FILE NO. 2-85791
FILE NO. 811-3823
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. ____ /_/
Post Effective Amendment No. 19 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
Amendment No. 20
(Check appropriate box or boxes.)
BABSON ENTERPRISE FUND, INC.
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (816) 751-5900
Larry D. Armel, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective (check
appropriate box)
/_/ immediately upon filing pursuant to paragraph (b)
/_/ on (date) pursuant to paragraph (b)
/_/ 60 days after filing pursuant to paragraph (a)(1)
/X/ on March 31, 1999 pursuant to paragraph (a)(1)
/_/ 75 days after filing pursuant to paragraph (a)(2)
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/_/ This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
BABSON
Enterprise
FUND
Prospectus
March 31, 1999
A no-load mutual fund that
invests in common stocks
of smaller, faster growing
companies.
BABSON FUNDS
JONES & BABSON DISTRIBUTORS
A member of the Generali Group
<PAGE>
PROSPECTUS
March 31, 1999
BABSON
ENTERPRISE
FUND, INC.
Investment Counsel:
DAVID L. BABSON & CO., INC.
Cambridge, Massachusetts
Managed and Distributed By:
JONES & BABSON, INC.
Kansas City, Missouri
TABLE OF CONTENTS
Page
Information About the Fund
Investment Objective and
Portfolio Management Policy 2
Risk Factors 2
Past Performance 3
Fees and Expenses 4
Management and Investment Counsel 4
Financial Highlights 5
Information about Investing
Limited Offering 6
How to Purchase Shares 6
How to Redeem Shares 6
Shareholder Services 7
How Share Price is Determined 7
Dividends, Distributions and their Taxation 7
Additional Policies about Transactions 8
Conducting Business with the Babson Funds 9
The Directors of the Fund have limited the offering of the fund's shares. The
Fund will not accept any new accounts until further notice.
Shares of the Fund have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission passed upon the adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
INVESTMENT OBJECTIVE AND PORTFOLIO MANAGEMENT POLICY
The objective of Babson Enterprise Fund is long-term growth of capital for
investors. To pursue this objective, the Fund invests in common stocks of
small, faster-growing companies that are considered realistically priced. The
fund's Investment Counsel is David L. Babson & Co., Inc., which manages the
fund's portfolio under the supervision of Jones & Babson, Inc. To analyze the
pricing levels of common stocks, the Investment Counsel considers the company's
valuation history and compares the prices with other similar companies in the
same industry or economic sector. The primary valuation ratios considered are:
Price relative to earnings
Price relative to sales
Price relative to assets as measured by book value
Price relative to cash flow
The Fund generally invests its assets in stocks of small companies which are
listed on a national or regional stock exchange, or are listed over-the-counter
(on NASDAQ, for example) with prices quoted daily in the financial press. Small
companies include those that are worth between $15 million and $300 million on
the stock market (market capitalization) at the time of purchase. These small
companies are often in an early stage of development. If they are successful
they can offer the possibility of more rapid sales and profit expansion than
larger, more mature businesses.
There may be times, however, when we believe that preferred stocks, bonds or
other defensive investments are appropriate. This type of investing is not
consistent with the fund's objective of long-term growth of capital, and would
be used only in a short-term situation with the intent of preserving your
investment. Keep in mind that short-term defensive investing still has the
potential to lose money. In normal conditions, the Fund will invest at least
80% in common stocks. To manage the cash in the Fund we will invest in short-
term high quality cash obligations. The objective and policies that determine
how the Fund is managed which are described can only be changed with the fund's
shareholders' approval.
RISK FACTORS
Because of the Funds focus on small companies, you should only invest as much
of your money as you feel comfortable exposing to above-average risk for the
potential of above-average rewards. The Fund is not designed to offer a
complete or balanced investment program in itself, and it is not necessarily a
suitable choice for all investors.
Common stocks fluctuate in price. Since the Fund is comprised primarily of
common stocks, the value of the Fund will go up and down and you will make or
lose money with these fluctuations.
Generally, small and less seasoned companies have more potential for rapid
growth. However, they often involve greater risk than larger companies. They
may not have the management experience, financial resources, product
diversification and competitive strengths of larger companies. While the Fund
cannot eliminate these risks, the fund's Investment Counsel will try to
minimize risk by diversifying - spreading the risk by putting the fund's
investments into a broad range of small company stocks.
Small company stocks tend to be bought and sold less often and in smaller
amounts than larger company stocks. Because of this, if the Fund wants to sell
a large quantity of a small company stock it may have to sell at a lower price
than its Investment Counsel might prefer, or it may have to sell in small
quantities over a period of time. The Fund tries to minimize this risk by
investing in stocks that are easily bought and sold at the time of purchase.
Different types of investments shift in and out of favor depending on market
and economic conditions. At various times stocks will be more or less favorable
than bonds, and small company stocks will be more or less favorable than large
company stocks. Because of this, the Fund will perform better or worse than
other types of funds depending on what is in "favor."
Computer systems that cannot process and calculate date-related information as
of and after January 1, 2000 are a concern for financial and business
organizations around the world. We are taking steps to address the Year 2000
issue with respect to the computers we use, and have asked that our major
service providers take comparable steps. However, there is no way to be sure
that these steps will completely protect the Fund from being affected.
PAST PERFORMANCE
The two tables below show the Fund's annual total returns and its long-term
performance. The bar chart shows how the fund's return has changed from year to
year. The second table shows how the fund's average annual returns for certain
periods compare with those of the Russell 2000 Index, a widely recognized index
of stock performance. Both tables reflect all expenses of the Fund and assume
that all dividends and capital gain distributions have been reinvested in new
shares of the Fund. Past performance is not necessarily an indication of how
the Fund will perform in the future.
[PERFORMANCE BAR CHART - ANNUAL RETURNS]
89 22.46%
90 -15.87%
91 43.04%
92 24.59%
93 16.27%
94 2.42%
95 16.43%
96 21.27%
97 32.43%
98 -11.36%
Best Quarter Q3 '97 14.95%
Worst Quarter Q3 '90 -21.74%
Average Annual Total Return as of December 31, 1998
1 Year 5 Years 10 Years
Fund -11.36% 11.17% 13.74%
Russell 2000 Index -2.55% 11.87% 12.92%
Fees & Expenses
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Fund.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees 1.07% *
Distribution (12b-1) Fees None
Other Expenses .02% *
Total Annual Fund Operating Expenses 1.09% *
*As a percentage of average daily net assets.
Fee Examples
The following examples are intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The examples
assume that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. The examples also
assume that your investment has a 5% return each year and that the fund's
operating expenses remain the same. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
1 Year 3 Years 5 Years 10 Years
$111 $347 $601 $1,329
MANAGEMENT AND INVESTMENT COUNSEL
Jones & Babson, Inc. was founded in 1959. It organized the Fund in 1983, and
acts as its Manager and principal underwriter. Pursuant to the current
Management Agreement, Jones & Babson, Inc. provides or pays the cost of all
management, supervisory and administrative services required in the normal
operation of the Fund. This includes investment management and supervision;
fees of the custodian, independent auditors and legal counsel; officers,
directors and other personnel; rent; shareholder services; and other items
incidental to corporate administration.
Operating expenses not required in the normal operation of the Fund are payable
by the Fund. These expenses include taxes, interest, governmental charges and
fees, including registration of the Fund with the Securities and Exchange
Commission and the various States, brokerage costs, dues, and all extraordinary
costs including expenses arising out of anticipated or actual litigation or
administrative proceedings.
Jones & Babson, Inc. employs David L. Babson & Co., Inc. as its Investment
Counsel to assist in the investment advisory function. David L. Babson & Co.,
Inc. is an investment counseling firm founded in 1940. It serves a broad
variety of individual, corporate and other institutional clients by maintaining
an extensive research and analytical staff. It has an experienced investment
analysis and research staff which eliminates the need for Jones & Babson, Inc.
and the Fund to maintain an extensive duplicate staff. Lance James took over
management of Babson Enterprise Fund in 1999. He joined David L. Babson & Co.
in 1986, and has 19 years of investment management experience. He has been
involved with the D.L. Babson small cap investment style, along with the fund's
prior manager since joining David L. Babson & Co., Inc.
For its services, the Fund pays Jones & Babson, Inc. a fee at the annual rate
of 150/100 of one percent (1.50%) of the first $30 million and 1% of amounts in
excess of $30 million of its average daily net assets. The Management Agreement
limits the liability of the Manager and its Investment Counsel, as well as
their officers, directors and personnel, to acts or omissions involving willful
malfeasance, bad faith, gross negligence or reckless disregard
of their duties.
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
financial performance for the past five years. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned on an investment in the
Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Ernst & Young LLP, whose report, along with the
fund's financial statements, are included in the annual report, which is
available upon request.
<TABLE>
<CAPTION>
For the Year Ended November 30th
1998 1997 1996 1995 1994
</CAPTION>
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 21.22 $ 18.51 $ 17.35 $ 16.64 $ 17.20
Income (loss) from investment operations:
Net investment income (loss) .044 .058 .057 .101 .032
Net gains or losses on securities
(both realized and unrealized) (2.154) 5.312 3.060 2.342 .569
Total from investment operations (2.110) 5.370 3.117 2.443 .601
Less distributions:
Dividends from net investment income (.060) - (.114) (.038) (.054)
Distributions from capital gains (2.420) (2.660) (1.843) (1.695) (1.107)
Total distributions (2.480) (2.660) (1.957) (1.733) (1.161)
Net asset value, end of period $ 16.63 $ 21.22 $ 18.51 $ 17.35 $ 16.64
Total return (11.05%) 33.49% 20.17% 16.42% 3.70%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 179 $ 216 $ 202 $ 202 $ 188
Ratio of expenses to average net assets 1.09% 1.08% 1.08% 1.09% 1.08%
Ratio of net income to average net assets .29% .30% .35% .67% .22%
Portfolio turnover rate 22% 22% 24% 13% 15%
</TABLE>
LIMITED OFFERING
The Directors of the Fund have taken action to limit the offering of the fund's
shares:
The Fund will not accept any new accounts, including IRAs and other
retirement plans, until further notice.
If you already have an account with the Fund, you may
continue to add to your account.
If you already have an account with the Fund, you may
continue to add to your account through reinvestment of your dividend
and capital gains distributions.
The Directors may change these sales limitations at any time. If you have
questions, please call us. As long as these limits remain in effect, if you
redeem all of your Fund shares, your account will be considered closed and you
will not be allowed to buy more shares of the Fund. When you exchange shares of
the Fund to another Babson Fund you are considered to be redeeming your shares
of the Fund. Likewise, if your Systematic Redemption Plan depletes your Fund
account to the point of a complete liquidation, you will not be allowed to open
a new account in the Fund or to buy more shares of the Fund. You may transfer
the registration of your Fund account to another individual. However, if you
transfer the entire amount of Fund shares in your account, your account will
then be considered closed and you will not be able to buy shares of the Fund.
HOW TO PURCHASE SHARES
No Load Fund
There are no sales commissions or Rule 12b-1 fees
How to Buy Shares (see accompanying chart for details)
By phone, mail or wire
Through Automatic Monthly Investments
Through exchanges from a Babson or Buffalo Fund
Minimum Initial Investment
$1,000 for most accounts
$250 for IRA and Uniform Transfer (Gift) to Minors accounts
$100 for Automatic Monthly Investments
$1,000 for exchanges from another fund
Minimum Additional Investment
$100 for purchases by phone or mail ($1,000 for wire purchases)
$50 for Automatic Monthly Investments
$1,000 for exchanges from another fund
Minimum Account Size
You must maintain a minimum account size equal to the current minimum initial
investment (usually $1,000). If your account falls below this amount due to
redemptions (not market action) we may notify you and ask you to increase the
account to the minimum. We will close the account and send your money if you do
not bring the account up to the minimum within 60 days after we mail you the
notice.
HOW TO REDEEM SHARES
You may withdraw from your Fund account at any time in the following amounts:
any amount for redemptions requested by mail, phone or telegraph
$1,000 or more for redemptions wired to your account ($10 fee)
$50 or more for redemptions by a systematic redemption plan (there may
be a fee)
$1,000 or more for exchanges to another fund
$100 or more for redemptions by automatic monthly exchange to another
fund
SHAREHOLDER SERVICES
The following services are also available to shareholders. Please call 1-800-4-
BABSON (1-800-422-2766) for more information:
Uniform Transfers (Gifts) to Minors accounts
Accounts for corporations or partnerships
Sub-Accounting Services for Keogh, tax qualified retirement plans, and
others Prototype Retirement Plans for the self-employed,
partnerships and corporations.
Traditional IRA accounts
Roth IRA accounts
Education IRA accounts
Simplified Employee Pensions (SEPs)
HOW SHARE PRICE IS DETERMINED
Shares of the Fund are purchased or redeemed at the net asset value per share
next calculated after your purchase order and payment or redemption order is
received in good order. In the case of certain institutions which have made
satisfactory payment or redemption arrangements with the Fund, orders may be
processed at the net asset value per share next effective after receipt by us.
The per share calculation is made by subtracting from the fund's total assets
any liabilities and then dividing into this amount the total outstanding shares
as of the date of the calculation. The net asset value per share is computed
once daily, Monday through Friday, at 4:00 p.m. (Eastern Time) on days when the
Fund is open for business (generally the same days that the New York Stock
Exchange is open for trading).
Each security owned by the Fund that is listed on an Exchange is valued at its
last sale price on that Exchange on the date as of which assets are valued.
Where the security is listed on more than one Exchange, the Fund will use the
price of that Exchange which it generally considers to be the principal
Exchange on which the stock is traded. Lacking sales, the security is valued at
the mean between the last current closing bid and asked prices. An unlisted
security for which over-the-counter market quotations are readily available is
valued at the mean between the last current bid and asked prices. When market
quotations are not readily available, any security or other asset is valued at
its fair value as determined in good faith by the Board of Directors.
DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION
The Fund pays shareholders distributions from its net investment income and
from any net capital gains that it has realized on the sale of securities. Each
of these distributions will be declared annually on or before December 31. Your
distributions will be reinvested automatically in additional shares of the
Fund, unless you have elected on your original application, or by written
instructions filed with the Fund, to have them paid in cash. There are no fees
or sales charges on reinvestments.
Dividends from net investment income or net short-term gains will be taxable
(for investors subject to income taxes) as ordinary income, whether paid in
cash or in additional shares. Whether paid in cash or additional shares, and
regardless of the length of time shares have been owned by the shareholder,
distributions from long-term capital gains are taxable to shareholders as such,
but are not eligible for the dividends-received deduction for corporations.
Also, if purchases of shares in a Fund are made shortly before a record date
for a dividend or capital gains
distribution, a portion of the investment will be returned as a taxable
distribution (for investors subject to tax).
Distributions declared in October, November or December and made payable to
shareholders of record in such a month are deemed to have been received by
shareholders on December 31 of such year, so long as the distributions are
actually paid before February 1 of the following year. You will be notified
each January as to the federal tax status of distributions paid by the Fund.
Such distributions may also be subject to state and local taxes.
Taxes on Transactions - Exchange and redemption of Fund shares are taxable
events for federal income tax
purposes. Any loss incurred on a sale or exchange of the Funds' shares held for
six months or less will be treated as a long-term capital loss to the extent of
capital gains received with respect to such shares. Starting January 1, 2001,
sales of securities held for more than five years will be taxed at special
lower rates. You may also be subject to state and municipal taxes on such
exchanges and redemptions.
Because everyone's tax situation is unique, always consult your tax
professional about federal, state and local tax consequences.
Dividends-Received Deduction for Corporations - Dividends from net investment
income and short-term capital gains will generally qualify in part for the 70%
dividends-received deduction for corporations. The Fund will send to
shareholders a statement each year advising the amount of the dividend income
which qualifies for such treatment.
Withholding - You must certify on your application, or on a separate form
supplied by us, that your Social Security or Taxpayer Identification Number
provided is correct and that you are not currently subject to backup
withholding, or that you are exempt from backup withholding. Otherwise, we are
required by federal law to withhold 31% of reportable payments paid to you.
ADDITIONAL POLICIES ABOUT TRANSACTIONS
We cannot process transaction requests that are not complete and in good order.
We may cancel or change our
transaction policies without notice. To avoid delays, please call us if you
have any questions about these policies.
Purchases - We may reject orders when not accompanied by payment or when in the
best interest of the Fund and its shareholders.
Redemptions - We try to send proceeds as soon as practicable. In any event, we
send proceeds by the third business day after we receive a request in good
order. We cannot accept requests that contain special conditions or effective
dates. We may request additional documentation to insure that a request is
genuine. Under certain circumstances, we may pay you proceeds in the form of
portfolio securities owned by the Fund. If you receive securities instead of
cash, you may incur brokerage costs when converting into cash.
If you request a redemption within 15 days of purchase, we will delay sending
your proceeds until we are certain that we have collected unconditional
payment, or until 15 days from the date of purchase. For your protection, if
your account address has been changed within the last 30 days, your redemption
request must be in writing and signed by each account owner, with signature
guarantees.
Signature Guarantees - You can get a signature guarantee from most banks or
securities dealers, but not a notary public. For your protection, we require a
guaranteed signature if you request:
A redemption check sent to a different payee, bank or address than
we have on file.
A redemption check mailed to an address that has been changed within
the last 30 days.
A redemption for $50,000 or more in writing.
A change in account registration or redemption instructions.
Corporations, Trusts and Other Entities - Additional documentation is normally
required for corporations, fiduciaries and others who hold shares in a
representative or nominee capacity. We cannot process your request until we
have all documents in the form required. Please call us first to avoid delays.
Exchanges to Another Fund - You must meet the minimum investment requirement of
the fund you are exchanging into. The names and registrations on the two
accounts must be identical. Your shares must have been held in an open account
for 15 days or more and we must have received good payment before we will
exchange shares. You should review the prospectus of the fund being purchased.
Call us for a free copy.
Telephone Services - During periods of increased market activity, you may have
difficulty reaching us by telephone. If this happens, contact us by mail or
telegraph. We may refuse a telephone request, including a telephone or
telegraph redemption request. We will use reasonable procedures to confirm that
telephone instructions are genuine. If such procedures are not followed, the
Fund may be liable for losses due to unauthorized or fraudulent instructions.
At our option, we may limit the frequency or the amount of telephone redemption
requests. Neither the Fund nor Jones & Babson, Inc. assumes responsibility for
the authenticity of telephone redemption requests.
CONDUCTING BUSINESS WITH THE BABSON FUNDS
[CHART-ROWS]
BY PHONE
BY MAIL
BY WIRE
THROUGH AUTOMATIC TRANSACTION PLANS
[CHART-COLUMB HEADINGS]
HOW TO OPEN AN ACCOUNT
HOW TO SELL SHARES
HOW TO EXCHANGE SHARES BY WIRE
BY PHONE
1-800-4-BABSON
(1-800-422-2766)
in the Kansas City area 751-5900
You must authorize each type of telephone
transaction on your account application or the appropriate form, available from
us. All account owners must sign. When you call, we may request personal
identification and tape record the call.
[How to Open an Account]
The Fund will not accept any new accounts until further notice. If you already
have an account with us and you have authorized telephone exchanges, you may
call to open an account in another Babson or Buffalo Fund by exchange ($1,000
minimum). The names and registrations on the accounts must be identical.
[How to Add to an Account]
If you already have an account with the Fund, you may continue to make
investments ($100 minimum) by telephone. After we have received your telephone
call, we will deduct from your checking account the cost of the shares.
Availability of this service is subject to approval by the Fund and
participating banks.
[How to Sell Shares]
You may withdraw any amount ($1,000 minimum if wired) by telephone or telegram.
We will send funds only to the address or bank account on file with us. Provide
the fund's name, your account number, the names of each account owner (exactly
as registered), and the number of shares or dollar amount to be redeemed. For
wires, also provide the bank name and bank account number.
[How to Exchange Shares By Wire]
You may exchange shares ($1,000 minimum or the initial minimum fund
requirement) for shares in another Babson or Buffalo Fund which have been held
in open account for 15 days or more.
BY MAIL
Initial Purchases and all Redemptions:
Babson Enterprise Fund, Inc.
P.O. Box 419757
Kansas City, MO 64141-6757
Subsequent Purchases:
Babson Enterprise Fund, Inc.
P.O. Box 419779
Kansas City, MO 64141-6779
[How to Open an Account]
The Fund will not accept any new accounts until further notice.
[How to Add to an Account]
If you already have an account with the Fund, you may continue to add to your
account. Make your check ($100 minimum) payable to UMB Bank, n.a. and mail it
to us. Always identify your account number or include the detachable reminder
stub (from your confirmation statement).
[How to Sell Shares]
In a letter, include the genuine signature of each registered owner (exactly as
registered), the name of each account owner, the account number and the number
of shares or the dollar amount to be redeemed. We will send funds only to the
address of record.
[How to Exchange Shares By Wire]
In a letter, include the genuine signature of each registered owner, the
account number, the number of shares or dollar amount to be exchanged ($1,000
minimum) and the Babson or Buffalo Fund into which the amount is being
transferred.
BY WIRE
UMB Bank, n.a.,
Kansas City, Missouri, ABA #101000695
For Babson Enterprise Fund, Inc./
AC=987032-6205
OBI=(your account number and account name)
[How to Open an Account]
The Fund will not accept any new accounts until further notice.
[How to Add to an Account]
If you already have an account with the Fund, you may continue to add to your
account. Wire share purchases ($1,000 minimum) should include the names of each
account owner, your account number and the Babson or Buffalo Fund in which you
are purchasing shares. You should notify us by telephone that you have sent a
wire purchase order to UMB Bank, n.a.
[How to Sell Shares]
Redemption proceeds ($1,000 minimum) may be wired to your pre-identified bank
account. A $10 fee is deducted. If we receive your request before 4:00 P.M.
(Eastern Time) we will normally wire funds the following business day. If we
receive your request later in the day, we will normally wire funds on the
second business day. Contact your bank about the time of receipt and
availability.
[How to Exchange Shares By Wire]
Not applicable.
THROUGH AUTOMATIC TRANSACTION PLANS
You must authorize each type of automatic transaction on your account
application or complete an authorization form, available from us upon request.
All registered owners must sign.
[How to Open an Account]
Not applicable.
[How to Add to an Account]
Automatic Monthly Investment:
No new Automatic Investment Plans may be established. If you have already
established a Plan, your automatic monthly investments will continue in a
constant dollar amount ($50 minimum) from your checking account. We will draft
your checking account on the same day each month in the amount you authorize.
[How to Sell Shares]
Systematic Redemption Plan:
You may specify a dollar amount ($50 minimum) to be withdrawn monthly or
quarterly or have your shares redeemed at a rate calculated to exhaust the
account at the end of a specified period. A fee of $1.50 or less may be charged
for each withdrawal. You must own shares in an open account valued at $10,000
when you first authorize the systematic redemption plan. You may cancel or
change your plan or redeem all your shares at any time. We will continue
withdrawals until your shares are gone or until the Fund or you cancel the
plan.
[How to Exchange Shares By Wire]
Monthly Exchanges:
You may authorize monthly exchanges from your account ($100 minimum) to another
Babson or Buffalo Fund. Exchanges will be continued until all shares have been
exchanged or until you terminate the service.
Equities
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund
Fixed Income
Bond Trust
Money Market Fund
Tax-Free Income Fund
* Closed to new investors.
ADDITIONAL INFORMATION
The Statement of Additional Information (SAI) contains additional information
about the Fund and is incorporated by reference into this Prospectus. The
fund's annual and semi-annual reports to shareholders contain additional
information about the fund's investments. In the fund's annual report, you will
find a discussion of the market conditions and investment strategies that
significantly affected the fund's performance during its last fiscal year.
You may obtain a free copy of these documents by calling, writing or e-mailing
the Fund as shown below. You also may call the toll free number given below to
request other information about the Fund and to make shareholder inquiries.
You may review and copy the SAI and other information about the Fund by
visiting the Securities and Exchange Commission's Public Reference Room in
Washington, DC (1-800-SEC-0330) or by visiting the Commission's Internet site
at http://www.sec.gov. Copies of this information also may be obtained, upon
payment of a duplicating fee, by writing to the Public Reference Section of the
Commission, Washington, DC 20549-609.
BABSON FUNDS
JONES & BABSON DISTRIBUTORS
A member of the Generali Group
P.O. Box 419757
Kansas City, MO 64141-6757
816-751-5900
1-800-4-BABSON
(1-800-422-2766)
www.babsonfunds.com
PART B
BABSON ENTERPRISE
FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
March 31, 1999
This Statement is not a Prospectus but should be read in
conjunction with the Fund's current Prospectus dated March 31, 1999. To
obtain the Prospectus or Annual Report to Shareholders, please call the
Fund toll-free at 1-800-4-BABSON (1-800-422-2766), or in the Kansas City
area 751-5900. Certain information from the Annual Report to
Shareholders is incorporated by reference into this Statement.
TABLE OF CONTENTS
Page
Investment Objective and Policies 2
Repurchase Agreements 2
Risk Factors Applicable to Repurchase
Agreements 2
Portfolio Transactions 2
Investment Restrictions 3
Performance Measures 4
Total Return 4
How the Fund's Shares are Distributed 5
Purchase and Redemption Services 5
How Share Purchases are Handled 5
Redemption of Shares 6
Management and Investment Counsel 7
Holidays 7
Officers and Directors 8
Compensation Table 9
Dividends, Distributions and Their Taxation 10
General Information and History 11
Custodian 11
Transfer Agent 12
Independent Auditors 12
Other Jones & Babson Funds 12
Financial Statements 13
INVESTMENT OBJECTIVE AND POLICIES
The following policies supplement the Fund's
investment objective and policies set forth in the
Prospectus. The Fund is an open-end, diversified
investment company.
The Directors of the Fund have taken action to
limit the offering of the Fund's shares. The Fund will
not accept any new accounts until further notice.
Because of its focus on smaller companies, the
overall income return on the Fund may be low.
Smaller companies frequently need to retain all or
most of their profits to finance their growth and will
pay small dividend yields, or none. If the companies
are successful, this plow-back of earnings and
internal financing of growth without the need to issue
additional shares ultimately should enhance the
companies' per share earnings and dividend
capability and make their shares more attractive in
the marketplace.
REPURCHASE AGREEMENTS
The Fund may invest in issues of the United States
Treasury or a United States government agency
subject to repurchase agreements. A repurchase
agreement involves the sale of securities to the Fund
with the concurrent agreement by the seller to
repurchase the securities at the Fund's cost plus
interest at an agreed rate upon demand or within a
specified time, thereby determining the yield during
the purchaser's period of ownership. The result is a
fixed rate of return insulated from market fluctuations
during such period. Under the Investment Company
Act of 1940, repurchase agreements are considered
loans by the Fund.
The Fund will enter into such repurchase
agreements only with United States banks having
assets in excess of $1 billion which are members of
the Federal Deposit Insurance Corporation, and with
certain securities dealers who meet the qualifications
set from time to time by the Board of Directors of the
Fund. The term to maturity of a repurchase
agreement normally will be no longer than a few
days. Repurchase agreements maturing in more than
seven days and other illiquid securities will not
exceed 10% of the net assets of the Fund.
RISK FACTORS APPLICABLE TO
REPURCHASE AGREEMENTS
The use of repurchase agreements involves certain
risks. For example, if the seller of the agreement
defaults on its obligation to repurchase the underlying
securities at a time when the value of these securities
has declined, the Fund may incur a loss upon
disposition of them. If the seller of the agreement
becomes insolvent and subject to liquidation or
reorganization under the Bankruptcy Code or other
laws, disposition of the underlying securities may be
delayed pending court proceedings. Finally, it is
possible that the Fund may not be able to perfect its
interest in the underlying securities. While the Fund's
management acknowledges these risks, it is expected
that they can be controlled through stringent security
selection criteria and careful monitoring procedures.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Fund
are made by Jones & Babson, Inc. pursuant to
recommendations by David L. Babson & Co. Inc.
Officers of the Fund and Jones & Babson, Inc. are
generally responsible for implementing or
supervising these decisions, including allocation of
portfolio brokerage and principal business as well as
the negotiation of commissions and/or the price of
the securities. Portfolio turnover will be no more
than is necessary to meet the Fund's investment
objectives. Under normal circumstances, it is
anticipated that the Fund's portfolio turnover will not
exceed 100%.
In instances where securities are purchased on a
commission basis, the Fund will seek competitive
and reasonable commission rates based on
circumstances of the trade involved and to the extent
that they do not detract from the quality of the
execution. The Fund, in purchasing and selling
portfolio securities, will seek the best available
combination of execution and overall price (which
shall include the cost of the transaction) consistent
with the circumstances which exist at the time. The
Fund does not intend to solicit competitive bids on
each transaction.
The Fund believes it is in its best interest and that
of its shareholders to have a stable and continuous
relationship with a diverse group of financially strong
and technically qualified broker-dealers who will
provide quality executions at competitive rates.
Broker-dealers meeting these qualifications also will
be selected for their demonstrated loyalty to the
Fund, when acting on its behalf, as well as for any
research or other services provided to the Fund.
Substantially all of the portfolio transactions are
through brokerage firms which are members of the
New York Stock Exchange which is typically the
most active market in the size of the Fund's
transactions and for the types of securities
predominant in the Fund's portfolio. When buying
securities in the over-the-counter market, the Fund
will select a broker who maintains a primary market
for the security unless it appears that a better
combination of price and execution may be obtained
elsewhere. The Fund normally will not pay a higher
commission rate to broker-dealers providing benefits
or services to it than it would pay to broker-dealers
who do not provide it such benefits or services.
However, the Fund reserves the right to do so within
the principles set out in Section 28(e) of the
Securities Exchange Act of 1934 when it appears that
this would be in the best interests of the shareholders.
No commitment is made to any broker or dealer
with regard to placing of orders for the purchase or
sale of Fund portfolio securities, and no specific
formula is used in placing such business. Allocation
is reviewed regularly by both the Board of Directors
of the Fund and Jones & Babson, Inc.
Since the Fund does not market its shares through
intermediary brokers or dealers, it is not the Fund's
practice to allocate brokerage or principal business on
the basis of sales of its shares which may be made
through such firms. However, it may place portfolio
orders with qualified broker-dealers who recommend
the Fund to other clients, or who act as agents in the
purchase of the Fund's shares for their clients.
Research services furnished by broker-dealers may
be useful to the Fund manager and its investment
counsel in serving other clients, as well as the Fund.
Conversely, the Fund may benefit from research
services obtained by the manager or its investment
counsel from the placement of portfolio brokerage of
other clients.
When it appears to be in the best interests of its
shareholders, the Fund may join with other clients of
the manager and its investment counsel in acquiring
or disposing of a portfolio holding. Securities
acquired or proceeds obtained will be equitably
distributed between the Fund and other clients
participating in the transaction. In some instances,
this investment procedure may affect the price paid
or received by the Fund or the size of the position
obtained by the Fund.
INVESTMENT RESTRICTIONS
In addition to the investment objective and
portfolio management policies set forth in the
Prospectus under the caption "Investment Objective
and Portfolio Management Policy," the following
restrictions also may not be changed without
approval of the "holders of a majority of the out-
standing shares" of the Fund.
The Fund will not: (1) purchase the securities of
any one issuer, except the United States Government,
if immediately after and as a result of such purchase
(a) the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the value of
the Fund's total assets, or (b) the Fund owns more
than 10% of the outstanding voting securities, or any
other class of securities, of such issuer; (2) engage in
the purchase or sale of real estate or commodities; (3)
underwrite the securities of other issuers; (4) make
loans to any of its officers, directors, or employees,
or to its manager, or general distributor, or officers or
directors thereof; (5) make loans to other persons,
except by the purchase of debt obligations which are
permitted under its investment policy; (6) invest in
companies for the purpose of exercising control of
management; (7) purchase securities on margin, or
sell securities short; (8) purchase shares of other
investment companies except in the open market at
ordinary broker's commission, but not in excess of
5% of the Fund's assets, or pursuant to a plan of
merger or consolidation; (9) invest in the aggregate
more than 5% of the value of its gross assets in the
securities of issuers (other than federal, state,
territorial, or local governments, or corporations, or
authorities established thereby), which, including
predecessors, have not had at least three years'
continuous operations nor invest more than 25% of
the Fund's assets in any one industry; (10) enter into
dealings with its officers or directors, its manager or
underwriter, or their officers or directors, or any
organization in which such persons have a financial
interest except for transactions in the Fund's own
shares or other securities through brokerage practices
which are considered normal and generally accepted
under circumstances existing at the time; (11)
purchase or retain securities of any company in
which any Fund officers or directors, or Fund
manager, its partner, officer, or director beneficially
owns more than 1/2 of 1% of said company's
securities, if all such persons owning more than 1/2
of 1% of such company's securities, own in the
aggregate more than 5% of the outstanding securities
of such company; (12) borrow or pledge its credit
under normal circumstances, except up to 10% of its
gross assets (computed at the lower of fair market
value or cost) for temporary or emergency purposes,
and not for the purpose of leveraging its investments,
and provided further that any borrowing in excess of
5% of the total assets of the Fund shall have asset
coverage of at least 3 to 1; (13) make itself or its
assets liable for the indebtedness of others; (14)
invest in securities which are assessable or involve
unlimited liability; or (15) issue senior securities
except for those investment procedures permissible
under the Fund's other restrictions.
PERFORMANCE MEASURES
The Fund may advertise "average annual total
return" over various periods of time. Such total return
figures show the average percentage change in value
of an investment in the Fund from the beginning date
of the measuring period to the end of the measuring
period. These figures reflect changes in the price of
the Fund's shares and assume that any income
dividends and/or capital gains distributions made by
the Fund during the period were reinvested in shares
of the Fund. Figures will be given for recent one-,
five- and ten-year periods (if applicable), and may be
given for other periods as well (such as from
commencement of the Fund's operations, or on a
year-by-year basis). When considering "average"
total return figures for periods longer than one year, it
is important to note that a Fund's annual total return
for any one year in the period might have been
greater or less than the average for the entire period.
Performance Comparisons. In advertisements or in
reports to shareholders, the Fund may compare its
performance to that of other mutual funds with
similar investment objectives and to stock or other
relevant indices. For example, it may compare its
performance to rankings prepared by Lipper
Analytical Services, Inc. (Lipper), a widely
recognized independent service which monitors the
performance of mutual funds. The Fund may
compare its performance to the Standard & Poor's
500 Stock Index (S&P 500), an index of unmanaged
groups of common stocks, the Dow Jones Industrial
Average, a recognized unmanaged index of common
stocks of 30 industrial companies listed on the
NYSE, the Russell 2000 Index, a small company
stock index, or the Consumer Price Index.
Performance information, rankings, ratings,
published editorial comments and listings as reported
in national financial publications such as Kiplinger's
Personal Finance Magazine, Business Week,
Morningstar Mutual Funds, Investor's Business
Daily, Institutional Investor, The Wall Street Journal,
Mutual Fund Forecaster, No-Load Investor, Money,
Forbes, Fortune and Barron's may also be used in
comparing performance of the Fund. Performance
comparisons should not be considered as
representative of the future performance of any Fund.
Performance rankings, recommendations,
published editorial comments and listings reported in
Money, Barron's, Kiplinger's Personal Finance
Magazine, Financial World, Forbes, U.S. News &
World Report, Business Week, The Wall Street
Journal, Investors Business Daily, USA Today,
Fortune and Stanger's may also be cited (if the Fund
is listed in any such publication) or used for
comparison, as well as performance listings and
rankings from Morningstar Mutual Funds, Personal
Finance, Income and Safety, The Mutual Fund Letter,
No-Load Fund Investor, United Mutual Fund
Selector, No-Load Fund Analyst, No-Load Fund X,
Louis Rukeyser's Wall Street newsletter, Donoghue's
Money Letter, CDA Investment Technologies, Inc.,
Wiesenberger Investment Companies Service and
Donoghue's Mutual Fund Almanac.
TOTAL RETURN
The Fund's "average annual total return" figures
described and shown below are computed according
to a formula prescribed by the Securities and
Exchange Commission. The formula can be
expressed as follows:
P(1+T)n = ERV
Where: P = a hypothetical initial payment
of $1000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a
hypothetical $1000 payment made
at the beginning of the 1, 5 or 10
year (or other) periods at the end of
the 1, 5 or 10 year (or other)
periods (or fractional portions
thereof).
The table below shows the average total return for
the Fund for the specified periods.
For the one year 12/1/97-11/30/98 -11.05%
For the five years 12/1/93-11/30/98 11.49%
For the ten years 12/1/88-11/30/98 13.88%
From commencement of 12.83%
operation to 11/30/98*
_______________________________________
* The Fund commenced operation December 2, 1983.
HOW THE FUND'S SHARES ARE
DISTRIBUTED
Jones & Babson, Inc., as agent of the Fund, agrees
to supply its best efforts as sole distributor of the
Fund's shares and, at its own expense, pay all sales
and distribution expenses in connection with their
offering other than registration fees and other
government charges. Jones & Babson, Inc. is located
at BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306.
Jones & Babson, Inc. does not receive any fee or
other compensation under the distribution agreement
which continues in effect until October 31, 1999, and
which will continue automatically for successive
annual periods ending each October 31, if continued
at least annually by the Fund's Board of Directors,
including a majority of those Directors who are not
parties to such Agreements or interested persons of
any such party. It terminates automatically if
assigned by either party or upon 60 days written
notice by either party to the other.
Jones & Babson, Inc. also acts as sole distributor of
the shares for David L. Babson Growth Fund, Inc.,
D.L. Babson Bond Trust, D.L. Babson Money
Market Fund, Inc., D.L. Babson Tax-Free Income
Fund, Inc., Babson Enterprise Fund II, Inc., Babson
Value Fund, Inc., Shadow Stock Fund, Inc., Babson-
Stewart Ivory International Fund, Inc., UMB Scout
Stock Fund, Inc., UMB Scout Bond Fund, Inc., UMB
Scout Money Market Fund, Inc., UMB Scout Tax-
Free Money Market Fund, Inc., UMB Scout Regional
Fund, Inc., UMB Scout WorldWide Fund, Inc., UMB
Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB Scout Kansas Tax-
Exempt Bond Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc. and AFBA Five Star Fund, Inc.
PURCHASE AND REDEMPTION SERVICES
We reserve the right to:
Waive or increase the minimum investment
requirements with respect to any person or
class of persons, which include shareholders
of the Fund's special investment programs.
Cancel or change the telephone investment
service, the telephone/telegraph exchange
service and the automatic monthly
investment plan without prior notice to you
where in the best interest of the Fund and its
investors.
Cancel or change the telephone/telegraph
redemption service at any time without
notice.
Begin charging a fee for the telephone
investment service or the automatic monthly
investment plan and to cancel or change
these services upon 15 days written notice to
you.
Begin charging a fee for the
telephone/telegraph service and to cancel or
change the service upon 60 days written
notice to you.
Begin charging a fee for the systematic
redemption plan upon 30 days written notice
to you.
Waive signature guarantee requirements in
certain instances where it appears reasonable
to do so and will not unduly affect the
interests of other shareholders. We may
waive the signature guarantee requirement if
you authorize the telephone/telegraph
redemption method at the same time you
submit the initial application to purchase
shares.
Require signature guarantees if there
appears to be a pattern of redemptions
designed to avoid the signature guarantee
requirement, or if we have other reason to
believe that this requirement would be in the
best interests of the Fund and its
shareholders.
HOW SHARE PURCHASES ARE HANDLED
We will not be responsible for the consequences of
delays, including delays in the banking or Federal
Reserve wire systems. We cannot process
transaction requests that are not complete and in good
order. If you use the services of any other broker to
purchase or redeem shares of the Fund, that broker
may charge you a fee. Each order accepted will be
fully invested in whole and fractional shares, unless
the purchase of a certain number of whole shares is
specified, at the net asset value per share next
effective after the order is accepted by the Fund.
Each investment is confirmed by a year-to-date
statement which provides the details of the immediate
transaction, plus all prior transactions in your account
during the current year. This includes the dollar
amount invested, the number of shares purchased or
redeemed, the price per share, and the aggregate
shares owned. A transcript of all activity in your
account during the previous year will be furnished
each January. By retaining each annual summary and
the last year-to-date statement, you have a complete
detailed history of your account which provides
necessary tax information. A duplicate copy of a past
annual statement is available from Jones & Babson,
Inc. at its cost, subject to a minimum charge of $5 per
account, per year requested.
Normally, the shares which you purchase are held
by the Fund in open account, thereby relieving you of
the responsibility of providing for the safekeeping of
a negotiable share certificate. Should you have a
special need for a certificate, one will be issued on
request for all or a portion of the whole shares in your
account. There is no charge for the first certificate
issued. A charge of $3.50 will be made for any
replacement certificates issued. In order to protect
the interests of the other shareholders, share
certificates will be sent to those shareholders who
request them only after the Fund has determined that
unconditional payment for the shares represented by
the certificate has been received by its custodian,
UMB Bank, n.a.
If an order to purchase shares must be canceled due
to non-payment, the purchaser will be responsible for
any loss incurred by the Fund arising out of such
cancellation. To recover any such loss, the Fund
reserves the right to redeem shares owned by any
purchaser whose order is canceled, and such
purchaser may be prohibited or restricted in the
manner of placing further orders.
The Fund reserves the right in its sole discretion to
withdraw all or any part of the offering made by the
prospectus or to reject purchase orders when, in the
judgment of management, such withdrawal or
rejection is in the best interest of the Fund and its
shareholders.
The Fund reserves the right to refuse to accept
orders for Fund shares unless accompanied by
payment, except when a responsible person has
indemnified the Fund against losses resulting from
the failure of investors to make payment. In the event
that the Fund sustains a loss as the result of failure by
a purchaser to make payment, the Fund's
underwriter, Jones & Babson, Inc., will cover the
loss.
REDEMPTION OF SHARES
We will not be responsible for the consequences of
delays, including delays in the banking or Federal
Reserve wire systems. We cannot process
transaction requests that are not complete and in good
order. We must receive an endorsed share certificate
with a signature guarantee, where a certificate has
been issued.
The Telephone/Telegraph Redemption Service
may only be used for non certificated shares held in
an open account. We reserve the right to refuse a
telephone or telegraph redemption request. At our
option, we may pay such redemption by wire or
check. We may reduce or waive the $10 charge for
wiring redemption proceeds in connection with
certain accounts.
To participate in the Systematic Redemption Plan
your dividends and capital gains distributions must be
reinvested in additional shares of the Fund.
The right of redemption may be suspended, or the
date of payment postponed beyond the normal three-
day period by the Fund's Board of Directors under the
following conditions authorized by the Investment
Company Act of 1940: (1) for any period (a) during
which the New York Stock Exchange is closed, other
than customary weekend and holiday closing, or (b)
during which trading on the New York Stock
Exchange is restricted; (2) for any period during
which an emergency exists as a result of which (a)
disposal by the Fund of securities owned by it is not
reasonably practicable or (b) it is not reasonably
practicable for the Fund to determine the fair value of
its net assets; or (3) for such other periods as the
Securities and Exchange Commission may by order
permit for the protection of the Fund's shareholders.
The Fund has elected to be governed by Rule 18f-1
under the Investment Company Act of 1940 pursuant
to which the Fund is obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of
the Fund's net asset value during any 90-day period
for any one shareholder. Should redemptions by any
shareholder exceed such limitation, the Fund may
redeem the excess in kind. If shares are redeemed in
kind, the redeeming shareholder may incur brokerage
costs in converting the assets to cash. The method of
valuing securities used to make redemptions in kind
will be the same as the method of valuing portfolio
securities described under "How Share Price is
Determined" in the Prospectus, and such valuation
will be made as of the same time the redemption
price is determined.
MANAGEMENT AND INVESTMENT
COUNSEL
As a part of the Management Agreement, Jones &
Babson, Inc. employs at its own expense David L.
Babson & Co. Inc., as its in-vestment counsel. David
L. Babson & Co. Inc. was founded in 1940 as a
private investment research and counseling
organization. David L. Babson & Co. Inc. serves
individual, corporate and other institutional clients. It
participates with Jones & Babson in the management
of nine Babson no-load mutual funds.
The aggregate management fees paid to Jones &
Babson, Inc. by the Fund during the three most
recent fiscal years ended November 30, 1998, 1997,
and 1996, (from which Jones & Babson, Inc. paid all
the Fund's expenses except those payable directly by
the Fund) were $2,199,612, $2,176,042, and
$2,248,503, respectively. The annual fee charged by
Jones & Babson, Inc. covers all normal operating
costs of the Fund. The annual fee charged by Jones
& Babson, Inc. is higher than the fees of most other
investment advisers whose charges cover only
investment advisory services with all remaining
operational expenses absorbed directly by the Fund.
Yet, it compares favorably with these other advisers
when all expenses to Fund shareholders are taken
into account. The total expenses of the Fund for the
fiscal year ended November 30, 1998, amounted to
109/100 of one percent (1.09%) of the average net
assets.
David L. Babson & Co. Inc. has an experienced
investment analysis and research staff which
eliminates the need for Jones & Babson, Inc. and the
Fund to maintain an extensive duplicate staff, with
the consequent increase in the cost of investment ad-
visory service. Jones & Babson, Inc. pays David L.
Babson Co. Inc. a fee of 70/100 of one percent
(.70%) of the first $30 million and 50/100 of 1%
(.50%) of amounts in excess of $30 million of
average daily total net assets, which is computed
daily and paid semimonthly. The cost of the services
of David L. & Babson & Co. Inc., is included in the
services of Jones & Babson, Inc. During the three
most recent fiscal years ended November 30, 1998,
1997 and 1996, Jones & Babson, Inc. paid David L.
Babson & Co. Inc. fees amounting to $1,088,793,
$1,088,713, and $1,109,388, respectively, related to
services provided to the Fund.
Certain officers and directors of the Fund are also
officers or directors or both of other Babson Funds,
Jones & Babson, Inc. or David L. Babson & Co. Inc.
Jones & Babson, Inc. is a wholly-owned subsidiary
of Business Men's Assurance Company of America
which is considered to be a controlling person under
the Investment Company Act of 1940. Assicurazioni
Generali S.p.A., an insurance organization founded in
1831 based in Trieste, Italy, is considered to be a
controlling person and is the ultimate parent of
Business Men's Assurance Company of America.
Mediobanca is a 5% owner of Generali.
David L. Babson & Co. Inc. is a wholly-owned
subsidiary of DLB Acquisition Corporation, an
indirect, majority owned subsidiary of Massachusetts
Mutual Life Insurance Company headquartered in
Springfield, Massachusetts. Massachusetts Mutual
Life Insurance Company is an insurance organization
founded in 1851 and is considered to be a controlling
person of David L. Babson & Co. Inc., under the
Investment Company Act of 1940.
HOLIDAYS
The net asset value per share is computed once
daily, Monday through Friday, at 4:00 p.m. (Eastern
Time) except: days when the Fund is not open for
business; days on which changes in the value of
portfolio securities will not materially affect the net
asset value; days during which no purchase or
redemption order is received by the Fund; and
customary holidays.
The Fund does not compute its net asset value on
the following customary holidays:
New Year's Day January 1
Martin Luther Third Monday
King, Jr. Day in January
Presidents' Holiday Third Monday
in February
Good Friday Friday before
Easter
Memorial Day Last Monday
in May
Independence Day July 4
Labor Day First Monday
in September
Thanksgiving Day Fourth Thursday
in November
Christmas Day December 25
OFFICERS AND DIRECTORS
The officers of the Fund manage its day-to-day
operations. The Fund's manager and its officers are
subject to the supervision and control of the Board of
Directors.
The Fund is managed by Jones & Babson, Inc.
subject to the supervision and control of the Board of
Directors. The following table lists the officers and
directors of the Fund and their ages. Unless noted
otherwise, the address of each officer and director is
BMA Tower, 700 Karnes Blvd., Kansas City,
Missouri 64108-3306. Except as indicated, each has
been an employee of Jones & Babson, Inc. for more
than five years.
**Larry D. Armel (57), President and Director.
President and Director, Jones & Babson, Inc., David
L. Babson Growth Fund, Inc., D.L. Babson Money
Market Fund, Inc., D.L. Babson Tax-Free Income
Fund, Inc., Babson Enterprise Fund II, Inc., Babson
Value Fund, Inc., Shadow Stock Fund, Inc., Babson-
Stewart Ivory International Fund, Inc., UMB Scout
Stock Fund, Inc., UMB Scout Bond Fund, Inc., UMB
Scout Money Market Fund, Inc., UMB Scout Tax-
Free Money Market Fund, Inc., UMB Scout Regional
Fund, Inc., UMB Scout WorldWide Fund, Inc., UMB
Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB Scout Kansas Tax-
Exempt Bond Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc., Investors Mark Series Fund,
Inc.; President and Trustee, D.L. Babson Bond Trust;
Director, AFBA Five Star Fund, Inc.
Francis C. Rood (64), Director. Retired, 73-395
Agave Lane, Palm Desert, California 92260-6653.
Formerly Vice President of Finance, Hallmark Cards,
Inc.; Director, David L. Babson Growth Fund, Inc.,
D.L. Babson Money Market Fund, Inc., D.L. Babson
Tax-Free Income Fund, Inc., Babson Enterprise Fund
II, Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Buffalo Balanced Fund, Inc., Buffalo
Equity Fund, Inc., Buffalo High Yield Fund, Inc.,
Buffalo USA Global Fund, Inc., Buffalo Small Cap
Fund, Inc., Investors Mark Series Fund, Inc.; Trustee,
D.L. Babson Bond Trust.
William H. Russell (75), Director. Financial
Consultant, 645 West 67th Street, Kansas City,
Missouri 64113; previously Vice President, Sprint;
Director, David L. Babson Growth Fund, Inc., D.L.
Babson Money Market Fund, Inc., D.L. Babson Tax-
Free Income Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Shadow Stock Fund,
Inc., Babson-Stewart Ivory International Fund, Inc.,
Buffalo Balanced Fund, Inc., Buffalo Equity Fund,
Inc., Buffalo High Yield Fund, Inc., Buffalo USA
Global Fund, Inc., Buffalo Small Cap Fund, Inc.,
Investors Mark Series Fund, Inc.; Trustee, D.L.
Babson Bond Trust.
H. David Rybolt (56), Director. Consultant, HDR
Associates, P.O. Box 2468, Shawnee Mission,
Kansas 66201; Director, David L. Babson Growth
Fund, Inc., D.L. Babson Money Market Fund, Inc.,
D.L. Babson Tax-Free Income Fund, Inc., Babson
Enterprise Fund II, Inc., Babson Value Fund, Inc.,
Shadow Stock Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc., Investors Mark Series Fund,
Inc.; Trustee, D. L. Babson Bond Trust.
P. Bradley Adams (38), Vice President and
Treasurer. Vice President and Treasurer, Jones &
Babson, Inc., David L. Babson Growth Fund, Inc.,
D.L. Babson Money Market Fund, Inc., D.L. Babson
Tax-Free Income Fund, Inc., Babson Enterprise Fund
II, Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International Fund,
Inc., D. L. Babson Bond Trust; UMB Scout Stock
Fund, Inc., UMB Scout Bond Fund, Inc., UMB Scout
Money Market Fund, Inc., UMB Scout Tax-Free
Money Market Fund, Inc., UMB Scout Regional
Fund, Inc., UMB Scout WorldWide Fund, Inc., UMB
Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB Scout Kansas Tax-
Exempt Bond Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc.; Vice President and Chief
Financial Officer, AFBA Five Star Fund, Inc.;
Principal Financial Officer, Investors Mark Series
Fund, Inc.
Martin A. Cramer (49), Vice President and
Secretary. Vice President and Secretary, Jones &
Babson, Inc., David L. Babson Growth Fund, Inc.,
D.L. Babson Money Market Fund, Inc., D.L. Babson
Tax-Free Income Fund, Inc., Babson Enterprise Fund
II, Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International Fund,
Inc., D. L. Babson Bond Trust, UMB Scout Stock
Fund, Inc., UMB Scout Bond Fund, Inc., UMB Scout
Money Market Fund, Inc., UMB Scout Tax-Free
Money Market Fund, Inc., UMB Scout Regional
Fund, Inc., UMB Scout WorldWide Fund, Inc., UMB
Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB Scout Kansas Tax-
Exempt Bond Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc.; Secretary and Assistant Vice
President, AFBA Five Star Fund, Inc.; Secretary,
Investors Mark Series Fund, Inc.
Constance E. Martin (37), Vice President.
Assistant Vice President, Jones & Babson, Inc.; Vice
President, David L. Babson Growth Fund, Inc., D.L.
Babson Money Market Fund, Inc., D.L. Babson Tax-
Free Income Fund, Inc., Babson Enterprise Fund II,
Inc., Babson Value Fund, Inc., Babson-Stewart Ivory
International Fund, Inc., D.L. Babson Bond Trust,
Shadow Stock Fund, Inc., UMB Scout Stock Fund,
Inc., UMB Scout Bond Fund, Inc., UMB Scout
Money Market Fund, Inc., UMB Scout Tax-Free
Money Market Fund, Inc., UMB Scout Regional
Fund, Inc., UMB Scout WorldWide Fund, Inc., UMB
Scout Balanced Fund, Inc., UMB Scout Capital
Preservation Fund, Inc., UMB Scout Kansas Tax-
Exempt Bond Fund, Inc., Buffalo Balanced Fund,
Inc., Buffalo Equity Fund, Inc., Buffalo High Yield
Fund, Inc., Buffalo USA Global Fund, Inc., Buffalo
Small Cap Fund, Inc.
Lance F. James (44), Vice President-Portfolio.
Executive Vice President and Director, David L.
Babson & Co. Inc., One Memorial Drive, Cambridge,
Massachusetts 02142; Vice President-Portfolio,
Babson Enterprise Fund II, Inc.
Remuneration of Officers and Directors. None of
the officers or directors will be remunerated by the
Fund for their normal duties and services. Their
compensation and expenses arising out of normal
operations will be paid by Jones & Babson, Inc.
under the provisions of the Management Agreement.
<TABLE>
<CAPTION>
COMPENSATION TABLE
Aggregate Pension or Retirement Estimated Total Compensation
Compensation Benefits Accrued As Annual Benefits From All Babson Funds
Name of Director From the Fund Part of Fund Expenses Upon Retirement Paid to Directors**
______________ _____________ __________________ _____________ ___________________
</CAPTION>
<S> <C> <C> <C> <C>
Larry D. Armel* -- -- -- --
Francis C. Rood $500 -- -- $7,250
William H. Russell $500 -- -- $7,250
H. David Rybolt $500 -- -- $7,000
</TABLE>
* As an "interested director," Mr. Armel received no compensation for
his services as a director.
** The amounts reported in this column reflect the total compensation
paid to Messrs. Rood and Rybolt for services as directors or trustees of
eight Babson Funds and to Mr. Russell for services as a director or trustee
of nine Babson Funds during the fiscal year ended November 30, 1998.
Directors' fees are paid by the Funds' manager and not by the Funds themselves.
Messrs. Rood, Russell and Rybolt have no financial
interest in, nor are they affiliated with either Jones &
Babson, Inc. or David L. Babson & Co. Inc.
The Audit Committee of the Board of Directors is
composed of Messrs. Rood, Russell and Rybolt.
The officers and directors of the Fund as a group own
less than 1% of the Fund.
The Fund will not hold annual meetings except as
required by the Investment Company Act of 1940 and
other applicable laws. The Fund is a Maryland
corporation. Under Maryland law, a special meeting of
stockholders of the Fund must be held if the Fund
receives the written request for a meeting from the
stockholders entitled to cast at least 25% of all the votes
entitled to be cast at the meeting. The Fund has
undertaken that its Directors will call a meeting of
stockholders if such a meeting is requested in writing
by the holders of not less than 10% of the outstanding
shares of the Fund. To the extent required by the
undertaking, the Fund will assist shareholder
communications in such matters.
DIVIDENDS, DISTRIBUTIONS
AND THEIR TAXATION
Election to be Taxed as a Regulated Investment
Company. The Fund has elected to be treated as a
regulated investment company under Subchapter M
of the Internal Revenue Code (the "Code"), has
qualified as such for its most recent fiscal year, and
intends to so qualify during the current fiscal year.
The directors reserve the right not to maintain the
qualification of the Fund as a regulated investment
company if they determine such course of action to
be beneficial to shareholders. In such case, the Fund
will be subject to federal, and possibly state,
corporate taxes on its taxable income and gains, and
distributions to you will be taxed as ordinary
dividend income to the extent of the Fund's available
earnings and profits.
All or a portion of any loss that you realize upon
the redemption of your Fund shares will be
disallowed to the extent that you purchase other
shares in the Fund (through reinvestment of
dividends or otherwise) within 30 days before or after
your share redemption. Any loss disallowed under
these rules will be added to your tax basis in the new
shares you purchase.
U.S. Government Obligations. Many states grant
tax-free status to dividends paid to you from interest
earned on direct obligations of the U.S. Government,
subject in some states to minimum investment
requirements that must be met by the Fund.
Investments in GNMA/FNMA securities, bankers'
acceptances, commercial paper and repurchase
agreements collateralized by U.S. Government
securities do not generally qualify for tax-free
treatment. At the end of each calendar year, the Fund
will provide you with the percentage of any
dividends paid that may qualify for tax-free treatment
on your personal income tax return. You should
consult with your own tax advisor to determine the
application of your state and local laws to these
distributions. Because the rules on exclusion of this
income are different for corporations, corporate
shareholders should consult with their corporate tax
advisors about whether any of their distributions may
be exempt from corporate income or franchise taxes.
Dividends-Received Deduction for
Corporations. As a corporate shareholder, you
should note that a percentage of the dividends paid by
the Fund for the most recent calendar year qualified
for the dividends-received deduction. You will be
permitted in some circumstances to deduct these
qualified dividends, thereby reducing the tax that you
would otherwise be required to pay on these
dividends. The dividends-received deduction will be
available only with respect to dividends designated
by the Fund as eligible for such treatment. Dividends
so designated by the Fund must be attributable to
dividends earned by the Fund from U.S. corporations
that were not debt-financed.
Under the 1997 Act, the amount that the Fund may
designate as eligible for the dividends-received
deduction will be reduced or eliminated if the shares
on which the dividends were earned by the Fund
were debt-financed or held by the Fund for less than
a 46 day period during a 90 day period beginning 45
days before the ex-dividend date of the corporate
stock. Similarly, if your Fund shares are debt-
financed or held by you for less than this same 46 day
period, then the dividends-received deduction may
also be reduced or eliminated. Even if designated as
dividends eligible for the dividends-received
deduction, all dividends (including the deducted
portion) must be included in your alternative
minimum taxable income calculation.
Conversion Transactions. Gains realized by a
Fund from transactions that are deemed to be
"conversion transactions" under the Code, and that
would otherwise produce capital gain may be
recharacterized as ordinary income to the extent that
such gain does not exceed an amount defined as the
"applicable imputed income amount." A conversion
transaction is any transaction in which substantially
all of the Fund's expected return is attributable to the
time value of the Fund's net investment in such
transaction, and any one of the following criteria are
met:
(1) there is an acquisition of property with a
substantially contemporaneous agreement to
sell the same or substantially identical
property in the future;
(2) the transaction is an applicable straddle;
(3) the transaction was marketed or sold to the
Fund on the basis that it would have the
economic characteristics of a loan but would
be taxed as capital gain; or
(4) the transaction is specified in Treasury
regulations to be promulgated in the future.
The applicable imputed income amount, which
represents the deemed return on the conversion
transaction based upon the time value of money, is
computed using a yield equal to 120% of the
applicable federal rate, reduced by any prior
recharacterizations under this provision or the
provisions of Section 263(g) of the Code dealing with
capitalized carrying costs.
Stripped Preferred Stock. Occasionally, the
Fund may purchase "stripped preferred stock" that is
subject to special tax treatment. Stripped preferred
stock is defined as certain preferred stock issues
where ownership of the stock has been separated
from the right to receive dividends that have not yet
become payable. The stock must have a fixed
redemption price, must not participate substantially in
the growth of the issuer and must be limited and
preferred as to dividends. The difference between the
redemption price and purchase price is taken into
Fund income over the term of the instrument as if it
were original issue discount. The amount that must
be included in each period generally depends on the
original yield to maturity, adjusted for any
prepayments of principal.
Defaulted Obligations. The Fund may be
required to accrue income on defaulted obligations
and to distribute such income to you even though it is
not currently receiving interest or principal payments
on such obligations. In order to generate cash to
satisfy these distribution requirements, the Fund may
be required to dispose of portfolio securities that it
otherwise would have continued to hold or to use
cash flows from other sources such as the sale of
Fund shares.
GENERAL INFORMATION AND HISTORY
The Fund, incorporated in Maryland on July 5,
1983, has a present authorized capitalization of
20,000,000 shares of $1 par value common stock.
All shares are of the same class with like rights and
privileges. Each full and fractional share, when
issued and outstanding, has: (1) equal voting rights
with respect to matters which affect the Fund, and (2)
equal dividend, distribution and redemption rights to
the assets of the Fund. Shares when issued are fully
paid and non-assessable. The Fund may create other
series of stock but will not issue any senior securities.
Shareholders do not have pre-emptive or conversion
rights.
Non-cumulative voting - These shares have non-
cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the
election of directors can elect 100% of the directors,
if they choose to do so, and in such event, the holders
of the remaining less than 50% of the shares voting
will not be able to elect any directors.
The Maryland General Corporation Law permits
registered investment companies, such as the Fund, to
operate without an annual meeting of shareholders
under specified circumstances if an annual meeting is
not required by the Investment Company Act of
1940. The Fund has adopted the appropriate
provisions in its By-Laws and may not, at its
discretion, hold annual meetings of shareholders for
the following purposes unless required to do so: (1)
election of directors; (2) approval of continuance of
any investment advisory agreement; (3) ratification
of the selection of independent auditors; and (4)
approval of a distribution plan. As a result, the Fund
does not intend to hold annual meetings.
The Fund may use the name "Babson" in its name
so long as Jones & Babson, Inc. is continued as
manager and David L. Babson & Co. Inc. as its
investment counsel. Complete details with respect to
the use of the name are set out in the Management
Agreement between the Fund and Jones & Babson,
Inc.
CUSTODIAN
The Fund's assets are held for safekeeping by an
independent custodian, UMB Bank, n.a., Kansas
City, MO. This means the bank, rather than the
Fund, has possession of the Fund's cash and
securities. The custodian bank is not responsible for
the Fund's investment management or administration.
But, as directed by the Fund's officers, it delivers
cash to those who have sold securities to the Fund in
return for such securities, and to those who have pur-
chased portfolio securities from the Fund, it delivers
such securities in return for their cash purchase price.
It also collects income directly from issuers of
securities owned by the Fund and holds this for
payment to shareholders after deduction of the Fund's
expenses. The custodian is compensated for its
services by the manager. There is no separate charge
to the Fund.
TRANSFER AGENT
Jones & Babson, Inc. also serves as transfer agent to
the Fund.
INDEPENDENT AUDITORS
The Fund's financial statements are audited annually
by independent auditors approved by the directors each
year, and in years in which an annual meeting is held
the directors may submit their selection of independent
auditors to the shareholders for ratification. Ernst &
Young LLP, One Kansas City Place, 1200 Main Street,
Suite 2000, Kansas City, Missouri 64105, is the Fund's
present independent auditor.
OTHER JONES & BABSON FUNDS
The Fund is one of nine no-load funds comprising the
Babson Mutual Fund Group managed by Jones &
Babson, Inc. in association with its investment counsel,
David L. Babson & Co. Inc. The other funds are:
BABSON EQUITY FUNDS
DAVID L. BABSON GROWTH FUND, INC. was
organized in 1960, with the objective of long-term
growth of both capital and dividend income through
investment in the common stocks of well-managed
companies which have a record of long term above-
average growth of both earnings and dividends.
BABSON ENTERPRISE FUND II, INC. was
organized in 1991, with the objective of long-term
growth of capital by investing in a diversified portfolio
of common stocks of smaller, faster-growing
companies which at the time of purchase are
considered by the Investment Adviser to be
realistically valued in the smaller company sector of
the market. This Fund is intended to be an investment
vehicle for that part of an investor's capital which can
appropriately be exposed to above-average risk in
anticipation of greater rewards.
BABSON VALUE FUND, INC. was organized in
1984, with the objective of long-term growth of capital
and income by investing in a diversified portfolio of
common stocks which are considered to be
undervalued in relation to earnings, dividends and/or
assets.
SHADOW STOCK FUND, INC. was organized in
1987, with the objective of long-term growth of capital
that can be exposed to above-average risk in
anticipation of greater-than-average rewards. The
Fund expects to reach its objective by investing in
small company stocks called "Shadow Stocks," i.e.,
stocks that combine the characteristics of "small
stocks" (as ranked by market capitalization) and
"neglected stocks" (least held by institutions and least
covered by analysts).
BABSON-STEWART IVORY INTERNATIONAL
FUND, INC. was organized in 1987, with the
objective of seeking a favorable total return (from
market appreciation and income) by investing
primarily in a diversified portfolio of equity securities
(common stocks and securities convertible into
common stocks) of established companies whose
primary business is carried on outside the United
States.
BABSON FIXED INCOME FUNDS
D. L. BABSON BOND TRUST was organized in
1944, and has been managed by Jones & Babson, Inc.
since 1972, with the objective of a high level of
current income and reasonable stability of principal. It
offers two portfolios - Portfolio L and Portfolio S.
D. L. BABSON MONEY MARKET FUND, INC.
was organized in 1979, to provide investors the
opportunity to manage their money over the short term
by investing in high-quality short-term debt instru-
ments for the purpose of maximizing income to the
extent consistent with safety of principal and
maintenance of liquidity. It offers two portfolios -
Prime and Federal. Money Market funds are neither
insured nor guaranteed by the U.S. Government and
there is no assurance that the funds will maintain a
stable net asset value.
D. L. BABSON TAX-FREE INCOME FUND, INC.
was organized in 1979 to provide shareholders the
highest level of regular income exempt from federal
income taxes consistent with investing in quality
municipal securities. It offers three separate high-
quality portfolios (including a money market
portfolio) which vary as to average length of maturity.
Income from the Tax-Free Money Market portfolio
may be subject to state and local taxes as well as the
Alternative Minimum Tax.
BUFFALO FUNDS
Jones & Babson also sponsors and manages the
Buffalo Group of Mutual Funds. They are:
BUFFALO BALANCED FUND, INC. was
organized in 1994, with the objective of long-term
capital growth and high current income through
investing in common stocks and secondarily by
investing in convertible bonds, preferred stocks and
convertible preferred stocks.
BUFFALO EQUITY FUND, INC. was organized
in 1994, with the objective of long-term capital
appreciation to be achieved primarily by investment
in common stocks. Realization of dividend income is
a secondary consideration.
BUFFALO HIGH YIELD FUND, INC. was
organized in 1994, with the objective of a high level
of current income and secondarily, capital growth by
investing primarily in high-yielding fixed income
securities.
BUFFALO USA GLOBAL FUND, INC. was
organized in 1994, with the objective of capital
growth by investing in common stocks of companies
based in the United States that receive greater than
40% of their revenues or pre-tax income from inter-
national operations.
BUFFALO SMALL CAP FUND, INC. was
organized in 1998, with the objective of long-term
capital growth by investment in equity securities of
small companies.
A prospectus for any of the Funds may be obtained
from Jones & Babson, Inc., BMA Tower, 700 Karnes
Blvd., Kansas City, MO 64108-3306.
Jones & Babson, Inc. also sponsors nine mutual
funds which especially seek to provide services to
customers of affiliate banks of UMB Financial
Corporation. They are: UMB Scout Stock Fund, Inc.,
UMB Scout Bond Fund, Inc., UMB Scout Money
Market Fund, Inc., UMB Scout Tax-Free Money
Market Fund, Inc., UMB Scout Regional Fund, Inc.,
UMB Scout WorldWide Fund, Inc., UMB Scout
Balanced Fund, Inc., UMB Scout Capital Preservation
Fund, Inc. and UMB Scout Kansas Tax-Exempt Bond
Fund, Inc.
Jones & Babson, Inc. also sponsors the AFBA Five
Star Fund, Inc.
FINANCIAL STATEMENTS
The audited financial statements of the Fund which
are contained in the November 30, 1998, Annual Report
to Shareholders are incorporated herein by reference.
* Directors who are interested persons as that term is
defined in the Investment Company Act of 1940, as
amended.
13
BABSON ENTERPRISE FUND, INC.
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS:
(a) (1) Articles of Incorporation of the
Registrant as filed in Maryland on
June 30, 1983
are filed herewith as
Exhibit No. EX99.23(a)(1).
(2) Articles Supplementary of the
Registrant as filed in Maryland on
October 7, 1983
are filed herewith as
Exhibit No. EX99.23(a)(2).
(3) Articles Supplementary of the
Registrant as filed in Maryland on
April 22, 1991
are filed herewith as
Exhibit No. EX99.23(a)(3).
(b) By-laws of the Registrant are filed herewith as
Exhibit No. EX99.23(b).
(c) Specimen copy of each security to be issued by
the Registrant as Exhibit NO. EX99.23(c).
(d) (1) Investment Management Agreement between
Registrant and Jones & Babson, Inc. dated
June 30, 1995
is filed herewith as Exhibit No. EX99.23(d)(1).
(2) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated
June 30, 1995,
is filed herewith as Exhibit No. EX99.23(d)(2).
(e) Principal Underwriting Agreement between the
Registrant and Jones & Babson, Inc. dated
September 30, 1995
is filed herewith as Exhibit No. EX99.23(e).
(f) Not Applicable.
(g) Custodian Agreement between Registrant and
UMB Bank, N.A. dated
May 5, 1997
is filed herewith at Exhibit No. EX99.23(g).
(h) Transfer Agency Agreement between
Registrant and Jones & Babson, Inc. is
filed herewith at Exhibit No. EX99.23(h).
(i) Opinion and Consent of Counsel as to the
Legality of the Securities to be Issued is
filed herewith as Exhibit No. EX99.23(i).
(j) (1) Consent of Independent Auditors is
filed herewith as Exhibit No. EX99.23(j)(1).
(2) Power of Attorney dated
January 23, 1992
is filed herewith as Exhibit No. EX99.23(j)(2).
(k) Not Applicable.
(l) Not Applicable.
(m) Not Applicable.
(n) Financial Data Schedule for the fiscal year
ended November 30, 1998 is filed herewith as
Exhibit No. EX27.23(n).
(o) Not Applicable.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
REGISTRANT: None.
ITEM 25. INDEMNIFICATION:
Under the terms of the Maryland General Corporation Law and
the Registrant's By-Laws, the Registrant shall indemnify any person who
was or is a director, officer, or employee of the Registrant to the
maximum extent permitted by the Maryland General Corporation Law;
provided however, that any such indemnification (unless ordered by a
court) shall be made by the Registrant only as authorized in the
specific case upon a determination that indemnification of such person
is proper in the circumstances. Such determination shall be made:
(i) by the Board of Directors by a majority vote of a
quorum which consists of the directors who are neither "interested
persons" of the Registrant as defined in Section 2(a)(19) of the 1940
Act, nor parties to the proceedings, or
(ii) if the required quorum is not obtainable or if a
quorum of such directors so directs, by independent legal counsel in a
written opinion.
No indemnification will be provided by the Registrant to any
director or officer of the Registrant for any liability to the
Registrant or shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of duty.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
The principal business of Jones & Babson, Inc. is the management of the
Babson and Buffalo families of mutual funds. It also has expertise in
the tax and pension plan field. It supervises a number of prototype and
profit-sharing plan programs sponsored by various organizations eligible
to be prototype plan sponsors. The principal business of David L.
Babson & Co., Inc. is to provide investment counsel and advice to a wide
variety of clients.
ITEM 27. PRINCIPAL UNDERWRITER:
(a) Jones & Babson, Inc., the only principal underwriter
of the Registrant, also acts as principal underwriter
for David L. Babson Growth Fund, Inc., D.L. Babson
Money Market Fund, Inc., D.L. Babson Tax-Free Income
Fund, Inc., D.L. Babson Bond Trust, Babson Enterprise
Fund II, Inc., Babson Value Fund, Inc., Shadow Stock
Fund, Inc., Babson-Stewart Ivory International Fund,
Inc., UMB Scout Stock Fund, Inc., UMB Scout Bond Fund,
Inc., UMB Scout Money Market Fund, Inc., UMB Scout
Tax-Free Money Market Fund, Inc., UMB Scout Balanced
Fund, Inc., UMB Scout Regional Fund, Inc., UMB Scout
WorldWide Fund, Inc., UMB Scout Capital Preservation
Fund, Inc., UMB Scout Kansas Tax-Exempt Bond Fund,
Inc., Buffalo Balanced Fund, Inc., Buffalo Equity
Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo
Small Cap Fund, Inc., Buffalo USA Global Fund, Inc.
and AFBA Five Star Fund, Inc.
(b) The tables below set forth certain information as to
the Underwriter's Directors, Officers, Partners and
Control Persons:
Name and Business Positions and Offices Positions and Offices
Address with Underwriter with the Registrant
Stephen S. Soden Chairman and Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Larry D. Armel President and Director President and Director
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Giorgio Balzer Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Robert T. Rakich Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Edward S. Ritter Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Robert N. Sawyer Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Vernon W. Voorhees Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
P. Bradley Adams Vice President and Vice Presdient and
BMA Tower Treasurer Treasurer
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Martin A. Cramer Vice Presdient and Vice President and
BMA Tower Secretary Secretary
700 Karnes Blvd.
Kansas City, MO 64108-
3306
Constance E. Martin Asst. Vice President Asst. Vice President
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-
3306
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:
Each account, book or other document required to be
maintained by Section 31(a) of the Investment Company Act of 1940, as
amended and Rules (17 CFR 270-31a-1 to 31a-3) promulgated thereunder, is
in the physical possession of Jones and Babson, Inc., at BMA Tower, 700
Karnes Blvd., Kansas City, Missouri 64108-3306.
ITEM 29. MANAGEMENT SERVICES:
There are no management related service contracts not
discussed in Part A or Part B.
ITEM 30. UNDERTAKINGS
Registrant undertakes that, if requested to do so by the
holders of at least 10% of the registrant's outstanding shares, to call
a meeting of shareholders for the purpose of voting upon the question of
removal of a director or directors and to assist in communications with
other shareholders as required by Section 16(c) of the Investment
Company Act of 1940, as amended.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, each as amended, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Kansas City, and State of
Missouri, on the 20th day of January, 1999.
BABSON ENTERPRISE FUND, INC.
By: /s/ Larry D. Armel
Larry D. Armel
President, Principal Executive Officer
and Director
Pursuant to the requirement of the Securities Act of 1933, this Registration
Statement has been signed below on by the following persons in the capacities
and on the date indicated:
Signature Title Date
/s/ Larry D. Armel President, Principal Executive January 20, 1999
Larry D. Armel Officer and Director
/s/ Francis C. Rood Director January 20, 1999
Francis C. Rood*
/s/ William H. Russell Director January 20, 1999
William H. Russell*
/s/ H. David Rybolt Director January 20, 1999
H. David Rybolt*
/s/ P. Bradley Adams Treasurer and Principal January 20, 1999
P Bradley Adams Financial and Accounting
Officer
* By: /s/ Larry D. Armel
Larry D. Armel, Attorney-in-Fact
(Pursuant to Power of Attorney filed herewith)
<PAGE>
BABSON ENTERPRISE FUND, INC.
EXHIBIT INDEX
Exhibit Exhibit No.
Articles of Incorporation EX99.23(a)(1)
Articles Supplementary EX99.23(a)(2)
Articles Supplementary EX99.23(a)(3)
Bylaws EX99.23(b)
Specimen Security EX99.23(c)
Investment Management Agreement EX99.23(d)(1)
Investment Counsel Agreement EX99.23(d)(2)
Underwriting Agreement EX99.23(e)
Custodian Agreement EX99.23(g)
Transfer Agency Agreement EX99.23(h)
Legal Opinion EX99.23(i)
Auditor Consent EX99.23(j)(1)
Power of Attorney EX99.23(j)(2)
Financial Data Schedule EX27.23(n)
EX99.23(a)(1)
ARTICLES OF INCORPORATION
OF
BABSON ENTERPRISE FUND, INC.
FIRST: I, the undersigned, Robert C. Puff, Jr., whose Post-Office
address is 5529 High Drive, Shawnee Mission, Kansas 66208, being at least
twenty-one years of age, do, under and by virtue of the general laws of the
state of Maryland authorizing the formation of corporations, associate myself
as Incorporator with the intention of forming a corporation (hereinafter
called the "Corporation").
SECOND: The name of the Corporation is Babson Enterprise Fund, Inc.
THIRD: The purpose for which the Corporation is formed is to act as an
open-end, diversified management investment company under the Investment
Company Act of 1940, as amended, and to exercise and enjoy all of the powers,
rights and privileges granted to, or conferred upon, corporations of a
similar character by the general laws of the state of Maryland now or
hereafter in force.
FOURTH: The Post-Office address of the principal office of the
Corporation in this state is c/o the Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202. The name of the Resident Agent of the
Corporation in this state is the Corporation Trust Incorporated, a
corporation of this state, and the Post-office address of the Resident Agent
is 32 South Street Baltimore, Maryland 21202.
FIFTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 10,000,000 shares of a par value
of one dollar ($1.00) per share and an aggregate par value of $10,000,000.
The number of the shares of stock of each class is such number, if any, of
shares of unissued stock as is classified or reclassified into such class by
the Corporation's Board of Directors pursuant to the authority contained in
Section 2-l05 of the Maryland General Corporation Law as filed by the
Corporation as Articles Supplementary under Section 2-108 of the Maryland
General Corporation Law (or any successor provisions). The Board of
Directors of the Corporation shall have the power to classify or reclassify
unissued shares into one or more classes which together with the issued
shares of stock of the corporation shall. have such designations as the board
may determine and (subject to any applicable rule, regulation or order of the
Securities and Exchange Commission or other applicable law or regulation)
shall have such preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends, qualifications, terms and
conditions of redemption and other characteristics as the Board may determine
(or in the absence of contrary determination, such as set forth herein). At
any time when there are no shares outstanding or subscribed for a particular
class previously established and designated by the Board of Directors, the
class may be liquidated by similar means. If the Board so determines,
Page 1 of 10
one or more classes of stock may be treated for all purposes other
than dividends as if all shares of such classes were shares of one
class. The dividends payable to the holders of any class (subject to
any applicable rule, regulation or order of the Securities and
Exchange Commission or any other applicable law or regulation) shall
be determined by the Board and need not be individually declared, but
may be declared and paid in accordance with a formula adopted by the
Board. Each share of a class shall have equal rights with each other
share of that class of stock with respect to the assets of the
Corporation pertaining to that class. Any fractional shares of
capital stock issued by the corporation shall have proportionately,
all the rights of full shares. Except as otherwise provided herein,
all references in these articles of incorporation to capital stock or
class of stock shall apply without discrimination to the shares of
each class of stock.
(A) The holders of each share of stock of the Corporation shall
be entitled to one vote for each full share, and a fractional vote for each
fractional share of stock, irrespective of the class then standing in his or
her name in the books of the Corporation. On any matter submitted to a vote
of shareholders, all shares of the Corporation then issued and outstanding
and entitled to vote, irrespective of the class, shall be voted in the
aggregate and not by class, except (1) when otherwise expressly provided by
the Maryland General Corporation Law or (2) when required by the Investment
Company Act of 1940, as amended, shares shall be voted by individual class;
and (3) when the matter does not affect any interest of a particular class,
then only shareholders of the affected class or classes shall be entitled to
vote thereon.
(B) Each class of stock of the Corporation shall have the
following powers, preferences and participating, voting, or other special
rights and the qualifications, restrictions, and limitations thereof shall be
as follows:
(1) All consideration received by the Corporation for the
issue or sale of stock of each class, together with all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to the class of shares of stock with respect to which such
assets, payments or funds were received by the Corporation for all purposes,
subject only to the rights of creditors, and shall be so handled upon the
books of account of the Corporation. Such assets, income, earnings, profits
and proceeds thereof, including any proceeds derived from the sale, exchange
or liquidation thereof and any assets derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as "assets
belonging to" such class.
(2) The Board of Directors may from time to time declare and
pay dividends or distributions, in stock or in cash, on any or all classes of
stock, the amount of such dividends and the payment of them being wholly in
the discretion of the Board of Directors.
(I) Dividends or distributions on shares of any class of
stock shall be paid only out of earnings, surplus, or other lawfully
available assets belonging to such class.
Page 2 of 10
(II) Inasmuch as one goal of the corporation is to
qualify as a regulated investment company" under the Internal Revenue Code of
1954, as amended, or any successor or comparable statute thereto, and
regulations promulgated thereunder; and inasmuch as the computation of net
income and gains for federal income tax purposes may vary from the
computation thereof on the books of the corporation, the Board of Directors
shall have the power in its discretion to distribute in any fiscal year as
dividends, including amounts designated in whole or in part as capital gain
distributions, amounts sufficient, in the opinion of the Board of Directors,
to enable the Corporation to qualify as a regulated investment company and to
avoid liability for the Corporation for federal income tax in respect of that
year. In furtherance, and not in limitation of the foregoing, in the event
that a class of shares has a net capital loss for a fiscal year, and to the
extent that the net capital loss offsets net capital gains from another
class, the amounts to be deemed available for distribution to the class with
the net capital gain shall be reduced by the amount of offset. The
shareholders of the class with the net capital gain shall be entitled to a
full distribution of the net income and the net capital gain to the extent
earned or realized. If the net capital loss of a class exceeds the net
capital gain from another class, the excess loss shall not reduce the net
investment income available for distribution to the class with the loss, but
shall be carried forward.
(3) In the event of the liquidation or dissolution of the
Corporation, shareholders of each class shall be entitled to receive, as a
class, out of the assets of the Corporation available for distribution to
shareholders, but other than general assets not belonging to any particular
class of stock, the assets belonging to such class; and the assets so
distributable to the shareholders of any class shall be distributed among
such shareholders in proportion to the number of shares of such class held
by them and recorded on the books of the Corporation. In the event that
there are any general assets not belonging to any particular class of stock
and available for distribution, such distribution shall be made to the
holders of stock of all classes in proportion to the asset value of the
respective classes determined as hereinafter provided.
(4) The assets belonging to any class of stock shall be
charged with the liabilities in respect to such class, and shall also be
charged with its share of the general liabilities of the Corporation, in
proportion to the asset value of the respective classes determined as
hereinafter set out. The determination of the Board of Directors shall be
conclusive as to the amount of liabilities, including accrued expenses and
reserves, as to the allocation of the same as to a given class, and as to
whether the same or general assets of the Corporation are allocable to one
or more classes.
(C) Each holder of any class of stock of the Corporation, who
shall surrender his certificate in good delivery form to the Corporation or
who, if the shares in question are not represented by certificates, shall
deliver to the Corporation a written request in good order signed by the
shareholder, shall be entitled to require the Corporation, to the extent
that the class of stock in question has assets lawfully available therefor
and out of such assets, but not otherwise, to redeem all or any part of the
shares of such stock standing in the
Page 3 of 10
name of such holder on the books of the Corporation, at the net asset value
of such shares, determined in the manner and as of the time, and payable as
provided in the Investment Company Act of 1940, as amended. The Corporation
shall make payment for any such shares to be redeemed as aforesaid, in cash,
or if in the opinion of the Board of Directors, which shall be conclusive,
conditions exist which make payment wholly in cash unwise or undesirable, the
Corporation may make payment wholly or partly in securities belonging to the
class to provide for such redemption by it of the shares of such class.
(1) The Board of Directors of the Corporation may, in
accordance with the Investment Company Act of 1940, as amended, suspend the
right of the holders of any class of stock of the Corporation to require the
Corporation to redeem shares of such class.
(2) The Board of Directors, in the economic best
interest of the Corporation and in order to reduce the disproportionately
burdensome expenses in servicing shareholder accounts, may from time to time,
establish uniform standards with respect to the minimum value of a
stockholder account or a minimum investment which may be made by a
stockholder. The Board of Directors, by resolution and without the vote or
consent of stockholders, may require that the aggregate net asset value of a
stockholder account shall not be less than the minimum initial investment
requirement of the Corporation at the time of the resolution. The resolution
may authorize the Corporation to close those stockholder accounts not meeting
the specified minimum standards of value by redeeming all of the shares in
such accounts, provided there is mailed to each affected stockholder account,
at least sixty (60) days prior to the planned redemption date, a notice
setting forth the minimum account size requirement and the date on which the
account will be closed if the minimum size requirement is not met prior to
said closing date.
(D) Each holder of any class of stock of the Corporation, who sur-
renders his certificate in good delivery form to the Corporation or, if the
shares in question are not represented by certificates, who delivers to the
Corporation a written request in good order signed by the shareholder, shall
be entitled to convert the shares in question on the basis hereinafter set
forth, into shares of stock of any other class of the Corporation. The
Corporation shall determine the net asset value, as hereinafter defined, of
the shares to be converted and shall deduct therefrom such conversion cost,
hereinafter described and within five (5) business days after such surrender
and payment, shall issue to the shareholder such number of shares of stock of
the class desired taken at the net asset value thereof determined in the same
manner and at the same time as that of the shares surrendered, which shall
equal the net asset value of the shares surrendered less conversion cost as
aforesaid. Any amount representing a fraction of a share may be paid in cash
at the option of the Corporation. The conversion cost above mentioned shall
be determined by adding a transaction charge as determined by the Board of
Directors. The transaction charge may be paid and/or assigned by the
Corporation to the underwriter and/or any other agency, as it may elect.
Upon any conversion taking place, proper transfer shall be made between the
assets belonging to the respective classes of stock. The Board of Directors
may limit this conversion privilege to shares which have been held for such
reasonable period of time as the Directors may determine.
Page 4 of 10
(E) The aggregate net asset value per share of a class of the Corporation's
capital stock shall be determined in accordance with the Investment Company
Act of 1940, as amended, and with generally accepted accounting principles,
by adding the market or appraised value of all securities, cash and other
assets of the Corporation pertaining to that class, subtracting the
liabilities determined by the Board of Directors to be applicable to that
class, and dividing the net result by the number of shares of the class
outstanding. Securities and other investments and assets will be valued at
fair value as determined in good faith by the Board of Directors.
SIXTH: The shares of stock of the Corporation may be issued to such
persons and at such prices from time to time as the Board of Directors may
determine. Such issuance shall be on a nonassessable basis. No holder of
shares of stock shall have pre-emptive rights and the Corporation shall have
the right to issue and sell to any person or persons shares of its stock or
any option rights exercisable for, or securities convertible into shares of
its stock without first offering such shares, rights or securities to the
holders of any shares.
SEVENTH: The number of Directors of the Corporation and their terms of
office shall be determined from time to time by the Directors pursuant to the
by-laws of the Corporation. Such number initially shall be seven and shall
never be less than three. The names of the initial Directors are:
Alfred J. Hoffman William J. Smith
who shall serve until the 1984 annual meeting of stockholders, or until his
successor shall have been duly elected and shall have qualified;
James W. Holman
Robert C. Puff, Jr.
who shall serve until the 1985 annual meeting of stockholders, or until his
successor shall have been duly elected and shall have qualified;
H. Bradlee Perry
Stephen W. Harris
Francis C. Rood
who shall serve until the 1986 annual meeting of stockholders, or until his
successor shall have been duly elected and shall have qualified.
(A) If a vacancy occurs on the Board of Directors by reason of
death, resignation, or otherwise, the Board of Directors may fill such
vacancy for the remainder of the unexpired term by majority vote of the
remaining directors; provided that after filling any such vacancy, at least
two thirds of the Directors shall have been elected by the stockholders, and
provided further that if at any time less than a majority of the Directors
then holding office were
Page 5 of 10
elected by the stockholders, a stockholders' meeting shall be called as
promptly as possible and, in any event, within sixty days, for the purpose of
electing Directors to fill existing vacancies.
EIGHTH: The Corporation is expressly empowered as follows:
(A) The Corporation may enter into a written contract or contracts
with any person, including any firm, corporation, trust, or association in
which any officer, other employee, director or stockholder of this
corporation may be interested, providing for a delegation of the management
of all or part of this corporation's securities portfolio (or portfolios) and
also for the delegation of the performance of administrative corporate
functions, subject always to the direction of the Board of Directors of this
corporation. The compensation payable by this corporation under such
contracts shall be such as is deemed fair and equitable to both parties by
the said Board of Directors. Each such contract shall in all respects be
consistent with and subject to the requirements of the Investment Company Act
of 1940, as amended, as then in effect and regulations of the Securities and
Exchange Commission or any succeeding governmental authority promulgated
thereunder.
(B) The Corporation may appoint one or more distributors or agents
or both for the sale of the shares of the Corporation, may allow such person
or persons a commission on the sale of such shares, and may enter into such
contract or contracts with such person or persons as the Board of Directors
of this Corporation in its discretion may deem reasonable and proper. Any
such contract or contracts for the sale of the shares of this corporation may
be made with any person even though such person may be an officer, other
employee, director or stockholder of this corporation or a corporation,
partnership, trust or association in which any such officer other employee,
director or stockholder may be interested, or such person may be the same as
that person retained pursuant to the powers granted in Section (A) of this
Article EIGHTH. Each such contract shall in all respects be consistent with
and subject to the requirements of the Investment Company Act of 1940, as
amended, as then in effect and regulations of the Securities and Exchange
Commission or any succeeding governmental authority promulgated thereunder.
(C) The Corporation may employ such custodian or custodians for
the safekeeping of the property of the corporation and of its shares, such
dividend disbursing agent or agents, and such transfer agent or agents and
registrar or registrars for its shares, and may make and perform such
contracts for the aforesaid purposes as in the opinion of the Board of
Directors of this Corporation may be reasonable, necessary or proper for the
conduct of the affairs of the Corporation, and may pay the fees and
disbursements of such custodians, dividend disbursing agents, transfer
agents, and registrars out of the income and/or any other property of the
Corporation. Notwithstanding any other provisions of these articles of
incorporation or the by-laws of the Corporation, the Board of Directors may
cause any or all of the property of the Corporation to be transferred to, or
be acquired and held in the name of, a custodian so appointed or any nominees
of this Corporation or nominee or nominees of such custodian satisfactory to
the Board of Directors of this Corporation.
Page 6 of 10
(D) The same person, partnership (general or limited),
association, trust or corporation may be employed in any multiple capacity
under subsections (A), (B) and (C) of this article EIGHTH and may receive
compensation from the Corporation in as many capacities in which such person,
partnership (general or limited), association, trust or corporation shall
serve the Corporation.
NINTH: (A) The Corporation shall indemnify any person who was or is
a party, or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in right of the Corporation), by
reason of the fact that he is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture,
trust, association or other enterprise, against expenses (including
attorney's fees), judgements, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, has no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or
proceeding by judgement, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interests of the Corporation,
and, with respect to any criminal action or proceeding, did not have
reasonable cause to believe that his conduct was unlawful.
(B) The Corporation shall indemnify any person who was or is a
party, or is threatened to be made a party, to any threatened or completed
action, suit or proceeding by or in the right of the Corporation to procure a
judgement in its favor by reason of the fact that he is or was a director or
officer of the Corporation, or is or was serving at the request of the
Corporation as a director or officer of another corporation, partnership,
trust, joint venture, association or other enterprise against expenses
(including attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation; except that no such indemnification
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable for negligence or misconduct in
the performance of his duty to the Corporation, unless and only to the extent
that a court shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper.
(C) To the extent that a director or officer of the Corporation
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subsections (A) and (B), or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Page 7 of 10
(D) Any indemnification under subsections (A) and (B) (unless
ordered by a court of competent jurisdiction) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (A) and (B) of this article NINTH. Such determination shall be
made by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or if such
a quorum is not obtainable, or even if obtainable, a quorum of directors who
are not "interested persons" as defined in the Investment Company Act of
1940, as amended, so directs, by independent legal counsel in a written
opinion, or if such written opinion is not obtainable, by vote of the
stockholders at the annual meeting or a special meeting called for that
purpose.
(E) Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board of
Directors in the specific case upon receipt of any undertaking by or on
behalf of the director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
Corporation as authorized in this article NINTH.
(F) The indemnification provided by this article NINTH shall not
be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or directors who are not "interested persons" as defined in the
Investment Company Act of 1940, as amended, or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs, executors
and administrators of such person.
(G) The Corporation may purchase and maintain insurance on its
behalf and on behalf of any person who is or was a director or officer of the
Corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, trust, joint
venture, association or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this article
NINTH.
(H) Anything to the contrary in the foregoing clauses (A) of this
article NINTH notwithstanding, no director or officer shall be indemnified
against any liability to the Corporation or to its security which he would
otherwise be subject by reason of willful misfeasance, gross negligence or
reckless disregard of the duties involved in the conflict of his office.
TENTH: In furtherance, and not in limitation, of the powers conferred
by the laws of the State of Maryland, the Board of Directors is expressly
authorized:
Page 8 of 10
(A) To make, alter or repeal the where such power is reserved by
the by-laws otherwise required by the Investment Company
by-laws of the Corporation, except to the stockholders, and except as Act of
1940, as amended.
(B) From time to time to determine whether and to what extent and
at what times and places and under what conditions and regulations the books
and accounts of the Corporation, or any of them other than the stock ledger,
shall be open to the inspection of the stockholder, and no stockholder shall
have any right to inspect any account or book or document of the Corporation,
except as conferred by law or authorized by resolution of the Board of
Directors or of the stockholders.
(C) To authorize and issue obligations of the Corporation, secured
and unsecured, without assent or vote of the stockholders, as the Board of
Directors may determine, and to authorize and cause to be executed mortgages
and liens upon the property of the Corporation, real and/or personal, but
only to the extent permitted by the fundamental policies of the Corporation
set out in its registration statement filed with the Securities and Exchange
Commission or any succeeding governmental authority, pursuant to the
Investment Company Act of 1940, as amended.
(D) In addition to the powers and authorities granted herein and
by statute expressly conferred upon it, the Board of Directors is authorized
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of Maryland law, these Articles of Incorporation, and the by-laws
of the Corporation.
ELEVENTH: The books of the Corporation may be kept (subject to any
provisions of Maryland law) outside the state of Maryland at such place or
places as may be designated from time to time by the Board of Directors or in
the by-laws of the Corporation. Elections of directors need not be by ballot
unless the by-laws of the Corporation so provide.
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in these Articles of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
THIRTEENTH: Notwithstanding any provision of Maryland law requiring
more than a majority vote of the common stock in connection with any
corporate action including, but not limited to, amendment of these Articles
of Incorporation, unless otherwise provided in these Articles of
Incorporation the Corporation may take or authorize such action upon the
favorable vote of the holders of a majority of the outstanding shares of
common stock.
FOURTEENTH The duration of the Corporation shall be perpetual.
Page 9 of 10
IN WITNESS WHEREOF, the undersigned Incorporator of the Babson
Enterprise Fund, Inc. who executed the foregoing Articles of
Incorporation hereby acknowledges that to the best of his knowledge the
matters and facts set forth herein are true in all material respects under
penalties of perjury.
Dated the 30th day of June, 1983.
/s/Robert C. Puff
Robert C. Puff
Page 10 of 10
EX99.23(a)(2)
BABSON ENTERPRISE FUND, INC.
ARTICLES SUPPLEMENTARY TO THE CHARTER
The BABSON ENTERPRISE FUND, INC., a Maryland Corporation having its
Principal office in Baltimore City, Maryland (hereinafter called the
Corporation), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The board of directors of the Corporation, at a meeting duly convened
and held on July 14, 1983, adopted a resolution classifying or reclassifying
ten million (10,000,000) unissued shares of the par value of one dollar
($1.00) per share of the Capital Stock of the Corporation as Enterprise
Portfolio Stock by setting or changing before the issuance of such shares,
the preferences, rights voting powers, restrictions, limitations as to
dividends, qualification or terms of redemption of, and the conversion or
other rights, thereof as hereinafter set forth.
SECOND: The preferences, conversion and other rights, voting powers,
restrictions, 1imi~atiops as to dividends, qualifications and terms and
conditions of redemption shall be as set out in Article FIFTH of the
corporation's Articles of Incorporation.
THIRD: The shares aforesaid have been duly classified by the board of
directors pursuant to authority and power contained in the charter of the
Corporation.
IN WITNESS WHEREOF, The BABSON ENTERPRISE FUND, INC. has caused these
presents to be signed in its name and on its behalf by its President and
witnessed (or attested) by its Secretary on October 7, 1983.
BABSON ENTERPRISE FUND, INC.
By: /s/Alfred J. Hoffman
President, Alfred J. Hoffman
Witness: (Attest)
/s/Jacqueline B. Willhite, Secretary
Jacqueline B. Willhite
PAGE 1 OF2 PAGES
THE UNDERSIGNED, President of BABSON ENTERPRISE FUND, INC., who executed on
behalf of said corporation the foregoing Articles Supplementary to the
Charter, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said corporation, the foregoing Articles
Supplementary to be the corporate act of said corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/Alfred J. Hoffman
Alfred J. Hoffman
PAGE 2 OF 2 PAGES
EX99.23(a)(3)
ARTICLES SUPPLEMENTARY
TO ARTICLES OF INCORPORATION
OF
BABSON ENTERPRISE FUND, INC.
The BABSON ENTERPRISE FUND, INC., a Maryland corporation having its
principal office in Baltimore, Maryland (hereinafter called the
"Corporation", hereby certifies to the State Department of Assessments and
Taxation of Maryland, in accordance with the requirements of Section 2-208
and 2-208.1 of the Maryland General Corporation Law that:
FIRST: The Corporation is registered as an open-end management
investment company under the Investment Company Act
1940.
SECOND: The total number of shares which the Corporation currently
has authority to issue is Ten Million (10,000,000) shares of stock, with a
par value of one dollar ($1.00) per share, known as Common Stock and such
Common Stock having an aggregate par value of Ten Million Dollars
($10,000,000), is classified and allocated into one class as follows:
Number of Shares of Common Stock
Name of Class Initially Classified and Allocated
Enterprise Portfolio 10,000,000
THIRD: The Board of Directors of the Corporation, at a meeting duly
convened and held on April 18, 1991, adopted resolutions increasing the
authorized capital of the Corporation by Ten Million (10,000,000) shares of
Common Stock with a par value of one dollar ($1.00) per share, to Twenty
Million (20,000,000) shares and allocating and classifying the additional
shares as follows:
Number of Shares of Common Stock
Name of Class Initially Classified and Allocated
Enterprise Portfolio 10,000,000
FOURTH: The shares of the Enterprise Portfolio series so classified
and allocated shall have all the rights and privileges as set forth in the
Corporation's Articles of Incorporation, including such priority in the
assets and liabilities of such series as may be provided in such Articles.
FIFTH: The shares of the Enterprise Portfolio series have been
classified by the Board of Directors pursuant to authority contained in the
Articles of Incorporation of the Corporation.
1
SIXTH: After giving effect to the increase and to the allocation,
the aggregate par value of all Common Stock of the Corporation is Twenty
Million Dollars ($20,000,000) and the total amount of Common Stock, with a
par value of one dollar ($1.00) per share, allocated to each class is as
follows:
Total Number of
Name of Class Shares Allocated
Enterprise Portfolio 20,000,000
SEVENTH: The total number of shares of capital stock that the
Corporation has authority to issue has been increased by the Board of
Directors in accordance with Section 2-105(c) of the Maryland General
Corporation Law.
IN WITNESS WHEREOF, BABSON ENTERPRISE FUND, INC. has Caused these
presents to be signed in its name and on its behalf by its President and
attested by its Assistant Secretary on April 22, 1991.
BABSON ENTERPRISE FUND, INC.
/s/Larry D. Armel
Larry D. Armel, President
Attest:
/s/Rosemary James
Rosemary James, Assistant Secretary
THE UNDERSIGNED, President of BABSON ENTERPRISE FUND, INC., who
executed on behalf of said Corporation the foregoing Articles Supplementary
to the Articles of Incorporation, of which this certificate is made a part,
hereby acknowledges, in the name and on behalf of said Corporation, the
foregoing Articles Supplementary to the Articles of Incorporation to be the
corporate act of said Corporation and further certifies that, to the best of
his knowledge, information and belief, the matters set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
/s/Larry D. Armel
Larry D. Armel, President
2
EX99.23(b)
AMENDED AND RESTATED BY-LAWS
AS OF NOVEMBER 30, 1996
OF
BABSON ENTERPRISE FUND, INC.
ARTICLE I
FISCAL YEAR AND OFFICES
Section 1. Fiscal Year. Unless otherwise provided by
resolution of the Board of Directors, the fiscal year of the corporation
shall begin on the first day of December and end on the last day of
November.
Section 2. Registered Office. The registered office of the
corporation in Maryland shall be C/O the CORPORATION TRUST,
INCORPORATED, 32 South Street, Baltimore, Maryland, 21202.
Section 3. Other Offices. The corporation shall have a place of
business in the State of Missouri, and the corporation shall have
the power to open additional offices for the conduct of its business,
either within or outside the states of Maryland and Missouri, at such
places as the Board of Directors may from time to time designate.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meeting. Meetings of the stockholders for
the election of directors shall be held in such place as the Board of
Directors may by resolution establish. In the absence of any specific
resolution, annual meetings of stockholders shall be held at the
corporation's principal office in the State of Missouri. Meetings of
stockholders for any other purpose may be held at such place and time as
shall be stated in the notice of the meeting, or in a duly executed
waiver of notice thereof.
Section 2. Annual Meetings. The annual meetings of stockholders,
if held, shall be held at such time during the month of September as
may be fixed by the Board of Directors by resolution each year. At any
annual meeting, the stockholders shall elect a Board of Directors and
transact any other business which may properly be brought before the
meeting. No annual meeting of stockholders shall be required in any
year in which the only business to be transacted at such meeting does
not require action by stockholders on any one or more of the following:
(1) the election of directors;
(2) approval of the investment advisory agreement;
(3) ratification of the selection of independent public
accountants;
(4) approval of a distribution agreement.
Section 3. Special Meetings. At any time in the interval between
annual meetings, special meetings of the stockholders may be called by
the president or by a majority of the Board of Directors and shall be
called by the president or secretary upon written request of the
holders of shares entitled to cast not less than ten percent of all the
votes entitled to be cast at such meeting.
Section 4. Notice. Not less than ten nor more than ninety days
before the date of every annual or special stockholders' meeting,
the secretary shall give to each stockholder entitled to vote at such
meeting written notice stating the time and place of the meeting and, in
the case of a special meeting, the purpose or purposes for which the
meeting is called. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 5. Record Date for Meetings. The Board of Directors may
fix in advance a date not more than ninety days, nor less than ten days,
prior to the date of any annual or special meeting of the stockholders
as a record date for the determination of the stockholders entitled to
receive notice of, and to vote at any meeting and any adjournment
thereof; and in such case such stockholders and only such stockholders
as shall be stockholders of record on the date so fixed shall be
entitled to receive notice of and to vote only such shares held and
outstanding on such record date that continue to be held and outstanding
at the time of voting.
Section 6. Quorum. At any meeting of stockholders, the
presence in person or by proxy of the holders of a majority of the
aggregate shares of stock at the time outstanding shall constitute a
quorum. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have the
power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have
been transacted at the meeting originally notified.
Section 7. Majority. The vote of the holders of a majority of
the stock having voting power, as measured by the applicable quorum
requirements set forth in Section 6, present in person or represented
by proxy, at a meeting duly called and at which a quorum is present,
shall be sufficient to take or authorize action upon any matter which
may properly come before the meeting, unless otherwise required by the
Investment Company Act of 1940, as amended.
Section 8. Voting. Each stockholder shall have one vote for each
full share and a fractional vote for each fractional share of stock
having voting power held by such stockholder on each matter submitted to
a vote at a meeting of stockholders. A stockholder may cast his vote in
person or by proxy, but no proxy shall be valid after eleven months
from its date, unless otherwise provided in the proxy. At all meetings
of stockholders, unless the voting is conducted by inspectors, all
questions relating to the qualification of voters and the validity of
proxies and the acceptance or rejection of votes shall be decided by
the chairman of the meeting.
Section 9. Inspectors. At any election of directors, the Board
of Directors prior thereto may, or, if they have not so acted, the
chairman of the meeting may, and upon the request of the holders of ten
percent (10%) of the shares entitled to vote at such election shall,
appoint two inspectors of election who shall first subscribe an oath of
affirmation to execute faithfully the duties of inspectors at such
election with strict impartiality and according to the best of their
ability, and shall after the election make a certificate of the result
of the vote taken. No candidate for the office of director shall
be appointed such inspector. The chairman of the meeting may cause a
vote by ballot to be taken upon any election or matter, and such vote
shall be taken upon the request of the holders of ten percent (10%)
of the stock entitled to vote on such election or matter.
Section 10. Stockholder List. The officer who has charge of the
stock ledger of the corporation shall, at least ten days before every
election of directors, prepare and make a complete list of the
stockholders entitled to vote at said election, arranged in
alphabetical order, showing the address and the number of shares
registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, during ordinary business hours,
for a period of at least ten days prior to the election, either at a
place within the city, town or village where the election is to be
held and which place shall be specified in the notice of meeting, or
if not specified, at the place where said meeting is to be held,
and the list shall be produced and kept at the time and place of
election during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business of the corporation shall
be managed by its Board of Directors, which may exercise all powers
of the corporation, except such as are by statute, or the Articles of
Incorporation, or by these By-laws conferred upon or reserved to the
stockholders.
Section 2. Number and Term of Office. The number of directors
which shall constitute the whole Board shall be determined from time to
time by the Board of Directors, but shall not be fewer than three. Each
director elected shall hold office until his successor is elected and
qualified. Directors need not be stockholders.
Section 3. Elections. The Directors shall all be of one class
and shall serve until their respective successors are elected and
qualified.
Section 4. Place of Meeting. Meetings of the Board of
Directors, regular or special, may be held at any place in or out of the
State of Maryland as the Board may from time to time determine.
Section 5. Quorum. At all meetings of the Board of Directors a
majority of the entire Board of Directors shall constitute a quorum for
the transaction of business and the action of a majority of the
directors present at any meeting at which a quorum is present shall be
the action of the Board of Directors unless the concurrence of a
greater proportion is required for such action by the laws of the State
of Maryland, these By-laws or the Articles of Incorporation or a
different number is required by the Investment Company Act of 1940, as
amended. If a quorum shall not be present at any meeting of
directors, the directors present thereat may by a majority vote adjourn
the meeting from time to time, without notice other than announcement
at the meeting, until a quorum shall be present.
Section 6. First Meeting. The first meeting of each newly
constituted Board of Directors shall be held as soon as practicable
after the annual meeting of stockholders in each year, at such time
and place as shall be specified in a notice given as hereinafter
provided for meetings of the Board of Directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 7. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and place as shall
from time to time be determined by the Board of Directors.
Section 8. Special Meetings. Special meetings of the Board of
Directors may be called by the president on one day's notice to each
director; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of
two directors.
Section 9. Telephonic Meetings. Regular or special meetings,
except for meetings to approve an investment advisory agreement or a
distribution plan, of the Board of Directors or any committee thereof,
may be held by means of a conference telephone or similar communications
equipment so that 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 the meeting.
Section 10. Informal Actions. Any action, except approval of an
investment advisory agreement, or a distribution plan, required or
permitted to be taken at any meeting of the Board of Directors or
any committee thereof may be taken without a meeting, if written
consent to such action is signed in one or more counterparts by all
members of the Board or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the
Board or committee.
Section 11. Committees. The Board of Directors may by
resolution passed by a majority of the whole Board appoint from among
its members an executive committee and other committees composed of two
or more directors, and may delegate to such committees, in the
intervals between meetings of the Board of Directors, any or all of
the power of the Board of Directors in the management of the business
and affairs of the corporation, except the power to declare dividends,
to issue stock or to recommend to stockholders any action requiring
stockholders' approval. In the absence of any member of such
committee, the members thereof present at any meeting, whether or
not they constitute a quorum, may appoint a member of the Board of
Directors to act in the place of such absent member.
Section 12. Action of Committees. The committees shall keep
minutes of their proceedings and shall report the same to the Board
of Directors at the meeting next succeeding, and any action by
committees shall be subject to revision and alteration by the Board of
Directors, provided that no rights of third persons shall be affected
by any such revision or alteration.
Section 13. Compensation. Any director, whether or not he is a
salaried officer or employee of the corporation, may be compensated
for his services as a director or as a member of a committee of
directors, or as chairman of the Board or chairman of a committee by
fixed or periodic payments or by fees for attendance at meetings or by
both, and in addition may be reimbursed for transportation and other
expenses, all in such manner and amounts as the Board of Directors may
from time to time determine.
Section 14. Removal. The stockholders of this corporation 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.
ARTICLE IV
NOTICES
Section 1. Form. Notices to stockholders shall be in writing and
delivered personally or mailed to the stockholders at their addresses
appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice
to directors need not state the purpose of a regular or special meeting.
Section 2. Waiver. Whenever any notice of the time, place or
purpose of any meeting of stockholders, directors or committee is
required to be given under the provisions of Maryland law or under
the provisions of the Articles of Incorporation or these By-laws, a
waiver thereof in writing, signed by the person or persons entitled to
such notice and filed with the records of the meeting, whether
before or after the holding thereof, or actual attendance at the
meeting of stockholders in person or by proxy, or at the meeting of
directors or committee in person, shall be deemed equivalent to the
giving of such notice to such persons.
ARTICLE V
OFFICERS
Section 1. Officers of the Corporation. The officers of the
corporation shall be elected by the Board of Directors and shall
include a president, who shall be a director, a secretary and a
treasurer. The Board of Directors may, from time to time, elect or
appoint a controller, one or more vice-presidents, assistant secretaries
and assistant treasurers. The president shall preside at meetings of
the Board of Directors, unless the Board of Directors, at its
discretion, elects a chairman of the Board to preside at such
meetings. In addition, such chairman shall perform and execute such
executive and administrative duties and have such powers as the Board
of Directors may from time to time prescribe. Two or more offices may
be held by the same person but no officer shall execute, acknowledge
or verify any instrument in more than one capacity, if such instrument
is required by law, the Articles of Incorporation or these By-laws to
be executed, acknowledged or verified by two or more officers.
Section 2. Election. The Board of Directors at its first meeting
after each annual meeting of stockholders shall choose a president, a
secretary and a treasurer.
Section 3. Compensation. The salaries or other compensation of
all officers and agents of the corporation paid directly by the
corporation shall be fixed by the Board of Directors, except that the
Board of Directors may delegate to any person or group of persons the
power to fix such salaries or other compensation.
Section 4. Tenure. The officers of the corporation shall serve
for one year and until the successors are chosen and qualify.
Any officer or agent may be removed by the affirmative vote of a
majority of the Board of Directors whenever, in its judgment, the best
interests of the corporation will be served thereby. Any vacancy
occurring in any office of the corporation by death, resignation,
removal or otherwise shall be filled by the Board of Directors.
Section 5. President. The president, unless the chairman has
been so designated, shall be the chief executive officer of the
corporation. He shall preside at all meetings of the stockholders and
directors and shall see that all orders and resolutions of the Board
are carried into effect. The president shall also be the chief
administrative officer of the corporation and shall perform such other
duties and have such other powers as the Board of Directors may from
time to time prescribe.
Section 6. Vice-Presidents. The vice-presidents, in the order
of their seniority, shall in the absence or disability of the
president, perform the duties and exercise the powers of the president
and shall perform such other duties as the Board of Directors may
from time to time prescribe.
Section 7. Secretary. The secretary shall attend all meetings
of the Board of Directors and all meetings of the stockholders and
record all the proceedings thereof and shall perform like duties for
any committee when required. In the absence of the secretary or an
assistant secretary, proceedings of such meetings shall be recorded by a
person selected by the chairman of the meeting. He shall give, or
cause to be given, notice of meetings of the stockholders and of the
Board of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or president, under whose
supervision he shall be. He shall keep in safe custody the seal of the
corporation and, when authorized by the Board of Directors, affix and
attest the same to any instrument requiring it. The Board of Directors
may give general authority to any other officer to affix the seal of
the corporation and to attest the same by affixing his signature.
Section 8. Assistant Secretaries. The assistant secretaries, in
order of their seniority, shall in the absence or disability of the
secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties as the Board of Directors
shall prescribe.
Section 9. Treasurer. The treasurer, unless another officer
has been so designated, shall be the chief financial officer of the
corporation. He shall be responsible for the maintenance of its
accounting records and shall render to the Board of Directors, at its
regular meetings, or when the Board of Directors so requires, an
account of all the corporation's financial transactions and a report
of the financial condition of the corporation.
Section 10. Controller. The controller shall be under the direct
supervision of the treasurer. He shall maintain adequate records of all
assets, liabilities and transactions of the corporation, establish and
maintain internal accounting control and, in cooperation with the
independent public accountants selected by the Board of Directors, shall
supervise internal auditing. He shall have such further powers and
duties as may be conferred upon him from time to time by the
president or the Board of Directors.
Section 11. Assistant Treasurers. The assistant treasurers, in
the order of their seniority, shall in the absence or disability of
the treasurer, perform the duties and exercise the powers of the
treasurer and shall perform such other duties as the president or
the Board of Directors may from time to time prescribe.
Section 12. Other Officers. The Board of Directors from time
to time may appoint such other officers and agents as it shall deem
advisable, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors. The Board of Directors
from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents, except
assistant treasurers and to prescribe the respective rights, terms of
office, authorities and duties.
ARTICLE VI
NET ASSET VALUE
The net asset value per share of stock of the corporation shall be
determined at least once each day at the close of business on the
New York Stock Exchange on each day the New York Stock Exchange is
open for trading. Net asset value shall be calculated by adding the
value of all securities and other assets of the Fund, deducting its
liabilities and dividing by the number of shares outstanding.
ARTICLE VII
INVESTMENT RESTRICTIONS
The following investment restriction cannot be changed
without the consent of the holders of a majority of the
corporation's outstanding shares of stock; the corporation shall not:
(1) purchase the securities of any one issuer, except the United States
Government, if immediately after and as a result of such purchase (a)
the value of the holdings of the Fund in the securities of such issuer
exceeds 5% of the value of the Fund's total assets, or (b) the Fund owns
more than 10% of the outstanding voting securities, or any other class
of securities, of such issuer; (2) engage in the purchase or sale of
real estate or commodities; (3) underwrite the securities of other
issuers; (4) make loans to any of its officers, directors, or employees,
or to its manager, or general distributor, or officers or directors
thereof; (5) make loans to other persons, except by the purchase of debt
obligations which are permitted under its investment policy; (6) invest
in companies for the purpose of exercising control of management; (7)
purchase securities on margin, or sell securities short; (8) purchase
shares of other investment companies except in the open market at
ordinary broker's commission, but not in excess of 5% of the Fund's
assets, or pursuant to a plan of merger or consolidation; (9) invest in
the aggregate more than 5% of the value of its gross assets in the
securities of issuers (other than federal, state, territorial, or local
governments, or corporations, or authorities established thereby),
which, including predecessors, have not had at least three years'
continuous operations nor invest more than 25% of the Fund's assets in
any one industry; (10) enter into dealings with its officers or
directors, its manager or underwriter, or their officers or directors,
or any organization in which such persons have a financial interest
except for transactions in the Fund's own shares or other securities
through brokerage practices which are considered normal and generally
accepted under circumstances existing at the time; (11) purchase or
retain securities of any company in which any Fund officers or
directors, or Fund manager, its partner, officer, or director
beneficially owns more than 1/2 of 1% of said company's securities, if
all such persons owning more than 1/2 of 1% of such company's
securities, own in the aggregate more than 5% of the outstanding
securities of such company; (12) borrow or pledge its credit under
normal circumstances, except up to 10% of its gross assets (computed at
the lower of fair market value or cost) for temporary or emergency
purposes, and not for the purpose of leveraging its investments, and
provided further that any borrowing in excess of 5% of the total assets
of the Fund shall have asset coverage of at least 3 to 1; (13) make
itself or its assets liable for the indebtedness of others; (14) invest
in securities which are assessable or involve unlimited liability; or
(15) issue senior securities except for those investment procedures
permissible under the Fund's other restrictions.
ARTICLE VIII
OTHER RESTRICTIONS
Section 1. Dealings. The officers and directors of the
corporation and its investment adviser shall have no dealings for or on
behalf of the corporation with themselves as principal or agent, or
with any corporation, partnership, trust, joint venture or association
in which they have a financial interest, provided that this section
shall not prevent:
(A) Officers or directors of the corporation from having
a financial interest in the corporation, in any sponsor, manager,
investment adviser or promoter of the corporation, or in any underwriter
or securities issued by the corporation.
(B) The purchase of securities for the portfolio of the
corporation, or sale of securities owned by the corporation
through a security dealer, one or more of whose partners, officers,
directors or security holders is an officer or director of the
corporation, provided such transactions are handled in a brokerage
capacity only, and provided commissions charged do not exceed customary
brokerage charges for such services.
(C) The employment of any legal counsel, registrar, transfer
agent, dividend disbursing agent or custodian having a partner,
officer, director or security holder who is an officer or director of
the corporation; provided only customary fees are charged for
services rendered to or for the benefit of the corporation.
(D) The purchase for the portfolio of the corporation of
securities issued by an issuer having an officer, director or security
holder who is an officer or director of the corporation or of any
manager of the corporation, unless the retention of such securities in
the portfolio of the corporation would otherwise be a violation of
these By-laws or the Articles of Incorporation of the corporation.
ARTICLE IX
STOCK
Section 1. Certificates. Each stockholder shall be entitled to
a certificate or certificates which shall certify the number of shares
owned by him in the corporation. Each certificate shall be signed by
the president or a vice-president and countersigned by the
secretary or an assistant secretary or the treasurer or an assistant
treasurer and shall be sealed with the corporate seal.
Section 2. Signature. When a certificate is signed by a transfer
agent or an assistant transfer agent or by a transfer clerk acting
on behalf of the corporation and a registrar, the signature of any such
president, vice-president, treasurer, assistant treasurer, secretary or
assistant secretary may be facsimile. In case any officer who
has signed any certificate ceases to be an officer of the corporation
before the certificate is issued, the certificate may nevertheless be
issued by the corporation with the same effect as if the officer had not
ceased to be such officer as of the date of its issue.
Section 3. Recording and Transfer Without Certificates.
Notwithstanding the foregoing provisions of this article, the
corporation shall have full power to participate in any program
approved by the Board of Directors providing for the recording and
transfer of ownership of shares of the corporation's stock by
electronic or other means without the issuance of certificates.
Section 4. Lost Certificates. The Board of Directors may direct
a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
alleged to have been stolen, lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of
stock to be stolen, lost or destroyed, or upon other satisfactory
evidence of such loss or destruction. When authorizing such
issuance of a new certificate or certificates, the Board of Directors
may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such stolen, lost or destroyed
certificate or certificates, or his legal representative to
advertise the same in such manner as it shall require and to give the
corporation a bond with sufficient surety, to the corporation to
indemnify it against any loss or claim that may be made by reason of the
issuance of a new certificate.
Section 5. Registered Stockholders. The corporation shall be
entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as
such owner, and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any
other person, whether or not it shall have express or other notice
thereof, except, as otherwise provided by the laws of Maryland.
Section 6. Transfer Agents and Registrars. The corporation may
act as its own transfer agent and/or registrar, or it may delegate
those duties to others. The Board of Directors may from time to time,
appoint or remove transfer agents and/or registrars of stock of the
corporation, and it may appoint the same person as both transfer agent
and registrar. Upon any such appointment being made all certificates
representing shares of stock thereafter issued shall be countersigned
by one of such transfer agents or by one of such registrars or by both
and shall not be valid unless so countersigned. If the same person
shall be both transfer agent and registrar, only countersignature by
such person shall be required.
Section 7. Stock Ledger. The corporation shall maintain an
original stock ledger containing the names and addresses of all
stockholders and the number and class of shares held by each
stockholder. Such stock ledger may be in written form or any other
form capable of being converted into written form within a reasonable
time for visual inspection.
Section 8. Transfers of Stock. The corporation shall transfer or
otherwise change the registration of its issued and outstanding shares
in its stock ledger upon receipt of an authorization in a form proper
and acceptable to it or its duly appointed agent. To the extent such
shares are evidenced by a certificate or certificates, the surrender
of such certificate properly endorsed shall be required where necessary.
Upon receipt of the transfer instructions in proper order by the
corporation, the corporation shall change its stock ledger records
accordingly and record the transaction upon its books.
ARTICLE X
GENERAL PROVISIONS
Section 1. Dividends. With respect to dividends (including
"dividends" designated as "short" or "long" term "capital gains"
distributions to satisfy requirements of the Investment Company Act of
1940, as amended, or the Internal Revenue Code of 1954, as amended from
time to time):
(A) Such dividends, at the election of the stockholders,
may be automatically reinvested in additional shares (or fractions
thereof) of the corporation at the "net asset value" determined on the
reinvestment date fixed by the Board of Directors.
(B) The Board of Directors in declaring any dividend, may fix a
record date not earlier than the date of declaration or more than 40
days prior to the date of payment, as of which the stockholders
entitled to receive such dividend shall be determined,
notwithstanding any transfer or the repurchase or issue (or sale) of
any shares after such record date.
(C) Dividends or distributions on shares of stock whether
payable in stock or cash, shall be paid out of earnings, surplus or
other lawfully available assets; provided that no dividend payment, or
distribution in the nature of a dividend payment, may be made wholly or
partly from any source other than accumulated, undistributed net
income, determined in accordance with good accounting practice,
and not including profits or losses realized in the sale of securities
or other properties, unless such payment is accompanied by a written
statement clearly indicating what portion of such payment per share
is made from the following sources:
(i) accumulated or undistributed net income not
including profits or losses from the sale of securities or other
properties;
(ii) accumulated undistributed net profits from the sale of
securities or other properties;
(iii) net profits from the sale of securities or other
properties during the then current fiscal year; and
(iv) paid-in surplus or other capital source.
(D) In declaring dividends and in recognition that the one goal
of the corporation is to qualify as a "regulated investment company"
under the Internal Revenue Code of 1954, as amended, the Board
of Directors shall be entitled to rely upon estimates made in the last
two months of the fiscal year as to the amounts of distribution
necessary for this purpose; and the Board of Directors, acting
consistently with good accounting practice and with the express
provisions of these By-laws, may credit receipts and charge payments to
income or otherwise, as it may seem proper.
(E) Any dividends declared, except as aforesaid, shall be
deemed liquidating dividends and the stockholders shall be so informed
to whatever extent may be required by law. A notice that dividends
have been paid from paid-in surplus, or a notice that dividends have
been paid from paid-in capital, shall be deemed to be a sufficient
notice that the same constitutes liquidating dividends.
(F) Anything in these By-laws to the contrary
notwithstanding, the Board of Directors may at any time declare and
distribute pro rata among the stockholders of a record date fixed as
above, a "stock dividend" out of either authorized but unissued,
or treasury shares of the corporation, or both.
Section 2. Rights in Securities. The Board of Directors, on
behalf of the corporation, shall have the authority to exercise all of
the rights of the corporation as owners of any securities which
might be exercised by any individual owning such securities in his own
right; including but not limited to, the rights to vote by proxy for
any and all purposes (including the right to authorize any officer
of the manager to execute proxies), to consent to the
reorganization, merger or consolidation of any company or to consent to
the sale, lease or mortgage of all or substantially all of the property
and assets of any company; and to exchange any of the shares of stock
of any company for shares of stock issued therefor upon any such
reorganization, merger, consolidation, sale, lease or mortgage.
Section 3. Custodianship. Securities owned by the corporation
and cash representing (A) the proceeds from sales of securities
owned by the corporation and of shares issued by the corporation, (B)
payments of principal upon securities owned by the corporation, or (C)
capital distributions in respect of securities owned by the
corporation shall be held by one or more custodians, as permitted by
the Investment Company Act of 1940, as amended, to be selected by the
Board of Directors. Each bank and/or trust company selected as a
custodian shall be organized and existing under a state banking
and/or trust company law, or shall be a national banking association
incorporated under the laws of the United States of America and
qualified to act as a trust company, and shall have an aggregate
capital, surplus and undivided profits of not less than $2,000,000.
Each custodian shall enter into an agreement with the corporation to
serve as a custodian of such securities and cash on terms consistent
with the provisions of these By-laws. From the time any such trust
company, banking association or other permissible entity becomes a
custodian of such securities and cash, it shall:
(A) Deliver securities owned by the corporation, only upon
sale of such securities for the account of the corporation and receipt
of payment therefor by the custodian, or when such securities may be
called, redeemed, retired or otherwise become payable, provided that
this provision shall not prevent:
(i) Delivery of securities for examination to the broker
selling the same, in accordance with the "street delivery" custom,
whereby such securities are delivered to such broker in exchange
for a delivery receipt exchanged on the same day for an
uncertified check of such broker to be presented on the same day
for certification.
(ii) Delivery of securities of an issuer in exchange
for or for conversion into, other securities alone, or cash and
other securities, pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment of the
securities of such issuer or for deposit with a reorganization
committee or protective committee, pursuant to a deposit
agreement.
(iii) The conversion by the custodian of securities owned
by the corporation, pursuant to the provisions of such
securities into other securities.
(iv) The surrender by the custodian of warrants, rights
or similar securities owned by the corporation in the exercise of
such warrants, rights or similar securities, or the surrender of
interim receipts or temporary securities for definitive
securities.
(v) The delivery of securities as collateral on
borrowing affected by the corporation, subject to the limitations
of Article VII of these By-laws.
(vi) The delivery of securities owned by the corporation,
as a complete or partial redemption in kind of securities
issued by the corporation.
(B) Deliver funds on the corporation only upon the purchase of
securities for the portfolio of the corporation, and the delivery of
such securities to the custodian; provided always, that such limitation
shall not prevent the release of funds by the custodian for
redemption of shares issued by the corporation, for payment of interest,
dividend disbursements, taxes, management fees, custodian fees, other
operating expenses properly authorized by an officer or officers as
required by the custodian agreement, payments in connection with
conversion, exchange or surrender of securities owned by the
corporation (as set forth in Subsection A of this Section) and for
organizational and such other obligations as approved by the Board of
Directors certified in writing.
(C) Upon the resignation or inability of a custodian to serve as
custodian of the assets of the corporation, the corporation shall use
its best efforts to obtain a successor custodian, to require that the
cash and securities owned by the corporation be delivered directly
to such successor custodian and, in the event that no such successor
can be found, to submit to the stockholders -- before permitting
delivery of the cash and securities owned by the corporation to
anyone other than a successor custodian -- the question of whether the
corporation shall be liquidated or shall function without such
custodian.
(D) Nothing hereinbefore contained shall prevent any such
custodian from delivering assets of the corporation to a successor
custodian having the qualifications hereinabove prescribed.
(E) No directors, officers, employees or agents of the
corporation shall be authorized or permitted to withdraw any assets
held by the custodian, except as permitted in this Article X and in the
Custodian Agreement. Directions, notices or instructions to the
custodian, with respect to delivery of securities, payment of cash or
otherwise, shall be given by such officer or officers and/or such
person or persons, and in such manner, as the Board of Directors may
from time to time designate.
Section 4. Reports. The corporation shall transmit to the
stockholders, at least semiannually, a report of the operations of the
corporation based at least annually upon an audit by independent public
accountants. Said report shall clearly set forth the information
customarily furnished in a balance sheet and profit and loss
statement, and in addition, shall clearly set forth a statement
of all amounts paid directly to securities dealers, legal counsel,
transfer agents, disbursing agents, registrars, custodians or
trustees, where such payments are made to a firm, corporation, bank or
trust company having an officer, director or partner who is also an
officer or director of this corporation. A copy or copies, of all
reports submitted to the stockholders of this corporation shall also be
sent, as required to the regulatory agencies of the United States of
America and the states in which the securities of this corporation are
registered and sold.
Section 5. Bonding of Officers and Employees. All officers and
employees of the corporation shall be bonded to such extent, and in
such manner, as may be required by law.
Section 6. Seal. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the words
"Corporate Seal, Maryland." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise reproduced.
ARTICLE XI
AMENDMENTS
These By-laws may be altered, amended, repealed or restated at any
regular or special meeting of the Board of Directors, provided that
the provisions of Article VII may not be altered, amended, repealed
or restated without the consent of a majority of the holders of the
corporation's outstanding common stock (as defined in the Investment
Company Act of 1940, as amended, and the corporation's Articles of
Incorporation) and provided further that the right of the Board of
Directors to alter, amend, repeal or restate and the procedures
therefor meet the requirements of the Investment Company Act of 1940, as
amended, if any.
13
15
EX99.23(c)
A MARYLAND CORPORATION
BABSON ENTERPRISE FUND, INC.
Common Stock Par Value, $1.00 Per Share
THIS CERTIFIES THAT ________________________________________________ is
the registered holder of ______________________________________________ Shares
of
BABSON ENTERPRISE FUND, INC.
transferable only on the books of the Corporation by the holder hereof in person
or by Attorney upon surrender of this Certificate properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this ___________day of _____________________A.D. 19__.
- ------------------------------ ----------------------------
Secretary President
Registered and Countersigned
By ________________________________
Authorized Person
<PAGE>
DEMAND FOR REDEMPTION
THE UNDERSIGNED SHAREHOLDER hereby surrenders to the Corporation this
certificate and the shares evidenced thereby and demands redemption in
accordance with the provisions of Article ______ of the Articles of
Incorporation and as described in the Prospectus.
_____________________, 19__ ---------------------------------------
Date Shareholder
- --------------------------------
Witness
THE SHAREHOLDER SHOULD REFER TO THE PROSPECTUS
FOR SIGNATURE GUARANTEE REQUIREMENTS
ASSIGNMENT
For Value Received, _______ hereby
sell, assign and transfer unto
- ---------------------------------------------
- ---------------------------------------------
Shares represented by the within Certificate,
and do hereby irrevocably constitute and
appoint -------------------------------------
Attorney to transfer the said Shares on
the Books of the within named Corporation
with full powers of substitution in the premises.
Dated _____________________, 19__
In the presence of
----------------------------------
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE, IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT, OR ANY
CHANGE WHATEVER.
CUSIP 056160-10-4
COM
EX99.23(d)(1)
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
BABSON ENTERPRISE FUND, INC.
THIS AGREEMENT, made and entered into this 30th day of June, 1995,
by and between BABSON ENTERPRISE FUND, INC., (a Maryland corporation,
hereinafter referred to as the "Fund") and JONES & BABSON, INC., a
corporation organized under the laws of the State of Missouri
(hereinafter referred to as the "Manager"), and which Agreement may be
executed in any number of counterparts, each of which shall be deemed to
be an original, but all of which together shall constitute but one
instrument.
WHEREAS the Fund was founded and incorporated by the Manager for
the purpose of engaging in the business of investing and reinvesting its
property and assets and to operate as an open-end diversified,
management investment company, as defined in the Investment Company Act
of 1940 as amended (Act), under which it is registered with the
Securities and Exchange Commission, and
WHEREAS the Manager was formed for and is engaged in the business
of supplying investment advice and management service to the Fund, as an
independent contractor and,
WHEREAS the Manager desires to enter into a contractual
arrangement whereby the Manager provides investment advice and
management service to the Fund for a fee.
NOW THEREFORE, in consideration of the mutual promises herein
contained, and other good and valuable consideration, receipt of which
is hereby acknowledged, it is mutually agreed and contracted by and
between the parties hereto that:
1. The Fund hereby employs the Manager, for the period set forth
in Paragraph 5 hereof, and on the terms set forth herein, to render
investment advice and management service to the Fund, subject to the
supervision and direction of the Board of Directors of the Fund. The
Manager hereby accepts such employment and agrees, during such period,
to render the services and assume the obligations herein set forth, for
the compensation herein provided. The Management shall, for all purposes
herein, be deemed to be an independent contractor, and shall, except as
provided in the Underwriting Agreement between the Manager and the Fund
or unless otherwise expressly provided and authorized, have no authority
to act for or represent the Fund in any way, or in any other way be
deemed an agent of the Fund.
The Manager shall furnish the Fund investment management and
administrative services. Investment management shall include analysis,
research and portfolio recommendations consistent with the Fund's
objectives and policies. Administrative services shall include the
services and compensation of such members of the Manager's organization
as shall be duly elected officers and/or Directors of the Fund and such
other personnel as shall be necessary to carry out its normal
operations; fees of the independent Directors, the custodian, the
Page 1 of 5
independent public accountant, investment counsel and legal counsel (but
not legal and audit fees and other costs in contemplation of or arising
out of litigation or administrative actions to which the Fund, its
officers or Directors are a party or incurred in anticipation of
becoming a party); rent; the cost of a transfer and dividend disbursing
agent or similar in-house services; bookkeeping; accounting; and all
other clerical and administrative functions as may be reasonable and
necessary to maintain the Fund's records and for it to operate as an
open-end management investment company. Exclusive of the management
fee, the Fund shall bear the cost of any interest, taxes, dues, fees and
other charges of governments and their agencies including the cost of
qualifying the Fund's shares for sale in any jurisdiction, brokerage
commissions, or any other expenses incurred by it which are not assumed
herein by the Manager.
All property, equipment and information used by the Manager in the
management and administration of the Fund shall belong to the Manager.
Should the management and administrative relationship between the Fund
and the Manager terminate, the Fund shall be entitled to, and the
Manager shall provide the Fund, a copy of all information and records in
the Manager's file necessary for the Fund to continue its functions,
which shall include computer systems and programs in use as of the date
of such termination; but nothing herein shall prohibit thereafter the
use of such information, systems or programs by the Manager, so long as
such does not unfairly interfere with the continued operation of the
Fund.
2. As compensation for the services to be rendered to the Fund by
the Manager under the provisions of this agreement, the Fund agrees to
pay semimonthly to the Manager an annual fee based on the average total
net assets of the Fund computed daily in accordance with its Certificate
of Incorporation and By-Laws as follows:
a. Eighty-five one-hundredths of one percent (85/100 of 1%) of
the average total net assets of the Fund that do not exceed two hundred
fifty million dollars ($250,000,000).
b. Seventy one-hundredths (70/100 of 1%) of the average total net
assets of the Fund that exceed two hundred fifty million dollars
($250,000,000).
c. Should the Fund's normal operating expenses except for taxes,
fees and other charges of governments and their agencies including the
cost of qualifying the Fund's shares for sale in any jurisdiction,
interest, brokerage commissions and costs arising out of litigation or
administrative actions, all as described in paragraph 1, exceed the
limits set out in sub-paragraphs a and b of this paragraph 2, the
Investment Manager shall reimburse the Fund in the amount of the excess.
3. It is understood and agreed that the services to be rendered
by the Manager to the Fund under the provisions of the Agreement are not
to be deemed exclusive, and the Manager shall be free to render similar
or different services to others so long as its ability to render the
services provided for in this Agreement shall not be impaired thereby.
4. It is understood and agreed that the Directors, officers,
agents, employees, and shareholders of the Fund may be interested in the
Manager as owners, employees, agents or otherwise, and that owners,
employees and agents of the Manager may be interested in the Fund as
shareholders or otherwise. It is understood and agreed that
shareholders, officers, Directors, and other personnel of the Manager
are and may continue to be officers and Directors of the Fund, but that
they receive no remuneration from the Fund solely for acting in those
capacities.
Page 2 of 5
5. This Agreement shall be executed and become effective pursuant
to its approval by the Fund's Board of Directors and by the vote of a
majority of the outstanding shares of the Fund as prescribed by the Act.
It shall remain in force through the 31st day of October, 1996, and
thereafter may be renewed for successive periods not exceeding one year
only so long as such renewal and continuance is specifically approved at
least annually by the Board of Directors or by vote of a majority of the
outstanding shares of the Fund as prescribed by the Act, and only if the
terms and the renewal of this Agreement have been approved by a vote of
a majority of the Directors of the Fund including a majority of the
Directors who are not parties to the Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of
voting on such approval. No amendment to this Agreement shall be
effective unless the terms thereof have been approved by the vote of a
majority of outstanding shares of the Fund as prescribed by the Act and
by vote of a majority of the Directors of the Fund who are not parties
to the Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval. It shall
be the duty of the Directors of the Fund to request and evaluate, and
the duty of the Manager to furnish, such information as may reasonably
be necessary to evaluate the terms of this Agreement and any amendment
thereto. This Agreement may be terminated at any time, without the
payment of any penalty, by the Directors of the Fund, or by the vote of
a majority of the outstanding voting shares of the Fund as prescribed by
the Act on not more than sixty days written notice to the Manager, and
it may be terminated by the Manager upon not less than sixty days
written notice to the Fund. It shall terminate automatically in the
event of its assignment by either party unless the parties hereby, by
agreement, obtain an exemption from the Securities and Exchange
Commission from the provisions of the Act pertaining to the subject
matter of this paragraph. Any notice, request or instruction provided
for herein,or for the giving of which, the occasion may arise hereunder,
shall be deemed duly given, if in writing and mailed by registered mail,
postage prepaid, addressed to the regular executive office of the Fund
or the Manager as the case may be. As used in this Agreement, the terms
"assignment", "a majority of the outstanding voting shares", and
"interested persons" shall have the same meaning as similar terms
contained in the Act.
6. It is specifically provided in this Agreement that the Manager
is to secure the services of DAVID L. BABSON & CO. INC. of Cambridge,
Massachusetts (at the sole expense of the Manager), as its Investment
Counsel to furnish advice and recommendations with respect to the
purchase and sale of securities and the making of portfolio commitments;
to place at the disposal of the Manager such statistical information as
may reasonably be required and in general to superintend the investments
of the Fund, subject to the control and approval of the Board of
Directors of the Manager and the Board of Directors of the Fund.
7. As a condition of this agreement, the Manager will provide in
its Investment Counsel agreement with DAVID L. BABSON & CO. INC. for the
exclusive right of the Fund to use the name "Babson" as part of its
name, so long as JONES & BABSON, INC., or any successor in interest,
continues as its Manager and DAVID L. BABSON & CO. INC., or any
successor in interest, continues as an Investment Counsel to the
Manager. The term "exclusive right of the Fund" appearing in the
preceding sentence means that no other investment company, whether or
not registered under the Investment Company Act of 1940, as amended,
will be entitled to use the precise name "Babson" so long as the Fund
has the right to use it as a part of its name. However, nothing herein
shall prohibit the right of JONES & BABSON, INC., Mr. Babson, or DAVID
L. BABSON & CO. INC. from granting to another investment company managed
by JONES & BABSON, INC. with DAVID L. BABSON & CO. INC. as its
Investment Counsel,
PAge 3 of 5
and which has investment objectives and policies
different from those of the Fund, to use in its name either the name
"Babson" or "D. L. Babson" or "Babson (D. L.)" or "Jones & Babson" or
any combination of these names. Should the Fund terminate either JONES
& BABSON, INC. or its successor as Manager for the Fund, or DAVID L.
BABSON & CO. INC., or its successor, as its Investment Counsel, either
JONES & BABSON, INC. or DAVID L. BABSON & CO. INC., or their respective
successors in interest, may elect to notify the Fund in writing that
permission to use the name "David L. Babson" (or any part thereof) has
been withdrawn, whereupon the Fund, its officers, directors and
shareholders, expressly agree to take all necessary corporate action and
to proceed expeditiously to change the name of the Fund and not use any
other name or take any other action which would indicate the Fund's
continued association with David L. Babson & Co. Inc., Mr. Babson, or
JONES & BABSON, INC. If the use of the name "David L. Babson" (or any
part thereof) is so withdrawn as aforesaid, the Fund, its officers,
directors and shareholders, understand and agree that there shall be no
limitation with respect to the future use of the name "David L. Babson"
(or any part thereof) by David L. Babson & Co. Inc., or its successor in
interest, or with the permission of David L. Babson & Co. Inc., or its
successor, by JONES & BABSON, INC. or its successor.
8. The agreement between JONES & BABSON, INC. and DAVID L. BABSON
& CO. INC. also shall provide that, although it is not anticipated,
there may occur some unforeseen reason which would prohibit DAVID L.
BABSON & CO. INC., as a matter of reasonable business necessity,
continuing as an Investment Counsel to JONES & BABSON, INC. Should such
circumstances occur, BABSON ENTERPRISE FUND, INC., or its successor may
elect to terminate its services, even though the Fund would want to
continue to use the name "Babson" and continue JONES & BABSON, INC., or
its successor, as Manager. Upon receipt of such a written notice, the
Fund, its officers, directors and shareholders, agree to take all
necessary corporate action and proceed expeditiously to change the name
of the Fund not later than one year after the effective date of the
termination notice, and not use any other name or take any other action
which would indicate the Fund's continued association with DAVID L.
BABSON & CO. INC., Mr. Babson or JONES & BABSON, INC. In consideration
for this right, DAVID L. BABSON & CO. INC. and JONES & BABSON, INC.
agree that should the name "Babson" be withdrawn, they will not permit
another investment company, whether or not registered under the
Investment Company Act of 1940, to use the name "Babson" as part of its
name for a period of five years subsequent to the effective date of the
written withdrawal request, unless this prohibition is waived or
modified by a majority vote of the Fund's shareholders entitled to vote
at the next annual meeting of the Fund's shareholders following receipt
of the request, and if any such action is also approved by the majority
of shares entitled to vote at a duly constituted meeting of the
shareholders of JONES & BABSON, INC. For this right to withdraw the
name "Babson" from the use of the Fund, DAVID L. BABSON & CO. INC. will
agree in its contract with JONES & BABSON, INC. that it will not compete
with JONES & BABSON, INC. for the management of the Fund during said
five-year period, unless this no-compete provision is waived by a
majority of the shares entitled to vote at a duly constituted meeting of
the shareholders of JONES & BABSON, INC.
9. It is further agreed that the provisions of Paragraphs 7 and 8
shall inure to the benefit of DAVID L. BABSON & CO. INC. and may be
imposed by it or any successor in interest as if it or such successor in
interest were parties to this Agreement.
10. The Manager shall not be liable for any error in judgment or
mistake at law for any loss suffered by the Fund in connection with any
matters to which this Agreement relates, except
Page 4 of 5
that nothing herein
contained shall be construed to protect the Investment Manager against
any liability by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reckless disregard of its
obligations or duties under this Agreement.
11. This Agreement may not be amended, transferred, assigned,
sold or in any manner hypothecated or pledged nor may any new Agreement
become effective without affirmative vote or written consent of the
holders of a majority of the shares of the Fund.
BABSON ENTERPRISE FUND, INC.
By/s/Larry D. Armel
Larry D. Armel
President
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
JONES & BABSON, INC.
By/s/Larry D. Armel
Larry D. Armel
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
Page 5 of 5
EX99.23(d)(2)
INVESTMENT COUNSEL AGREEMENT
Between
JONES & BABSON, INC.
and
DAVID L. BABSON & CO. INC.
THIS AGREEMENT made this 30th day of June, 1995 by and between JONES &
BABSON, INC. (hereinafter referred to as the "Manager"), and DAVID L. BABSON
& CO. INC. (hereinafter referred to as the "Investment Counsel"), and which
Agreement may be executed in any number of counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute but
one instrument.
WITNESSETH:
WHEREAS, the Directors of the Manager want to enter into a contract with
the Investment Counsel to render the Manager the following services:
To furnish research, analysis, advice and recommendations with respect
to the purchase and sale of securities and the making of investment
commitments; to place at the disposal of the Manager such statistical
information and reports as may reasonably be required, and in general to
superintend the investments of the BABSON ENTERPRISE FUND, INC. (Fund),
subject to the control of the Directors of the Fund and JONES & BABSON, INC.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties agree as follows:
1. During the term of this Agreement, or any extension or extensions
thereof, the Investment Counsel will, to the best of its ability, furnish the
foregoing services.
2. As compensation, JONES & BABSON, INC. will pay Investment Counsel for
its services the following annual fee computed daily as determined by the
Fund's price make-up sheet and which shall be payable monthly or at such other
intervals as agreed by the parties.
a. Seventy one-hundredths of one percent (70/100 of 1%) of the average
daily total net assets of the Fund which do not exceed thirty million
dollars ($30,000,000).
b. Fifty one-hundredths of one percent (50/100 of 1%) of the average
daily total net assets of the Fund which exceed thirty million
dollars ($30,000,000).
Page 1 of 4
3. This Agreement shall become effective concurrently with the
investment Management Agreement between JONES & BABSON, INC. and the BABSON
ENTERPRISE FUND, INC. pursuant to the approval of the shareholders of the Fund
according to the provisions of the Investment Company Act of 1940 (Act).
4. This Agreement shall continue for a period ending October 31, 1996.
It may be renewed thereafter for successive periods not exceeding one year
only so long as such renewal and continuance is specifically approved at least
annually by the Board of Directors of the Fund or by a vote of the majority of
the outstanding voting securities of the Fund as prescribed by the Act and
provided further that such continuance is approved at least annually
thereafter by a vote of a majority of the Directors who are not parties to
such Agreement or interested persons of such party, cast in person at a
meeting called for the purpose of voting on such approval. The Investment
Counsel shall provide the Manager such information as may be reasonably
necessary to assist the Directors of the Fund to evaluate the terms of the
Management Agreement. This Agreement automatically will terminate with the
Management Agreement without the payment of any penalty, upon sixty days
written notice by the Fund to the Manager that the Board of Directors or the
shareholders by vote of a majority of the outstanding voting securities of the
Fund, as provided by the Act, has terminated the Management Agreement.
This Agreement shall automatically terminate in the event of its
assignment or assignment of the Management Agreement unless such assignment is
approved by the Directors and the shareholders of the Fund as herein before
provided or unless an exemption is obtained from the Securities and Exchange
Commission from the provisions of the Act pertaining to the subject matter of
this paragraph.
5. It is expressly understood and agreed that the services to be
rendered by the Investment Counsel to the Manager under the provisions of this
Agreement are not to be deemed to be exclusive, and the Investment Counsel
shall be free to render similar or different services to others so long as its
ability to render the services provided for in this Agreement shall not be
impaired thereby, and provided further that the services to be rendered by the
Investment Counsel to the Manager under this Agreement and the compensation
provided for in Paragraph 2 hereof shall be limited solely to services with
reference to the Fund.
6. The Manager agrees that it will furnish currently to Investment
Counsel all information reasonably necessary to permit Investment Counsel to
give the advice called for under this Agreement and such information with
reference to the Fund that is reasonably necessary to permit Investment
Counsel to carry out its responsibilities under this Agreement, and the
parties agree that they will from time to time consult and make appropriate
arrangements as to specific information that is required under this paragraph
and the frequency and manner with which it shall be supplied.
7. The Investment Counsel shall not be liable for any error of judgment
or mistake at law or for any loss suffered by the Manager or the Fund in
connection with any matters to which this Agreement relates except that
nothing herein contained shall be construed to protect the Investment Counsel
against any liability by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reckless disregard of its
obligations or duties under this agreement.
Page 2 of 4
8. In compliance with the provisions of the Management Agreement between
the Fund and JONES & BABSON, INC., Investment Counsel agrees with Manager that
subject to the terms and conditions of this Paragraph 8, the Fund may use the
name of "David L. Babson" (or any part thereof) as part of its name so long
as JONES & BABSON, INC., or any successor in interest, continues as Manager
and DAVID L. BABSON & CO. INC., or any successor in interest, continues as
Investment Counsel. Should the Fund terminate either JONES & BABSON, INC., or
its successor as Manager, or DAVID L. BABSON & CO. INC., or its successor as
Investment Counsel, either JONES & BABSON, INC., or DAVID L. BABSON & CO.
INC., or their respective successors in interest, may elect to notify the Fund
in writing that permission to use the name "David L. Babson" (or any part
thereof) has been withdrawn. It is understood that the Fund has, in its
Management Agreement with JONES & BABSON, INC., expressly agreed that it, its
officers, directors and shareholders will take all necessary corporate action
and proceed expeditiously to change the name of the Fund and not use any other
name or take any action which would indicate the Fund's continued association
with DAVID L. BABSON & CO. INC. If the use of the name "David L. Babson" (or
any part thereof) is so withdrawn as aforesaid, it is understood and agreed
that there shall be no limitation with respect to the future use of the name
"David L. Babson" (or any part thereof) by DAVID L. BABSON & CO. INC., or its
successor in interest, or by JONES & BABSON, INC. or its successor in
interest.
9. Although it is not anticipated, there may occur some unforeseen
reason which would prohibit DAVID L. BABSON & CO. INC., as a matter of
reasonable business necessity, continuing as Investment Counsel. Should such
circumstances occur, DAVID L. BABSON & CO. INC., or its successor may elect to
terminate its services, even though the Fund would want to continue to use the
name "David L. Babson" (or any part thereof) and continue JONES & BABSON,
INC., or its successor, as manager with DAVID L. BABSON & CO. INC., or its
successor, as Investment Counsel. Upon receipt of such a written notice, the
Fund, its officers, directors and shareholders, have agreed in the Management
Agreement between the Fund and JONES & BABSON, INC., for the benefit of DAVID
L. BABSON & CO. INC., to take all necessary corporate action and proceed
expeditiously to change the name of the Fund (but if necessary, take up to one
year from the effective date of the termination of the Management Agreement)
and not use any other name or take any other action which would indicate the
Fund's continued association with DAVID L. BABSON & CO. INC. In consideration
for this right, DAVID L. BABSON & CO. INC. agrees that should it so request
the withdrawal of the name "David L. Babson" (or any part thereof) it will not
permit another investment company, whether or not registered under the
Investment Company Act of 1940, to use the name "David L. Babson" (or any part
thereof) as part of its name for a period of five years subsequent to the
effective date of the written withdrawal request, unless this prohibition is
waived or modified by a majority vote of the Fund's shareholders entitled to
vote at a duly constituted meeting of the Fund's shareholders following
receipt of the request, and if any such action is also approved by the
majority of shares entitled to vote at a duly constituted meeting of the
shareholders of JONES & BABSON, INC. For this right to withdraw the name
"David L. Babson" (or any part thereof) from the use of the Fund, DAVID L.
BABSON & CO. INC. agrees that it will not compete with JONES & BABSON, INC.
for the management of the Fund during said five-year period, unless this no-
compete provision is waived by a majority of the shares entitled to vote at a
duly
Page 3 of 4
constituted meeting of the shareholders of JONES & BABSON, INC.
Each party hereby executes this Agreement as of the 30th day of June,
1995, pursuant to the authority granted by its Board of Directors.
DAVID L. BABSON & CO. INC.
By: /s/ Peter C. Thompson
Peter C. Thompson
ATTEST:
By: /s/ Paula C. Howell
Paula C. Howell
JONES & BABSON, INC.
By: /s/ Larry D. Armel
Larry D. Armel
ATTEST:
By: /s/ Martin A. Cramer
Martin A. Cramer
Page 4 of 4
EX99.23(e)
UNDERWRITING AGREEMENT
Between
BABSON ENTERPRISE FUND, INC.
and
JONES & BABSON, INC.
THIS AGREEMENT, made and entered into this 30th day of September, 1993, by
and between BABSON ENTERPRISE FUND, INC., (a Maryland corporation,
hereinafter referred to as the "Fund") and JONES & BABSON, Inc. (a Missouri
corporation, hereinafter referred to as "Principal Underwriter")
1. Subject to the provisions of its Certificate of Incorporation and By-
Laws, copies of which have been delivered to and are acknowledged by the
Principal Underwriter, the Board of Directors of the Fund hereby appoint the
firm of Jones & Babson, Inc. as the Principal Underwriter and sole
distributor of the shares of the Fund, except for shares which the Fund may
elect pursuant to authority of its Board of Directors to issue direct to
registered owners, which shall include by definition but not by limitation
stock issued by virtue of reinvestment of dividends, or as the result of a
splitting of shares, or as the result of the Fund merging or consolidating
with another organization, or in return for acquisition of assets, or as the
result of shares issued in connection with a contractual plan for which the
Fund is the underlying investment, or for the purpose of complying with the
registration laws of a particular state or jurisdiction.
2. In consideration of its appointment under this Agreement as Principal
Underwriter, Jones & Babson, Inc. agrees to pay all costs of all management,
supervisory and administrative services required in the normal operation of
the Fund. This includes investment management and supervision; fees of the
custodian, independent public accountants and legal counsel; remuneration of
directors, officers and other personnel; rent; shareholder services,
including the maintenance of the shareholder accounting system and transfer
agency; and such other items as are incidental to corpor~te adm~nistration.
Not considered normal operating expenses and therefore payable by the Fund,
are taxes, interest, fees and other charges of governments and their agencies
including the cost of qualifying the Fund's shares for sale in any
jurisdiction, brokerage costs, dues and all extraordinary costs and expenses
including but not limited to legal and accounting fees incurred in
anticipation of or arising out of litigation or administrative proceedings to
which the Fund, its directors or officers may be subject or a party thereto.
3. The Fund agrees to prepare and file registration statements with the
Securities and Exchange Commission and the Securities Departments of the
various states and other jurisdictions in
1 OF 3 PAGES
which the shares may be offered, and do such other things and to take such
other actions as may be mutually agreed upon by and between the parties as
shall be reasonably necessary in order to effect the registration and the
sale of the Fund's shares.
4. The Principal Underwriter agrees to place its full facilities at the
disposal of the Fund and to assist and cooperate fully with respect to the
registration and qualification of the Fund's shares, as well as perform all
functions required in connection with any offering including, but not limited
to, the creation and preparation of literature, advertising, and any other
promotional material for the purpose of selling the Fund's shares.
5. Jones & Babson, Inc. will act as agent of the Fund and not as principal
in the solicitation and sale of the shares of the Fund unless expressly
agreed to in writing by the Principal Underwriter and the Fund.
6. Normally, the Fund shall not exercise any direction or control over the
time and place of solicitation, the persons to be solicited, or the manner of
solicitation; but the Principal Underwriter agrees that solicitations shall
be in a form acceptable to the Fund and shall be subject to such terms and
conditions as may be prescribed from time to time by the Fund, the
Registration Statement, the Prospectus, the Certificate of Incorporation, and
By-Laws of the Fund, and shall not violate any provision of the laws of the
United States or of any other jurisdiction to which solicitations are
subject, or violate any rule or regulation promulgated by any lawfully
constituted authority to which the Fund or Principal Underwriter may be
subject.
7. The Fund agrees to issue new shares direct to the registered owner
pursuant to this Agreement and according to instructions from the Principal
Underwriter, subject to the net asset value of such shares next effective
after acceptance of the order by the Fund and as more fully set out in
paragraph 8.
8. The Fund hereby authorizes the Principal Underwriter to sell its shares
in accordance with the following schedule of prices:
The applicable price will be the net asset value per share next
effective after receipt and acceptance by the Fund of a proper offer to
purchase, determined in accordance with the Certificate of
Incorporation, By-Laws, Registration Statement and Prospectus of the
Fund.
9. The Fund agrees that, as long as this Agreement is in effect, it will
not authorize anyone else to offer or solicit applications for shares of the
Fund and will not accept any such application if submitted by or through
anyone other than the Principal Underwriter, unless the Principal Underwriter
shall first have agreed in writing to such authorization.
2 OF 3 PAGES
10. This Agreement (i) may be terminated without the payment of any
penalty, either by vote of the Board of Directors of the Fund or by vote of a
majority of the outstanding voting securities of the Fund, on sixty (60) days
written notice to the Principal Underwriter; (ii) may be terminated without
penalty by the Principal Underwriter on sixty (60) days written notice to the
Fund; and (iii) shall immediately terminate in the event of its assignment.
11. The Principal Underwriter agrees that it will not take either a short
or long position with respect to shares of the Fund; that it will not place
orders for more shares than are required to fill the requests received by it
as agent of the Fund; and that it will expeditiously transmit all such orders
to the Fund.
12. Nothing contained in this Agreement shall be deemed to protect the
Principal Underwriter against any liability to the Fund or to its securities
holders to which the Principal Underwriter would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties hereunder, or by reason of its reckless disregard
of its obligations and duties hereunder.
13. This Agreement shall become effective on the date first above written,
and continue in effect through the 31st day of October, 1994 and thereafter
shall continue automatically for successive annual periods ending with each
31st day of October, provided that such continuance is specifically approved
at least annually by the Board of Directors or by vote of a majority of the
outstanding voting securities of the Fund and provided further that this
Agreement or any renewal thereof shall be approved by the vote of a majority
of the Directors who are not parties to the Agreement or interested persons
of any such party, cast in person, at a meeting called for the purpose of
voting on such approval.
BABSON ENTERPRISE FUND, INC.
By /s/Larry D. Armel
Larry D. Armel
President
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
Secretary
JONES & BABSON, INC.
By /s/Larry D. Armel
Larry D. Armel
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
3 OF 3 PAGES
EX99.23(g)
CUSTODY AGREEMENT
Dated May 5, 1997
Between
UMB BANK, N.A.
and
JONES & BABSON FUNDS
TABLE OF CONTENTS
SECTION PAGE
1. Appointment of Custodian 1
2. Definitions 1
(a) Securities 1
(b) Assets 2
(c) Instructions and Special Instructions 2
3. Delivery of Corporate Documents 2
4. Powers and Duties of Custodian and Domestic Subcustodian 3
(a) Safekeeping 4
(b) Manner of Holding Securities 4
(c) Free Delivery of Assets 5
(d) Exchange of Securities 6
(e) Purchases of Assets 6
(f) Sales of Assets 7
(g) Options 7
(h) Futures Contracts 8
(i) Segregated Accounts 9
(j) Depository Receipts 9
(k) Corporate Actions, Put Bonds, Called Bonds, Etc. 9
(l) Interest Bearing Deposits 10
(m) Foreign Exchange Transactions 10
(n) Pledges or Loans of Securities 11
(o) Stock Dividends, Rights, Etc. 12
(p) Routine Dealings 12
(q) Collections 12
(r) Bank Accounts 13
(s) Dividends, Distributions and Redemptions 13
(t) Proceeds from Shares Sold 13
(u) Proxies and Notices; Compliance with the Shareholders
Communication Act of 1985 13
(v) Books and Records 14
(w) Opinion of Fund's Independent Certified Public Accountants 14
(x) Reports by Independent Certified Public Accountants 14
(y) Bills and Others Disbursements 14
5. Subcustodians 15
(a) Domestic Subcustodians 15
(b) Foreign Subcustodians 15
(c) Interim Subcustodians 16
(d) Special Subcustodians 16
(e) Termination of a Subcustodian 17
(f) Certification Regarding Foreign Subcustodians 17
6. Standard of Care 17
(a) General Standard of Care 17
(b) Actions Prohibited by Applicable Law, Events Beyond
Custodian's Control, Armed 17
Conflict, Sovereign Risk, etc.
(c) Liability for Past Records 18
(d) Advice of Counsel 18
(e) Advice of the Fund and Others 18
(f) Instructions Appearing to be Genuine 18
(g) Exceptions from Liability 19
7. Liability of the Custodian for Actions of Others 19
(a) Domestic Subcustodians 19
(b) Liability for Acts and Omissions of Foreign Subcustodians 19
(c) Securities Systems, Interim Subcustodians, Special
Subcustodians, Securities 20
Depositories and Clearing Agencies
(d) Defaults or Insolvencies of Brokers, Banks, Etc. 20
(e) Reimbursement of Expenses 20
8. Indemnification 20
(a) Indemnification by Fund 20
(b) Indemnification by Custodian 21
9. Advances 21
10. Liens 21
11. Compensation 22
12. Powers of Attorney 22
13. Termination and Assignment 22
14. Additional Funds 23
15. Notices 23
16. Miscellaneous 23
CUSTODY AGREEMENT
This agreement made as of this 5th day of May, 1997, between UMB Bank,
n.a., a national banking association with its principal place of business
located at Kansas City, Missouri (hereinafter "Custodian"), and each of the
Funds which have executed the signature page hereof together with such
additional Funds which shall be made parties to this Agreement by the
execution of a separate signature page hereto (individually, a "Fund" and
collectively, the "Funds").
WITNESSETH:
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended; and
WHEREAS, each Fund desires to appoint Custodian as its custodian for the
custody of Assets (as hereinafter defined) owned by such Fund which Assets are
to be held in such accounts as such Fund may establish from time to time; and
WHEREAS, Custodian is willing to accept such appointment on the terms
and conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutually covenant
and agree as follows:
1. APPOINTMENT OF CUSTODIAN.
Each Fund hereby constitutes and appoints the Custodian as custodian of
Assets belonging to each such Fund which have been or may be from time to time
deposited with the Custodian. Custodian accepts such appointment as a
custodian and agrees to perform the duties and responsibilities of Custodian
as set forth herein on the conditions set forth herein.
2. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
meanings so indicated:
(a) "Security" or "Securities" shall mean stocks, bonds, bills, rights,
script, warrants, interim certificates and all negotiable or nonnegotiable
paper commonly known as Securities and other instruments or obligations.
(b) "Assets" shall mean Securities, monies and other property held by
the Custodian for the benefit of a Fund.
(c)(1) "Instructions", as used herein, shall mean: (i) a tested telex,
a written (including, without limitation, facsimile transmission) request,
direction, instruction or certification signed or initialed by or on behalf of
a Fund by an Authorized Person; (ii) a telephonic or other oral communication
from a person the Custodian reasonably believes to be an Authorized Person; or
(iii) a communication effected directly between an electro-mechanical or
electronic device or system (including, without limitation, computers) on
behalf of a Fund. Instructions in the form of oral communications shall be
confirmed by the appropriate Fund by tested telex or in writing in the manner
set forth in clause (i) above, but the lack of such confirmation shall in no
way affect any action taken by the Custodian in reliance upon such oral
Instructions prior to the Custodian's receipt of such confirmation. Each Fund
authorizes the Custodian to record any and all telephonic or other oral
Instructions communicated to the Custodian.
(c)(2) "Special Instructions", as used herein, shall mean Instructions
countersigned or confirmed in writing by the Treasurer or any Assistant
Treasurer of a Fund or any other person designated by the Treasurer of such
Fund in writing, which countersignature or confirmation shall be included on
the same instrument containing the Instructions or on a separate instrument
relating thereto.
(c)(3) Instructions and Special Instructions shall be delivered to the
Custodian at the address and/or telephone, facsimile transmission or telex
number agreed upon from time to time by the Custodian and each Fund.
(c)(4) Where appropriate, Instructions and Special Instructions shall
be continuing instructions.
3. DELIVERY OF CORPORATE DOCUMENTS.
Each of the parties to this Agreement represents that its execution does
not violate any of the provisions of its respective charter, articles of
incorporation, articles of association or bylaws and all required corporate
action to authorize the execution and delivery of this Agreement has been
taken.
Each Fund has furnished the Custodian with copies, properly certified or
authenticated, with all amendments or supplements thereto, of the following
documents:
(a) Certificate of Incorporation (or equivalent document) of the Fund
as in effect on the date hereof;
(b) By-Laws of the Fund as in effect on the date hereof;
(c) Resolutions of the Board of Directors of the Fund appointing the
Custodian and approving the form of this Agreement; and
(d) The Fund's current prospectus and statements of additional
information.
Each Fund shall promptly furnish the Custodian with copies of any
updates, amendments or supplements to the foregoing documents.
In addition, each Fund has delivered or will promptly deliver to the
Custodian, copies of the Resolution(s) of its Board of Directors or Trustees
and all amendments or supplements thereto, properly certified or
authenticated, designating certain officers or employees of each such Fund who
will have continuing authority to certify to the Custodian: (a) the names,
titles, signatures and scope of authority of all persons authorized to give
Instructions or any other notice, request, direction, instruction, certificate
or instrument on behalf of each Fund, and (b) the names, titles and signatures
of those persons authorized to countersign or confirm Special Instructions on
behalf of each Fund (in both cases collectively, the "Authorized Persons" and
individually, an "Authorized Person"). Such Resolutions and certificates may
be accepted and relied upon by the Custodian as conclusive evidence of the
facts set forth therein and shall be considered to be in full force and effect
until delivery to the Custodian of a similar Resolution or certificate to the
contrary. Upon delivery of a certificate which deletes or does not include
the name(s) of a person previously authorized to give Instructions or to
countersign or confirm Special Instructions, such persons shall no longer be
considered an Authorized Person authorized to give Instructions or to
countersign or confirm Special Instructions. Unless the certificate
specifically requires that the approval of anyone else will first have been
obtained, the Custodian will be under no obligation to inquire into the right
of the person giving such Instructions or Special Instructions to do so.
Notwithstanding any of the foregoing, no Instructions or Special Instructions
received by the Custodian from a Fund will be deemed to authorize or permit
any director, trustee, officer, employee, or agent of such Fund to withdraw
any of the Assets of such Fund upon the mere receipt of such authorization,
Special Instructions or Instructions from such director, trustee, officer,
employee or agent.
4. POWERS AND DUTIES OF CUSTODIAN AND DOMESTIC SUBCUSTODIAN.
Except for Assets held by any Subcustodian appointed pursuant to
Sections 5(b), (c), or (d) of this Agreement, the Custodian shall have and
perform the powers and duties hereinafter set forth in this Section 4. For
purposes of this Section 4 all references to powers and duties of the
"Custodian" shall also refer to any Domestic Subcustodian appointed pursuant
to Section 5(a).
(a) Safekeeping.
The Custodian will keep safely the Assets of each Fund which are
delivered to it from time to time. The Custodian shall not be responsible for
any property of a Fund held or received by such Fund and not delivered to the
Custodian.
(b) Manner of Holding Securities.
(1) The Custodian shall at all times hold Securities of each
Fund
either: (i) by physical possession of the share certificates or
other
instruments representing such Securities in registered or bearer form; or (ii)
in book-entry form by a Securities System (as hereinafter defined) in
accordance with the provisions of sub-paragraph (3) below.
(2) The Custodian may hold registrable portfolio Securities
which
have been delivered to it in physical form, by registering the same in the
name of the appropriate Fund or its nominee, or in the name of the Custodian
or its nominee, for whose actions such Fund and Custodian, respectively, shall
be fully responsible. Upon the receipt of Instructions, the Custodian shall
hold such Securities in street certificate form, so called, with or without
any indication of fiduciary capacity. However, unless it receives
Instructions to the contrary, the Custodian will register all such portfolio
Securities in the name of the Custodian's authorized nominee. All such
Securities shall be held in an account of the Custodian containing only assets
of the appropriate Fund or only assets held by the Custodian as a fiduciary,
provided that the records of the Custodian shall indicate at all times the
Fund or other customer for which such Securities are held in such accounts and
the respective interests therein.
(3) The Custodian may deposit and/or maintain domestic
Securities
owned by a Fund in, and each Fund hereby approves use of: (a) The Depository
Trust Company; (b) The Participants Trust Company; and (c) any book-entry
system as provided in (i) Subpart O of Treasury Circular No. 300, 31 CFR
306.115, (ii) Subpart B of Treasury Circular Public Debt Series No. 27-76, 31
CFR 350.2, or (iii) the book-entry regulations of federal agencies
substantially in the form of 31 CFR 306.115. Upon the receipt of Special
Instructions, the Custodian may deposit and/or maintain domestic Securities
owned by a Fund in any other domestic clearing agency registered with the
Securities and Exchange Commission ("SEC") under Section 17A of the Securities
Exchange Act of 1934 (or as may otherwise be authorized by the SEC to serve in
the capacity of depository or clearing agent for the Securities or other
assets of investment companies) which acts as a Securities depository. Each
of the foregoing shall be referred to in this Agreement as a "Securities
System", and all such Securities Systems shall be listed on the attached
Appendix A. Use of a Securities System shall be in accordance with applicable
Federal Reserve Board and SEC rules and regulations, if any, and subject to
the following provisions:
(i) The Custodian may deposit the Securities directly
or through
one or more agents or Subcustodians which are also qualified to act as
custodians for investment companies.
(ii) The Custodian shall deposit and/or maintain the
Securities
in a Securities System, provided that such Securities are represented in an
account ("Account") of the Custodian in the Securities System that includes
only assets held by the Custodian as a fiduciary, custodian or otherwise for
customers.
(iii) The books and records of the Custodian shall at
all times
identify those Securities belonging to any one or more Funds which are
maintained in a Securities System.
(iv) The Custodian shall pay for Securities purchased
for the
account of a Fund only upon (a) receipt of advice from the Securities System
that such Securities have been transferred to the Account of the Custodian in
accordance with the rules of the Securities System, and (b) the making of an
entry on the records of the Custodian to reflect such payment and transfer for
the account of such Fund. The Custodian shall transfer Securities sold for
the account of a Fund only upon (a) receipt of advice from the Securities
System that payment for such Securities has been transferred to the Account of
the Custodian in accordance with the rules of the Securities System, and (b)
the making of an entry on the records of the Custodian to reflect such
transfer and payment for the account of such Fund. Copies of all advices from
the Securities System relating to transfers of Securities for the account of a
Fund shall be maintained for such Fund by the Custodian. The Custodian shall
deliver to a Fund on the next succeeding business day daily transaction
reports which shall include each day's transactions in the Securities System
for the account of such Fund. Such transaction reports shall be delivered to
such Fund or any agent designated by such Fund pursuant to Instructions, by
computer or in such other manner as such Fund and Custodian may agree.
(v) The Custodian shall, if requested by a Fund
pursuant to
Instructions, provide such Fund with reports obtained by the Custodian or any
Subcustodian with respect to a Securities System's accounting system, internal
accounting control and procedures for safeguarding Securities deposited in the
Securities System.
(vi) Upon receipt of Special Instructions, the
Custodian shall
terminate the use of any Securities System on behalf of a Fund as promptly as
practicable and shall take all actions reasonably practicable to safeguard the
Securities of such Fund maintained with such Securities System.
(c) Free Delivery of Assets.
Notwithstanding any other provision of this Agreement and except as
provided in Section 3 hereof, the Custodian, upon receipt of Special
Instructions, will undertake to make free delivery of Assets, provided such
Assets are on hand and available, in connection with a Fund's transactions and
to transfer such Assets to such broker, dealer, Subcustodian, bank, agent,
Securities System or otherwise as specified in such Special Instructions.
(d) Exchange of Securities.
Upon receipt of Instructions, the Custodian will exchange portfolio
Securities held by it for a Fund for other Securities or cash paid in
connection with any reorganization, recapitalization, merger, consolidation,
or conversion of convertible Securities, and will deposit any such Securities
in accordance with the terms of any reorganization or protective plan.
Without Instructions, the Custodian is authorized to exchange Securities
held by it in temporary form for Securities in definitive form, to surrender
Securities for transfer into a name or nominee name as permitted in Section
4(b)(2), to effect an exchange of shares in a stock split or when the par
value of the stock is changed, to sell any fractional shares, and, upon
receiving payment therefor, to surrender bonds or other Securities held by it
at maturity or call.
(e) Purchases of Assets.
(1) Securities Purchases. In accordance with Instructions, the
Custodian shall, with respect to a purchase of Securities, pay for such
Securities out of monies held for a Fund's account for which the purchase was
made, but only insofar as monies are available therein for such purpose, and
receive the portfolio Securities so purchased. Unless the Custodian has
received Special Instructions to the contrary, such payment will be made only
upon receipt of Securities by the Custodian, a clearing corporation of a
national Securities exchange of which the Custodian is a member, or a
Securities System in accordance with the provisions of Section 4(b)(3) hereof.
Notwithstanding the foregoing, upon receipt of Instructions: (i) in
connection with a repurchase agreement, the Custodian may release funds to a
Securities System prior to the receipt of advice from the Securities System
that the Securities underlying such repurchase agreement have been transferred
by book-entry into the Account maintained with such Securities System by the
Custodian, provided that the Custodian's instructions to the Securities System
require that the Securities System may make payment of such funds to the other
party to the repurchase agreement only upon transfer by book-entry of the
Securities underlying the repurchase agreement into such Account; (ii) in the
case of Interest Bearing Deposits, currency deposits, and other deposits,
foreign exchange transactions, futures contracts or options, pursuant to
Sections 4(g), 4(h), 4(l), and 4(m) hereof, the Custodian may make payment
therefor before receipt of an advice of transaction; and (iii) in the case of
Securities as to which payment for the Security and receipt of the instrument
evidencing the Security are under generally accepted trade practice or the
terms of the instrument representing the Security expected to take place in
different locations or through separate parties, such as commercial paper
which is indexed to foreign currency exchange rates, derivatives and similar
Securities, the Custodian may make payment for such Securities prior to
delivery thereof in accordance with such generally accepted trade practice or
the terms of the instrument representing such Security.
(2) Other Assets Purchased. Upon receipt of Instructions and
except as
otherwise provided herein, the Custodian shall pay for and receive other
Assets for the account of a Fund as provided in Instructions.
(f) Sales of Assets.
(1) Securities Sold. In accordance with Instructions, the
Custodian
will, with respect to a sale, deliver or cause to be delivered the Securities
thus designated as sold to the broker or other person specified in the
Instructions relating to such sale. Unless the Custodian has received Special
Instructions to the contrary, such delivery shall be made only upon receipt of
payment therefor in the form of: (a) cash, certified check, bank cashier's
check, bank credit, or bank wire transfer; (b) credit to the account of the
Custodian with a clearing corporation of a national Securities exchange of
which the Custodian is a member; or (c) credit to the Account of the Custodian
with a Securities System, in accordance with the provisions of Section 4(b)(3)
hereof. Notwithstanding the foregoing, Securities held in physical form may
be delivered and paid for in accordance with "street delivery custom" to a
broker or its clearing agent, against delivery to the Custodian of a receipt
for such Securities, provided that the Custodian shall have taken reasonable
steps to ensure prompt collection of the payment for, or return of, such
Securities by the broker or its clearing agent, and provided further that the
Custodian shall not be responsible for the selection of or the failure or
inability to perform of such broker or its clearing agent or for any related
loss arising from delivery or custody of such Securities prior to receiving
payment therefor.
(2) Other Assets Sold. Upon receipt of Instructions and except
as
otherwise provided herein, the Custodian shall receive payment for and deliver
other Assets for the account of a Fund as provided in Instructions.
(g) Options.
(1) Upon receipt of Instructions relating to the purchase of an
option
or sale of a covered call option, the Custodian shall: (a) receive and retain
confirmations or other documents, if any, evidencing the purchase or writing
of the option by a Fund; (b) if the transaction involves the sale of a covered
call option, deposit and maintain in a segregated account the Securities
(either physically or by book-entry in a Securities System) subject to the
covered call option written on behalf of such Fund; and (c) pay, release
and/or transfer such Securities, cash or other Assets in accordance with any
notices or other communications evidencing the expiration, termination or
exercise of such options which are furnished to the Custodian by the Options
Clearing Corporation (the "OCC"), the securities or options exchanges on which
such options were traded, or such other organization as may be responsible for
handling such option transactions.
(2) Upon receipt of Instructions relating to the sale of a
naked option
(including stock index and commodity options), the Custodian, the appropriate
Fund and the broker-dealer shall enter into an agreement to comply with the
rules of the OCC or of any registered national securities exchange or similar
organizations(s). Pursuant to that agreement and such Fund's Instructions,
the Custodian shall: (a) receive and retain confirmations or other documents,
if any, evidencing the writing of the option; (b) deposit and maintain in a
segregated account, Securities (either physically or by book-entry in a
Securities System), cash and/or other Assets; and (c) pay, release and/or
transfer such Securities, cash or other Assets in accordance with any such
agreement and with any notices or other communications evidencing the
expiration, termination or exercise of such option which are furnished to the
Custodian by the OCC, the securities or options exchanges on which such
options were traded, or such other organization as may be responsible for
handling such option transactions. The appropriate Fund and the broker-dealer
shall be responsible for determining the quality and quantity of assets held
in any segregated account established in compliance with applicable margin
maintenance requirements and the performance of other terms of any option
contract.
(h) Futures Contracts.
Upon receipt of Instructions, the Custodian shall enter into a futures
margin procedural agreement among the appropriate Fund, the Custodian and the
designated futures commission merchant (a "Procedural Agreement"). Under the
Procedural Agreement the Custodian shall: (a) receive and retain
confirmations, if any, evidencing the purchase or sale of a futures contract
or an option on a futures contract by such Fund; (b) deposit and maintain in a
segregated account cash, Securities and/or other Assets designated as initial,
maintenance or variation "margin" deposits intended to secure such Fund's
performance of its obligations under any futures contracts purchased or sold,
or any options on futures contracts written by such Fund, in accordance with
the provisions of any Procedural Agreement designed to comply with the
provisions of the Commodity Futures Trading Commission and/or any commodity
exchange or contract market (such as the Chicago Board of Trade), or any
similar organization(s), regarding such margin deposits; and (c) release
Assets from and/or transfer Assets into such margin accounts only in
accordance with any such Procedural Agreements. The appropriate Fund and such
futures commission merchant shall be responsible for determining the type and
amount of Assets held in the segregated account or paid to the broker-dealer
in compliance with applicable margin maintenance requirements and the
performance of any futures contract or option on a futures contract in
accordance with its terms.
(i) Segregated Accounts.
Upon receipt of Instructions, the Custodian shall establish and maintain
on its books a segregated account or accounts for and on behalf of a Fund,
into which account or accounts may be transferred Assets of such Fund,
including Securities maintained by the Custodian in a Securities System
pursuant to Paragraph (b)(3) of this Section 4, said account or accounts to be
maintained (i) for the purposes set forth in Sections 4(g), 4(h) and 4(n) and
(ii) for the purpose of compliance by such Fund with the procedures required
by the SEC Investment Company Act Release Number 10666 or any subsequent
release or releases relating to the maintenance of segregated accounts by
registered investment companies, or (iii) for such other purposes as may be
set forth, from time to time, in Special Instructions. The Custodian shall
not be responsible for the determination of the type or amount of Assets to be
held in any segregated account referred to in this paragraph, or for
compliance by the Fund with required procedures noted in (ii) above.
(j) Depository Receipts.
Upon receipt of Instructions, the Custodian shall surrender or cause to
be
surrendered Securities to the depository used for such Securities by an issuer
of American Depository Receipts or International Depository Receipts
(hereinafter referred to, collectively, as "ADRs"), against a written receipt
therefor adequately describing such Securities and written evidence
satisfactory to the organization surrendering the same that the depository has
acknowledged receipt of instructions to issue ADRs with respect to such
Securities in the name of the Custodian or a nominee of the Custodian, for
delivery in accordance with such instructions.
Upon receipt of Instructions, the Custodian shall surrender or cause to
be
surrendered ADRs to the issuer thereof, against a written receipt therefor
adequately describing the ADRs surrendered and written evidence satisfactory
to the organization surrendering the same that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to deliver the
Securities underlying such ADRs in accordance with such instructions.
(k) Corporate Actions, Put Bonds, Called Bonds, Etc.
Upon receipt of Instructions, the Custodian shall: (a) deliver warrants,
puts, calls, rights or similar Securities to the issuer or trustee thereof (or
to the agent of such issuer or trustee) for the purpose of exercise or sale,
provided that the new Securities, cash or other Assets, if any, acquired as a
result of such actions are to be delivered to the Custodian; and (b) deposit
Securities upon invitations for tenders thereof, provided that the
consideration for such Securities is to be paid or delivered to the Custodian,
or the tendered Securities are to be returned to the Custodian.
Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary in Instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of
security ownership, and shall notify the appropriate Fund of such action in
writing by facsimile transmission or in such other manner as such Fund and
Custodian may agree in writing.
The Fund agrees that if it gives an Instruction for the performance of
an
act on the last permissible date of a period established by any optional offer
or on the last permissible date for the performance of such act, the Fund
shall hold the Bank harmless from any adverse consequences in connection with
acting upon or failing to act upon such Instructions.
(l) Interest Bearing Deposits.
Upon receipt of Instructions directing the Custodian to purchase
interest
bearing fixed term and call deposits (hereinafter referred to, collectively,
as "Interest Bearing Deposits") for the account of a Fund, the Custodian shall
purchase such Interest Bearing Deposits in the name of such Fund with such
banks or trust companies, including the Custodian, any Subcustodian or any
subsidiary or affiliate of the Custodian (hereinafter referred to as "Banking
Institutions"), and in such amounts as such Fund may direct pursuant to
Instructions. Such Interest Bearing Deposits may be denominated in U.S.
dollars or other currencies, as such Fund may determine and direct pursuant to
Instructions. The responsibilities of the Custodian to a Fund for Interest
Bearing Deposits issued by the Custodian shall be that of a U.S. bank for a
similar deposit. With respect to Interest Bearing Deposits other than those
issued by the Custodian, (a) the Custodian shall be responsible for the
collection of income and the transmission of cash to and from such accounts;
and (b) the Custodian shall have no duty with respect to the selection of the
Banking Institution or for the failure of such Banking Institution to pay upon
demand.
(m) Foreign Exchange Transactions.
(l) Each Fund hereby appoints the Custodian as its agent in the
execution of all currency exchange transactions. The Custodian agrees to
provide exchange rate and U.S. Dollar information, in writing, to the Funds.
Such information shall be supplied by the Custodian at least by the business
day prior to the value date of the foreign exchange transaction, provided that
the Custodian receives the request for such information at least two business
days prior to the value date of the transaction.
(2) Upon receipt of Instructions, the Custodian shall settle
foreign
exchange contracts or options to purchase and sell foreign currencies for spot
and future delivery on behalf of and for the account of a Fund with such
currency brokers or Banking Institutions as such Fund may determine and direct
pursuant to Instructions. If, in its Instructions, a Fund does not direct the
Custodian to utilize a particular currency broker or Banking Institution, the
Custodian is authorized to select such currency broker or Banking Institution
as it deems appropriate to execute the Fund's foreign currency transaction.
(3) Each Fund accepts full responsibility for its use of third
party
foreign exchange brokers and for execution of said foreign exchange contracts
and understands that the Fund shall be responsible for any and all costs and
interest charges which may be incurred as a result of the failure or delay of
its third party broker to deliver foreign exchange. The Custodian shall have
no responsibility or liability with respect to the selection of the currency
brokers or Banking Institutions with which a Fund deals or the performance of
such brokers or Banking Institutions.
(4) Notwithstanding anything to the contrary contained herein,
upon
receipt of Instructions the Custodian may, in connection with a foreign
exchange contract, make free outgoing payments of cash in the form of U.S.
Dollars or foreign currency prior to receipt of confirmation of such foreign
exchange contract or confirmation that the countervalue currency completing
such contract has been delivered or received.
(5) The Custodian shall not be obligated to enter into foreign
exchange
transactions as principal. However, if the Custodian has made available to a
Fund its services as a principal in foreign exchange transactions
and subject to any separate agreement between the parties relating to such
transactions, the Custodian shall enter into foreign exchange contracts or
options to purchase and sell foreign currencies for spot and future delivery
on behalf of and for the account of the Fund, with the Custodian as principal.
(n) Pledges or Loans of Securities.
(1) Upon receipt of Instructions from a Fund, the Custodian
will
release or cause to be released Securities held in custody to the pledgees
designated in such Instructions by way of pledge or hypothecation to secure
loans incurred by such Fund with various lenders including but not limited to
UMB Bank, n.a.; provided, however, that the Securities shall be released only
upon payment to the Custodian of the monies borrowed, except that in cases
where additional collateral is required to secure existing borrowings, further
Securities may be released or delivered, or caused to be released or delivered
for that purpose upon receipt of Instructions. Upon receipt of Instructions,
the Custodian will pay, but only from funds available for such purpose, any
such loan upon re-delivery to it of the Securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing such loan. In
lieu of delivering collateral to a pledgee, the Custodian, on the receipt of
Instructions, shall transfer the pledged Securities to a segregated account
for the benefit of the pledgee.
(2) Upon receipt of Special Instructions, and execution of a
separate
Securities Lending Agreement, the Custodian will release Securities held in
custody to the borrower designated in such Instructions and may, except as
otherwise provided below, deliver such Securities prior to the receipt of
collateral, if any, for such borrowing, provided that, in case of loans of
Securities held by a Securities System that are secured by cash collateral,
the Custodian's instructions to the Securities System shall require that the
Securities System deliver the Securities of the appropriate Fund to the
borrower thereof only upon receipt of the collateral for such borrowing. The
Custodian shall have no responsibility or liability for any loss arising from
the delivery of Securities prior to the receipt of collateral. Upon receipt
of Instructions and the loaned Securities, the Custodian will release the
collateral to the borrower.
(o) Stock Dividends, Rights, Etc.
The Custodian shall receive and collect all stock dividends, rights, and
other items of like nature and, upon receipt of Instructions, take action with
respect to the same as directed in such Instructions.
(p) Routine Dealings.
The Custodian will, in general, attend to all routine and mechanical
matters in accordance with industry standards in connection with the sale,
exchange, substitution, purchase, transfer, or other dealings with Securities
or other property of each Fund except as may be otherwise provided in this
Agreement or directed from time to time by Instructions from any particular
Fund. The Custodian may also make payments to itself or others from the
Assets for disbursements and out-of-pocket expenses incidental to handling
Securities or other similar items relating to its duties under this Agreement,
provided that all such payments shall be accounted for to the appropriate
Fund.
(q) Collections.
The Custodian shall (a) collect amounts due and payable to each Fund
with
respect to portfolio Securities and other Assets; (b) promptly credit to the
account of each Fund all income and other payments relating to portfolio
Securities and other Assets held by the Custodian hereunder upon Custodian's
receipt of such income or payments or as otherwise agreed in writing by the
Custodian and any particular Fund; (c) promptly endorse and deliver any
instruments required to effect such collection; and (d) promptly execute
ownership and other certificates and affidavits for all federal, state, local
and foreign tax purposes in connection with receipt of income or other
payments with respect to portfolio Securities and other Assets, or in
connection with the transfer of such Securities or other Assets; provided,
however, that with respect to portfolio Securities registered in so-called
street name, or physical Securities with variable interest rates, the
Custodian shall use its best efforts to collect amounts due and payable to any
such Fund. The Custodian shall notify a Fund in writing by facsimile
transmission or in such other manner as such Fund and Custodian may agree in
writing if any amount payable with respect to portfolio Securities or other
Assets is not received by the Custodian when due. The Custodian shall not be
responsible for the collection of amounts due and payable with respect to
portfolio Securities or other Assets that are in default.
(r) Bank Accounts.
Upon Instructions, the Custodian shall open and operate a bank account
or
accounts on the books of the Custodian; provided that such bank account(s)
shall be in the name of the Custodian or a nominee thereof, for the account of
one or more Funds, and shall be subject only to draft or order of the
Custodian. The responsibilities of the Custodian to any one or more such
Funds for deposits accepted on the Custodian's books shall be that of a U.S.
bank for a similar deposit.
(s) Dividends, Distributions and Redemptions.
To enable each Fund to pay dividends or other distributions to
shareholders of each such Fund and to make payment to shareholders who have
requested repurchase or redemption of their shares of each such Fund
(collectively, the "Shares"), the Custodian shall release cash or Securities
insofar as available. In the case of cash, the Custodian shall, upon the
receipt of Instructions, transfer such funds by check or wire transfer to any
account at any bank or trust company designated by each such Fund in such
Instructions. In the case of Securities, the Custodian shall, upon the
receipt of Special Instructions, make such transfer to any entity or account
designated by each such Fund in such Special Instructions.
(t) Proceeds from Shares Sold.
The Custodian shall receive funds representing cash payments received
for
shares issued or sold from time to time by each Fund, and shall credit such
funds to the account of the appropriate Fund. The Custodian shall notify the
appropriate Fund of Custodian's receipt of cash in payment for shares issued
by such Fund by facsimile transmission or in such other manner as such Fund
and the Custodian shall agree. Upon receipt of Instructions, the Custodian
shall: (a) deliver all federal funds received by the Custodian in payment for
shares as may be set forth in such Instructions and at a time agreed upon
between the Custodian and such Fund; and (b) make federal funds available to a
Fund as of specified times agreed upon from time to time by such Fund and the
Custodian, in the amount of checks received in payment for shares which are
deposited to the accounts of such Fund.
(u) Proxies and Notices; Compliance with the Shareholders Communication
Act of 1985.
The Custodian shall deliver or cause to be delivered to the appropriate
Fund all forms of proxies, all notices of meetings, and any other notices or
announcements affecting or relating to Securities owned by such Fund that are
received by the Custodian, any Subcustodian, or any nominee of either of them,
and, upon receipt of Instructions, the Custodian shall execute and deliver, or
cause such Subcustodian or nominee to execute and deliver, such proxies or
other authorizations as may be required. Except as directed pursuant to
Instructions, neither the Custodian nor any Subcustodian or nominee shall vote
upon any such Securities, or execute any proxy to vote thereon, or give any
consent or take any other action with respect thereto.
The Custodian will not release the identity of any Fund to an issuer
which
requests such information pursuant to the Shareholder Communications Act of
1985 for the specific purpose of direct communications between such issuer and
any such Fund unless a particular Fund directs the Custodian otherwise in
writing.
(v) Books and Records.
The Custodian shall maintain such records relating to its activities
under
this Agreement as are required to be maintained by Rule 31a-1 under the
Investment Company Act of 1940 ("the 1940 Act") and to preserve them for the
periods prescribed in Rule 31a-2 under the 1940 Act. These records shall be
open for inspection by duly authorized officers, employees or agents
(including independent public accountants) of the appropriate Fund during
normal business hours of the Custodian.
The Custodian shall provide accountings relating to its activities under
this Agreement as shall be agreed upon by each Fund and the Custodian.
(w) Opinion of Fund's Independent Certified Public Accountants.
The Custodian shall take all reasonable action as each Fund may request
to
obtain from year to year favorable opinions from each such Fund's independent
certified public accountants with respect to the Custodian's activities
hereunder and in connection with the preparation of each such Fund's periodic
reports to the SEC and with respect to any other requirements of the SEC.
(x) Reports by Independent Certified Public Accountants.
At the request of a Fund, the Custodian shall deliver to such Fund a
written report prepared by the Custodian's independent certified public
accountants with respect to the services provided by the Custodian under this
Agreement, including, without limitation, the Custodian's accounting system,
internal accounting control and procedures for safeguarding cash, Securities
and other Assets, including cash, Securities and other Assets deposited and/or
maintained in a Securities System or with a Subcustodian. Such report shall
be of sufficient scope and in sufficient detail as may reasonably be required
by such Fund and as may reasonably be obtained by the Custodian.
(y) Bills and Other Disbursements.
Upon receipt of Instructions, the Custodian shall pay, or cause to be
paid, all bills, statements, or other obligations of a Fund.
5. SUBCUSTODIANS.
From time to time, in accordance with the relevant provisions of this
Agreement, the Custodian may appoint one or more Domestic Subcustodians,
Foreign Subcustodians, Special Subcustodians, or Interim Subcustodians (as
each are hereinafter defined) to act on behalf of any one or more Funds. A
Domestic Subcustodian, in accordance with the provisions of this Agreement,
may also appoint a Foreign Subcustodian, Special Subcustodian, or Interim
Subcustodian to act on behalf of any one or more Funds. For purposes of this
Agreement, all Domestic Subcustodians, Foreign Subcustodians, Special
Subcustodians and Interim Subcustodians shall be referred to collectively as
"Subcustodians".
(a) Domestic Subcustodians.
The Custodian may, at any time and from time to time, appoint any bank
as
defined in Section 2(a)(5) of the 1940 Act or any trust company or other
entity, any of which meet the requirements of a custodian under Section 17(f)
of the 1940 Act and the rules and regulations thereunder, to act for the
Custodian on behalf of any one or more Funds as a subcustodian for purposes of
holding Assets of such Fund(s) and performing other functions of the Custodian
within the United States (a "Domestic Subcustodian"). Each Fund shall approve
in writing the appointment of the proposed Domestic Subcustodian; and the
Custodian's appointment of any such Domestic Subcustodian shall not be
effective without such prior written approval of the Fund(s). Each such duly
approved Domestic Subcustodian shall be listed on Appendix A attached hereto,
as it may be amended, from time to time.
(b) Foreign Subcustodians.
The Custodian may at any time appoint, or cause a Domestic Subcustodian
to
appoint, any bank, trust company or other entity meeting the requirements of
an "eligible foreign custodian" under Section 17(f) of the 1940 Act and the
rules and regulations thereunder to act for the Custodian on behalf of any one
or more Funds as a subcustodian or sub-subcustodian (if appointed by a
Domestic Subcustodian) for purposes of holding Assets of the Fund(s) and
performing other functions of the Custodian in countries other than the United
States of America (hereinafter referred to as a "Foreign Subcustodian" in the
context of either a subcustodian or a sub-subcustodian); provided that the
Custodian shall have obtained written confirmation from each Fund of the
approval of the Board of Directors or other governing body of each such Fund
(which approval may be withheld in the sole discretion of such Board of
Directors or other governing body or entity) with respect to (i) the identity
of any proposed Foreign Subcustodian (including branch designation), (ii) the
country or countries in which, and the securities depositories or clearing
agencies (hereinafter "Securities Depositories and Clearing Agencies"), if
any, through which, the Custodian or any proposed Foreign Subcustodian is
authorized to hold Securities and other Assets of each such Fund, and (iii)
the form and terms of the subcustodian agreement to be entered into with such
proposed Foreign Subcustodian. Each such duly approved Foreign Subcustodian
and the countries where and the Securities Depositories and Clearing Agencies
through which they may hold Securities and other Assets of the Fund(s) shall
be listed on Appendix A attached hereto, as it may be amended, from time to
time. Each Fund shall be responsible for informing the Custodian sufficiently
in advance of a proposed investment which is to be held in a country in which
no Foreign Subcustodian is authorized to act, in order that there shall be
sufficient time for the Custodian, or any Domestic Subcustodian, to effect the
appropriate arrangements with a proposed Foreign Subcustodian, including
obtaining approval as provided in this Section 5(b). In connection with the
appointment of any Foreign Subcustodian, the Custodian shall, or shall cause
the Domestic Subcustodian to, enter into a subcustodian agreement with the
Foreign Subcustodian in form and substance approved by each such Fund. The
Custodian shall not consent to the amendment of, and shall cause any Domestic
Subcustodian not to consent to the amendment of, any agreement entered into
with a Foreign Subcustodian, which materially affects any Fund's rights under
such agreement, except upon prior written approval of such Fund pursuant to
Special Instructions.
(c) Interim Subcustodians.
Notwithstanding the foregoing, in the event that a Fund shall invest in
an
Asset to be held in a country in which no Foreign Subcustodian is authorized
to act, the Custodian shall notify such Fund in writing by facsimile
transmission or in such other manner as such Fund and the Custodian shall
agree in writing of the unavailability of an approved Foreign Subcustodian in
such country; and upon the receipt of Special Instructions from such Fund, the
Custodian shall, or shall cause its Domestic Subcustodian to, appoint or
approve an entity (referred to herein as an "Interim Subcustodian") designated
in such Special Instructions to hold such Security or other Asset.
(d) Special Subcustodians.
Upon receipt of Special Instructions, the Custodian shall, on behalf of
a
Fund, appoint one or more banks, trust companies or other entities designated
in such Special Instructions to act for the Custodian on behalf of such Fund
as a subcustodian for purposes of: (i) effecting third-party repurchase
transactions with banks, brokers, dealers or other entities through the use of
a common custodian or subcustodian; (ii) providing depository and clearing
agency services with respect to certain variable rate demand note Securities,
(iii) providing depository and clearing agency services with respect to dollar
denominated Securities, and (iv) effecting any other transactions designated
by such Fund in such Special Instructions. Each such designated subcustodian
(hereinafter referred to as a "Special Subcustodian") shall be listed on
Appendix A attached hereto, as it may be amended from time to time. In
connection with the appointment of any Special Subcustodian, the Custodian
shall enter into a subcustodian agreement with the Special Subcustodian in
form and substance approved by the appropriate Fund in Special Instructions.
The Custodian shall not amend any subcustodian agreement entered into with a
Special Subcustodian, or waive any rights under such agreement, except upon
prior approval pursuant to Special Instructions.
(e) Termination of a Subcustodian.
The Custodian may, at any time in its discretion upon notification to
the
appropriate Fund(s), terminate any Subcustodian of such Fund(s) in accordance
with the termination provisions under the applicable subcustodian agreement,
and upon the receipt of Special Instructions, the Custodian will terminate any
Subcustodian in accordance with the termination provisions under the
applicable subcustodian agreement.
(f) Certification Regarding Foreign Subcustodians.
Upon request of a Fund, the Custodian shall deliver to such Fund a
certificate stating: (i) the identity of each Foreign Subcustodian then
acting on behalf of the Custodian; (ii) the countries in which and the
Securities
Depositories and Clearing Agencies through which each such Foreign
Subcustodian is then holding cash, Securities and other Assets of such Fund;
and (iii) such other information as may be requested by such Fund, and as the
Custodian shall be reasonably able to obtain, to evidence compliance with
rules and regulations under the 1940 Act.
6. STANDARD OF CARE.
(a) General Standard of Care.
The Custodian shall be liable to a Fund for all losses, damages and
reasonable costs and expenses suffered or incurred by such Fund resulting from
the negligence or willful misfeasance of the Custodian; provided, however, in
no event shall the Custodian be liable for special, indirect or consequential
damages arising under or in connection with this Agreement.
(b) Actions Prohibited by Applicable Law, Events Beyond Custodian's
Control, Sovereign Risk, Etc.
In no event shall the Custodian or any Domestic Subcustodian incur
liability hereunder (i) if the Custodian or any Subcustodian or Securities
System, or any subcustodian, Securities System, Securities Depository or
Clearing Agency utilized by the Custodian or any such Subcustodian, or any
nominee of the Custodian or any Subcustodian (individually, a "Person") is
prevented, forbidden or delayed from performing, or omits to perform, any act
or thing which this Agreement provides shall be performed or omitted to be
performed, by reason of: (a) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
of any foreign country, or political subdivision thereof or of any court of
competent jurisdiction (and neither the Custodian nor any other Person shall
be obligated to take any action contrary thereto); or (b) any event beyond the
control of the Custodian or other Person such as armed conflict, riots,
strikes, lockouts, labor disputes, equipment or transmission failures, natural
disasters, or failure of the mails, transportation, communications or power
supply; or (ii) for any loss, damage, cost or expense resulting from
"Sovereign Risk." A "Sovereign Risk" shall mean nationalization,
expropriation, currency devaluation, revaluation or fluctuation, confiscation,
seizure, cancellation, destruction or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, taxes, levies or other charges affecting a Fund's Assets;
or acts of armed conflict, terrorism, insurrection or revolution; or any other
act or event beyond the Custodian's or such other Person's control.
(c) Liability for Past Records.
Neither the Custodian nor any Domestic Subcustodian shall have any
liability in respect of any loss, damage or expense suffered by a Fund,
insofar as such loss, damage or expense arises from the performance of the
Custodian or any Domestic Subcustodian in reliance upon records that were
maintained for such Fund by entities other than the Custodian or any Domestic
Subcustodian prior to the Custodian's employment hereunder.
(d) Advice of Counsel.
The Custodian and all Domestic Subcustodians shall be entitled to
receive
and act upon advice of counsel of its own choosing on all matters. The
Custodian and all Domestic Subcustodians shall be without liability for any
actions taken or omitted in good faith pursuant to the advice of counsel.
(e) Advice of the Fund and Others.
The Custodian and any Domestic Subcustodian may rely upon the advice of
any Fund and upon statements of such Fund's accountants and other persons
believed by it in good faith to be expert in matters upon which they are
consulted, and neither the Custodian nor any Domestic Subcustodian shall be
liable for any actions taken or omitted, in good faith, pursuant to such
advice or statements.
(f) Instructions Appearing to be Genuine.
The Custodian and all Domestic Subcustodians shall be fully protected
and
indemnified in acting as a custodian hereunder upon any Resolutions of the
Board of Directors or Trustees, Instructions, Special Instructions, advice,
notice, request, consent, certificate, instrument or paper appearing to it to
be genuine and to have been properly executed and shall, unless otherwise
specifically provided herein, be entitled to receive as conclusive proof of
any fact or matter required to be ascertained from any Fund hereunder a
certificate signed by any officer of such Fund authorized to countersign or
confirm Special Instructions.
(g) Exceptions from Liability.
Without limiting the generality of any other provisions hereof, neither
the Custodian nor any Domestic Subcustodian shall be under any duty or
obligation to inquire into, nor be liable for:
(i) the validity of the issue of any Securities purchased by
or for
any Fund, the legality of the purchase thereof or evidence of ownership
required to be received by any such Fund, or the propriety of the decision to
purchase or amount paid therefor;
(ii) the legality of the sale of any Securities by or for
any Fund,
or the propriety of the amount for which the same were sold; or
(iii) any other expenditures, encumbrances of Securities,
borrowings
or similar actions with respect to any Fund's Assets;
and may, until notified to the contrary, presume that all Instructions or
Special Instructions received by it are not in conflict with or in any way
contrary to any provisions of any such Fund's Declaration of Trust,
Partnership Agreement, Articles of Incorporation or By-Laws or votes or
proceedings of the shareholders, trustees, partners or directors of any such
Fund, or any such Fund's currently effective Registration Statement on file
with the SEC.
7. LIABILITY OF THE CUSTODIAN FOR ACTIONS OF OTHERS.
(a) Domestic Subcustodians
The Custodian shall be liable for the acts or omissions of any Domestic
Subcustodian to the same extent as if such actions or omissions were performed
by the Custodian itself.
(b) Liability for Acts and Omissions of Foreign Subcustodians.
The Custodian shall be liable to a Fund for any loss or damage to such
Fund caused by or resulting from the acts or omissions of any Foreign
Subcustodian to the extent that, under the terms set forth in the subcustodian
agreement between the Custodian or a Domestic Subcustodian and such Foreign
Subcustodian, the Foreign Subcustodian has failed to perform in accordance
with the standard of conduct imposed under such subcustodian agreement and the
Custodian or Domestic Subcustodian recovers from the Foreign Subcustodian
under the applicable subcustodian agreement.
(c) Securities Systems, Interim Subcustodians, Special Subcustodians,
Securities Depositories and Clearing Agencies.
The Custodian shall not be liable to any Fund for any loss, damage or
expense suffered or incurred by such Fund resulting from or occasioned by the
actions or omissions of a Securities System, Interim Subcustodian, Special
Subcustodian, or Securities Depository and Clearing Agency unless such loss,
damage or expense is caused by, or results from, the negligence or willful
misfeasance of the Custodian.
(d) Defaults or Insolvencies of Brokers, Banks, Etc.
The Custodian shall not be liable for any loss, damage or expense
suffered
or incurred by any Fund resulting from or occasioned by the actions,
omissions, neglects, defaults or insolvency of any broker, bank, trust company
or any other person with whom the Custodian may deal (other than any of such
entities acting as a Subcustodian, Securities System or Securities Depository
and Clearing Agency, for whose actions the liability of the Custodian is set
out elsewhere in this Agreement) unless such loss, damage or expense is caused
by, or results from, the negligence or willful misfeasance of the Custodian.
(e) Reimbursement of Expenses.
Each Fund agrees to reimburse the Custodian for all out-of-pocket
expenses
incurred by the Custodian in connection with this Agreement, but excluding
salaries and usual overhead expenses.
8. INDEMNIFICATION.
(a) Indemnification by Fund.
Subject to the limitations set forth in this Agreement, each Fund agrees
to indemnify and hold harmless the Custodian and its nominees from all losses,
damages and expenses (including attorneys' fees) suffered or incurred by the
Custodian or its nominee caused by or arising from actions taken by the
Custodian, its employees or agents in the performance of its duties and
obligations under this Agreement, including, but not limited to, any
indemnification obligations undertaken by the Custodian under any relevant
subcustodian agreement; provided, however, that such indemnity shall not apply
to the extent the Custodian is liable under Sections 6 or 7 hereof.
If any Fund requires the Custodian to take any action with respect to
Securities, which action involves the payment of money or which may, in the
opinion of the Custodian, result in the Custodian or its nominee assigned to
such Fund being liable for the payment of money or incurring liability of some
other form, such Fund, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
(b) Indemnification by Custodian.
Subject to the limitations set forth in this Agreement and in addition
to
the obligations provided in Sections 6 and 7, the Custodian agrees to
indemnify and hold harmless each Fund from all losses, damages and expenses
suffered or incurred by each such Fund caused by the negligence or willful
misfeasance of the Custodian.
9. ADVANCES.
In the event that, pursuant to Instructions, the Custodian or any
Subcustodian, Securities System, or Securities Depository or Clearing Agency
acting either directly or indirectly under agreement with the Custodian (each
of which for purposes of this Section 9 shall be referred to as "Custodian"),
makes any payment or transfer of funds on behalf of any Fund as to which there
would be, at the close of business on the date of such payment or transfer,
insufficient funds held by the Custodian on behalf of any such Fund, the
Custodian may, in its discretion without further Instructions, provide an
advance ("Advance") to any such Fund in an amount sufficient to allow the
completion of the transaction by reason of which such payment or transfer of
funds is to be made. In addition, in the event the Custodian is directed by
Instructions to make any payment or transfer of funds on behalf of any Fund as
to which it is subsequently determined that such Fund has overdrawn its cash
account with the Custodian as of the close of business on the date of such
payment or transfer, said overdraft shall constitute an Advance. Any Advance
shall be payable by the Fund on behalf of which the Advance was made on demand
by Custodian, unless otherwise agreed by such Fund and the Custodian, and
shall accrue interest from the date of the Advance to the date of payment by
such Fund to the Custodian at a rate agreed upon in writing from time to time
by the Custodian and such Fund. It is understood that any transaction in
respect of which the Custodian shall have made an Advance, including but not
limited to a foreign exchange contract or transaction in respect of which the
Custodian is not acting as a principal, is for the account of and at the risk
of the Fund on behalf of which the Advance was made, and not, by reason of
such Advance, deemed to be a transaction undertaken by the Custodian for its
own account and risk. The Custodian and each of the Funds which are parties
to this Agreement acknowledge that the purpose of Advances is to finance
temporarily the purchase or sale of Securities for prompt delivery in
accordance with the settlement terms of such transactions or to meet emergency
expenses not reasonably foreseeable by a Fund. The Custodian shall promptly
notify the appropriate Fund of any Advance. Such notification shall be sent
by facsimile transmission or in such other manner as such Fund and the
Custodian may agree.
10. LIENS.
The Bank shall have a lien on the Property in the Custody Account to
secure payment of fees and expenses for the services rendered under this
Agreement. If the Bank advances cash or securities to the Fund for any
purpose or in the event that the Bank or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of its duties hereunder, except such as may
arise from its or its nominee's negligent action, negligent failure to act or
willful misconduct, any Property at any time held for the Custody Account
shall be security therefor and the Fund hereby grants a security interest
therein to the Bank. The Fund shall promptly reimburse the Bank for any such
advance of cash or securities or any such taxes, charges, expenses,
assessments, claims or liabilities upon request for payment, but should the
Fund fail to so reimburse the Bank, the Bank shall be entitled to dispose of
such Property to the extent necessary to obtain reimbursement. The Bank shall
be entitled to debit any account of the Fund with the Bank including, without
limitation, the Custody Account, in connection with any such advance and any
interest on such advance as the Bank deems reasonable.
11. COMPENSATION.
Each Fund will pay to the Custodian such compensation as is agreed to in
writing by the Custodian and each such Fund from time to time. Such
compensation, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 7(e), shall be billed to each such Fund
and paid in cash to the Custodian.
12. POWERS OF ATTORNEY.
Upon request, each Fund shall deliver to the Custodian such proxies,
powers of attorney or other instruments as may be reasonable and necessary or
desirable in connection with the performance by the Custodian or any
Subcustodian of their respective obligations under this Agreement or any
applicable subcustodian agreement.
13. TERMINATION AND ASSIGNMENT.
Any Fund or the Custodian may terminate this Agreement by notice in
writing, delivered or mailed, postage prepaid (certified mail, return receipt
requested) to the other not less than 90 days prior to the date upon which
such termination shall take effect. Upon termination of this Agreement, the
appropriate Fund shall pay to the Custodian such fees as may be due the
Custodian hereunder as well as its reimbursable disbursements, costs and
expenses paid or incurred. Upon termination of this Agreement, the Custodian
shall deliver, at the terminating party's expense, all Assets held by it
hereunder to the appropriate Fund or as otherwise designated by such Fund by
Special Instructions. Upon such delivery, the Custodian shall have no further
obligations or liabilities under this Agreement except as to the final
resolution of matters relating to activity occurring prior to the effective
date of termination.
This Agreement may not be assigned by the Custodian or any Fund without
the respective consent of the other, duly authorized by a resolution by its
Board of Directors or Trustees.
14. ADDITIONAL FUNDS.
An additional Fund or Funds may become a party to this Agreement after
the
date hereof by an instrument in writing to such effect signed by such Fund or
Funds and the Custodian. If this Agreement is terminated as to one or more of
the Funds (but less than all of the Funds) or if an additional Fund or Funds
shall become a party to this Agreement, there shall be delivered to each party
an Appendix #1 or an amended Appendix #1, signed by each of the additional
Funds (if any) and each of the remaining Funds as well as the Custodian,
deleting or adding such Fund or Funds, as the case may be. The termination of
this Agreement as to less than all of the Funds shall not affect the
obligations of the Custodian and the remaining Funds hereunder as set forth on
the signature page hereto and in Appendix #1 as revised from time to time.
15. NOTICES.
As to each Fund, notices, requests, instructions and other writings
delivered to Jones & Babson, Inc, 700 Karnes Blvd., Kansas City, Missouri
64108, postage prepaid, or to such other address as any particular Fund may
have designated to the Custodian in writing, shall be deemed to have been
properly delivered or given to a Fund.
Notices, requests, instructions and other writings delivered to the
Securities Administration Department of the Custodian at its office at 928
Grand Avenue, Kansas City, Missouri, or mailed postage prepaid, to the
Custodian's Securities Administration Department, Post Office Box 226, Kansas
City, Missouri 64141, or to such other addresses as the Custodian may have
designated to each Fund in writing, shall be deemed to have been properly
delivered or given to the Custodian hereunder; provided, however, that
procedures for the delivery of Instructions and Special Instructions shall be
governed by Section 2(c) hereof.
16. MISCELLANEOUS.
(a) This Agreement is executed and delivered in the State of Missouri
and
shall be governed by the laws of such state.
(b) All of the terms and provisions of this Agreement shall be binding
upon, and inure to the benefit of, and be enforceable by the respective
successors and assigns of the parties hereto.
(c) No provisions of this Agreement may be amended, modified or waived,
in any manner except in writing, properly executed by both parties hereto;
provided, however, Appendix A may be amended from time to time as Domestic
Subcustodians, Foreign Subcustodians, Special Subcustodians, and Securities
Depositories and Clearing Agencies are approved or terminated according to the
terms of this Agreement.
(d) The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect.
(e) This Agreement shall be effective as of the date of execution
hereof.
(f) This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
(g) The following terms are defined terms within the meaning of this
Agreement, and the definitions thereof are found in the following sections of
the Agreement:
Term Section
Account 4(b)(3)(ii)
ADR'S 4(j)
Advance 9
Assets 2(b)
Authorized Person 3
Banking Institution 4(1)
Domestic Subcustodian 5(a)
Foreign Subcustodian 5(b)
Instruction 2(c)(1)
Interim Subcustodian 5(c)
Interest Bearing Deposit 4(1)
Term Section
Liability 10
OCC 4(g)(2)
Person 6(b)
Procedural Agreement 4(h)
SEC 4(b)(3)
Securities 2(a)
Securities Depositories and
Clearing Agencies 5(b)
Securities System 4(b)(3)
Shares 4(s)
Sovereign Risk 6(b)
Special Instruction 2(c)(2)
Special Subcustodian 5(c)
Subcustodian 5
1940 Act 4(v)
(h) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid by any court of
competent jurisdiction, the remaining portion or portions shall be considered
severable and shall not be affected, and the rights and obligations of the
parties shall be construed and enforced as if this Agreement did not contain
the particular part, term or provision held to be illegal or invalid.
(i) This Agreement constitutes the entire understanding and agreement
of the parties hereto with respect to the subject matter hereof, and
accordingly supersedes, as of the effective date of this Agreement, any
custodian agreement heretofore in effect between the Fund and the Custodian.
IN WITNESS WHEREOF, the parties hereto have caused this Custody
Agreement to be executed by their respective duly authorized officers.
JONES & BABSON FUNDS
By: P. Bradley Adams
Name: P. Bradley Adams
Title: Treasurer
Date: May 5, 1997
UMB BANK, N.A.
By: Ralph R. Santoro
Name: Ralph R. Santoro
Title: Vice President
Date: April 22, 1997
<PAGE>
APPENDIX A
CUSTODY AGREEMENT
DOMESTIC SUBCUSTODIANS:
United Missouri Trust Company of New York
Morgan Stanley Trust Company (Foreign Securities Only)
SECURITIES SYSTEMS:
Federal Book Entry
Depository Trust Company
Participant's Trust Company
SPECIAL SUBCUSTODIANS:
SECURITIES DEPOSITORIES
COUNTRIES FOREIGN SUBCUSTODIANS CLEARING AGENCIES
Euroclear
JONES & BABSON FUNDS
By: P. Bradley Adams
Name: P. Bradley Adams
Title: Treasurer
Date: May 5, 1997
UMB BANK, N.A.
By: Ralph R. Santoro
Name: Ralph R. Santoro
Title: Vice President
Date: April 22, 1997
<PAGE>
APPENDIX #1
UMB Bank, n.a.
AND
UNITED MISSOURI TRUST COMPANY OF NEW YORK
DOMESTIC CUSTODY FEE AGREEMENT
FOR THE
JONES AND BABSON FAMILY OF FUNDS
JONES AND BABSON FUNDS
David L. Babson Growth Fund, Inc.
Babson Enterprise Fund, Inc.
Babson Enterprise II, Fund, Inc.
Babson Value Fund, Inc.
Shadow Stock Fund, Inc.
D. L. Babson Tax-Free Income Fund, Inc. - Portfolio S
D. L. Babson Tax-Free Income Fund, Inc. - Portfolio L
D. L. Babson Tax-Free Income Fund, Inc. - Portfolio M
D. L. Babson Money Market Fund, Inc. - Prime Portfolio
D. L. Babson Money Market Fund, Inc. - Federal Portfolio
D. L. Babson Bond Trust - Short Portfolio
D. L. Babson Bond Trust - Long Portfolio
Buffalo Balanced Fund, Inc.
Buffalo Equity Fund, Inc.
Buffalo Global Fund, Inc.
Buffalo High Yield Fund, Inc.
Buffalo Small Cap Fund, Inc.
AFBA Five Star Fund, Inc. - Balanced Portfolio
AFBA Five Star Fund, Inc. - Equity Portfolio
AFBA Five Star Fund, Inc. - USA Global Portfolio
AFBA Five Star Fund, Inc. - High Yield Portfolio
Jones & Babson UMB Bank, n.a.
By: /s/P. Bradley Adams By: /s/Ralph R. Santoro
Name: P/ Bradley Adams Name: Ralph R. Santoro
Title: Treasurer Title: Vice President
Date: 5/5/97 Date: 04/22/97
EX99.23(h)
TRANSFER AGENCY AGREEMENT
This Agreement made as of the 31st day of March 31, 1995 between
Babson Enterprise Fund, Inc., a Maryland corporation (the "Fund"),
and Jones & Babson, Inc., a Missouri corporation (the "Transfer
Agent").
WITNESSETH
That in consideration of the mutual promises hereinafter set
forth, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases
shall have the following meanings:
1. "Approved Institution" shall mean an entity so named in a
Certificate, as hereinafter defined. From time to time, the Fund may
amend a previously delivered Certificate by delivering to the Transfer
Agent a Certificate naming an additional entity or deleting any entity
named in a previously delivered Certificate.
2. The "Board of Directors" shall mean the Board of Directors
of the Fund.
3. "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Transfer Agent by the Fund which is signed by any Officer,
as hereinafter defined, and actually received by the Transfer Agent.
4. "Custodian" shall mean the financial institution appointed
as custodian under the terms and conditions of the Custody Agreement
between the financial institution and the Fund, or its successor(s).
5. "Fund Business Day" shall be determined as set out in the
Fund's prospectuses as shall be effective from time to time.
6. "Officer" shall be deemed to be the Fund's President, any
Vice President, Secretary, Treasurer, Controller, any Assistant
Controller, any Assistant Treasurer and any Assistant Secretary, and any
other person 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 any person reasonably believed by the Transfer
Agent to be such a person.
7. "Out-of-Pocket Expenses" means amounts reasonably
necessary and actually incurred by Transfer Agent in the provision of
Transfer Agent services or pursuant to this Agreement for the following
purposes: postage (and first class mail insurance in connection with
mailing Share certificates), envelopes, check forms, continuous forms,
forms for reports and statements, stationery and other similar items,
telephone and telegraph charges incurred in answering inquiries from
dealers or shareholders, microfilm used to record transactions in
shareholder accounts and computer tapes used for permanent storage of
records and cost of insertion of materials in mailing envelopes by
outside firms. Any charges associated with special or exception
processing shall also be considered Out-of-Pocket Expenses.
8. "Prospectus" shall mean the most recent Fund prospectus
actually received by the Transfer Agent from the Fund with respect to
which the Fund has indicated a registration statement under the
Securities Act of 1933, as amended, has become effective, including the
Statement of Additional Information, incorporated by reference therein.
9. "Shares" shall mean all or any part of each class or
series of the shares of beneficial interest of the Fund or portfolio
listed in the Certificate as to which the Transfer Agent acts as
transfer agent hereunder, as may be amended from time to time, which are
authorized and/or issued by the Fund.
ARTICLE II
APPOINTMENT OF TRANSFER AGENT
1. Effective as of the date of this Agreement, the Fund hereby
constitutes and appoints the Transfer Agent as transfer agent of all the
Shares of the Fund and as dividend disbursing agent during the period of
this Agreement.
2. The Transfer Agent hereby accepts appointment as transfer
agent and dividend disbursing agent and agrees to perform duties thereof
as hereinafter set forth.
3. In connection with such appointment, the Fund upon the
request of the Transfer Agent, shall deliver the following documents to
the Transfer Agent:
(i) A copy of the Articles of Incorporation of the Fund
and all
amendments thereto certified by the Secretary of the Fund;
(ii) A copy of the By-laws of the Fund certified by the
Secretary of the
Fund;
(iii) A copy of a resolution of the Board of Directors of
the Fund
certified by the Secretary of the Fund appointing the Transfer
Agent and
authorizing the execution of this Transfer Agency Agreement;
(iv) A Certificate signed by the Secretary of the Fund
specifying: the number of authorized Shares, the number of such
authorized Shares issued, the number of such authorized Shares
issued and currently outstanding, the names and specimen
signatures of the Officers of the Fund and the name and address of
the legal counsel for the Fund;
(v) Specimen Share certificate for each or series class of
Shares in the form approved by the Board of Directors of the Fund
(and in a format compatible with the Transfer Agent's system),
together with a Certificate signed by the Secretary of the Fund as
to such approval;
(vi) Copies of the Fund's registration statement, as
amended to date, and the most recently filed Post-Effective
Amendment thereto, filed by the Fund with the Securities and
Exchange Commission under the Securities Act of 1933, as amended,
and under the Investment Company Act of 1940, as amended, together
with any applications filed in connection therewith; and
(vii) Opinion of counsel for the Fund with respect to the
validity of the authorized and outstanding Shares, whether such
Shares are fully paid and nonassessable and the status of such
Shares under the Securities Act of 1933, as amended, and any other
applicable federal law or regulation (i.e., if subject to
registration, that they have been registered and that the
registration statement has become effective or, if exempt, the
specific grounds therefor).
ARTICLE III
AUTHORIZATION AND ISSUANCE OF SHARES
1. If requested by the Transfer Agent, the Fund shall deliver
to the Transfer Agent the following documents on or before the effective
date of any increase or decrease in the total number of Shares
authorized to be issued:
(a) A certified copy of the amendment to the Articles of
Incorporation giving effect to such increase or decrease;
(b) In the case of an increase, an opinion of counsel for
the Fund with respect to the validity of the Shares of the Fund
and the status of such Shares under the Securities Act of 1933, as
amended, and any other applicable federal law or regulation (i.e.,
if subject to registration, that they have been registered and
that the registration statement has become effective or, if
exempt, the specific grounds therefor); and
(c) In the case of an increase, if the appointment of the
Transfer Agent was theretofore expressly limited, a certified copy
of a resolution of the Board of Directors of the Fund increasing
the authority of the Transfer Agent.
2. Prior to the issuance of any additional Shares pursuant to
stock dividends or stock splits, etc., and prior to any reduction in the
number of Shares outstanding, if requested by the Transfer Agent, the
Fund shall deliver the following documents to the Transfer Agent:
(a) A certified copy of the resolution(s) adopted by the
Board of Directors and/or the shareholders of the Fund authorizing
such issuance of additional Shares or such reduction, as the case
may be; and
(b) An opinion of counsel for the Fund with respect to
the validity of the Shares and the status of such Shares under the
Securities Act of 1933, as amended, and any other applicable
federal law or regulation (i.e., if subject to registration, that
they have been registered and that the registration statement has
become effective, or, if exempt, the specific grounds therefor).
ARTICLE IV
RECAPITALIZATION OR CAPITAL ADJUSTMENT
1. In the case of any negative stock split, recapitalization or
other capital adjustment requiring a change in the form of Share
certificates, the Transfer Agent will issue Share certificates in the
new form in exchange for, or upon transfer of, outstanding Share
certificates in the old form, upon receiving:
a) A Certificate authorizing the issuance of the Share
certificates in the new form;
(b) A certified copy of any amendment to the Articles of
Incorporation with respect to the change;
(c) Specimen Share certificates for each class of Shares
in the new form approved by the Board of Directors of the Fund,
with a Certificate signed by the Secretary of the Fund as to such
approval; and
(d) An opinion of counsel for the Fund with respect to the
validity of the Shares in the new form and the status of such
Shares under the Securities Act of 1933, as amended, and any other
applicable federal law or regulation (i.e., if subject to
registration, that the Shares have been registered and that the
registration statement has become effective or, if exempt, the
specific grounds therefor).
2. The Fund at its expense shall furnish the Transfer Agent
with a sufficient supply of blank Share certificates in the new form and
from time to time will replenish such supply upon the request of the
Transfer Agent. Such blank Share certificates shall be compatible with
the Transfer Agent's system and shall be properly signed by facsimile or
otherwise by Officers of the Fund authorized by law or by the By-laws to
sign Share certificates and, if required, shall bear the corporate seal
or facsimile thereof. The Fund agrees to indemnify and exonerate, save
and hold the Transfer Agent harmless from and against any and all claims
or demands that may be asserted against the Transfer Agent with respect
to the genuineness of any Share certificate supplied to the Transfer
Agent pursuant to this Article.
ARTICLE V
ISSUANCE, REDEMPTION AND TRANSFER OF SHARES
1. (a) The Transfer Agent acknowledges that it has received a
copy of the Fund's Prospectus, which Prospectus describes how
sales and redemption of Shares of the Fund shall be made, and the
Transfer Agent agrees to accept purchase orders and redemption
requests with respect to Shares on each Fund Business Day in
accordance with such Prospectus. The Fund agrees to provide the
Transfer Agent with sufficient advance notice to enable the
Transfer Agent to effect any changes in the procedures set forth
in the Prospectus regarding such purchase and redemption
procedure; provided, however, that in no event will such advance
notice be less than thirty (30) days.
(b) The Transfer Agent shall also accept with respect to
each Fund Business Day, at such times as are agreed upon from time
to time by the Transfer Agent and the Fund, a computer tape or
electronic data transmission consistent in all respects with the
Transfer Agent's record format, as amended from time to time,
which is believed by the Transfer Agent to be furnished by or on
behalf of any Approved Institution. The Transfer Agent shall not
be liable for any losses or damages to the Fund or its
shareholders in the event that a computer tape or electronic data
transmission from an Approved Institution is unable to be
processed for any reason beyond the control of the Transfer Agent,
or if any of the information on such tape or transmission is found
to be incorrect.
2. On each Fund Business Day, the Transfer Agent shall, as of
the time at which the Fund computes the net asset value of the Fund,
issue to and redeem from the accounts specified in a purchase order,
redemption request or computer tape or electronic data transmission,
which in accordance with the Prospectus is effective on such Fund
Business Day, the appropriate number of full and fractional Shares based
on the net asset value per Share of such Fund specified in an advice
received on such Fund Business Day from the Fund. Notwithstanding the
foregoing, if a redemption specified in a computer tape or electronic
data transmission is for a dollar value of Shares in excess of the
dollar value of uncertificated Shares in the specified account, the
Transfer Agent shall not effect such redemption in whole or in part and
shall within twenty-four (24) hours orally advise the Approved
Institution which supplied such tape of the discrepancy.
3. In connection with a reinvestment of a dividend or
distribution of Shares of the Fund, the Transfer Agent shall as of each
Fund Business Day, as specified in a Certificate or resolution described
in paragraph 1 of succeeding Article VI, issue Shares of the Fund based
on the net asset value per Share of such Fund specified in an advice
received from the Fund on such Fund Business Day.
4. On each Fund Business Day, the Transfer Agent shall supply
the Fund with a statement specifying with respect to the immediately
preceding Fund Business Day: the total number of Shares of the Fund
(including fractional Shares) issued and outstanding at the opening of
business on such day; the total number of Shares of the Fund sold on
such day, pursuant to the preceding paragraph 2 of this Article; the
total number of Shares of the Fund redeemed from shareholders by the
Transfer Agent on such day; the total number of Shares of the Fund, if
any, sold on such day pursuant to the preceding paragraph 3 of this
Article, and the total number of Shares of the Fund issued and
outstanding.
5. In connection with each purchase and each redemption of
Shares, the Transfer Agent shall send such statements as are prescribed
by the Federal Securities laws applicable to transfer agents or as
described in the Prospectus. If the Prospectus indicates that
certificates for Shares are available and if specifically requested in
writing by any shareholder, or if otherwise required hereunder, the
Transfer Agent will countersign (if necessary), issue and mail to such
shareholder at the address set forth in the records of the Transfer
Agent a Share certificate for any full Share requested.
6. As of each Fund Business Day, the Transfer Agent shall
furnish the Fund with an advice setting forth the number and dollar
amount of Shares to be redeemed on such Fund Business Day in accordance
with paragraph 2 of this Article.
7. Upon receipt of a proper redemption request and moneys paid
to it by the Custodian in connection with a redemption of Shares, the
Transfer Agent shall cancel the redeemed Shares and after making
appropriate deduction for any withholding of taxes required of it by
applicable law: (a) in the case of a redemption of Shares pursuant to a
redemption described in the preceding paragraph l(a) of this Article,
make payment in accordance with the Fund's redemption and payment
procedures described in the Prospectus; and (b) in the case of a
redemption of Shares pursuant to a computer tape or electronic data
transmission described in the preceding paragraph l(b) of this Article,
make payment by directing a federal funds wire order to the account
previously designated by the Approved Institution specified in said
computer tape or electronic data transmission.
8. The Transfer Agent shall not be required to issue any Shares
after it has received from an Officer of the Fund or from an appropriate
federal or state authority written notification that the sale of Shares
has been suspended or discontinued, and the Transfer Agent shall be
entitled to rely upon such written notification.
9. Upon the issuance of any Shares in accordance with this
Agreement, 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 of any Shares.
10. The Transfer Agent shall accept a computer tape or
electronic data transmission consistent with the Transfer Agent's record
format, as amended from time to time, which is reasonably believed by
the Transfer Agent to be furnished by or on behalf of any Approved
Institution and is represented to be instructions with respect to the
transfer of Shares from one account of such Approved Institution to
another such account, and shall effect the transfers specified in said
computer tape or electronic data transmission. The Transfer Agent shall
not be liable for any losses to the Fund or its shareholders in the
event that a computer tape or electronic data transmission from an
Approved Institution is unable to be processed for any reason beyond the
control of the Transfer Agent, or if any of the information on such tape
or transmission is found to be incorrect.
11. (a) Except as otherwise provided in subparagraph (b) of
this paragraph and in paragraph 13 of this Article, Shares will be
transferred or redeemed upon presentation to the Transfer Agent of
Share certificates or instructions properly endorsed for transfer
or redemption, accompanied by such documents as the Transfer Agent
deems necessary to evidence the authority of the person making
such transfer or redemption, and bearing satisfactory evidence of
the payment of stock transfer taxes. In the case of small estates
where no administration is contemplated, the Transfer Agent may,
when furnished with an appropriate surety bond, and without
further approval of the Fund, transfer or redeem Shares registered
in the name of a decedent where the current market value of the
Shares being transferred does not exceed such amount as may from
time to time be prescribed by various states. The Transfer Agent
reserves the right to refuse to transfer or redeem Shares until it
is satisfied that the endorsement on the stock certificate or
instructions is valid and genuine, and for that purpose it will
require, unless otherwise instructed by an authorized Officer of
the Fund, a guarantee of signature by an "Eligible Guarantor
Institution" as that term is defined by SEC Rule 17Ad-15. The
Transfer Agent also reserves the right to refuse to transfer or
redeem 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 to
any claims adverse to such transfer or redemption. The Transfer
Agent may, in effecting transfers and redemptions of Shares, rely
upon those provisions of the Uniform Act for the Simplification of
Fiduciary Security Transfers or the Uniform Commercial Code, as
the same may be amended from time to time, applicable to the
transfer of securities, and the Fund shall indemnify the Transfer
Agent for any act done or omitted by it in good faith in reliance
upon such laws. In no event will the Fund indemnify the Transfer
Agent for any act done by it as a result of willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties.
The Transfer Agent shall be entitled to accept, and shall be fully
protected by the Fund in accepting, any request from any entity to
carry out any transaction in Shares received by the Transfer Agent
through any of the various programs offered through the National
Securities Clearing Corporation ("NSCC") (including, but not
limited to, Networking and FundServ). Any such entity shall
constitute an Approved Institution as defined herein.
(b) Notwithstanding the foregoing or any other provision
contained in this Agreement to the contrary, the Transfer Agent
shall be fully protected by the Fund in not requiring any
instruments, documents, assurances, endorsements or guarantees,
including, without limitation, any signature guarantees, in
connection with a redemption or transfer of Shares whenever the
Transfer Agent reasonably believes that requiring the same would
be inconsistent with the transfer and redemption procedures as
described in the Prospectus.
12. Notwithstanding any provision contained in this Agreement to
the contrary, the Transfer Agent shall not be required or expected to
require, as a condition to any transfer of any Shares pursuant to
paragraph 11 of this Article or any redemption of any Shares pursuant to
a computer tape or electronic data transmission described in this
Agreement, any documents, including, without limitation, any documents
of the kind described in subparagraph (a) of paragraph 11 of this
Article, to evidence the authority of the person requesting the transfer
or redemption and/or the payment of any stock transfer taxes, and shall
be fully protected in acting in accordance with the applicable
provisions of this Article.
13. (a) As used in this Agreement, the terms "computer tape
or electronic data transmission" and "computer tape believed by
the Transfer Agent to be furnished by an Approved Institution",
shall include any tapes generated by the Transfer Agent to reflect
information believed by the Transfer Agent to have been input by
an Approved Institution, via a remote terminal or other similar
link, into a data processing, storage or collection system, or
similar system (the "System"), located on the Transfer Agent's
premises. For purposes of paragraph 1 of this Article, such a
computer tape or electronic data transmission shall be deemed to
have been furnished at such times as are agreed upon from time to
time by the Transfer Agent and Fund only if the information
reflected thereon was input to the System at such times as are
agreed upon from time to time by the Transfer Agent and the Fund.
(b) Nothing contained in this Agreement shall constitute
any agreement or representation by the Transfer Agent to permit,
or to agree to permit, any Approved Institution to input
information into a System.
(c) The Transfer Agent reserves the right to approve, in
advance, any Approved Institution; such approval not to be
unreasonably withheld. The Transfer Agent also reserves the right
to terminate any and all automated data communications, at its
discretion, upon a reasonable attempt to notify the Fund when in
the opinion of the Transfer Agent continuation of such
communications would jeopardize the accuracy and/or integrity of
the Fund's records on the System.
ARTICLE VI
DIVIDENDS AND DISTRIBUTIONS
1. The Fund shall furnish to the Transfer Agent a copy of a
resolution of its Board of Directors, certified by the
Secretary or any Assistant Secretary, either: (i) setting forth
the date of the declaration of a dividend or distribution, the date of
accrual or payment, as the case may be, thereof, the record date as of
which shareholders entitled to payment, or accrual, as the case may be,
shall be determined, the amount per Share of such dividend or
distribution, the payment date on which all previously accrued and
unpaid dividends are to be paid and the total amount, if any, payable to
the Transfer Agent on such payment date; or (ii) authorizing the
declaration of dividends and distributions on a daily or other periodic
basis and authorizing the Transfer Agent to rely on a Certificate
setting forth the information described in subsection (i) of this
paragraph.
2. Upon the mail date specified in such Certificate or
resolution, as the case may be, the Fund shall, in the case of a cash
dividend or distribution, cause the Custodian to deposit in an account
in the name of the Transfer Agent on behalf of the Fund an amount of
cash, if any, sufficient for the Transfer Agent to make the payment, as
of the mail date, specified in such Certificate or resolution, as the
case may be, to the shareholders who were of record on the record date.
The Transfer Agent will, upon receipt of any such cash, make payment of
such cash dividends or distributions to the shareholders of record as of
the record date by: (i) mailing a check, payable to the registered
shareholder, to the address of record or dividend mailing address; or
(ii) wiring such amounts to the accounts previously designated by an
Approved Institution, as the case may be. The Transfer Agent shall not
be liable for any improper payments made in good faith and without
negligence, in accordance with a Certificate or resolution described in
the preceding paragraph. If the Transfer Agent shall not receive from
the Custodian sufficient cash to make payments of any cash dividend or
distribution to all shareholders of the Fund 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 sufficient cash is
provided to the Transfer Agent.
3. It is understood that the Transfer Agent shall in no way be
responsible for the determination of the rate or form of dividends or
capital gain distributions due to the shareholders. It is expressly
agreed and understood that the Transfer Agent is not liable for any loss
as a result of processing a distribution based on information provided
in the Certificate that is incorrect. The Fund agrees to pay the
Transfer Agent for any and all costs, both direct and Out-of-Pocket
Expenses, incurred in such corrective work as necessary to remedy such
error.
4. It is understood that the Transfer Agent shall file such
appropriate information returns concerning the payment of dividend and
capital gain distributions with the proper federal, state and local
authorities as are required by law to be filed by the Fund, but shall in
no way be responsible for the collection or withholding of taxes due on
such dividends or distributions due to shareholders, except and only to
the extent required by applicable law. Anything in this Agreement to the
contrary notwithstanding, the Fund shall be solely responsible for the
accurate, complete and timely filing with the proper federal, state and
local authorities of all tax information with respect to any Fund
account maintained under Matrix Level 3 through any of the various
programs offered through the NSCC (including, but not limited to,
Networking and FundServ).
ARTICLE VII
CONCERNING THE FUND
1. The Fund represents to the Transfer Agent that:
(a) It is a corporation duly organized and existing under
the laws of the State of Maryland.
(b) It is empowered under applicable laws and by its
Articles of Incorporation and By-laws to enter into and perform
this Agreement.
(c) All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
(d) It is an investment company registered under the
Investment Company Act of 1940, as amended.
(e) A registration statement under the Securities Act of
1933, as amended, with respect to the Shares is effective. The
Fund shall notify the Transfer Agent if such registration
statement or any state securities registrations have been
terminated or a stop order has been entered with respect to the
Shares.
2. Each copy of the Articles of Incorporation of the Fund and
copies of all amendments thereto shall be certified by the Secretary of
State (or other appropriate official) of the state of organization, and
if such Articles of Incorporation and/or amendments are required by law
also to be filed with a county or other officer or official body, a
certificate of such filing shall be filed with a certified copy
submitted to the Transfer Agent. Each copy of the By-laws and copies of
all amendments thereto, and copies of resolutions of the Board of
Directors of the Fund shall be certified by the Secretary of the Fund
under seal.
3. The Fund shall promptly deliver to the Transfer Agent
written notice of any change in the Officers authorized to sign Share
certificates, notifications or requests, together with a specimen
signature of each new Officer. In the event any Officer who shall have
signed manually or whose facsimile signature shall have been affixed to
blank Share certificates shall die, resign or be removed prior to
issuance of such Share certificates, the Transfer Agent may issue such
Share certificates of the Fund notwithstanding such death, resignation
or removal, and the Fund shall promptly deliver to the Transfer Agent
such approval, adoption or ratification as may be required by law.
4. It shall be the sole responsibility of the Fund to deliver
to the Transfer Agent the Fund's currently effective Prospectus and, for
purposes of this Agreement, the Transfer Agent shall not be deemed to
have notice of any information contained in such Prospectus until a
reasonable time after it is actually received by the Transfer Agent.
ARTICLE VIII
CONCERNING THE TRANSFER AGENT
1. The Transfer Agent represents and warrants to the Fund that:
(a) It is a corporation duly organized and existing under
the laws of the State of Missouri.
(b) It is empowered under applicable law and by its
Articles of Incorporation and By-laws to enter into and perform
this Agreement.
(c) All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
(d) It is duly registered as a transfer agent under
Section 17A of the Securities Exchange Act of 1934, as amended.
2. The Transfer Agent shall not be liable and shall be
indemnified in acting upon any computer tape or electronic data
transmission, writing or document reasonably believed by it to be
genuine and to have been signed or made by an Officer of the Fund or
person designated by the Fund and shall not be held to have any notice
of any change of authority of any person until receipt of written notice
thereof from the Fund or such person. It shall also be protected in
processing Share certificates which bear the proper countersignature of
the Transfer Agent and which it reasonably believes to bear the proper
manual or facsimile signature of the Officers of the Fund.
3. The Transfer Agent upon notice to the Fund may establish
such additional procedures, rules and regulations governing the transfer
or registration of Share certificates as it may deem advisable and
consistent with such rules and regulations generally adopted by mutual
fund transfer agents.
4. The Transfer Agent shall keep such records as it may deem
advisable and is agreeable to the Fund, but not inconsistent with the
rules and regulations of appropriate government authorities, in
particular Rules 31a-2 and 31a-3 under the Investment Company Act of
1940, as amended. The Transfer Agent acknowledges that such records are
the property of the Fund. The Transfer Agent may deliver to the Fund
from time to time at its discretion, for safekeeping or disposition by
the Fund in accordance with law, such records, papers, documents
accumulated in the execution of its duties as such Transfer Agent, as
the Transfer Agent may deem expedient, other than those which the
Transfer Agent is itself required to maintain pursuant to applicable
laws and regulations. The Fund shall assume all responsibility for any
failure thereafter to produce any record, paper, cancelled Share
certificate or other document so returned, if and when required. Such
records maintained by the Transfer Agent pursuant to this paragraph 4,
which have not been previously delivered to the Fund pursuant to the
foregoing provisions of this paragraph 4, shall be considered to be the
property of the Fund, shall be made available upon request for
inspection by the Officers, employees and auditors of the Fund, and
records shall be delivered to the Fund upon request and in any event
upon the date of termination of this Agreement, as specified in Article
IX of this Agreement, in the form and manner kept by the Transfer Agent
on such date of termination or such earlier date as may be requested by
the Fund.
5. The Transfer Agent shall not be liable for any loss or
damage, including counsel fees, resulting from its actions or omissions
to act or otherwise, except for any loss or damage arising out of its
bad faith, willful misfeasance, gross negligence or reckless disregard
of its duties under this Agreement.
6. (a) The Fund shall indemnify and exonerate, save and hold
harmless the Transfer Agent from and against any and all claims
(whether with or without basis in fact or law), demands, expenses
(including reasonable attorneys' fees) and liabilities 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 any action taken or omitted to be
taken by any prior transfer agent of the Fund or as a result of
any action taken or omitted to be taken by the Transfer Agent in
good faith and without gross negligence or willful misfeasance or
in reliance upon: (i) any provision of this Agreement; (ii)
the Prospectus; (iii) any instruction or order including, without
limitation, any computer tape or electronic data transmission
reasonably believed by the Transfer Agent to have been received
from an Approved Institution; (iv) any instrument, order or Share
certificate reasonably believed by it to be genuine and to be
signed, countersigned or executed by any duly authorized Officer
of the Fund; (v) any Certificate or other instructions of an
Officer; (vi) any opinion of legal counsel for the Fund or the
Transfer Agent; or (vii) any request by any entity to carry out
any transaction in Shares received by the Transfer Agent through
any of the various programs offered through the NSCC (including,
but not limited to, Networking and FundServ). The Fund shall
indemnify and exonerate, save and hold the Transfer Agent harmless
from and against any and all claims (whether with or without basis
in fact or law), demands, expenses (including reasonable
attorneys' fees) and liabilities 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 any action taken or omitted to be taken by the Transfer
Agent in good faith in connection with its appointment or in
reliance upon any law, act, regulation or any interpretation of
the same even though such law, act or regulation may thereafter
have been altered, changed, amended or repealed.
(b) The Transfer Agent shall not settle any claim, demand,
expense or liability to which it may seek indemnity pursuant to
paragraph 6(a) above (each, an "Indemnifiable Claim") without
the express written consent of an Officer of the Fund. The
Transfer Agent shall notify the Fund within fifteen (15) days of
receipt of notification of an Indemnifiable Claim, provided that
the failure by the Transfer Agent to furnish such notification
shall not impair its right to seek indemnification from the Fund
unless the Fund is unable to adequately defend the Indemnifiable
Claim as a result of such failure, and further provided, that if
as a result of the Transfer Agent's failure to provide the Fund
with timely notice of the institution of litigation a judgment by
default is entered, prior to seeking indemnification from the Fund
the Transfer Agent, at its own cost and expense, shall open such
judgment. The Fund shall have the right to defend any
Indemnifiable Claim at its own expense, provided that such defense
shall be conducted by counsel selected by the Fund and reasonably
acceptable to the Transfer Agent. The Transfer Agent may join in
such defense at its own expense, but to the extent that it shall
so desire the Fund shall direct such defense. The Fund shall not
settle any Indemnifiable Claim without the express written consent
of the Transfer Agent if the Transfer Agent determines that such
settlement would have an adverse effect on the Transfer Agent
beyond the scope of this Agreement. In such event, the Fund and
the Transfer Agent shall each be responsible for their own defense
at their own cost and expense, and such claim shall not be deemed
an Indemnifiable Claim hereunder. If the Fund shall fail or refuse
to defend an Indemnifiable Claim, the Transfer Agent may provide
its own defense at the cost and expense of the Fund. Anything in
this Agreement to the contrary notwithstanding, the Fund shall not
indemnify the Transfer Agent against any liability or expense
arising out of the Transfer Agent's willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties and
obligations under this Agreement. The Transfer Agent shall
indemnify and hold the Fund harmless from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or
failure or omission to act by the Transfer Agent as a result of
the Transfer Agent's lack of good faith, gross negligence or
willful misfeasance.
7. The Transfer Agent shall not be liable to the Fund with
respect to any redemption draft on which the signature of the drawer is
forged and which the Fund's Custodian has advised the Transfer Agent to
honor the redemption (but nothing herein is meant to impose any duties
upon the Fund's Custodian); nor shall the Transfer Agent be liable for
any material alteration or absence or forgery of any endorsement, it
being understood that the Transfer Agent's sole responsibility with
respect to inspecting redemption drafts is to use reasonable care to
verify the drawer's signature against signatures on file.
8. There shall be excluded from the consideration of whether
the Transfer Agent has breached this Agreement in any way, any period of
time, and only such period of time during which the Transfer Agent's
performance is materially affected, by reason of circumstances beyond
its control (collectively, "Causes"), including, without limitation,
mechanical breakdowns of equipment (including any alternative power
supply and operating systems software), flood or catastrophe, acts of
God, failures of transportation, communication or power supply, strikes,
lockouts, work stoppages or other similar circumstances.
9. At any time the Transfer Agent may apply to an Officer of
the Fund for written instructions with respect to any matter arising in
connection with the Transfer Agent's duties and obligations under this
Agreement, and the Transfer Agent shall not be liable for any action
taken or permitted by it in good faith in accordance with such written
instructions. Such application by the Transfer Agent for written
instructions from an Officer of the Fund may set forth in writing any
action proposed to be taken or omitted by the Transfer Agent with
respect to its duties or obligations under this Agreement and the date
on and/or after which such action shall be taken. The Transfer Agent
shall not be liable for any action taken or omitted in accordance with a
proposal included in any such application on or after the date specified
therein unless, prior to taking or omitting any such action, the
Transfer Agent has received written instructions in response to such
application specifying the action to be taken or omitted. The Transfer
Agent may consult counsel of the Fund, or upon notice to the Fund, 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
accordance with the advice or opinion of counsel to the Fund or its own
counsel.
10. The Transfer Agent may issue new Share certificates in place
of certificates represented to have been lost, stolen or destroyed upon
receiving written instructions from the shareholder accompanied by proof
of an indemnity or surety bond issued by a recognized insurance
institution specified by the Fund or the Transfer Agent.
If the Transfer Agent receives written notification from the shareholder
or broker dealer that the certificate issued was never received, and
such notification is made within thirty (30) days of the date of
issuance, the Transfer Agent may reissue the certificate without
requiring a surety bond. The Transfer Agent may also reissue
certificates which are represented as lost, stolen or destroyed without
requiring a surety bond provided that the notification is in writing and
accompanied by an indemnification signed on behalf of a member firm of
the New York Stock Exchange and signed by an officer of said firm with
the signature guaranteed. Notwithstanding the foregoing, the Transfer
Agent will reissue a certificate upon written authorization from an
Officer of the Fund.
11. In case of any requests or demands for the inspection of the
shareholder records of the Fund, the Transfer Agent will endeavor to
notify the Fund promptly and to secure instructions from an Officer as
to such inspection. The Transfer Agent reserves the right, however, to
exhibit the shareholder records to any person whenever it receives an
opinion from its counsel that there is a reasonable likelihood that the
Transfer Agent will be held liable for the failure to exhibit the
shareholder records to such person; provided, however, that in
connection with any such disclosure the Transfer Agent shall promptly
notify the Fund that such disclosure has been made or is to be made.
12. At the request of an Officer of the Fund, the Transfer Agent
will address and mail such appropriate notices to shareholders as the
Fund may direct.
13. 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:
(a) The legality of the issue or sale of any Shares, the
sufficiency of the amount to be received therefor, or the
authority of the Approved Institution or of the Fund, as the case
may be, to request such sale or issuance;
(b) The legality of a transfer of Shares, or of a
redemption of any Shares, the propriety of the amount to be paid
therefor, or the authority of the Approved Institution or of the
Fund, as the case may be, to request such transfer or redemption;
(c) The legality of the declaration of any dividend by the
Fund, or the legality of the issue of any Shares in payment of any
stock dividend; or
(d) The legality of any recapitalization or readjustment
of Shares.
14. The Transfer Agent 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 Transfer Agent.
15. Purchase and Prices of Services:
(a) The Fund will compensate the Transfer Agent for, and
Transfer Agent will provide, beginning on the execution date of
this Agreement and continuing until the termination of this
Agreement as provided hereinafter, the services set forth in
Schedule I.
(b) The current unit prices for the services are set forth
in Schedule II (the "Schedule II Fees"). Effective as of January
1, 1997, once in each calendar year, the Transfer Agent may elect
to raise the Schedule II Fees upon ninety (90) days prior notice
to the Fund, all subject to the mutual agreement of the parties
hereto. Notwithstanding the annual right to raise the Schedule II
Fees, the Transfer Agent may increase prices due to changes in
legal or regulatory requirements subject to the approval of the
Fund, which approval shall not be unreasonably withheld.
16. Billing and Payment:
(a) The Transfer Agent shall bill the Fund monthly in
arrears for accounts maintained and Out-of-Pocket Expenses. The
Transfer Agent may from time to time request that the Fund advance
estimated expenditures of an unusual nature subject to
reconciliation of actual expenses as soon as practicable
thereafter.
(b) The Fund shall pay the Transfer Agent in immediately
available funds at UMB Bank, n.a. in Kansas City, Missouri within
thirty (30) days of the date of the bill. Any amounts due under
this Agreement which are not paid within said thirty (30) day
period shall bear interest at the rate of one and one-half percent
(l 1/2%) per month from such date until paid in full.
ARTICLE IX
TERMINATION
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 sixty (60) days after the
date of receipt 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 the
successor transfer agent or transfer agents. In the event such notice is
given by the Transfer Agent, the Fund shall on or before the termination
date, deliver to the Transfer Agent a copy of a resolution of its Board
of Directors, certified by the Secretary or any Assistant Secretary,
designating a successor transfer agent or transfer agents. In the
absence of such designation by the Fund, the Fund shall upon the date
specified in the notice of termination of this Agreement and delivery of
the records maintained hereunder, be deemed to be its own transfer agent
and the Transfer Agent shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement.
In the event this Agreement is terminated as provided herein, the
Transfer Agent, upon the written request of the Fund, shall deliver the
records of the Fund on electromagnetic media to the Fund or its
successor transfer agent. The Fund shall be responsible to the Transfer
Agent for the reasonable costs and expenses associated with the
preparation and delivery of such media.
ARTICLE X
MISCELLANEOUS
1 The Fund agrees that prior to effecting any change in the
Prospectus which would increase or alter the duties and obligations of
the Transfer Agent hereunder, it shall advise the Transfer Agent of such
proposed change at least thirty (30) days prior to the intended date of
the same, and shall proceed with such change only if it shall have
received the written consent of the Transfer Agent thereto, which shall
not be unreasonably withheld.
2. 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:
2440 Pershing Road
Kansas City, MO 64108
or at such other place as the Fund may from time to time designate in
writing.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Transfer Agent shall be
sufficiently given if addressed to the Transfer Agent and mailed or
delivered to:
2440 Pershing Road
Kansas City, MO 64108
or at such other place as the Transfer Agent may from time to time
designate in writing.
4. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the
formality of this Agreement.
5. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns.
6. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri.
7. 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.
8. The provisions of this Agreement are intended to benefit
only the Transfer Agent and the Fund, and no rights shall be granted to
any other person by virtue of this Agreement.
9. (a) The Transfer Agent shall endeavor to assist in
resolving shareholder inquiries and errors relating to the period
during which prior transfer agents acted as such for the Fund. Any
such inquiries or errors which cannot be expediently resolved by
the Transfer Agent will be referred to the Fund.
(b) The Transfer Agent shall only be responsible for the
safekeeping and maintenance of transfer agency records, cancelled
Share certificates and correspondence of the Fund created or
produced prior to the time of conversion which are under its
control and acknowledged in a writing to the Fund to be in its
possession. Any expenses or liabilities incurred by the Transfer
Agent as a result of shareholder inquiries, regulatory compliance
or audits related to such records and not caused as a result of
Transfer Agent's bad faith, willful misfeasance or gross
negligence shall be the responsibility of the Fund as provided in
Article VIII herein.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective corporate officer, thereunto duly
authorized and their respective corporate seals to be hereunto affixed,
as of the day and year first above written.
BABSON ENTERPRISE FUND II, INC.
By /s/Larry D. Armel
Name: Larry D. Armel
Title: President
[SEAL]
JONES & BABSON, INC.
By /s/Michael A. Brummel
Name: Michael A. Brummel
Title: Assistant Secretary
[SEAL]
<PAGE>
SCHEDULE I
DESCRIPTION OF SERVICES
In consideration of the fees to be paid in such manner and at such
times as Fund and Transfer Agent may agree, Transfer Agent will provide the
services set forth below:
Examine and Process New Accounts, Subsequent Payments, Liquidations,
Exchanges, Telephone Transactions, Check Redemptions, Automatic Withdrawals,
Certificate Issuance, Wire Order Trades, Dividends, Dividend Statements,
Dealer Statements.
This Agreement does not apply to services with respect to qualified
plans. Such services, including, but not limited to fiduciary accounting
services and the preparation and mailing of Forms 5498 and 1099R, are
available subject to separate agreement for an additional charge.
DAILY ACTIVITY
Maintain the following shareholder information in such a manner as the
Transfer Agent shall determine:
Name and Address, including Zip Code
Balance of Uncertificated Shares
Balance of Certificated Shares
Certificate number, number of shares, issuance date of each certificate
outstanding and cancellation date for each certificate date for each
certificate no longer outstanding, if issued
Balance of dollars available for redemption
Dividend code (daily accrual, monthly reinvest, monthly cash or
quarterly cash)
Type of account code
Establishment date indicating the date an account was opened, carrying
forward pre-conversion data as available
Original establishment date for accounts opened by exchange W-9
withholding status and periodic reporting
State of residence code
Social Security or taxpayer identification number, and indication of
certification
Historical transactions on the account for the most recent 18 months,
or other period as mutually agreed to from time-to-time
Indication as to whether phone transactions can be accepted for this
account. Beneficial owner code, i.e. male, female, joint tenant, etc.
An alternate or "secondary" account number issued by a dealer (or bank,
etc.) to a customer for use, inquiry and transaction input by "remote
accessors"
FUNCTIONS
Answer investor and dealer telephone and/or written inquiries, except
those concerning Fund policy, or requests for investment advice which
will be referred to the Fund, or those which the Fund chooses to answer
Deposit Fund share certificates into accounts upon receipt of
instructions from the investor or other authorized person, if issued
Examine and process transfers of shares insuring that all transfer
requirements and legal documents have been supplied
Process and confirm address changes
Process standard account record changes as required, i.e. Dividend
Codes, etc.
Microfilm source documents for transactions, such as account
applications and correspondence
Perform backup withholding for those accounts which federal government
regulations indicate is necessary
Solicit missing taxpayer identification numbers
Provide remote access inquiry to Fund records via Fund supplied
hardware (Fund responsible for connection line and monthly fee)
REPORTS PROVIDED
Daily Journals Reflecting all shares and
dollar activity for the
previous day
Blue Sky Report Supply information monthly
for Fund's Preparation of
Blue Sky Reporting
N-SAR Report Supply monthly correspondence,
redemption and liquidation
information for use in fund's
N-SAR Report
Additionally, monthly average daily balance reports will be provided at
the Fund's request to the Fund at no charge.
Prepare and mail copies of summary statements to dealers and investment
advisers
Generate and mail confirmation statements for financial transactions
DIVIDEND ACTIVITY
Reinvest or pay in cash including reinvesting in other funds within the
fund group serviced by the Transfer Agent as described in each Fund
Prospectus
Distribute capital gains simultaneously with income dividends
DEALER SERVICES
Prepare and mail confirmation statements to dealers and
Prepare and mail copies of statements to dealers, same frequency as
investor statements
ANNUAL MEETINGS
Assist Fund in obtaining a qualified service to: address and mail
proxies and related material, tabulate returned proxies and supply
daily reports when sufficient proxies have been received
Prepare certified list of stockholders, hard copy or microform
PERIODIC ACTIVITIES
Mail transaction confirmation statements daily to investors
Address and mail four (4) periodic financial reports (material must be
adaptable to Transfer Agent's mechanical equipment as reasonably
specified by the Transfer Agent)
Mail periodic statement to investors
Compute, prepare and furnish all necessary reports to Governmental
authorities: Forms 1099DIV, 1099B, 1042 and 1042S
Enclose various marketing material as designated by the Fund in statement
mailings, i.e. monthly and quarterly statements (material must be adaptable
to mechanical equipment as reasonably specified by the Transfer Agent)
SCHEDULE II
TRANSFER AGENT FEE SCHEDULE
(None for this Fund)
EX99.23(i)
Law Office
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Direct Dial: (215) 564-8024
January 18, 1999
Babson Enterprise Fund, Inc.
BMA Tower 700 Karnes Blvd.
Kansas City, MO 64108-3306
Re: Legal Opinion-Securities Act of 1933
Ladies and Gentlemen:
We have examined the Articles of Incorporation, as amended
and supplemented, if applicable (the "Articles") of Babson Enterprise
Fund, Inc. (the "Fund"), a corporation organized under Maryland law,
the By-Laws of the Fund, and its proposed form of Share Certificates (if
any), all as amended to date, and the various pertinent corporate
proceedings we deem material. We have also examined the Notification of
Registration and the Registration Statements filed under the Investment
Company Act of 1940, as amended (the "Investment Company Act") and the
Securities Act of 1933, as amended (the "Securities Act"), all as
amended to date, as well as other items we deem material to this
opinion.
The Fund is authorized by the Articles to issue twenty
million (20,000,000) shares of common stock at a par value of $1.00 and
currently issues shares representing interests in a single portfolio of
investments. The Fund has filed with the U.S. Securities and Exchange
Commission, a Registration Statement under the Securities Act, which
Registration Statement is deemed to register an indefinite number of
shares of the Fund pursuant to the provisions of Section 24(f) of the
Investment Company Act. You have further advised us that the Fund has
filed, and each year hereafter will timely file, a Notice pursuant to
Rule 24f-2 under the Investment Company Act perfecting the registration
of the shares sold by the Fund during each fiscal year during which such
registration of an indefinite number of shares remains in effect.
You have also informed us that the shares of the Fund have
been, and will continue to be, sold in accordance with the Fund's usual
method of distributing its registered shares, under which prospectuses
are made available for delivery to offerees and purchasers of such
shares in accordance with Section 5(b) of the Securities Act.
Based upon the foregoing information and examination, so
long as the Fund remains a valid and subsisting entity under the laws of
its state of organization, and the registration of an indefinite number
of shares of the Fund remains effective, the authorized shares of the
Fund when issued for the consideration set by the Board of Directors
pursuant to the Articles, and subject to compliance with Rule 24f-2,
will be legally outstanding, fully-paid, and non-assessable shares, and
the holders of such shares will have all the rights provided for with
respect to such holding by the Articles and the laws of the State of
Maryland.
We hereby consent to the use of this opinion, in lieu of any
other, as an exhibit to the Registration Statement of the Fund, along
with any amendments thereto, covering the registration of the shares of
the Fund under the Securities Act and the applications, registration
statements or notice filings, and amendments thereto, filed in
accordance with the securities laws of the several states in which
shares of the Fund are offered, and we further consent to reference in
the registration statement of the Fund to the fact that this opinion
concerning the legality of the issue has been rendered by us.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
BY: /s/ Mark H. Plafker
Mark H. Plafker
Doc. #163631 v.01
EX99.23(j)(1)
Consent of Independent Auditors
We consent to the references to our firm under the captions
"Financial Highlights" in the Prospectus and "Independent
Auditors" in the Statement of Additional Information and to the
incorporation by reference of our report dated December 30, 1998, in the
Registration Statement (Form N-1A) and related Prospectus of
Babson Enterprise Fund, Inc. filed with the Securities and Exchange
Commission in this Post-Effective Amendment No. 19 under the
Securities Act of 1933 (Registration No. 2-85791) and Amendment
No. 20 under the Investment Company Act of 1940 (Registration No.
811-3823).
/s/Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
January 13, 1999
EX99.23(j)(2)
POWER OF ATTORNEY
WHEREAS the undersigned is a Director of Babson Enterprise Fund, Inc., a
Maryland Corporation which intends to do business as an open-end diversified
investment company (mutual fund), and
WHEREAS the Babson Enterprise Fund, Inc. intends to register its shares with
the Securities and Exchange Commission under the Securities Act of 1933 and
the Investment Company Act of 1940 and with the Securities Departments of the
various states and the District of Columbia. Now, therefore,
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned does hereby appoint each of the persons hereinafter set
out as his attorney each with the power to act severally in the name of the
undersigned and to execute on his behalf all forms and documents required by
the Securities and Exchange Commission, or any state of the United States of
America, or the District of Columbia, in connection with the initial
registration of the securities of the Babson Enterprise Fund, Inc. and in the
maintenance of such registrations.
Larry D. Armel
Stephen R. Ross
Richard L. Graber
IN WITNESS WHEREOF, I have hereunto set my hand this of 23rd day
of January, 1992.
/s/Francis C. Rood
Francis C. Rood
Sworn to before me this of 23rd day of January, 1992.
Elizabeth L. Allwood, Notary Pub1ic
County of Jackson, State of Missouri
My commission expires November 19, 1995.
POWER OF ATTORNEY
WHEREAS the undersigned is a Director of Babson Enterprise Fund, Inc., a
Maryland Corporation which intends to do business as an open-end diversified
investment company (mutual fund), and
WHEREAS the Babson Enterprise Fund, Inc. intends to register its shares with
the Securities and Exchange Commission under the Securities Act of 1933 and
the Investment Company Act of 1940 and with the Securities Departments of the
various states and the District of Columbia. Now, therefore,
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned does hereby appoint each of the persons hereinafter set
out as his attorney each with the power to act severally in the name of the
undersigned and to execute on his behalf all forms and documents required by
the Securities and Exchange Commission, or any state of the United States of
America, or the District of Columbia, in connection with the initial
registration of the securities of the Babson Enterprise Fund, Inc. and in the
maintenance of such registrations.
Larry D. Armel
Stephen R. Ross
Richard L. Graber
IN WITNESS WHEREOF, I have hereunto set my hand this of 23rd day
of January, 1992.
/s/William H. Russell
William H. Russell
Sworn to before me this of 23rd day of January, 1992.
Elizabeth L. Allwood, Notary Pub1ic
County of Jackson, State of Missouri
My commission expires November 19, 1995.
POWER OF ATTORNEY
WHEREAS the undersigned is a Director of Babson Enterprise Fund, Inc., a
Maryland Corporation which intends to do business as an open-end diversified
investment company (mutual fund), and
WHEREAS the Babson Enterprise Fund, Inc. intends to register its shares with
the Securities and Exchange Commission under the Securities Act of 1933 and
the Investment Company Act of 1940 and with the Securities Departments of the
various states and the District of Columbia. Now, therefore,
KNOW ALL MEN BY THESE PRESENTS:
THAT the undersigned does hereby appoint each of the persons hereinafter set
out as his attorney each with the power to act severally in the name of the
undersigned and to execute on his behalf all forms and documents required by
the Securities and Exchange Commission, or any state of the United States of
America, or the District of Columbia, in connection with the initial
registration of the securities of the Babson Enterprise Fund, Inc. and in the
maintenance of such registrations.
Larry D. Armel
Stephen R. Ross
Richard L. Graber
IN WITNESS WHEREOF, I have hereunto set my hand this of 23rd day
of January, 1992.
/s/H. David Rybolt
H. David Rybolt
Sworn to before me this of 23rd day of January, 1992.
Elizabeth L. Allwood, Notary Pub1ic
County of Jackson, State of Missouri
My commission expires November 19, 1995.
[ARTICLE] 6
[CIK] 0000725496
[NAME] BABSON ENTERPRISE FUND INC
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] NOV-30-1998
[PERIOD-END] NOV-30-1998
[INVESTMENTS-AT-COST] 159033428
[INVESTMENTS-AT-VALUE] 179324814
[RECEIVABLES] 288326
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 179613140
[PAYABLE-FOR-SECURITIES] 58557
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 264028
[TOTAL-LIABILITIES] 322585
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 132314344
[SHARES-COMMON-STOCK] 10781188
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 642640
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 26042185
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 20291386
[NET-ASSETS] 179290555
[DIVIDEND-INCOME] 2545205
[INTEREST-INCOME] 282193
[OTHER-INCOME] 0
[EXPENSES-NET] 2225682
[NET-INVESTMENT-INCOME] 601716
[REALIZED-GAINS-CURRENT] 28111378
[APPREC-INCREASE-CURRENT] (51433680)
[NET-CHANGE-FROM-OPS] (22720586)
[EQUALIZATION] 78485
[DISTRIBUTIONS-OF-INCOME] 607184
[DISTRIBUTIONS-OF-GAINS] 24566129
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 389195
[NUMBER-OF-SHARES-REDEEMED] 1074034
[SHARES-REINVESTED] 1279316
[NET-CHANGE-IN-ASSETS] (36903674)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2199612
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2225682
[AVERAGE-NET-ASSETS] 0
[PER-SHARE-NAV-BEGIN] 21.22
[PER-SHARE-NII] .044
[PER-SHARE-GAIN-APPREC] (2.154)
[PER-SHARE-DIVIDEND] .06
[PER-SHARE-DISTRIBUTIONS] 2.42
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 16.63
[EXPENSE-RATIO] 1.09
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
