, on or before the date this Agreement goes into effect, file with
the Transfer Agent a copy of each of the following documents:
(a) The Articles of Incorporation, as then in effect;
(b) The bylaws of the Fund, as then in effect;
(c) The resolution of the Board of Directors authorizing this agreement;
(d) All account application forms and other documents relating to
shareholder accounts or relating to any plan, program or service offered by the
Fund relating to the sale, holding or redemption of Shares.
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<PAGE>
6. Further Documentation. The Fund shall also furnish from time to time a
copy of each of the following documents:
(a) Each registration statement filed with the Commission, and all related
amendments and orders relating to the sale of Shares;
(b) Each amendment to the Articles of Incorporation and to the bylaws of
the Fund;
(c) Copies of each resolution of the Directors designating Authorized
Persons to give instructions to the Transfer Agent;
(d) A certificate of any change in any Officer or Director of the Fund;
(e) Such other certificates, documents or opinions as may mutually be
deemed necessary or appropriate for the Transfer Agent in the proper performance
of its duties.
7. Representations of the Fund. The Fund represents to the Transfer Agent
that, as of the date of this agreement, it is authorized to issue 25,000,000
Shares. When Shares are hereafter issued in accordance with the terms of sale
in the Prospectus, such Shares shall be validly issued, full paid and
nonassessable by the Fund.
8. Duties of the Transfer Agent.
(a) The Transfer Agent shall be responsible for administering and
performing the functions required for the Shares, for acting as service agent in
connection with dividends and distributions on the Shares, and for performing
shareholder account administrative agent functions in connection with the
issuance, transfer and redemption or repurchase (including coordination with the
Custodian) of the Shares. The details of the operating standards and procedures
to be followed shall be determined from time to time by agreement between the
Transfer Agent and the Fund, and where appropriate, the Custodian.
(b) The Transfer Agent shall create and maintain all necessary records
including those specified in Section 17 hereof, in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and those records pertaining to the
various functions performed by it hereunder. All records shall be available for
inspection and use by the Fund, including after termination of this agreement.
Where applicable, such records shall be maintained by the Transfer Agent for the
periods and in the places required by Rule 31a-2 under the 1940 Act.
(c) The Transfer Agent shall make available during regular business hours
all records and other data created and maintained pursuant to this agreement,
for reasonable audit and inspection by the Fund and any person retained by the
Fund. Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours its facilities and premises employed in
connection with its performance of this agreement for reasonable visitation by
the Fund and any person retained by the Fund.
3
<PAGE>
(d) The Transfer Agent shall maintain records of the name of each
registered owner of Shares, the number of Shares (to the nearest one-thousandth
of a Share) owned by such registered owner and in the aggregate by all
registered owners and, to the extent it is able to do so, the address and tax
identification number of each registered owner. The Transfer Agent shall
maintain a stop transfer record when necessary.
(e) The Transfer Agent shall address and mail all communications by the
Fund to its Shareholders, including reports to Shareholders, dividend and
distribution notices, and notices of and proxy materials for meetings of
Shareholders.
(f) The Transfer Agent shall investigate all Shareholder inquiries relating
to accounts of the respective Shareholders, and shall answer all correspondence
from Shareholders, and to the extent appropriate, from securities brokers and
others, relating to its duties hereunder, and such other correspondence as may
from time to time be mutually agreed upon between the Transfer Agent and the
Fund.
(g) The Transfer Agent shall furnish the Fund with reports of registration
of ownership of Shares, such periodic and special reports as the Fund may
reasonably request and the Transfer Agent can reasonably provide, and such other
information, including Shareholder lists and statistical information concerning
Shareholder accounts, as may be agreed upon from time to time between the Fund
and the Transfer Agent.
(h) In connection with special and annual meetings of Shareholders, the
Transfer Agent shall prepare lists of Shareholders, shall mail to the
Shareholders notices of the meetings and proxy materials, shall furnish to the
Fund affidavits of such mailings, shall process and tabulate the voting
instructions of the proxies returned by or for Shareholders, shall report to the
Fund on such returns and tabulations, shall report at each meeting on the number
of Shares represented at the meeting by proxy and, separately, by Shareholders
in person, shall act as teller at the meeting, and shall certify the voting of
holders of Shares.
9. Sales of Fund Shares.
(a) Whenever the Fund shall sell any of its Shares, the Fund shall deliver
or cause to be delivered to the Transfer Agent a Certificate duly specifying:
(i) the number of Shares sold, trade date and price per Share and the total
price; (ii) the amount of money to be delivered to the Custodian from the sale
of such Shares; and (iii) in the case of a new account, a new account
application or sufficient information with which to establish an account.
(b) The Transfer Agent shall, upon receipt by it of a check or other medium
of payment identified by it as funds or a claim of funds in payment of the
purchase price for sales of Shares (and where required, payable or endorsed to
the Transfer Agent as agent for, or identified as being for the account of, the
Fund), promptly deposit such check or other payment to the appropriate account
postings necessary to reflect the sale according to arrangements to be made
between it and the Custodian. The Transfer Agent will notify the Fund, or its
designee, and the Custodian of all purchases and related account adjustments.
4
<PAGE>
(c) Upon receipt of the notification required under paragraph (a) hereof,
the Transfer Agent shall issue to the purchaser a confirmation of the
information received under paragraph 9(a) (including, if needed, a request for
additional information needed for the account records).
(d) Upon the issuance of any Shares in accordance with the foregoing
provisions of this Section, the Transfer Agent shall not be responsible for the
payment of any original issue or other taxes required to be paid by the Fund in
connection with such issuance.
(e) The Transfer Agent may establish such additional rules and regulations
governing the transfer or registration of certificates for Shares as it may deem
advisable and as are consistent with rules and regulations generally adopted by
bank transfer agents, except as it may be instructed otherwise by an Officer.
10. Failure of Payment. In the event that any check or other order for
the payment of the price of Shares sold by the Fund is for any reason not paid
upon demand for payment, the Transfer Agent will: (i) give prompt notice to the
Fund or its designee of such failure of payment; (ii) place a stop transfer
order against all Shares that were to have been issued in consideration for such
failed payment; and (iii) take such other steps as the Transfer Agent may, in
its discretion, deem appropriate or as the Fund or its designee may instruct.
11. Redemptions. The Transfer Agent shall duly process demands by
Shareholders for redemption of Shares only in accordance with the requirements
and procedures set forth in the Prospectus, except as and to the extent waived
or otherwise specified by an Officer in any individual redemption.
12. Transfers and Exchanges. The Transfer Agent shall duly process
transfers of registered ownership of Shares only in accordance with the
requirements and procedures set forth in the Prospectus applicable to
redemptions (modified, if necessary, to accommodate any difference in a transfer
from a redemption), except as and to the extent waived or otherwise specified by
an Officer in any individual transaction.
13. Right to Seek Assurances. The Transfer Agent reserves the right not
to process a transfer or redemption of Shares until it is satisfied that the
requested transfer or redemption is legally authorized, and it shall incur no
liability for the refusal, in good faith, to make transfers or redemptions which
the Transfer Agent, in its judgment, deems improper or unauthorized, or until it
is satisfied that there is no basis for any claims adverse to such transfer or
redemption. The Transfer Agent may, in effecting transfers, rely upon the
provisions of the Uniform Act for the Simplification of Fiduciary Security
Transfers of Arizona or the Uniform Commercial Code of Arizona, as they may be
amended from time to time, which in the opinion of legal counsel for the Fund or
of its own legal counsel protect it in not requiring certain documents in
connection with the transfer or redemption of Shares, and the Fund shall
indemnify the Transfer Agent for any act done or omitted by it in reliance upon
such laws or opinions of counsel of the Fund or of its own counsel.
5
<PAGE>
14. Distributions.
(a) The Fund shall promptly notify the Transfer Agent of the declaration of
any dividend or other distribution on Shares. The Fund shall furnish to the
Transfer Agent a resolution of the Board of Directors certified by the Secretary
declaring a dividend or distribution of a specified amount per Share or in the
aggregate, the medium of payment if payable other than in United States dollars,
and the record date and the payable date of the distribution if the declaration
was in an aggregate amount. In the event that the amount of the dividend or
distribution is declared in the aggregate, then promptly after the record date a
Certificate will be furnished to the Transfer Agent stating the per share
equivalent of the aggregate amount as of the record date.
(b) The Transfer Agent shall, on or before the payable date of any dividend
or distribution, notify the Custodian of the estimated amount of cash required
to pay the dividend or distribution, and the Fund agrees that, on or before the
mailing date of such dividend or distribution, it shall instruct the Custodian
to place in a dividend disbursing account funds equal to the cash amount to be
paid. As of the first calendar day after the record date, the Transfer Agent
shall record in the Share accounts of those registered Shareholders whose
dividends or distributions are to be reinvested in Shares the number and price
of the Shares so acquired priced at the applicable net asset value. The
Transfer Agent shall calculate, prepare and mail checks to Shareholders whose
dividends and other distributions are to be received by them in money.
(c) The Transfer Agent shall replace lost checks upon receipt of properly
executed affidavits, and will maintain stop payment orders against replaced
checks.
(d) The Transfer Agent shall not be liable for the propriety of payments
made in accordance with the resolutions of the Board of Directors.
(e) If the Transfer Agent does not receive from the Custodian sufficient
cash to make payment to all Shareholders as of the record date, the Transfer
Agent shall, upon notifying the Fund, withhold payment to all Shareholders of
record as of the record date until such sufficient cash is provided to the
Transfer Agent.
15. Other Duties. In addition to the duties expressly provided for
herein, the Transfer Agent shall perform such other duties and functions and
shall be paid such amounts therefore as may from time to time be agreed in
writing.
16. Taxes. The Transfer Agent shall file such appropriate information
returns concerning the payment of dividends and capital gains distributions with
the proper Federal, state and local authorities as are required by law to be
filed by the Fund and shall withhold such sums as are required to be withheld by
applicable law.
6
<PAGE>
17. Books and Records.
(a) The Transfer Agent shall maintain records showing for each
Shareholder's account the following: (i) names, addresses and tax identification
numbers; (ii) numbers of shares held; (iii) historical information regarding the
account of each Shareholder, including dividends paid and date and price of all
transactions on a Shareholder's account; (iv) any stop or restraining order
placed against a Shareholder's account; (v) information on withholdings; (vi)
any capital gain or dividend reinvestment order, plan application, dividend
address and correspondence relating to the current maintenance of a
Shareholder's account; (vii) any information required in order for the Transfer
Agent to perform the calculations contemplated or required by this agreement;
and (viii) such other information and data as may be required by law.
(b) Any records required to be maintained by Rule 31a-1 under the 1940 Act
will be preserved for the periods prescribed in Rule 31a-2 under the 1940 Act.
Such records may be inspected by the Fund at reasonable times. The Transfer
Agent may, at its option at any time, and shall forthwith upon the Fund's
demand, turn over to the Fund and cease to retain in the Transfer Agent's files,
records and documents created and maintained by the Transfer Agent in
performance of its services or for its protection.
18. Reliance by Transfer Agent; Instructions
(a) The Transfer Agent shall be protected in acting upon any paper or
document believed by it to be genuine and to have been signed by an Authorized
Person, and shall not be held to have any notice of any change of authority of
any person until receipt of written certification thereof from the Fund. It
shall also be protected in processing Share certificates that it reasonably
believes to bear the proper manual or facsimile signatures of the Officers of
the Fund, but shall be responsible for the proper countersignature of the
Transfer Agent.
(b) At any time the Transfer Agent may apply to any Authorized Person of
the Fund for Written Instructions, and at the expense of the Fund, may seek
advice from legal counsel for the Fund or its own legal counsel, with respect to
any matter arising in connection with this agreement, and it shall not be liable
for any action taken or not taken or suffered by it in good faith in accordance
with such Written Instructions or with the opinion of such counsel and, apart
from that, in the exercise of reasonable care. In addition, the Transfer Agent,
its officers, agents or employees, shall accept instructions or requests given
to them by any person representing or acting on behalf of the Fund only if said
representative is known by the Transfer Agent, its officers, agents or
employees, to be an Authorized Person. The Transfer Agent shall have no duty or
obligation to inquire into, nor shall the Transfer Agent be responsible for, the
legality of any act done by it upon the request or direction of Authorized
Persons of the Fund.
(c) Notwithstanding any of the foregoing provisions of this agreement, the
Transfer Agent shall be under no duty or obligation to inquire into, and shall
not be liable for: (i) the legality of the issue or sale of any Shares of the
Fund, nor the sufficiency of the amount to be received therefor; (ii) the
legality of the redemption of any Shares of the Fund, nor the propriety of the
amount to be paid therefor; (iii) the legality of the declaration of any
dividend by the Fund, nor the legality of the issue of any dividend by the Fund,
nor the legality of the issue of any Shares
7
<PAGE>
of the Fund in payment of any stock dividend; or (iv) the legality of any
recapitalization or readjustment of the Shares of the Fund.
19. Standard of Care and Indemnification.
(a) The Transfer Agent may, in connection with this agreement, employ
agents or attorneys in fact, or both, and shall not be liable for any loss
arising out of or in connection with its actions (which includes the actions of
its agents and attorneys in fact) under this agreement so long as it (which
includes its agents and attorneys in fact) acts in good faith and with due
diligence, and is not negligent or guilty of any willful misconduct.
(b) The Fund hereby agrees to indemnify and hold harmless the Transfer
Agent from and against any and all claims, demands, expenses and liabilities
(whether with or without basis in fact or law) of any and every nature which the
Transfer Agent may sustain or incur or which may be asserted against the
Transfer Agent by any person by reason of, or as a result of: (i) any action
taken or omitted to be taken by the Transfer Agent in good faith in reliance
upon any Certificate, instrument, order or stock certificate believed by it to
be genuine and to be signed, countersigned or executed by any duly authorized
person, upon the Oral Instructions or Written Instructions of an Authorized
Person of the Fund or upon the opinion of legal counsel for the Fund or its own
counsel; or (ii) any action taken or omitted to be taken by the Transfer Agent
in good faith in reliance upon any law, act, regulation or interpretation of the
same even though the same may thereafter have been altered, changed, amended or
repealed. However, indemnification hereunder shall not apply to actions or
omissions of the Transfer Agent or its partners, employees or agents in case of
its own negligence, willful misconduct, bad faith, or reckless disregard of its
or their own duties hereunder.
(c) The Transfer Agent hereby agrees to indemnify and hold harmless the
Fund from and against any and all claims, demands, expenses and liabilities
(whether with or without basis in fact or law) of any and every nature which the
Fund may sustain or incur or which may be asserted against the Fund by any
person by reason of, or as a result of, the negligence or misconduct of the
Transfer Agent or its agents or contractors. However, indemnification hereunder
shall not apply to actions or omissions of the Fund or its directors, officers,
employees or agents in case of its own negligence, willful misconduct, bad
faith, or reckless disregard of its own or their own duties hereunder.
20. Affiliation Between Fund and Transfer Agent. It is understood that
the partners and employees of the Transfer Agent may be interested in the Fund
as directors, officers, employees, agents, Shareholders, or otherwise. The fact
that any officer, director, employee, agent or Shareholder (or two or more of
them) of the Fund is or may be an affiliated person (as defined in the 1940 Act)
of the Transfer Agent shall not affect the validity of this agreement.
21. Term.
(a) This agreement shall become effective on the date on which the Fund's
registration of its shares under the Securities Act of 1933 on form N-1A No.
333-___________ becomes effective under that Act (the "Effective Date") and
shall continue in effect from year to year
8
<PAGE>
thereafter, on and after March 20, 2000, so long as such continuance is
specifically approved at least annually both (i) by either the Board of
Directors, or by the vote of a majority of the outstanding voting securities of
the Fund (as defined in the 1940 Act), and (ii) by a vote of the majority of the
Directors who are not interested persons of the Fund (as defined in the 1940
Act), voting in person at a meeting of the Board of Directors called for the
purpose of voting on such approval.
(b) This agreement may be terminated at any time, without payment of
penalty, by the Board of Directors of the Fund, or by a vote of the holders of a
majority of the outstanding voting securities of the Fund, on not more than 60
days' written notice to the Transfer Agent. In the event such notice is given
by the Fund, it shall be accompanied by a resolution of the Board of Directors
certified by the Secretary, electing to terminate this agreement and designating
a successor transfer agent. This agreement may be terminated by the Transfer
Agent at any time upon 60 days' written notice to the Fund. This agreement
shall terminate automatically in the event of its assignment (as defined in
Section 2(a)(4) of the 1940 act).
22. Amendment. This agreement may not be amended or modified in any
manner except by a written agreement executed by both parties to this agreement,
and approved in the manner required by subparagraph 21(a) for the continuation
of the agreement.
23. Subcontracting. The Fund agrees that Transfer Agent may, in its
discretion, subcontract for certain of the services to be provided hereunder;
provided, however, that the Transfer Agent shall continue to be responsible to
the Fund for the performance of those services to the extent specified in this
agreement.
24. Security. The Transfer Agent represents and warrants that, to the
best of its knowledge, the various procedures and systems which the Transfer
Agent has implemented with regard to safeguarding from loss or damage
attributable to fire, theft or any other cause (including provision for twenty-
four hours a day restricted access) the Fund's blank checks, records and other
data and the Transfer Agent's records, data, equipment, facilities and other
property used in the performance of its obligations hereunder are adequate and
that it will make such changes therein from time to time as in its judgment are
required for the secure performance of its obligations hereunder. The parties
shall review such systems and procedures on a periodic basis.
25. Confidentiality of Records. The Transfer Agent agrees not to disclose
any information received from the Fund to any person except the Transfer Agent's
employees and agents, and shall use its best efforts to maintain such
information as confidential. Upon termination of this agreement, the Transfer
Agent shall return to the Fund all records in the possession and control of the
Transfer Agent related to the Fund's activities, other than the Transfer Agent's
own business records.
26. Miscellaneous.
(a) This agreement shall be construed in accordance with the laws of the
State of Arizona.
9
<PAGE>
(b) This agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original: but such counterparts shall, together,
constitute only one instrument.
Dated December 17, 1997
L. ROY PAPP & ASSOCIATES
By: /s/ L. Roy Papp
----------------------------------------
L. Roy Papp, a general partner
PAPP FOCUS FUND, INC.
By: /s/ Harry A. Papp
----------------------------------------
Harry A. Papp, President
10
<PAGE>
FEE SCHEDULE
Commencing on the date shares of Papp Focus Fund, Inc. (the "Fund") are
first offered for sale to the public, compensation payable by the Fund to L. Roy
Papp & Associates (the "Transfer Agent") pursuant to Section 4 of the Transfer
Agency agreement between the Fund and the Transfer Agent dated December 17, 1997
shall be as follows:
<TABLE>
<S> <C>
Monthly fee per Shareholder account $ .75
Fee per Shareholder-initiated transaction--
purchase (other than by reinvestment in Fund
shares) transfer or redemption 1.00
Fee per account for dividend or distribution paid
(other than by reinvestment in Fund shares) .50
</TABLE>
There is no charge for the processing changes in account information or for
furnishing information with respect to any account, and there is no charge for
opening a new account other than the $1 fee assessed for the initial purchase.
A dividend and distribution payable on the same date shall result in the
imposition of only one fee per account. The full monthly account fee will be
payable on an account that is open for any portion of a month. It is understood
that the Transfer Agent will make no charges for its services hereunder until
January 1, 2000.
Approved:
PAPP FOCUS FUND, INC. L. ROY PAPP & ASSOCIATES
By: /s/ Harry A. Papp By: /s/ L. Roy Papp
--------------------------- -------------------------
President a general partner
11
<PAGE>
EXHIBIT 13
Papp Focus Fund, Inc.
Subscription Agreement
----------------------
1. Subscription for Shares. I agree to purchase from Papp Focus Fund,
Inc. 10,000 shares of capital stock of the Fund for a price of $10 per share, on
the terms and conditions set forth herein and in the preliminary prospectus
described below, and agree to tender $100,000 in payment therefor at such time
as the board of directors or the president determines.
I understand that the Fund filed a registration statement with the
Securities and Exchange Commission on Form N-1A, which contains the preliminary
prospectus describing the Fund and the stock. I acknowledge receipt of a copy of
the preliminary prospectus.
I recognize that the Fund will not be fully operational until it commences
a public offering of its shares. Accordingly, a number of features of the Fund
described in the preliminary prospectus, including, without limitation, the
declaration and payment of dividends, and redemption of shares upon request of
shareholders, are not, in fact, in existence at the present time and will not be
instituted until the Fund's registration statement becomes effective under the
Securities Act of 1933.
2. Representations and Warranties. I represent and warrant as follows:
(a) I am aware that no federal or state agency has made any finding
or determination as to the fairness for investment, nor any recommendation
nor endorsement, of the shares:
(b) I have such knowledge and experience of financial and business
matters as will enable me to utilize the information made available to me
in connection with the offering of the shares to evaluate the merits and
risks of the prospective investment and to make an informed investment
decision;
(c) I recognize that the Fund has only recently been organized and
has no financial or operating history and, further, that investment in the
Fund involves certain risks, and I have taken full cognizance of and
understand all of the risks related to the purchase of the shares and I
acknowledge that I have suitable financial resources and anticipated income
to bear the economic risk of such an investment;
(d) I am purchasing the shares for my own account, for investment,
and not with any intention of redemption, distribution, or resale of the
shares, either in whole or in part;
(e) I will not sell the shares purchased by me without registration
of them under the Securities Act of 1933 or exemption therefrom;
<PAGE>
(f) I have been furnished with and have read this agreement, the
preliminary prospectus and such other documents relating to the Fund as I
have requested and as have been provided to me by the Fund;
(g) I have also had the opportunity to ask questions of, and receive
answers from, officers of the Fund concerning the Fund and the terms of the
offering.
3. Rejection of Subscription. I recognize that the Fund reserves the
right to reject or limit any subscription.
4. Social Security Number. I certify under penalties of perjury that the
number shown on this form is my correct social security number and that I am not
subject to backup withholding as result of a failure to report all interest and
dividend income to the Internal Revenue Service.
L. Roy Papp ###-##-####
- ------------------------------------- -------------------------------------
(Name please print) (Social Security Number)
4400 North 32nd Street, Suite 280, Phoenix, Arizona 85018
- --------------------------------------------------------------------------------
(Address)
Dated: January 5, 1998 /s/ L. Roy Papp
-----------------------------
(Signature)
2
<PAGE>
[Logo appears here]
EXHIBIT 19
PAPP FOCUS FUND, INC.
4400 North 32nd Street
Suite 280
NEW ACCOUNT PURCHASE APPLICATION PHOENIX, ARIZONA 85018
(602) 956-1115
(800) 421-4004
Dated: ________________________
Make checks payable to, and mail to: Papp Focus Fund, Inc., 4400 North 32nd
Street, Suite 280, Phoenix, AZ 85018
................................................................................
1 AMOUNT OF PURCHASE: $_________ ($5,000 minimum for new account, except for
Individual Retirement Accounts (IRAs) where the minimum is $1,000)
................................................................................
2 REGISTRATION: (check one)
[ ] Individual or
Joint Account: _________________________ ___________________________
(Individual) (Joint Tenant, if any)
[ ] Transfer (or Gift) to Minor:________________, Custodian for_________________
(Custodian) (Minor)
Under the Uniform Transfers (or Gifts) to Minors Act of ____________________
(State of residence)
[ ] IRA:__________________________________ Custodian for ______________________
(Institutional Custodian Required) (Individual)
IRA IRA Rollover (circle one)
[ ] Other: (Corporations, Trusts, or others): __________________________________
(Trustee(s) - please include agreement date,
___________________________________
corporation, partnership or other entity)
________________________________________________________________________________
................................................................................
3 ADDRESS OF RECORD: ______________________________________________________
City__________________ State____________ Zip_______ Telephone ( ) _____________
4 CITIZENSHIP: [ ] United States [ ] Other (specify) _____________________
................................................................................
5 SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER: _______________________________
Page 1 of 2
(Please complete both sides of this application)
<PAGE>
NEW ACCOUNT PURCHASE APPLICATION
6 DISTRIBUTIONS - Dividends and capital gain distributions will be reinvested
automatically in additional shares (whole and fractional) unless the Fund is
otherwise instructed in writing. If you wish all or a portion of distributions
to be paid in cash, please so indicate.
[ ] Pay income dividends [ ] Pay any capital gains
in cash distributions in cash
................................................................................
7 AGREEMENT - By signing this Application, I certify that I have received and
read the prospectus and agree to its terms and that all information provided in
the Application is correct.
................................................................................
8 TAX CERTIFICATIONS - Under penalties of perjury, I certify that:
1. the number shown on this Application is my correct Social Security or other
tax identification number (or I am waiting for a number to be issued to me),
and
2. I am not subject to backup withholding, either because the IRS has not
notified me that I am subject to backup withholding for failure to report
dividend or interest income, or because the IRS has notified me that I am no
longer subject to backup withholding.
The IRS does not require your consent to any provision of this document other
than the certifications required to avoid backup withholding (under the heading
"Tax Certifications").
................................................................................
SIGNATURE:
-------------------------- ------------------------------------
(signature of shareholder) (signature of joint investor, if any)
................................................................................
Each transaction in your account will be confirmed in writing. The Fund does not
issue stock certificates. All full and fractional shares are held in book entry
form.
Page 2 of 2
(Please complete both sides of this application)
