SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
D.L. Babson Tax-Free Income Fund, Inc.
D.L. Babson Money Market Fund, Inc.
Babson Enterprise Fund, Inc.
Babson Enterprise Fund II, Inc.
David L. Babson Growth Fund, Inc.
Babson Value Fund, Inc.
Shadow Stock Fund, Inc.
Babson-Stewart Ivory International Fund, Inc.
- - ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - ------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------
D.L. Babson Tax-Free Income Fund, Inc.
D.L. Babson Money Market Fund, Inc.
Babson Enterprise Fund, Inc.
Babson Enterprise Fund II, Inc.
David L. Babson Growth Fund, Inc.
Babson Value Fund, Inc.
Shadow Stock Fund, Inc.
Babson-Stewart Ivory International Fund, Inc.
February 13, 2003
Dear Shareholders:
The attached Proxy Statement describes important shareholder proposals relating
to the planned acquisition of Jones & Babson, Inc., the investment manager to
the investment companies within the Babson Funds group listed above, by RBC Dain
Rauscher Corp. The Investment Company Act of 1940 requires a vote whenever there
is a change in ownership of an investment company's adviser. The acquisition
will result in a change of ownership of Jones & Babson, Inc., and the
termination of the existing management agreement for each Fund. Therefore you
are now being asked to approve a new investment advisory agreement between the
Funds and Jones & Babson, Inc.
The acquisition of Jones & Babson, Inc. should not affect you as a shareholder,
as the Funds are expected to continue receiving the same level and quality of
management expertise and services.
As a result of the ownership change, the Investment Counsel Agreements by which
sub-advisory services are provided to the Funds will terminate automatically
when the Current Management Agreements terminate. Therefore, shareholder
approval of new Investment Counsel Agreements is also required.
The other proposal that you are being asked to approve is the election of a
Board of Directors for each Fund.
The Boards of Directors have scheduled a Special Meeting of Shareholders to be
held on March 28, 2003 at which you are being asked to approve the proposals
described above. We hope that you will take the time to review the attached
Proxy Statement and provide us with your vote on these important issues.
A Questions and Answers section is provided at the beginning of the Proxy
Statement to address various questions that you may have about the proposals
being considered, the voting process and the shareholder meeting generally. We
urge you to confirm the Board's recommendations by voting FOR these proposals.
You may vote by mail, telephone, using the Internet or in person.
Thank you for your continued support of the Babson Funds. If you should have any
questions regarding the proxy material, please call the Funds' toll-free number,
(877) 722-2766, and ask to speak with a representative, who will be happy to
help you.
Sincerely,
Stephen S. Soden
D.L. Babson Tax-Free Income Fund, Inc.
D.L. Babson Money Market Fund, Inc.
Babson Enterprise Fund, Inc.
Babson Enterprise Fund II, Inc.
David L. Babson Growth Fund, Inc.
Babson Value Fund, Inc.
Shadow Stock Fund, Inc.
Babson-Stewart Ivory International Fund, Inc.
Notice of Joint Special Meeting of Shareholders
to be held March 28, 2003
To the Shareholders:
NOTICE IS HEREBY GIVEN that a Joint Special Meeting of Shareholders (the
"Special Meeting") of the investment companies within the Babson Funds group
listed above (each a "Fund" and together the "Funds") will be held at the Funds'
principal offices at the BMA Tower, 700 Karnes Boulevard, Kansas City, Missouri
64108, on March 28, 2003, at 1:00 p.m., local time.
The Special Meeting is being held so that shareholders of each Fund may consider
and vote on the following proposals affecting their Fund, as fully described in
the attached Proxy Statement.
FOR ALL FUNDS:
- - --------------
1. To elect four Directors (seven Directors with respect to Babson Enterprise
Fund II, Inc.) to hold office until their successors are duly elected and
qualified or until their earlier resignation or removal;
2. To approve a New Investment Advisory Agreement between each Fund and Jones
& Babson, Inc.;
FOR ALL FUNDS (EXCEPT BABSON-STEWART IVORY INTERNATIONAL FUND, INC.):
- - --------------------------------------------------------------------
3.a. To approve a New Investment Counsel Agreement between Jones & Babson, Inc.
and David L. Babson & Company Inc.;
FOR THE BABSON-STEWART IVORY INTERNATIONAL FUND, INC. ONLY:
- - -----------------------------------------------------------
3.b. To approve a New Investment Counsel Agreement between Jones & Babson, Inc.
and S.I. International Assets (formerly Babson-Stewart Ivory
International)
FOR THE SHADOW STOCK FUND, INC. ONLY:
- - -------------------------------------
3.c. To approve a New Investment Counsel Agreement between Jones & Babson, Inc.
and Analytic Systems, Inc.
FOR ALL FUNDS:
- - --------------
4. To transact such other business as may properly come before the Special
Meeting and any adjournments thereof.
The record date for determining shareholders entitled to notice of, and to vote
at, the Special Meeting and at any adjournments thereof has been fixed at the
close of business on January 17, 2003 for each Fund. These proxy materials were
first mailed to shareholders on or about February 13, 2003.
As described further in the Proxy Statement, the principal solicitation of
proxies will be by mail, but they may be solicited on behalf of management by
telephone and personal contact through D.F. King & Co., Inc. or its agents, as
well as through Directors, officers and regular employees of management.
You are cordially invited to attend the Special Meeting. Whether or not you
expect to attend, please complete, date and sign each enclosed Proxy Ballot and
mail it promptly in the enclosed envelope to assure representation of your
shares (unless you are voting by telephone or through the Internet).
By Order of the Boards of Directors
Martin A. Cramer
Secretary
February 13, 2003
Kansas City, Missouri
PROXY STATEMENT
TABLE OF CONTENTS
Page
Questions and Answers............................................. 3
Proposal 1: Election of Directors................................. 11
Proposal 2: Approval of New Investment Advisory Agreements........ 21
Proposal 3: Approval of New Investment Counsel Agreements......... 31
Proposal 4: Other Business........................................ 36
Additional Information............................................ 36
Exhibits Current Management Agreements.......................... A-1
Form of Proposed New Investment Advisory Agreement..... B-1
Investment Counsel Agreements.......................... C-1
Investment Counsel Agreement - S.I. International
Assets............................................. D-1
Investment Counsel Agreement - Analytic Systems, Inc... E-1
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
We encourage you to read the attached Proxy Statement in full. However, the
following questions and answers represent some typical questions that
shareholders might have regarding this proxy.
Q: WHY AM I BEING SENT THIS PROXY?
A: You are receiving this proxy because you have the right to provide voting
instructions on the important proposals concerning your investment in the
Funds.
Q: WHY AM I BEING ASKED TO APPROVE THE PROPOSED NEW INVESTMENT ADVISORY
AGREEMENT?
A: Each Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), which requires that any investment advisory
agreement for a mutual fund terminate automatically if the investment
adviser experiences a significant change in ownership. This provision has
the effect of requiring that shareholders vote on a new investment advisory
agreement and is designed to ensure that shareholders have a say in the
company or persons that manage their fund. The acquisition of Jones &
Babson, Inc., the Funds' investment adviser, by RBC Dain Rauscher Corp.
("RBC Dain") will result in a change of ownership of Jones & Babson, Inc.
and therefore requires shareholder approval of a New Investment Advisory
Agreement between each Fund and Jones & Babson, Inc. Details of the change
of ownership are contained in the Proxy Statement. The material differences
between each current Management Agreement and the proposed New Investment
Advisory Agreement for each Fund are described in the Proxy Statement. Your
approval of the New Investment Advisory Agreement is not expected to change
the level, nature or quality of services provided to the Funds.
Q. WILL THERE BE ANY FEE CHANGES UNDER THE PROPOSED NEW INVESTMENT ADVISORY
AGREEMENT?
A: Currently, Jones & Babson, Inc. provides advisory and non-advisory services
under the Management Agreement. Under the proposed New Investment Advisory
Agreement, Jones & Babson, Inc. will only be providing advisory services
and therefore will be paid .10% less annually in advisory fees. Jones &
Babson, Inc. will be providing certain non-advisory services to the Funds
pursuant to a proposed new Administrative Services Agreement under which it
will be paid .10% annually by each Fund for such services. The
Administrative Services Agreement is not required to be submitted to
shareholders for approval. Therefore, you are not being asked to approve
the Administrative Services Agreement now nor will your approval of this
Agreement be sought in the future. There is the potential that there could
be an increase in the total operating expenses of a Fund in the future
should the Board of a Fund decide to approve an increase in the fees under
the Administrative Services Agreement. Any such increase will not be
submitted to shareholders for their approval. However, as described in the
Proxy Statement, the changes described will not result in an increase in
overall Fund expenses for at least two years from the date of the RBC Dain
acquisition of Jones & Babson, Inc.
The proposed New Investment Advisory Agreement, unlike the Current
Management Agreements, does not mandate the use of David L. Babson &
Company Inc. as sub-adviser for the Funds. In addition, as discussed in
more detail in the Proxy Statement, the New Investment Advisory Agreement
would allow Jones & Babson, Inc., subject to approval by the Board of
Directors, to terminate David L. Babson & Company Inc. or any other
sub-adviser retained by Jones & Babson, Inc. Although shareholders would no
longer have the right to vote on the termination of sub-advisers, the
Boards of Directors have determined that this provision is in the best
interest of shareholders because it provides the Funds and their adviser
maximum flexibility in seeking to obtain the best investment results for
shareholders.
Q: WILL THERE BE ANY CHANGES IN THE MANAGEMENT OF THE FUNDS IN CONNECTION WITH
THE CHANGE IN CONTROL OF JONES & BABSON, INC.?
A: No. Jones & Babson, Inc. will continue to manage the Funds after the change
in ownership takes place, and it is also anticipated that the current
sub-advisers will remain in place. The Funds are expected to continue
receiving the same level and quality of management expertise and services
as they do now.
Q: WHY AM I BEING ASKED TO APPROVE THE PROPOSED NEW INVESTMENT COUNSEL
AGREEMENT?
A: Each Fund's Current Investment Counsel Agreement provides that it
terminates automatically if the Management Agreement with Jones & Babson,
Inc. terminates. Because RBC Dain's acquisition of Jones & Babson, Inc.
will cause the termination of the Management Agreement, shareholder
approval of a New Investment Counsel Agreement is required. The material
differences between the Current Investment Counsel Agreement and the
proposed New Investment Counsel Agreement for each Fund are described in
the Proxy Statement. Your approval of a New Investment Counsel Agreement
for your Fund will not increase the sub-advisory fees of each of the Funds
or change the level, nature or quality of services provided to the Funds.
Q: WHAT ELSE AM I BEING ASKED TO APPROVE?
A: You are being asked to elect a Board of Directors for each Fund.
Q: HOW DO THE BOARDS OF DIRECTORS RECOMMEND THAT I VOTE?
A: After careful consideration, each Board of Directors unanimously recommends
that you vote in favor of, or FOR, each proposal on the enclosed Proxy
Ballot.
Q: WHO IS ELIGIBLE TO VOTE?
A: Shareholders of record at the close of business on January 17, 2003 are
entitled to vote at the Special Meeting or any adjournment thereof. Each
share or fractional share of record of a Fund is entitled to one vote or a
fractional vote on each matter presented at the Special Meeting that
pertains to that Fund.
Q: WHOM DO I CALL FOR MORE INFORMATION OR TO PLACE MY VOTE?
A: Please call your Fund at (877) 722-2766 for additional information. You can
vote in one of four ways:
By Mail: Use the enclosed Proxy Ballot to record your vote for
each proposal, then return the card in the postpaid envelope provided.
By Telephone: Please see the instructions on the Proxy Ballot.
Using the Internet: Please see the instructions on the
Proxy Ballot.
In Person: By attending the Special Meeting and voting your shares.
Q: WHAT WILL HAPPEN IF THERE ARE NOT ENOUGH VOTES TO OBTAIN A QUORUM OR
APPROVE THE PROPOSALS?
A: It is important that shareholders vote to ensure that there is a quorum for
the Special Meeting. If a quorum is not present at the Special Meeting, the
persons named as proxies may propose one or more adjournments of the
Special Meeting for that Fund to permit further solicitation of proxies
provided they determine that such an adjournment and additional
solicitation is reasonable and in the best interest of shareholders. If we
do not receive your vote after several weeks, you may be contacted by
officers of the Funds or their adviser or by our proxy solicitor, who will
remind you to vote your shares. If we don't receive sufficient votes to
approve the proposals by the date of the Special Meeting, we may adjourn
the Special Meeting to a later date so that we can continue to seek more
votes.
D.L. Babson Tax-Free Income Fund, Inc.
D.L. Babson Money Market Fund, Inc.
Babson Enterprise Fund, Inc.
Babson Enterprise Fund II, Inc.
David L. Babson Growth Fund, Inc.
Babson Value Fund, Inc.
Shadow Stock Fund, Inc.
Babson-Stewart Ivory International Fund, Inc.
Proxy Statement
Joint Special Meeting of Shareholders
March 28, 2003
This Proxy Statement is being furnished in connection with the solicitation of
proxies (voting instructions) from shareholders of the Babson Funds listed above
(each a "Fund" and together the "Funds"), by and on behalf of the Boards of
Directors of the Funds. Each Fund is a corporation organized under the laws of
the State of Maryland.
The proxies are intended for use at a Joint Special Meeting of Shareholders of
the Funds (the "Special Meeting") to be held at the Funds' principal offices at
the BMA Tower, 700 Karnes Boulevard, Kansas City, Missouri 64108, on March 28,
2003, at 1:00 p.m., local time, or any adjournments thereof, for the purposes
set forth in the accompanying Notice.
The Directors have scheduled the Special Meeting as a joint meeting of the
shareholders of the Funds because shareholders of each Fund are being asked to
consider and vote on similar matters. Shares entitled to be voted at the Special
Meeting and at any adjournments thereof are those full and fractional shares
owned by shareholders of record as of the Record Date that are still held at the
time they are to be voted. All shares of a Fund will vote together as a single
class on each proposal affecting that Fund, and shareholders of a Fund are
entitled to one vote per share (and a fractional vote for any fractional share)
on all proposals affecting that Fund.
Please indicate your voting instructions on the enclosed Proxy Ballot, sign and
date the Ballot and return it in the envelope provided. If you wish to vote
using the Internet or over the telephone, instructions about how to do so are
contained in the materials that accompany this Proxy Statement (please see the
instructions on the Proxy Ballot). If your shares are held in the name of your
broker, please contact your broker for instructions regarding how to vote your
shares.
If your Proxy is properly signed, dated and returned in time to be voted at the
Special Meeting, the Shares represented by it that you still hold will be voted
as you have instructed. You may revoke your Proxy at any time before it is voted
by: (1) delivering a written revocation to the Secretary of the Fund, (2)
forwarding to the Fund a later-dated Proxy Ballot that is received by the Fund
at or prior to the Special Meeting, or (3) attending the Special Meeting and
voting in person.
In the event a quorum for any Fund is not present at the Special Meeting or in
the event that a quorum is present but sufficient votes to approve a Proposal
for a Fund are not received, the persons named as proxies may propose one or
more adjournments of the Special Meeting for that Fund to permit further
solicitation of proxies provided they determine that such an adjournment and
additional solicitation is reasonable and in the best interest of shareholders.
Reports to Shareholders and Financial Statements. The Funds' latest joint Annual
Report to Shareholders, which includes audited financial statements for the
fiscal year ended June 30, 2002, is available free of charge. To obtain a copy,
please call the Babson Funds toll-free at (877) 722-2766, or in the Kansas City
area at (816) 751-5900, or you may send a written request to Babson Funds, P.O.
Box 219757, Kansas City, MO 64121-9757.
Your vote is important no matter how many shares you own. If you have any
questions concerning the Proxy Statement or the procedures to be followed to
execute and deliver a Proxy, please contact the Babson Funds by calling Martin
A. Cramer toll-free at (877) 722-2766. In order to avoid the additional expense
of further solicitation, we ask your cooperation in returning your Proxy Ballot
promptly.
PROXY SUMMARY TABLE
The proposals to be voted on by Shareholders of the Funds are as follows:
Proposals Fund(s) to Which Each Proposal Applies
1. Election of four Directors for each ALL FUNDS
Fund (seven Directors with respect to
Babson Enterprise Fund II, Inc.) to
hold office until their successors
are duly elected and qualified or
until their earlier resignation or
removal.
2. Approval of a New Investment Advisory ALL FUNDS
Agreement between each Fund and
Jones & Babson, Inc.
3.a. Approval of a New Investment Counsel D.L. BABSON TAX-FREE INCOME FUND, INC.
Agreement between Jones & Babson, Inc. D.L. BABSON MONEY MARKET FUND, INC.
and David L. Babson & Company Inc. BABSON ENTERPRISE FUND, INC.
BABSON ENTERPRISE FUND II, INC.
DAVID L. BABSON GROWTH FUND, INC.
BABSON VALUE FUND, INC.
SHADOW STOCK FUND, INC.
3.b. Approval of a New Investment Counsel BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
Agreement between Jones & Babson, Inc.
and S.I. International Assets
(formerly Babson-Stewart Ivory
International)
3.c. Approval of New Investment Counsel SHADOW STOCK FUND, INC.
Agreement between Jones & Babson,
Inc. and Analytic Systems, Inc.
Introduction
RBC Dain, an affiliate of Liberty Life Insurance Company ("Liberty"), part of
the U.S. operations of RBC Insurance, the insurance operations of Royal Bank of
Canada, has entered into a Purchase Agreement ("J&B Purchase Agreement") with
Generali Finance B.V. ("Generali"), the indirect parent company of Business
Men's Assurance Company of America ("BMA"), and BMA, dated April 29, 2002. Under
the J&B Purchase Agreement, RBC Dain will purchase from BMA all of the
outstanding shares of common stock of Jones & Babson, Inc. ("J&B"), a
wholly-owned subsidiary of BMA and the investment adviser to the Funds ("J&B
Transaction"). The J&B Transaction is subject to certain regulatory approvals
and other customary conditions as well as the approval by each Fund's
shareholders of a new investment advisory agreement with J&B (to take effect
following the acquisition by RBC Dain). There is no assurance these approvals
will be obtained.
In a related transaction, Generali and Liberty have entered into a Purchase
Agreement dated April 29, 2002 ("BMA Purchase Agreement"). Under the BMA
Purchase Agreement, Liberty will purchase from Generali all of the outstanding
shares of common stock of BMA ("BMA Transaction"). The BMA Transaction is
subject to the satisfaction of various terms and conditions and various
regulatory and other approvals including approval by the Missouri Department of
Insurance of the acquisition of BMA by Liberty. There is no assurance these
approvals will be obtained.
Each of the BMA Transaction and the J&B Transaction is conditioned upon the
closing of the other acquisition. Assuming all regulatory and other approvals
are obtained in a timely manner, the parties anticipate that the J&B Transaction
(as well as the BMA Transaction) will close on or about May 1, 2003 (the
"Closing").
The J&B Purchase Agreement contains certain closing conditions. One of the
conditions requires that shareholder approvals of new advisory and sub-advisory
agreements for the Funds and other affiliated funds managed by Jones & Babson,
Inc. and certain affiliates be obtained from shareholders whose shares
represent, as of the Closing, at least 75% of the aggregate net assets of the
Funds and the other affiliated funds as of the date of the J&B Purchase
Agreement. These other affiliated funds consist of the following: J&B Funds,
Investors Mark Series Fund, Inc., and D.L. Babson Bond Trust. Increases or
decreases attributable exclusively to positive or negative changes in the market
value of portfolio assets that occur between the date of the J&B Purchase
Agreement and the date of the Closing are not taken into account in calculating
this 75% figure. There is no assurance that this condition will be met. If
approvals are not obtained from the requisite 75%, the J&B Purchase Agreement
provides that RBC Dain shall propose to Generali a revised purchase price to be
paid to Generali. In this event, there is no assurance that RBC Dain's revised
offer will be acceptable to Generali. Therefore, there is no guarantee that the
Closing will occur. Shareholders of the Funds are not being asked to vote on the
J&B Transaction or the BMA Transaction.
The consummation of the J&B Transaction will result in an "assignment," as that
term is defined in the Investment Company Act of 1940 ("1940 Act"), of each
Fund's current management and investment counsel agreements ("Current
Agreements"). Under the 1940 Act, the Current Agreements will automatically
terminate upon their assignment. As a result, the Boards of Directors of the
Funds have approved New Investment Advisory and New Investment Counsel
Agreements ("New Agreements"), subject to approval by shareholders. The New
Agreements are discussed in detail later in this Proxy Statement.
Section 15(f) of the 1940 Act provides that an investment adviser (such as J&B)
to a registered investment company (such as the Funds), and the affiliates of
such adviser, may receive any amount or benefit in connection with a sale of any
interest in such investment adviser that results in an assignment of an
investment advisory contract if the following two conditions are satisfied: (1)
for a period of three years after such assignment, at least 75% of the board of
directors of the investment company cannot be "interested persons" (within the
meaning of Section 2(a)(19) of the 1940 Act) of the new investment adviser or
its predecessor; and (2) no "unfair burden" (as defined in the 1940 Act) may be
imposed on the investment company as a result of the assignment or any express
or implied terms, conditions or understandings applicable thereto.
Consistent with the first condition of Section 15(f), Generali, BMA and RBC Dain
have agreed in the J&B Purchase Agreement that RBC Dain will cause the Funds to
comply with the requirements of 15(f) including using all commercially
reasonable efforts to assure that, for a period of three years after the
Closing, at least 75% of the Board of Directors of each Fund, or any permitted
successor thereto, are not "interested persons" (as defined in the 1940 Act) of
J&B.
With respect to the second condition of Section 15(f), any unfair burden on an
investment company is defined in the 1940 Act to include any arrangement during
the two year period after any such transaction occurs whereby the investment
adviser or its predecessor or successor, or any interested person of such
adviser, predecessor or successor, receives or is entitled to receive any
compensation, either directly or indirectly, of two types. The first type is
compensation from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company,
other than bona fide ordinary compensation as principal underwriter for such
company. The second type is compensation from the investment company or its
security holders for other than bona fide investment advisory or other services.
In the J&B Purchase Agreement, RBC Dain agreed not to impose or seek to impose,
for a period of two years after the Closing date, any unfair burden on the Funds
within the meaning of Section 15(f) of the 1940 Act. As described later in this
Proxy Statement, overall expenses of the Funds will not exceed current levels
for a period of two years from the Closing date, under an Expense Limitation
Agreement between J&B and the Funds.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
It is proposed that four nominees (seven nominees with respect to the Babson
Enterprise Fund II, Inc.) be elected to each Fund's Board at the Special
Meeting. The nominees would serve until their successors have been duly elected
and qualified or until their earlier resignation or removal. The nominees would
take office effective upon Closing. Biographical information regarding each of
the nominees is provided in this Proposal.
The role of a Fund's Board of Directors is to provide general oversight of the
Fund's business, and to ensure that the Fund is operated for the benefit of
shareholders. The Directors meet at least quarterly and review each Fund's
performance and oversee the services provided to the Fund by the investment
manager, sub-advisers and the Fund's other service providers.
Information Regarding Nominees
At a meeting held on May 30, 2002, the Directors who are not interested persons
of the Funds, J&B or any sub-adviser (the "Independent Directors"), unanimously
nominated Messrs. Bell, James and Wein and Ms. Hale, described below, for
election as Directors, to take office effective upon Closing. Prior to the
nomination of these four individuals, a committee of the Independent Directors
reviewed detailed written information concerning the nominees and met in person
with them. None of these four nominees is currently a Director of any of the
Funds. If elected by shareholders, these four nominees will only take office if
the Closing occurs. If the Closing does not occur, the current Directors will
remain as the entire Board of Directors of each Fund. If elected, each will
serve until his or her successor is duly elected and qualified. If any of the
nominees become unavailable for election as a Director before the meeting,
proxies will be voted for the other persons that the Directors recommend. The
four nominees, each of whom will be an Independent Director if elected by
shareholders, are all currently directors of Great Hall Investment Funds, Inc.,
a mutual fund advised by Voyageur Asset Management Inc., an RBC Dain affiliate.
With respect to the nominees for Babson Enterprise Fund II, Inc., William H.
Russell, Stephen S. Soden and H. David Rybolt, each a current Director, are
being proposed for election.
With regard to the current Directors, Mr. Russell is a Director of all Funds and
has previously been elected as such by shareholders. Mr. Rybolt is a Director of
all Funds, except Babson-Stewart Ivory International Fund, Inc., and has
previously been elected as such by shareholders.
Edward S. Ritter is a Director of all Funds, except Babson Enterprise Fund II,
Inc., and has previously been elected as such by shareholders. Mr. Ritter
intends to resign as a Director of such Funds upon Closing. Stephen S. Soden is
a Director of Babson Enterprise Fund II, Inc., has not been elected by
shareholders and intends to resign as a Director of the Fund upon Closing. James
T. Jensen is a Director of Babson-Stewart Ivory International Fund, Inc.
("International Fund") and has previously been elected as such by shareholders.
Background Information Regarding the Nominees, Directors and Executive Officers
of the Funds
The following provides the names, ages, addresses and principal occupations of
the nominees and the existing Directors. The age of each individual is indicated
in parenthesis.
Current Interested Directors
- - --------------------------- -------------------- ----------------------- ----------------- ------------------- --------------
Name, Address and Age Position(s) Held with Term of Office and Principal Occupation Number of Other
the Funds Length of Time Served During Past 5 Years Portfolios in Fund Directorships
Complex(1) Overseen Held by
or to be Overseen Director
by Director
- - --------------------------- -------------------- ----------------------- -------------------- ------------------ --------------
- - --------------------------- -------------------- ----------------------- -------------------- ------------------ --------------
Edward S. Ritter* (48) Director Director since Senior Vice President- Nine2 Director,
BMA Tower September 13, 2002 Corporate Development, Jones &
700 Karnes Boulevard Business Men's Assurance Babson,
Kansas City, Missouri 64108 Company of America ("BMA") Inc., (mutual
(insurance company); fund management
Vice President of company)
Investors Mark Advisor,
LLC ("IMA") (mutual
fund management company).
- - --------------------------- -------------------- ----------------------- ---------------------- ------------------ -------------
- - --------------------------- -------------------- ----------------------- ---------------------- ------------------ -------------
Stephen S. Soden* (57) Director, President Three years of service President, Chief Executive Eleven3 Director,
BMA Tower and Principal as a Director Officer and Chairman of the Board, Jones &
700 Karnes Boulevard Executive Officer Jones & Babson, Inc. (mutual fund Babson,
Kansas City, MO 64108 management company); President, Inc., (mutual
IMA (mutual fund management company); fund management
President and Principal Executive company)
Officer, Investors Mark Series
Fund; President and Principal
Executive Officer, Buffalo Fund
Complex (seven funds);
President and Principal Executive
Officer, J&B Funds (three
funds); Senior Vice President
of BMA and, formerly, President
and Chief Executive Officer of BMA
Financial Services, Inc.
("BMAFS") (broker/dealer)
until December 31, 2001 when
BMAFS ceased operations.
*Mr. Ritter and Mr. Soden may be deemed to be "interested persons" of the Funds
as that term is defined in the 1940 Act due to their positions with Jones &
Babson, Inc., the Funds' investment manager, principal underwriter and
administrator.
Current Independent Directors
- - --------------------------- -------------------- ----------------------- -------------------- ------------------- ------------
Name, Address and Age Position(s) Held with Term of Office and Principal Occupation Number of Other
the Funds Length of Time Served During Past 5 Years Portfolios in Fund Directorships
Complex Overseen Held by
or to be Overseen Director
by Director
- - --------------------------- -------------------- ----------------------- ---------------------- ------------------ ------------
- - --------------------------- -------------------- ----------------------- ---------------------- ------------------ ------------
William H. Russell (79) Director Eighteen years of Financial Consultant Nineteen4 None
service as a
BMA Tower Director
700 Karnes Blvd
Kansas City, MO 64108
- - --------------------------- ----------------------- ---------------------- --------------------- ---------------- --------------
- - --------------------------- ----------------------- ---------------------- ---------------------- ---------------- -------------
H. David Rybolt (60) Director Twelve years of Consultant, HDR Eighteen5 None
service as a Associates (management
BMA Tower Director consulting)
700 Karnes Blvd
Kansas City, MO 64108
- - --------------------------- ----------------------- -------------------- ---------------------- ----------------- -------------
James T. Jensen (74) Director Sixteen years of Chief Executive Officer One6 None
service as a Jensen Associates, Inc.
BMA Tower Director (consulting)
700 Karnes Blvd
Kansas City, MO 64108
- - ---------------------------- ---------------------- ------------------- --------------------- ----------------- --------------
- - ---------------------------- ---------------------- ------------------- --------------------- ----------------- --------------
NOMINEES FOR ELECTION AS INDEPENDENT DIRECTORS
T. Geron ("Jerry") Bell (61) Director Nominee Not Applicable President of C.R.P. Sports (the 22 Director, Great Hall
34 Kirby Puckett Place parent company of the Minnesota Investment Funds,
Minneapolis, MN 55415 Twins and of Victory Sports) since Inc., a registered
November, 2002; prior thereto, investment company
President of the Minnesota Twins advised by an
Baseball Club Incorporated since affiliate of RBC
1987. Dain that consists of
five separate
portfolios.
Sandra J. Hale (68) Director Nominee Not Applicable President of Enterprise Management, 22 Director, Great Hall
60 South Sixth Street Int'l. since 1991. Investment Funds,
Minneapolis, MN 55402 Inc., a registered
investment company
advised by an
affiliated of RBC
Dain that consists
of five separate
portfolios.
Ronald James (52) Director Nominee Not Applicable President and Chief Executive 22 Director, Great Hall
MJH 300, 1000 LaSalle Officer, Center for Ethical Investment Funds,
Minneapolis, MN 55403-2005 Business Cultures since 2000; Inc., a registered
President and Chief Executive investment company
Officer of the Human Resources advised by an
Group, a division of Ceridian affiliate of RBC
Corporation, from 1996 to 1998. Dain that consists
Ceridian Corporation is an of five separate
information services company portfolios.
specializing in human resources
outsourcing solutions.
Jay H. Wein (70) Director Nominee Not Applicable Independent investor and business 22 Director, Great Hall
5305 Elmridge Circle consultant since 1989. Investment Funds,
Excelsior, MN 55331 Inc., a mutual fund
advised by an
affiliate of RBC
Dain that consists
of five separate
portfolios.
NOMINEE FOR ELECTION AS INTERESTED DIRECTOR - BABSON ENTERPRISE FUND II, INC.
Stephen S. Soden** Director
ADDITIONAL NOMINEES FOR ELECTION AS INDEPENDENT DIRECTORS - BABSON ENTERPRISE
FUND II, INC.
William H. Russell** Director
H. David Rybolt** Director
- - --------------------------
** Biographical information for Messrs. Russell, Rybolt and Soden is contained
above.
Executive Officers of the Funds
Currently, the principal executive officers of the Funds are all officers and/or
employees of Jones & Babson, Inc. The following table contains information about
the current principal executive officers of the Funds.
- - ------------------------------------ ---------------------------- -------------------- -------------------------------
Name, Address and Age Position with the Funds Term of Office and Principal Occupation(s)
Length of Time Served During Past Five Years
- - ------------------------------------ ---------------------------- -------------------- ------------------------------
- - ------------------------------------ ---------------------------- -------------------- ------------------------------
Stephen S. Soden* (57)
BMA Tower
700 Karnes Boulevard
Kansas City, MO 64108
- - ------------------------------------ ---------------------------- ------------------- ---------------------------------------
- - ------------------------------------ ---------------------------- -------------------- ---------------------------------------
P. Bradley Adams (42) Vice President, Treasurer, One year term and Vice President, Chief Financial Officer and
Principal Financial Officer twelve years of Treasurer, Jones & Babson, Inc. (mutual
BMA Tower and Principal Accounting service fund management company); Treasurer, IMA
700 Karnes Blvd Officer (mutual fund management company);
Kansas City, MO 64108 Principal Financial Officer and
Principal Accounting Officer,
Investors Mark Series Fund; Vice
President, Treasurer, Principal Financial
Officer and Principal Accounting
Officer, Buffalo Fund Complex;
Vice President, Principal Financial
Officer, Principal Accounting Officer
and Trustee, J&B Funds; and Treasurer,
Principal Financial Officer and
Principal Accounting Officer, Gold
Bank Funds (two mutual funds)7.
- - ------------------------------------ --------------------------- --------------------- ---------------------------------------
- - ------------------------------------ --------------------------- --------------------- ---------------------------------------
Martin A. Cramer (53) Vice President, Chief One year term and Legal and Regulatory Affairs Vice
Compliance Officer and twelve years of President, Chief Compliance Officer and
BMA Tower Secretary service Secretary, Jones & Babson, Inc. (mutual
700 Karnes Blvd fund management company); Chief Compliance
Kansas City, MO 64108 Officer and Secretary, IMA (mutual fund
management company); Vice President, Chief
Compliance Officer and Secretary, Buffalo
Fund Complex; Assistant Vice President, Chief
Compliance Officer and Secretary, J&B Funds;
and Secretary, Gold Bank Funds (two mutual
funds).
- - ------------------------------------ --------------------------- --------------------- ---------------------------------------
- - ------------------------------------ --------------------------- --------------------- ---------------------------------------
Constance E. Martin (41) Vice President One year term and Director - Mutual Fund Client Relations,
seven years of Jones & Babson, Inc. (mutual fund
BMA Tower service management company); Vice President,
700 Karnes Blvd Buffalo Fund Complex and J&B Funds.
Kansas City, MO 64108
- - ------------------------------------ -------------------------- ---------------------- --------------------------------------
*Biographical information for Mr. Soden is provided above under "Current
Interested Directors."
1 The term "Fund Complex" as used herein consists of the Babson Funds, J&B
Funds, the Buffalo Fund Complex and Investors Mark Series Fund, Inc. The
Babson Funds consist of: Babson Enterprise Fund II, Inc., D.L. Babson Bond
Trust, D.L. Babson Money Market Fund, Inc., D.L. Babson Tax-Free Income
Fund, Inc., Babson Enterprise Fund, Inc., David L. Babson Growth Fund,
Inc., Babson Value Fund, Inc., Shadow Stock Fund, Inc. and Babson-Stewart
Ivory International Fund, Inc. The Buffalo Fund Complex consists of Buffalo
Balanced Fund, Inc., Buffalo Large Cap Fund, Inc., Buffalo High Yield Fund,
Inc., Buffalo Small Cap Fund, Inc., Buffalo USA Global Fund, Inc. and the
Buffalo Funds, which is a series fund consisting of Buffalo Science &
Technology Fund and Buffalo Mid Cap Fund. Jones & Babson, Inc. serves as
principal underwriter and registered transfer agent for each fund in the
Buffalo Fund Complex. The J&B Funds is a series fund consisting of J&B
Mid-Cap Aggressive Growth Fund, J&B Small-Cap Aggressive Growth Fund and
J&B Small-Cap International Fund. Jones & Babson, Inc. serves as investment
advisor, principal underwriter and registered transfer agent for each of
the J&B Funds. Investors Mark Series Fund, Inc. consists of the following
nine portfolios: Balanced, Global Fixed Income, Growth & Income,
Intermediate Fixed Income, Large Cap Value, Large Cap Growth, Small Cap
Equity, Mid Cap Equity and Money Market. Jones & Babson, Inc. serves as the
principal underwriter for Investors Mark Series Fund, Inc. D.L. Babson Bond
Trust, the J&B Funds, the Buffalo Fund Complex and Investors Mark Series
Fund are not subject to this proxy.
2 Director/Trustee for each of the Babson Funds except Babson Enterprise Fund
II.
3 Director of Babson Enterprise Fund II, Mr. Soden is also a Trustee of
the J&B Funds and Director/Trustee of the Buffalo Fund Complex.
4 Director/Trustee for each of the Babson Funds and Director of Investors
Mark Series Fund.
5 Director/Trustee for each of the Babson Funds except Babson-Stewart Ivory
International. Director of Investors Mark Series Fund and D.L. Babson
Bond Trust.
6 Director of Babson-Stewart Ivory International Fund.
7 Gold Bank Funds is a series fund consisting of Gold Bank Equity and Gold
Bank Money Market Fund. Jones & Babson, Inc. serves as Registered Transfer
Agent for each of the Gold Bank Funds.
As of the Record Date, the Directors/nominees held the following interests in
the Funds' securities:
- - ------------------------------- ------------------------------------------------ -------------------------------------
Aggregate Dollar Range of Equity
Name of Independent Directors/ Dollar Range of Equity Securities Securities in all Funds
Nominees in Each Fund Overseen or to be Overseen by
Director/Trustee in Family of
Investment Companies
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
William H. Russell Tax-Free Income: $50,001-$100,000 $50,001-$100,000
Enterprise II: $10,00l-$ 50,000
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
H. David Rybolt Enterprise: $10,001-$50,000 Over $100,000
Shadow Stock: $ 1-$10,000
Value: $10,001-$50,000
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
James T. Jensen Enterprise II: $10,001-$50,000 $50,001-$100,000
International: $10,001-$50,000
Value: $10,001-$50,000
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
T. Geron Bell None None
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
Sandra J. Hale None None
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
Ronald James None None
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
Jay H. Wein None None
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
Name of Interested Directors/Nominees:
Edward S. Ritter Shadow Stock: $ 10,001-$ 50,000 $ 10,001-$ 50,000
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
Stephen S. Soden Value: $50,000-$100,000 Over $100,000
- - ------------------------------- ------------------------------------------------ -------------------------------------
- - ------------------------------- ------------------------------------------------ -------------------------------------
Audit Committee. Each Fund has an Audit Committee that assists the Fund's Board
in fulfilling its duties relating to the Fund's accounting and financial
reporting practices, and also serves as a direct line of communication between
the Board and the independent accountants. The Audit Committee of each Board is
composed of its Independent Directors. The Audit Committee of each Board held
one meeting during each Fund's most recent fiscal year. The Independent
Directors have no financial interest in, nor are they affiliated with either
J&B, the manager of each Fund, or any of the investment counsel to each Fund.
Messrs. Bell, James and Wein and Ms. Hale, if elected, will also be members of
the Audit Committee. The specific functions of each Audit Committee include
recommending the engagement or retention of the independent accountants,
reviewing with the independent accountants the plan and results of the auditing
engagement, approving professional services provided by the independent
accountants prior to the performance of such services, considering the range of
audit and non-audit fees, reviewing the independence of the independent
accountants, reviewing the scope and results of the Fund's procedures for
internal auditing, and reviewing the Fund's system of internal accounting
controls.
Independent Accountants. Each Board has selected Ernst & Young LLP ("Ernst &
Young") to be each Fund's independent public accountants for each Fund's current
fiscal year. Ernst & Young examines the annual financial statements of the Funds
and provides tax-related services to the Funds. It is not expected that
representatives of Ernst & Young will be present at the Special Meeting, and,
therefore, they will not be making a statement and will not be available to
respond to questions.
In the event the proposed acquisition of J&B is completed, Ernst & Young will
resign as independent accountants of the Funds due to certain relationships with
RBC Dain and its affiliates and the Boards of Directors will subsequently
approve new independent accountants for the Funds, based on recommendations of
their respective Audit Committees.
Audit Fees. For the fiscal year that ended June 30, 2002, Ernst & Young has or
will be paid $82,788 for the professional services it rendered in auditing the
Funds' financial statements. The only fees Ernst & Young receives are
audit-related fees and fees for tax-related services.
Financial Information Systems Design and Implementation Fees and All Other Fees.
Ernst & Young does not provide Financial Information Systems Design and
Implementation services or other consulting services to the Funds, their
investment advisers or to any other entity that controls, that is controlled by
or that is under common control with the adviser and that provides services to
the Funds.
Compensation of Directors. Currently, the Funds do not directly compensate any
Interested Director or officer for their normal duties and services. The
Independent Directors' fees, including travel and other expenses related to the
Board meetings, are paid by J&B pursuant to the provisions of the Current
Management Agreements with the Funds, which require J&B to bear the operating
costs of the Funds out of its management fee. If the New Agreements are approved
by shareholders, the Funds (and not J&B) will compensate the Directors for their
fees and expenses.
Currently, J&B pays each Independent Director an annual retainer out of its
management fees for serving as a Director of at least one Babson Fund, including
D.L. Babson Bond Trust, which is not the subject of this Proxy Statement.
Independent Directors are paid a $4,000 annual retainer by J&B if they serve as
a Director on one to four Funds or a $7,000 annual retainer by J&B if they serve
on five or more Funds. Mr. Rybolt serves as an Independent Director of all Funds
except Babson-Stewart Ivory International Fund, Inc. Mr. Russell serves as an
Independent Director of all Funds. Mr. Jensen receives an annual retainer of
$4,000 for serving on the Babson-Stewart Ivory International Fund, Inc. Board
only. The Independent Directors also receive from J&B out of its management fees
a fee of $125 for each Fund's Board meeting attended. During the last fiscal
year, each Board held five meetings, except for Babson Enterprise Fund, Inc.,
which held six meetings. No Director attended less than 75% of the applicable
meetings, including Committee meetings. The following chart sets forth each
Independent Director's annual compensation:
- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
Compensation for Serving
on the Boards of the Pension or Retirement Total Compensation from
Name of Director Babson Funds Benefits Accrued the Fund Complex
During the Most Recently
Completed Fiscal Year for
Each Fund
- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
William H. Russell $12,750 n.a. $19,750
- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
H. David Rybolt $12,125 n.a. $19,125
- - ------------------------------- ---------------------------- --------------------------- ----------------------------
- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
James T. Jensen* $500 n.a. $ 4,500
- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
- - ------------------------------- ---------------------------- ---------------------------- ----------------------------
* As noted above, Mr. Jensen only serves on the Board of Babson-Stewart Ivory
International Fund, Inc.
Required Vote. The nominees to serve as Directors of a Fund who receive the
affirmative vote of a plurality of all votes cast by shareholders of that Fund
at the Special Meeting, provided a quorum is present, will be elected for all
Funds.
RECOMMENDATION OF THE BOARDS OF DIRECTORS. THE BOARDS OF DIRECTORS UNANIMOUSLY
RECOMMEND THAT SHAREHOLDERS OF EACH FUND VOTE IN FAVOR OF ELECTING THE NOMINEES.
PROPOSAL NO. 2
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN EACH
FUND AND JONES & BABSON, INC.
Under Proposal No. 2, each Fund's shareholders, voting separately, are being
asked to approve a new investment advisory agreement (the "New Investment
Advisory Agreement") between their Fund and J&B. The Boards are seeking approval
of the New Investment Advisory Agreement to permit each Fund's management to
continue providing uninterrupted service to the Funds after the Closing.
As required by the 1940 Act, the current management agreements (the "Current
Management Agreements") provide for their automatic termination upon assignment.
The J&B Transaction will constitute an assignment, as that term is defined in
the 1940 Act, of the Current Management Agreements, and consequently, their
termination. Accordingly, a New Investment Advisory Agreement with J&B with
respect to each Fund is being proposed for approval by shareholders to take
effect upon the Closing.
In addition, each of the current investment counsel agreements (each, a "Current
Investment Counsel Agreement") between J&B and the respective investment counsel
to each Fund provides for termination upon termination of the corresponding
Current Management Agreement. Accordingly, each of the Current Investment
Counsel Agreements will also terminate upon the Closing. New Investment Counsel
Agreements are therefore also being separately proposed for approval by
shareholders and are described in Proposal 3 below.
Approval of the New Investment Advisory Agreement
As described below, the Directors are proposing that shareholders of each Fund
approve a New Investment Advisory Agreement with J&B and each Fund. A
description of the New Investment Advisory Agreement and the services to be
provided by J&B is set forth below. This description is qualified in its
entirety by reference to the form of the New Investment Advisory Agreement
attached to this Proxy Statement as Exhibit B.
Information About J&B
J&B serves as the investment manager of each Fund and, as such, provides each
Fund with professional investment supervision and management. J&B, formed in
1959, has been the investment adviser for each Fund since its inception. J&B is
a wholly-owned subsidiary of BMA which is considered to be a controlling person
of J&B under the 1940 Act. Assicurazioni Generali S.p.A., an insurance
organization founded in 1831 based in Trieste, Italy, is considered to be a
controlling person of and is the ultimate parent of BMA.
The following chart lists the principal executive officers and directors of J&B
and their principal occupations, if different from their positions with J&B:
NAME POSITION WITH J&B AND
PRINCIPAL OCCUPATION
- - ------------------------------------------------------------------------------
Stephen S. Soden *
Michael K. Deardorff (53) Senior Vice President-
BMA Tower Variable & Fixed Products,
700 Karnes Boulevard Business Men's Assurance
Kansas City, Missouri 64108 Company of America
(insurance company);
Director of
Jones & Babson,
Inc. (mutual fund
management company).
David A. Gates (50) Vice President-
BMA Tower General Counsel & Secretary,
700 Karnes Boulevard Business Men's Assurance
Kansas City, Missouri 64108 Company of America
(insurance company);
Director of
Jones & Babson,
Inc. (mutual fund
management company).
Edward S. Ritter *
Robert N. Sawyer (56) Senior Vice President,
BMA Tower Chief Investment Officer and Director,
700 Karnes Boulevard Business Men's Assurance
Kansas City, Missouri 64108 Company of America
(insurance company);
Director of
Jones & Babson,
Inc. (mutual fund
management company).
David L. Higley (51) Senior Vice President
BMA Tower & Chief Financial Officer,
700 Karnes Boulevard Business Men's Assurance
Kansas City, Missouri 64108 Company of America
(insurance company);
Director of
Jones & Babson,
Inc. (mutual fund
management company).
P. Bradley Adams *
Martin A. Cramer *
Constance E. Martin *
Todd W. Brown Director - Mutual Fund Accounting of
BMA Tower Jones & Babson, Inc. (mutual fund
700 Karnes Boulevard management company).
Kansas City, Missouri 64108
* Biographical information for these individuals is contained in Proposal No. 1
above.
Information About RBC Dain
RBC Dain. RBC Dain (formerly, Dain Rauscher Corp.), a Minneapolis,
Minnesota-based holding company formed in 1973, provides investment advice and
services to individual investors in the western United States and investment
banking, research and sales services to corporate and governmental clients
nationwide and in Europe through its principal subsidiary, Dain Rauscher Inc.
("Dain Rauscher"). Dain Rauscher deals in securities of, and is a market-maker
in securities of, issuers based throughout the United States and in Europe. Dain
Rauscher also clears and settles securities trades for approximately 180
correspondent brokerage firms through its RBC Dain Correspondent Services
division, which is based in Minneapolis, Minnesota. Another RBC Dain subsidiary,
Voyageur Asset Management, was formed in 1983 and currently provides investment
advisory and administrative services to the Great Hall(R) Investment Funds, a
series of five open-end money market mutual funds. Voyageur also provides
investment advisory services to the RBC Funds, a series of six equity and fixed
income funds. Voyageur also provides fixed income, equity and balanced portfolio
management services to a variety of private account clients. Voyageur's
investment team currently manages over $20 billion in assets for individuals,
public entities, Taft-Hartley plans, corporations, private nonprofits,
foundations, endowments and healthcare organizations. Dain Rauscher Lending
Services Inc. was formed in 1997 to make certain types of loans to customers
that are collateralized by customers' control and restricted securities. At
December 31, 2002, RBC Dain had approximately 5,000 employees located in 41
states. RBC Dain is a Delaware corporation with its executive offices located at
Dain Rauscher Plaza, 60 South Sixth Street, Minneapolis, Minnesota 55402-4422.
Its telephone number is (612) 371-2711. RBC Dain is a wholly-owned subsidiary of
Royal Bank of Canada.
Royal Bank of Canada. Royal Bank of Canada is a Canadian chartered bank, with
its principal executive office located at 200 Bay Street, Toronto, Ontario,
Canada M5J 2J5. Shares of Royal Bank of Canada are listed on the Toronto Stock
Exchange and on the New York Stock Exchange. Royal Bank of Canada ranks as
Canada's largest financial institution as measured by assets and market
capitalization as of October 31, 2002. As of October 31, 2002, its most recent
fiscal year end, Royal Bank of Canada was the seventh largest bank in North
America and among the 60 largest banks in the world, measured by assets. Royal
Bank of Canada and its subsidiaries engage principally in personal and
commercial banking, insurance products, investment and trust services, corporate
and investment banking and on-line banking and transaction-based services,
including custody. RBC Global Investment Management (wholly owned by Royal Bank
of Canada) is the primary investment advisor to Royal Mutual Funds and manages
approximately C$42 billion in assets. Royal Mutual Funds is Canada's largest
no-load mutual fund company, with over 50 mutual funds offering investors the
full range of choice for Canadian, U.S., International and Global investing.
Information About the Current Management Agreements
The Current Management Agreements provide for a "unified fee" arrangement under
which J&B receives a management fee for (1) providing investment management
services (which involves selecting, monitoring and supervising the investment
counsel); (2) providing, obtaining or paying the cost of general fund
administration, fund accounting and transfer agency services; and (3) paying the
fees of the investment counsel, custodian, independent directors' fees, outside
legal counsel and auditors, as well as the costs of printing, mailing and other
Fund expenses. The Current Management Agreements also provide for the Funds to
pay certain expenses directly, such as interest, taxes, dues, fees and other
governmental charges. These fees paid directly are limited in scope (between one
and five basis points, except for Babson-Stewart Ivory International Fund, Inc.,
which pays foreign sub-custodian costs directly that are equal to 0.61%).
Therefore, under the unified fee arrangement, the overall expenses of the Funds
are largely reflected by the management fee. The Current Management Agreements
are attached to this Proxy Statement as Exhibit A.
The Current Management Agreements require J&B to retain David L. Babson &
Company Inc. as sub-adviser.
Also, under the Current Management Agreements, all the Funds that have "Babson"
in their names may use the name "Babson" in their names only so long as J&B
continues as manager and David L. Babson & Company Inc. continues to serve as
sub-adviser for the Funds.
The Current Management Agreements dated June 30, 1995 were most recently
continued by the Boards of Directors on October 24, 2002 and were last approved
by shareholders on June 29, 1995. The Agreements were last submitted to
shareholders in connection with a change in control of David L. Babson & Company
Inc., which was purchased by DLB Acquisition Corporation, an indirect,
majority-owned subsidiary of Massachusetts Mutual Life Insurance Company.
For the fiscal year ended June 30, 2002, each of the Funds paid J&B a percentage
of its average daily net assets as compensation for its services as investment
adviser to the Fund as shown below.
Management Aggregate Amount
Fund Fee Paid of Management Fees paid
- ------ ------- ------------------------
D.L. Babson Tax-Free Income Fund, Inc... 0.95% $ 341,855
D.L. Babson Money Market Fund, Inc...... 0.85% $ 327,056
Babson Enterprise Fund, Inc............. 1.06% $2,469,646
Babson Enterprise Fund II, Inc.......... 1.26% $ 724,392
David L. Babson Growth Fund, Inc........ 0.83% $2,362,083
Babson Value Fund, Inc.................. 0.95% $4,264,092
Shadow Stock Fund, Inc.................. 1.00% $ 555,880
Babson-Stewart Ivory International Fund, Inc.. 0.95% $ 286,697
Under the Current Management Agreements, for its services, Babson Enterprise
Fund and Enterprise Fund II are obligated to pay J&B a fee at the annual rate of
1.50% of the first $30 million of average daily net assets and 1% of amounts in
excess of $30 million. Babson Growth Fund is obligated to pay J&B a fee at the
annual rate of .85% of the first $250 million and .70% of amounts in excess of
$250 million of average daily net assets. Shadow Stock Fund is obligated to pay
J&B a fee of 1.00% of average daily assets. Babson Value Fund and Babson-Stewart
Ivory International Fund are obligated to pay J&B a fee at the annual rate of
..95% of average daily net assets. Babson Tax-Free Income Fund is obligated to
pay J&B a fee at the annual rate of .95% of average daily net assets. Babson
Money Market Fund is obligated to pay J&B a fee at the annual rate of .85% of
average daily net assets.
Information About the Proposed New Investment Advisory Agreement
The proposed New Investment Advisory Agreement differs significantly from the
Current Management Agreements. The New Investment Advisory Agreement provides a
more traditional structure than currently in place for the Funds, whereby the
Funds would agree to directly pay for their own expenses (advisory and
non-advisory) rather than paying a single "unified" management fee to J&B. Under
the current "unified" management fee structure, J&B is responsible for the
provision of needed services and payment of all or most of the advisory or
non-advisory expenses of the Funds. In order to retain the same general economic
effect of the "unified fee" structure, an Administrative Services Agreement for
each Fund under which J&B will provide fund administration, transfer agency,
fund accounting and other services in a manner similar to the current
arrangement was approved by each Board at the May 30, 2002 joint meeting. Each
Fund will pay J&B an annual fee of .10% of average daily net assets under the
Administrative Services Agreement. The .10% fee under the Administrative
Services Agreement was established by J&B based on the portion of the management
fees under the Current Management Agreements that is attributable to the
non-advisory functions, based on the expectation of future asset growth due to
the RBC Dain acquisition and the economies of scale that will result therefrom.
The Administrative Services Agreement is not required to be submitted to
shareholders for approval. Therefore, you are not being asked to approve the
Administrative Services Agreement now nor will your approval of this Agreement
be sought in the future. However, the advisory fee under the New Investment
Advisory Agreement for each Fund has been reduced from its current level, such
that the combined advisory and administrative fees are identical to the current
management fees. The Administrative Services Agreement can be amended by the
Board without shareholder approval, and, therefore this is your only opportunity
to vote on the proposed new arrangements. There is the potential that there
could be an increase in the total operating expenses of a Fund in the future
should the Board of a Fund decide to approve an increase in the fees under the
Administrative Services Agreement. However, as described below, no increase
shall occur for at least two years from the date of the Closing.
The proposed New Investment Advisory Agreement, unlike the Current Management
Agreements, does not mandate the use of David L. Babson & Company Inc. as
sub-adviser for the Funds. In addition, as discussed in more detail in Proposal
3 herein, the New Investment Advisory Agreement would allow J&B, subject to
approval by the Board of Directors, to terminate David L. Babson & Company Inc.
or any other sub-adviser retained by J&B. Such a termination could occur in
connection with a desire by a Board to have the adviser manage a Fund directly,
or to seek a replacement firm to serve as investment counsel. The latter
arrangement would require shareholder approval of a new investment counsel
agreement. Further, the Babson name protections found in the Current Management
Agreements have not been included in the New Investment Advisory Agreement.
However, they have been included in the New Investment Counsel Agreements (see
Proposal 3 below).
There are other material differences between the Current Management Agreements
and the New Investment Advisory Agreement. The New Investment Advisory Agreement
contains a number of provisions not found in the Current Management Agreements
but which are common to modern investment advisory agreements. These provisions
include:
* authorization to utilize sub-advisers to the full extent permitted under
the 1940 Act.
* specific authority to hire and fire sub-advisers without shareholder
approval, if the Fund/adviser seeks and obtains the necessary exemptive
relief from the Securities and Exchange Commission ("SEC").
* discretion and authority for the adviser to allocate portfolio brokerage of
the Funds, and consistent with federal law, pay higher brokerage costs when
the adviser deems it to be reasonable in view of the brokerage and research
services obtained by the adviser.
* flexibility to amend the advisory agreement without shareholder approval in
circumstances where approval is not required by the 1940 Act as interpreted
by the SEC or its staff or if the SEC has granted an exemption from such
approval requirement.
* the provision of a non-exclusive right for each Fund to use the name of the
adviser for so long as the adviser serves as the Fund's adviser.
* indemnification provisions where, under certain circumstances, the Funds
agree to indemnify the adviser and the adviser agrees to indemnify the
Funds.
There are certain similarities between the Current Management Agreement for each
Fund and the New Investment Advisory Agreement. Under both Agreements, the
adviser is retained to manage the investment and reinvestment of the assets of
the Funds. The Agreements also each provide that they may be terminated without
penalty upon 60 days written notice by the Fund. The Agreements also each
provide that, in the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties, the adviser shall not be liable for
errors of judgment or losses related to its advisory services to the Funds.
Comparability of Fees and Expenses under Current Management Agreements and New
Investment Advisory Agreement
The following tables allow you to compare the various fees and expenses that you
may pay for buying and holding shares of the Funds under the Current Management
Agreements and the New Investment Advisory Agreement. The table entitled
"Current Fees and Expenses" contains the current fee information under the
Current Management Agreements. The table entitled "Pro Forma Fees and Expenses"
shows you what the fees and expenses are estimated to be should this proposal be
approved.
The amounts set forth in the following tables are based on the expenses for the
Funds for the fiscal year ended June 30, 2002. We have provided expense examples
below.
The shares of the Funds are not charged any initial or deferred sales charge,
any 12b-1 fees, or any other transaction fees.
Current Fees and Expenses
- ------------------------
Fund Management Fees Other Expenses Total Fund Operating Expenses
- -------- --------------- ------------- -----------------------------
Babson Enterprise 1.06% .02% 1.08%
Babson Enterprise II 1.26% .04% 1.30%
Babson Growth .83% .02% .85%
Shadow Stock 1.00% .03% 1.03%
Babson Value .95% .01% .96%
Babson-Stewart Ivory
International .95% .70% 1.65%
Babson Money Market .85% .08% .93%
Babson Tax-Free Income .95% .04% .99%
Pro Forma Fees and Expenses
- ---------------------------
Fund Advisory Administrative Service Other Total Fund
Fees Fees Expenses Operating Expenses
- ----- -------- ---------------------- -------- ------------------
Babson Enterprise .96% .10% .02% 1.08%
Babson Enterprise II 1.16% .10% .04% 1.30%
Babson Growth .73% .10% .02% .85%
Shadow Stock .90% .10% .03% 1.03%
Babson Value .85% .10% .01% .96%
Babson-Stewart Ivory
International .85% .10% .70% 1.65%
Babson Money Market .75% .10% .08% .93%
Babson Tax-Free Income .85% .10% .04% .99%
Fee Examples Under Both Current Fees and Expenses and
Pro Forma Fees and Expenses
These examples are intended to help you compare the cost of investing in each
Fund with the cost of investing in other mutual funds. They assume you invest
$10,000, receive a 5% return each year, and that operating expenses for each
period remain the same. Although your actual costs may be higher or lower, based
on the assumptions below your costs would be:
1 Year 3 Years 5 Years 10 Years
Babson Enterprise Fund $ 110 $ 343 $ 595 $ 1,317
Babson Enterprise Fund II 132 412 713 1,568
Babson Growth Fund 87 271 471 1,049
Shadow Stock Fund 105 328 569 1,259
Babson Value Fund 98 306 531 1,178
Babson-Stewart Ivory International Fund 168 520 897 1,955
Babson Money Market 95 296 515 1,143
Babson Tax-Free Income 101 315 547 1,213
The dollar amounts shown above are the same as under the current fees and
expenses.
Comparison of Aggregate Amount of Management Fees Paid
The following table shows the aggregate amount of management fees paid by each
Fund for the fiscal year ended June 30, 2002 under the column entitled
"Aggregate Amount of Management Fees Paid." The column "Pro Forma Aggregate
Amount of Advisory Fees Which Would Have Been Paid" shows what the aggregate
amount of advisory fees would have been for the fiscal year ended June 30, 2002
under the proposed New Investment Advisory Agreement. The column "Pro Forma
Aggregate Amount of Administrative Services Fees Which Would Have Been Paid"
shows what the aggregate amount of administrative services fees would have been
for the fiscal year ended June 30, 2002 had the Administrative Services
Agreement been in effect.
Aggregate Amount Pro Forma Aggregate Pro Forma Aggregate
of Management Amount of Advisory Amount of Administrative
Fund Fees Paid Fees Which Would Have Services Fees Which
Been Paid Would Have Been Paid
- ------ ----------------- ---------------------- -------------------------
D.L. Babson Tax-Free Income Fund, Inc... $ 341,855 $ 306,662 $ 35,193
D.L. Babson Money Market Fund, Inc...... $ 327,056 $ 289,455 $ 37,601
Babson Enterprise Fund, Inc............. $ 2,469,646 $2,227,055 $242,591
Babson Enterprise Fund II, Inc.......... $ 724,392 $ 666,439 $ 57,953
David L. Babson Growth Fund, Inc........ $ 2,362,083 $2,099,918 $262,165
Babson Value Fund, Inc.................. $ 4,264,092 $3,967,518 $296,574
Shadow Stock Fund, Inc.................. $ 694,850 $ 627,940 $ 66,910
Babson-Stewart Ivory International Fund, Inc.. $ 286,697 $ 255,810 $ 30,887
Expense Limitation Agreement. An Expense Limitation Agreement for each Fund was
approved for each Fund by the respective Boards under which J&B, once J&B is
acquired by RBC Dain, would subsidize the overall expenses of the Funds for a
period of two years from the Closing date, in order to maintain the overall
expense levels of the Funds at the current expense levels. For the Funds, the
Expense Limitation Agreement would maintain the overall expense ratios of the
Funds at the same levels that would be maintained under the current management
fee percentages, combined with the minimal other expenses borne by the Funds
outside of the "unified" fee structure during the fiscal year ended June 30,
2002.
Recommendation of the Boards of Directors
At a joint meeting of the Boards of Directors held on May 30, 2002, called for
the purpose of, among other things, voting on approval of the New Investment
Advisory Agreement, the Boards, including all of the Independent Directors of
each Fund's Board, unanimously approved, subject to the shareholder approval of
each Fund, the New Investment Advisory Agreement. The approvals of the New
Investment Advisory Agreement by each Fund are conditioned upon the Closing of
the J&B Transaction. If the J&B Transaction is not closed, then the Current
Management Agreements for each Fund will continue to stay in place.
In reaching this conclusion, the Boards obtained such information as they deemed
reasonably necessary to approve J&B as investment adviser to each Fund. In
evaluating the terms of the New Investment Advisory Agreement, the Boards
considered the possible effects of the J&B Transaction upon the Funds and J&B
and upon the ability of J&B to provide an appropriate range of management and
administrative services, the performance record of J&B, and the anticipated
relationship between J&B and RBC Dain. The Boards evaluated the financial
strength and resources of RBC Dain and its experience in the mutual fund
business. The Boards also took into account the management, personnel and
operations of RBC Dain, the commitment of RBC Dain to the financial services
industry, and the proposed structure of the J&B Transaction. The Boards
considered RBC Dain's overall vision with respect to the Funds and other funds
within the fund complex which is to create, invest in and grow a single
diversified mutual fund platform in the United States to be distributed both to
and through outside parties and through U.S. affiliates of RBC Financial Group.
Currently, the RBC Dain complex consists of the Great Hall Funds and the RBC
Funds. The Boards took into consideration that by combining the RBC Dain fund
complex with the Funds and the other mutual funds associated with J&B, diversity
and critical mass were expected to be created to form a viable U.S. mutual fund
platform that could be competitive in size and performance immediately. The
Boards were informed of RBC Dain's belief that the J&B Transaction is expected
to significantly benefit the Funds and their shareholders in that shareholders
will have greater investment diversification opportunities due to a broader
range of fund offerings in both investment style and objectives. The Boards took
into account that a significant increase in distribution is anticipated due to
opportunities to introduce the Funds to affiliates within the RBC Financial
Group network as well as to new external sources. The Boards based their
determinations in this regard on the report of Board members who had personally
visited RBC Dain's offices, on a review of written materials provided by RBC
Dain in response to a specific request by the Boards prior to the joint Board
Meeting on May 30, 2002 and on discussions with a representative of RBC Dain and
J&B management at the meeting.
The Boards considered, among other things, the fact that the New Investment
Advisory Agreement does not mandate the use of David L. Babson as sub-adviser
for the Funds, which means that it would be possible for the Boards to terminate
David L. Babson without seeking approval of shareholders. In addition, the
Boards considered that the New Investment Advisory Agreement gives specific
authority to the Boards and the adviser to hire and fire sub-advisers without
shareholder approval if the Funds/adviser seeks and obtains the necessary
exemptive relief from the SEC. The Boards determined that this provision was in
the best interest of shareholders because it provides the Funds and their
adviser maximum flexibility in seeking to obtain the best investment results for
shareholders.
The Boards evaluated statements made by RBC Dain that it has no present
intention to alter the current fee and expense structure with respect to the
Funds. The Boards considered that the Expense Limitation Agreement provides that
no increase in fees and expenses from the current levels can occur for at least
two years. The Boards considered that the New Investment Advisory Agreement,
related Administrative Services Agreement and Expense Limitation Agreement
contain economic terms and conditions no less favorable than those currently in
place and provide for services of the same nature and quality as those currently
in place. The Boards discussed the nature of the proposed contractual expense
limitation arrangements and the manner in which the arrangements could be
continued, modified or terminated.
The Boards were informed by RBC Dain that presently it is not known whether
there will be changes in the manner in which the Funds currently obtain support
services (such as fund administration, transfer agency and custody services) and
that RBC is exploring several possibilities as to how support services will be
provided for the U.S. mutual fund platform referred to above. RBC Dain informed
the Boards that it is its intent to ensure the Funds are supported in the most
effective manner.
After meeting in executive session at the May 30, 2002 Joint Board Meeting, the
Independent Directors reported that they had discussed the proposed acquisition
of J&B, the information in the materials provided by RBC Dain, the outlook for
the Funds, the composition of the Boards, and the anticipated and potential
effects of the proposed new ownership on various aspects of the Funds'
operations. The Independent Directors also discussed their intention to
diligently evaluate any proposed replacement of advisers or other service
providers with affiliates of RBC Dain, and the level of Fund expenses and any
subsidies in the form of advisory fee waivers and/or reimbursement of expenses
that are maintained after the initial two year period following the acquisition.
In voting to approve the New Investment Advisory Agreement, the Independent
Directors noted that their discussion in this regard was premised on numerous
factors including the nature, quality and resources of the RBC Financial Group,
the strategic plan involving the Funds, and the potential for increased
distribution and growth of the Funds. The Independent Directors indicated that
they believed that the proposed acquisition would ultimately benefit the Funds
and their shareholders as a result of having J&B and its affiliates become part
of a large financial services organization that is committed to investing the
resources and energy necessary to grow the Funds into part of a large successful
suite of investment products.
Based on the considerations set forth above, the Boards, including all of the
Independent Directors of each Fund, unanimously determined that it was in the
best interests of each Fund and its shareholders to enter into the New
Investment Advisory Agreement and to recommend approval of the New Investment
Advisory Agreement by shareholders.
Required Vote. Passage of Proposal 2 as to each Fund requires a vote of the
"majority of the outstanding voting securities" of the applicable Fund, as
defined in the 1940 Act, which means the lesser of (i) 67% or more of the shares
of the Fund entitled to vote thereon present in person or by proxy at the
Special Meeting if holders of more than 50% of the outstanding shares of the
Fund are present in person or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Fund.
RECOMMENDATION OF THE BOARDS OF DIRECTORS. THE BOARDS OF DIRECTORS UNANIMOUSLY
RECOMMEND THAT SHAREHOLDERS OF EACH FUND APPROVE THE NEW INVESTMENT ADVISORY
AGREEMENT FOR THEIR FUND.
PROPOSAL NOS. 3(a), 3(b) and 3(c)
3(a) APPROVAL OF A NEW INVESTMENT COUNSEL AGREEMENT BETWEEN JONES & BABSON, INC.
AND DAVID L. BABSON & COMPANY INC. FOR ALL FUNDS EXCEPT BABSON-STEWART IVORY
INTERNATIONAL FUND, INC.
3(b) APPROVAL OF A NEW INVESTMENT COUNSEL AGREEMENT BETWEEN JONES & BABSON, INC.
AND S.I. INTERNATIONAL ASSETS (FORMERLY BABSON-STEWART IVORY INTERNATIONAL,)
WITH RESPECT TO BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
3(c) APPROVAL OF A NEW INVESTMENT COUNSEL AGREEMENT BETWEEN JONES & BABSON, INC.
AND ANALYTIC SYSTEMS, INC. WITH RESPECT TO SHADOW STOCK FUND, INC.
Information About David L. Babson & Company Inc.
David L. Babson & Company Inc. ("David L. Babson" or "Investment Counsel"), an
investment advisory firm founded in 1940, acts as the sub-adviser to all Funds
except Babson-Stewart Ivory International Fund, Inc. David L. Babson, located in
Cambridge, Massachusetts, serves individual, corporate and other institutional
clients. It 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 1951 and is considered
to be a controlling person of David L. Babson under the 1940 Act.
Information About S.I. International Assets (formerly Babson-Stewart Ivory
International)
S.I. International Assets (formerly Babson-Stewart Ivory International) acts as
sub-adviser to the Babson-Stewart Ivory International Fund, Inc. S.I.
International Assets is a partnership formed in 1987 by David L. Babson and
Stewart Ivory & Company (International) Limited, an indirect subsidiary of the
Commonwealth Bank of Australia.
Information About Analytic Systems, Inc.
Analytic Systems, Inc. provides consulting about qualitative portfolio theory
and stock selection as an additional sub-adviser for the Shadow Stock Fund, Inc.
Analytic Systems, Inc. is located in Chicago, Illinois and was founded in 1987.
Information About the Current Investment Counsel Agreements
The Current Investment Counsel Agreements between J&B and each of David L.
Babson, S.I. International Assets and Analytic Systems, Inc. (each the
"Investment Counsel") provide for the Investment Counsel to provide research,
analysis, advice and recommendations with respect to the purchase or sale of
securities and the making of investment commitments for each Fund. The Current
Investment Counsel Agreements also provide that, in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties, the
Investment Counsel shall not be liable for error of judgment or losses related
to its sub-advisory services to the Funds. The Current Agreements do not allow
J&B to unilaterally terminate the Agreements.
Each of the New Investment Counsel Agreements is substantially similar to the
Current Investment Counsel Agreements, with the exception of effectiveness and
termination dates, and the modernization of certain provisions. The termination
provisions of the New Investment Counsel Agreements are different from the
Current Investment Counsel Agreements in that J&B is permitted under the New
Agreements to terminate the New Agreements upon 60 days' notice. Under the New
Investment Counsel Agreements, while shareholders would be required to approve
any new sub-adviser, it would be possible for J&B to terminate the sub-advisory
relationship and internalize the management of the Funds' portfolios, with only
the approval of the relevant Fund's Board.
Each Fund's Board continued the Current Investment Counsel Agreements on October
24, 2002. All of the Investment Counsel Agreements, except the agreement between
J&B and S.I. International Assets, are dated June 30, 1995 and were last
approved by shareholders on June 29, 1995. With one exception, the Investment
Counsel Agreements were last submitted to shareholders in connection with a
change in control of David L. Babson, which was purchased by DLB Acquisition
Corporation, an indirect, majority-owned subsidiary of Massachusetts Mutual Life
Insurance Company. The Investment Counsel Agreement between S.I. International
Assets and J&B, dated August 1, 2000, was last submitted for approval to
shareholders of the Babson-Stewart Ivory International Fund on that date in
connection with a change in control in Stewart Ivory & Company (International)
Limited, which, through a series of transactions, became an indirect subsidiary
of the Commonwealth Bank of Australia.
In addition to the changes outlined above, the New Investment Counsel Agreements
contain certain provisions relating to the Babson name, substantially similar to
but differing in some respects from the name protection provisions in the
Current Investment Counsel Agreements.
Currently, as long as J&B, or any successor in interest, continues as investment
manager to a Fund and retains David L. Babson as sub-adviser, the Fund has the
exclusive license to use the Babson name in its name and David L. Babson is not
permitted to use the Babson name as part of another mutual fund's name (except
that David L. Babson can and does also share the exclusive license with other
Babson Funds).
Under the New Investment Counsel Agreements, the Funds continue to have the
exclusive license to use the Babson name. However, as in the Current Investment
Counsel Agreements, in the event that shareholders, the Board, or J&B, or its
successor in interest, elects to terminate David L. Babson as sub-adviser to a
Fund, David L. Babson has the right to withdraw the right of that Fund to use
the Babson name and that Fund is no longer authorized to use the Babson name.
In the event that David L. Babson resigns as sub-adviser to a Fund (except
Babson Enterprise Fund, Inc., Babson Enterprise Fund II, Inc. or Babson Value
Fund, Inc.), that Fund may only continue to use the Babson name for a year. In
addition, David L. Babson would not be restricted from using the name for
another SEC-registered mutual fund after two years (the Current Investment
Counsel Agreements have a similar provision but it is for five years, not two).
The name protections in the New Investment Counsel Agreement between J&B and
Analytic Systems, Inc. for Shadow Stock Fund, Inc. have been similarly modified.
The New Investment Counsel Agreements (except the New Investment Counsel
Agreement between J&B and Analytic Systems, Inc. with respect to the Shadow
Stock Fund, Inc.) contain a new provision that gives David L. Babson the right
to withdraw the right of a Fund to use the Babson name and mandates that the
Fund promptly cease using the Babson name in the event that shareholders, the
Board, or J&B, or its successor in interest, elects to:
(1) terminate David L. Babson as sub-adviser to any of Babson Enterprise Fund,
Inc., Babson Enterprise Fund II, Inc. or Babson Value Fund, Inc., or
(2) remove the Babson name from the name of any of Babson Enterprise Fund,
Inc., Babson Enterprise Fund II, Inc. or Babson Value Fund, Inc.
Since the same provision is proposed for approval by shareholders of all of the
Babson Funds, the effect of the provision described above, therefore, is that if
David L. Babson is terminated from Babson Enterprise Fund, Inc., Babson
Enterprise Fund II, Inc. or Babson Value Fund, Inc., or if the Babson name is
removed from the name of any one of these three Funds, then David L. Babson has
the right to withdraw the use of the name from all Funds. The description of the
New Investment Counsel Agreements is qualified in its entirety by reference to
the Form of the New Investment Counsel Agreements attached to this Proxy
Statement as Exhibits C, D and E.
RECOMMENDATION OF THE BOARDS OF DIRECTORS
At joint meetings of the Boards of Directors held on May 30, 2002 and October 9,
2002, the Boards considered the approval of the New Investment Counsel
Agreements. The Boards, including all of the Independent Directors of each
Fund's Board, unanimously approved, subject to shareholder approval, the New
Investment Counsel Agreements. The approvals of the New Investment Counsel
Agreements are conditioned upon the Closing of the J&B Transaction. If the J&B
Transaction is not closed, the Current Investment Counsel Agreements will
continue to stay in place.
In reaching this conclusion, the Boards obtained such information as they deemed
reasonably necessary to approve David L. Babson as investment counsel for each
Fund. The Independent Directors, prior to approving the New Investment Counsel
Agreements, met informally with members of the management of J&B and with each
other to hold discussions concerning the approval of the New Investment Counsel
Agreements, as well as discussing the issues extensively with their counsel. In
addition, at the October 9, 2002 Board Meeting, a representative of RBC Dain who
had been involved in the negotiations with respect to the New Investment Counsel
Agreements, made a presentation to the Boards and answered Directors' questions
concerning the New Investment Counsel Agreements. The Independent Directors
evaluated all positive and negative aspects of the New Investment Counsel
Agreements. The Independent Directors recognized the value of the Babson name
but determined that, although the Funds had less protection with respect to
their right to the Babson name in the New Investment Counsel Agreements than in
the Current Investment Counsel Agreements, the anticipated overall benefits to
the Funds of the purchase of J&B by RBC Dain outweighed this negative aspect.
Namely the Boards acknowledged the potential benefits that the Funds may realize
in the future after the Closing. These included, among others, the extensive
distribution capabilities of RBC Dain, RBC Dain's interest in growing its U.S.
operations and the potential resulting growth of assets of the Funds, as well as
the other factors which the Board had previously considered in its approval of
the New Investment Advisory Agreements.
APPROVAL OF AGREEMENTS
Each Investment Counsel Agreement must be approved by shareholders of the Fund
to which it relates. Approval of an Investment Counsel Agreement is contingent
upon approval of the New Investment Advisory Agreement by the shareholders of
the pertinent Fund. If the New Investment Advisory Agreement and the New
Investment Counsel Agreement are approved by a Fund's shareholders, then the
Agreements will become effective for that Fund concurrently at the time of
Closing. If shareholders of a Fund should fail to approve either the New
Investment Advisory Agreement or the New Investment Counsel Agreement, the Board
of Directors of the Fund will meet to consider appropriate action.
Required Vote. Passage of Proposal 3 as to each Fund requires a vote of the
"majority of the outstanding voting securities" of the applicable Fund, as
defined in the 1940 Act, which means the lesser of (i) 67% or more of the shares
of the Fund entitled to vote thereon present in person or by proxy at the
Special Meeting if holders of more than 50% of the outstanding shares of the
Fund are present in person or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Fund.
RECOMMENDATION OF THE BOARDS OF DIRECTORS. THE BOARDS OF DIRECTORS UNANIMOUSLY
RECOMMEND THAT SHAREHOLDERS OF EACH FUND APPROVE THE NEW INVESTMENT COUNSEL
AGREEMENT FOR THEIR FUND.
PROPOSAL NO. 4
Other Business
The Directors do not know of any business to be presented at the Special Meeting
other than those matters described in this Proxy Statement. If any other matter
requiring a vote of a Fund's shareholders should properly come before the
Special Meeting, including any question as to an adjournment or postponement of
the Special Meeting, the persons named on the enclosed proxy card will vote on
such matters according to their best judgment in the best interests of
shareholders.
ADDITIONAL INFORMATION
Management of the Funds. Jones & Babson, Inc., 700 Karnes Boulevard, Kansas
City, Missouri 64108, serves as each Fund's investment manager, principal
underwriter and administrator.
Quorum and Required Vote. Under each Fund's Bylaws, a majority of a Fund's
outstanding shares, present in person or represented by proxy, will constitute a
quorum for that Fund at the Special Meeting. Proxies returned for shares that
represent "broker non-votes" (i.e., shares held by brokers or nominees as to
which: (i) instructions have not been received from the beneficial owners or
persons entitled to vote; and (ii) the broker or nominee does not have
discretionary voting power on a particular matter), and shares whose proxies
reflect an abstention on any item are all counted as shares present and entitled
to vote for purposes of determining whether the required quorum of shares
exists. With respect to Proposal 1, abstentions and broker non-votes will be
treated as votes present but not cast and, therefore, will not be counted for
purposes of determining whether matters to be voted upon at the Special Meeting
have been approved. With respect to Proposals 2 and 3, abstentions and broker
non-votes will have the effect of a vote against the Proposals. With respect to
adjournments, abstentions and broker non-votes will have the effect of a vote
against an adjournment.
The votes required to approve any proposal are as follows. For election of
Directors (Proposal 1), the nominees to serve as Directors of a Fund who receive
the affirmative vote of a plurality of the shares of such Fund voted at the
Special Meeting, provided a quorum is present, will be elected. The approval of
the New Investment Advisory Agreement and the approval of New Investment Counsel
Agreements (Proposals 2 and 3, respectively), require a vote of the "majority of
the outstanding voting securities" of the applicable Fund, as defined in the
1940 Act, which means the lesser of (i) 67% or more of the Shares entitled to
vote thereon present in person or by proxy at the Special Meeting if holders of
more than 50% of the outstanding shares are present in person or represented by
proxy, or (ii) more than 50% of the outstanding shares.
Additional Voting Information. Shares entitled to be voted at the Special
Meeting and at any adjournments thereof are those full and fractional shares
owned by shareholders of record as of the Record Date. All shares of a Fund will
vote together as a single class on each proposal affecting that Fund, and
shareholders of a Fund are entitled to one vote per share (and a fractional vote
for any fractional share) on all proposals affecting that Fund.
If your Proxy is properly signed, dated and returned in time to be voted at the
Special Meeting, the shares represented by it that you still hold will be voted
as you have instructed. If you sign, date and return the Proxy Ballot but give
no voting instructions, your shares will be voted "FOR" each of the Directors
named in the Proxy Statement; "FOR" the approval of the New Investment Advisory
Agreement; "FOR" the approval of New Investment Counsel Agreements; and to
"GRANT" discretionary authority to the persons named in the Proxy Ballot as to
any other matters that properly may come before the Special Meeting and at any
adjournments thereof.
At any meeting of shareholders, any holder of Shares entitled to vote may vote
by proxy, provided that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Secretary, or with such other officer or agent
of the Fund as the Secretary may direct, for the verification prior to the time
at which such vote shall be taken. Pursuant to a resolution of the Directors of
each Fund, individuals have been designated to serve as proxies at the Special
Meeting.
Solicitation of Proxies. The principal solicitation of proxies will be by mail,
but they may be solicited on behalf of management by telephone and personal
contact through D.F. King & Co., Inc. ("D.F. King") or its agents as well as
through Directors, officers and regular employees of management. J&B engaged
D.F. King, an independent proxy solicitation firm, to assist in soliciting
proxies. It is anticipated that D.F. King will be paid approximately $111,000 by
J&B for its services with respect to the Funds and several other mutual funds
related to J&B, which are subject to similar proxy statements as the Funds. The
contractual arrangement between J&B and D.F. King includes a flat fee plus per
use fees for outbound and inbound telephone calls, votes made by telephone and
other expenses, like postage. The fees that J&B will pay may fall as low as
$63,000, depending upon how many outbound telephone calls D.F. King makes.
You may be reminded to vote your shares by phone, and your vote will be recorded
over the phone if you choose to vote in that manner. With respect to votes
recorded over the phone, the Funds will use procedures designed to authenticate
shareholder identities, to allow shareholders to authorize the voting of their
shares in accordance with their instructions and to confirm that their
identities have been properly recorded. Proxies voted by telephone may be
revoked at any time before they are voted in the same manner that proxies by
mail may be revoked. Internet voting will also be available. Please see the
voting card for information regarding how to vote by phone or the Internet.
The cost of preparing, printing and mailing the Notice, Proxy Statement and
accompanying Proxy card, and all other costs in connection with the solicitation
of proxies will be paid for by J&B. J&B reimburses brokerage firms and others
for their expenses in forwarding proxy material to the beneficial owners and
soliciting them to execute proxies.
Record Date Information. The Record Date for determining shareholders entitled
to notice of, and to vote at, the Special Meeting and at any adjournments
thereof has been fixed at the close of business on January 17, 2003 for each
Fund. As of the Record Date, the following numbers of shares were outstanding
for each Fund:
- - ------------------------------------------------------------ --------------------------------------------------------
Fund Name Outstanding Shares
- - ------------------------------------------------------------ --------------------------------------------------------
- - ------------------------------------------------------------ --------------------------------------------------------
D.L. Babson Tax-Free Income Fund, Inc. 4,046,842.741
- - ------------------------------------------------------------ --------------------------------------------------------
- - ------------------------------------------------------------ --------------------------------------------------------
D.L. Babson Money Market Fund, Inc. 35,914,774.010
- - ------------------------------------------------------------ --------------------------------------------------------
- - ------------------------------------------------------------ --------------------------------------------------------
Babson Enterprise Fund, Inc. 12,257,597.120
- - ------------------------------------------------------------ --------------------------------------------------------
- - ------------------------------------------------------------ --------------------------------------------------------
Babson Enterprise Fund II, Inc. 2,325,406.197
- - ------------------------------------------------------------ --------------------------------------------------------
- - ------------------------------------------------------------ --------------------------------------------------------
David L. Babson Growth Fund, Inc. 22,930,305.972
- - ------------------------------------------------------------ --------------------------------------------------------
- - ------------------------------------------------------------ --------------------------------------------------------
Babson Value Fund, Inc. 10,213,570.295
- - ------------------------------------------------------------ --------------------------------------------------------
- - ------------------------------------------------------------ --------------------------------------------------------
Shadow Stock Fund, Inc. 7,094,961.530
- - ------------------------------------------------------------ --------------------------------------------------------
- - ------------------------------------------------------------ --------------------------------------------------------
Babson-Stewart Ivory International Fund, Inc. 1,134,112.187
- - ------------------------------------------------------------ --------------------------------------------------------
Principal Shareholders. To the knowledge of the Funds' management, as of the
Record Date the entities shown in the chart below held beneficially or of record
more than 5% of certain Funds' outstanding shares. Unless otherwise indicated,
each such owner has sole investment and voting power (or shares this power with
a spouse) with respect to the shares owned. In addition, to the knowledge of
management, as of the Record Date, no Director (or Director nominee) of a Fund
owned 1% or more of the outstanding shares of that Fund, and the officers,
Directors and nominees for Director of each Fund owned, as a group, less than 1%
of their Fund's outstanding shares.
- - --------------------------------------------- ----------------------- -----------------------------------------------
Name Ownership Interest Fund
- - --------------------------------------------- ----------------------- -----------------------------------------------
- - --------------------------------------------- ----------------------- -----------------------------------------------
David Bowen & Co. 5.6% D.L. Babson Tax-Free Income Fund, Inc.
P.O. Box 1647
Boston, MA 02105-1647
- - --------------------------------------------- ----------------------- -----------------------------------------------
- - --------------------------------------------- ----------------------- -----------------------------------------------
Charles Schwab & Co., Inc. 13.0% Babson Enterprise Fund, Inc.
101 Montgomery Street 30.2% Shadow Stock Fund, Inc.
San Francisco, CA 94104-4122 11.6% Babson-Stewart Ivory International Fund, Inc.
25.9% Babson Value Fund, Inc.
11.6% Babson Enterprise Fund II, Inc.
5.1% D.L. Babson Tax-Free Income Fund, Inc.
- - --------------------------------------------- ----------------------- -----------------------------------------------
- - --------------------------------------------- ----------------------- -----------------------------------------------
National Financial Services Corp. 10.9% Babson Enterprise Fund, Inc.
P.O. Box 3908 16.4% Shadow Stock Fund, Inc.
Church Street Station 7.0% Babson-Stewart Ivory International Fund, Inc.
New York, NY 10008-3908 8.7% Babson Value Fund, Inc.
6.8% Babson Enterprise Fund II, Inc.
- - --------------------------------------------- ---------------------- -----------------------------------------------
- - --------------------------------------------- ----------------------- -----------------------------------------------
Quincy Mutual Fire Ins. Co. 9.6% Babson Enterprise Fund, Inc.
57 Washington Street
Quincy, MA 02169-5343
- - --------------------------------------------- ----------------------- -----------------------------------------------
- - --------------------------------------------- ----------------------- -----------------------------------------------
National Academy of Sciences 5.6% Babson Enterprise Fund, Inc.
2101 Constitution Avenue
Washington, DC 20418-0006
- - --------------------------------------------- ----------------------- -----------------------------------------------
- - --------------------------------------------- ----------------------- -----------------------------------------------
College of Aeronautics 6.1% Babson-Stewart Ivory International Fund, Inc.
LaGuardia Airport
Flushing, NY 11371
- - --------------------------------------------- ----------------------- -----------------------------------------------
- - --------------------------------------------- ----------------------- -----------------------------------------------
Donald A. Pels 9.9% Babson Enterprise Fund II, Inc.
375 Park Avenue Suite 3303
New York, NY 10152-3304
Shareholder Proposals. The Funds are not required to, and do not hold regular
shareholder meetings. Shareholders desiring to submit proposals for this Special
Meeting must submit them in writing to the Secretary of the Funds no later than
30 days prior to the Special Meeting. Any shareholder desiring to submit a
proposal less than 30 days prior to the Special Meeting may do so orally at the
Special Meeting. Proxies will be authorized to exercise their discretion to vote
"AGAINST" any shareholder proposals that are raised at this Special Meeting, if
management of the Funds or J&B objects to such proposal(s). Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent
shareholders meeting should send their written proposals to the Secretary of the
Funds at the address set forth on the cover of this Proxy Statement. Shareholder
proposals must be received in a reasonable time prior to the date of a meeting
of shareholders to be considered for inclusion in the proxy materials for a
meeting. Timely submission of a proposal does not, however, necessarily mean
that the proposal will be included.
Whether or not you expect to attend the shareholder meeting, please complete,
date and sign each Proxy card and mail it promptly in the enclosed envelope to
assure representation of your shares (unless you are voting by telephone or
through the Internet).
By Order of the Boards of Directors
Martin A. Cramer
Secretary
February 13, 2003
Kansas City, Missouri
EXHIBIT A
CURRENT MANAGEMENT AGREEMENTS
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
DAVID L. BABSON GROWTH FUND, INC.
THIS AGREEMENT, made and entered into this 30th day of June, 1995, by and
between DAVID L. BABSON GROWTH 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
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.
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, 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, DAVID L. BABSON GROWTH
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 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.
DAVID L. BABSON GROWTH 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
President
ATTEST:
/s/ Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
D. L. BABSON MONEY MARKET FUND, INC.
THIS AGREEMENT, made and entered into this 30th day of June, 1995, by and
between D. L. BABSON MONEY MARKET 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
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.
b. 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.
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, 1995, 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, 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, D. L. BABSON MONEY MARKET
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 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.
D. L. BABSON MONEY MARKET 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
President
ATTEST:
/s/ Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
D. L. BABSON TAX-FREE INCOME FUND, INC.
THIS AGREEMENT, made and entered into this 30th day of June, 1995, by and
between D. L. BABSON TAX-FREE INCOME 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
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. With respect to Portfolio MM (Money Market): fifty one- hundredths
of one percent (50/100 of 1%) of the average total net assets of the Fund
thereof.
b. With respect to Portfolio S (Shorter Term) and Portfolio L (Longer
Term): ninety-five one-hundredths of one percent (95/100 of 1%) of the
average total net assets of the Fund thereof.
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.
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, 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, D. L. BABSON TAX-FREE
INCOME 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 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.
D. L. BABSON TAX-FREE INCOME 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
President
ATTEST:
/s/ Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
THIS AGREEMENT, made and entered into this 30th day of June, 1995, by and
between BABSON-STEWART IVORY INTERNATIONAL 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
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. Ninety-five one-hundredths of one percent (95/100 of 1%) of the
average total net assets of the Fund.
b. 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.
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, 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-STEWART IVORY
INTERNATIONAL 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 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-STEWART IVORY INTERNATIONAL 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
President
ATTEST:
/s/ Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
SHADOW STOCK FUND, INC.
THIS AGREEMENT, made and entered into this 30th day of June, 1995, by and
between SHADOW STOCK 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
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. One percent (1%) of the average total net assets of the Fund.
b. 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.
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
and ANALYTIC SYSTEMS, INC. of Chicago, Illinois (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 "Shadow Stock" as part of its name, so long as
JONES & BABSON, INC., or any successor in interest, continues as its manager and
ANALYTIC SYSTEMS, 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 "Shadow Stock" so long as the Fund has the
right to use it as a part of its name. Should the Fund terminate either JONES &
BABSON, INC., or its successor, as Manager for the Fund, or ANALYTIC SYSTEMS,
INC., or its successor, as an Investment Counsel, either JONES & BABSON, INC. or
ANALYTIC SYSTEMS, INC., or their respective successors in interest, may elect to
notify the Fund in writing that permission to use the name "Shadow Stock" 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
ANALYTIC SYSTEMS, INC., JONES & BABSON, INC. or DAVID L. BABSON & CO. INC. If
the use of the name "Shadow Stock" 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 "Shadow Stock" by
ANALYTIC SYSTEMS, INC. or its successor in interest, or with the permission of
ANALYTIC SYSTEMS, INC., by JONES & BABSON, INC. or DAVID L. BABSON & CO. INC.,
or their respective successors.
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, SHADOW STOCK 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 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.
SHADOW STOCK 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
President
ATTEST:
/s/ Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
BABSON VALUE FUND, INC.
THIS AGREEMENT, made and entered into this 30th day of June, 1995, by and
between BABSON VALUE 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
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. Ninety-five one-hundredths of one percent (95/100 of 1%) of the average
total net assets of the Fund.
b. 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-paragraph a 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.
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, 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 VALUE 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 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 VALUE 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
President
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
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
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. One hundred fifty one-hundredths of one percent (150/100 of 1%) of
the average total net assets of the Fund that do not exceed thirty million
dollars ($30,000,000).
b. One percent (1%) of the average total net assets of the Fund that
exceed thirty million dollars ($30,000,000).
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.
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, 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 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
President
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
MANAGEMENT AGREEMENT
Between
JONES & BABSON, INC.
and
BABSON ENTERPRISE FUND II, INC.
THIS AGREEMENT, made and entered into this 30th day of June, 1995, by and
between BABSON ENTERPRISE FUND II, 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
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. One hundred fifty one-hundredths of one percent (150/100 of 1%) of
the average total net assets of the Fund that do not exceed thirty million
dollars ($30,000,000).
b. One percent (1%) of the average total net assets of the Fund that
exceed thirty million dollars ($30,000,000).
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.
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, 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 II,
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 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 II, 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
President
ATTEST:
/s/Martin A. Cramer
Martin A. Cramer
Vice President and Secretary
EXHIBIT B
FORM OF PROPOSED NEW INVESTMENT
ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into on __________, 2003 between
___________ FUND, INC., a Maryland corporation (the "Company"), and JONES &
BABSON, INC. , a Missouri corporation (the "Adviser").
RECITALS
WHEREAS, the Company is an open-end management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Company desires to retain the Adviser, which is a registered
investment adviser under the Investment Advisers Act of 1940, as amended, to act
as investment adviser for the Company, and to manage its assets.
NOW, THEREFORE, the Company and the Adviser do mutually agree and promise
as follows:
1. EMPLOYMENT.
(a) The Company hereby appoints Adviser as investment adviser for the
Company, and Adviser accepts such appointment. Subject to the supervision of the
Company's Board of Directors and the terms of this Agreement, the Adviser shall
act as investment adviser for and manage the investment and reinvestment of the
assets of the Company. The Adviser shall discharge the foregoing
responsibilities subject to the control of the Company's Board of Directors and
in compliance with such policies as the Board of Directors may from time to time
establish, and in compliance with the objectives, policies, and limitations for
the Company set forth in the Company's prospectus(es) and statement of
additional information, as amended or supplemented from time to time, and
applicable laws and regulations. The Adviser shall (i) provide for use by the
Company, at the Adviser's expense, office space and all necessary office
facilities, equipment and personnel for servicing the investments of the
Company, (ii) pay the salaries and fees of all officers and directors of the
Company who are "interested persons" of the Adviser as such term is defined in
the 1940 Act, and (iii) pay for all clerical services relating to research,
statistical and investment work.
(b) The Adviser is authorized to delegate any or all of its rights, duties
and obligations under this Agreement (subject in any event to all of the
limitations, terms and conditions applicable to the Adviser hereunder) to one or
more sub-advisers, and may enter into agreements with sub-advisers, and may
replace any such sub-advisers from time to time in its discretion, in accordance
with the 1940 Act, the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and rules and regulations thereunder, as such statutes, rules
and regulations are amended from time to time or are interpreted from time to
time by the staff of the Securities and Exchange Commission (the "SEC"), and if
applicable, exemptive orders or similar relief granted by the SEC, upon receipt
of approval of such sub-advisers by the Company's Board of Directors and by the
Company's shareholders (unless any such approval is not required by such
statutes, rules, regulations, interpretations, orders or similar relief). The
Adviser shall oversee the performance of any sub-adviser engaged hereunder.
However, the Adviser shall not be accountable to the Company for any loss or
liability relating to specific investment decisions made solely by any
sub-adviser. The Adviser may not terminate any sub-advisory agreement relating
to the Company without approval by a majority of the Company's independent
directors.
(c) The services of the Adviser to the Company are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others as
long as its services for others does not in any way hinder, preclude or prevent
the Adviser from performing its duties and obligations under this Agreement.
2. ALLOCATION OF BROKERAGE.
(a) The Adviser is authorized, subject to the supervision of the Company's
Board of Directors and consistent with any policies and procedures the Board of
Directors may from time to time adopt, to place orders for the purchase and sale
of securities and to negotiate commissions to be paid on such transactions. The
Adviser is authorized to select the brokers or dealers that will execute the
purchases and sales of securities for the Company and is directed to use its
best efforts to obtain the best net results as described in the Company's
statement of additional information.
(b) Subject to the appropriate policies and procedures approved by the
Company's Board of Directors, the Adviser may, on behalf of the Company, pay
brokerage commissions to a broker which provides brokerage and research services
to the Adviser in excess of the amount another broker would have charged for
effecting the transaction, provided (i) the Adviser determines in good faith
that the amount is reasonable in relation to the value of the brokerage and
research services provided by the executing broker in terms of the particular
transaction or in terms of the Adviser's overall responsibilities with respect
to the Company and the accounts as to which the Adviser exercises investment
discretion, (ii) such payment is made in compliance with Section 28(e) of the
Securities Exchange Act of 1934, as amended, and other applicable state and
federal laws, and (iii) in the opinion of the Adviser, the total commissions
paid by the Company will be reasonable in relation to the benefits to the
Company over the long term. In addition, subject to seeking the most favorable
price and best execution available, the Adviser may also consider sales of
shares of the Company as a factor in the selection of brokers and dealers.
Subject to seeking the most favorable price and execution, the Board of
Directors may cause the Adviser to effect transactions in portfolio securities
through broker-dealers in a manner that will help generate resources to: (i) pay
the cost of certain expenses which the Company is required to pay or for which
the Company is required to arrange payment; or (ii) finance activities that are
primarily intended to result in the sale of the Company's shares.
(c) When the Adviser deems the purchase or sale of a security to be in the
best interest of the Company as well as other of its clients, the Adviser to the
extent permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be purchased or sold to attempt to
obtain a more favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Adviser in
the manner the Adviser considers to be the most equitable and consistent with
its fiduciary obligations to the Company and its other affected clients.
3. EXPENSES. The Company will pay all its expenses other than those
expressly stated to be payable by the Adviser hereunder, which expenses payable
by the Company shall include, without limitation, interest charges, taxes,
brokerage commissions and similar expenses, distribution and shareholder
servicing expenses, expenses of issue, sale, repurchase or redemption of shares,
expenses of registering or qualifying shares for sale, expenses of printing and
distributing prospectuses to existing shareholders, charges of custodians
(including sums as custodian and for keeping books and similar services),
transfer agents (including the printing and mailing of reports and notices to
shareholders), registrars, auditing and legal services, clerical services
related to recordkeeping and shareholder relations, printing of share
certificates, fees for directors who are not "interested persons" of the
Adviser, and other expenses not expressly assumed by the Adviser under Paragraph
1(a) above or under any other agreement. Anything to the contrary herein
notwithstanding, the Adviser may at any time and from time to time assume or
reimburse any expense payable by the Company pursuant to this Agreement.
4. AUTHORITY OF ADVISER. The Adviser shall for all purposes herein be
considered an independent contractor and shall not, unless expressly authorized
and empowered by the Company, have authority to act for or represent the Company
in any way, form or manner. Any authority granted by the Company on behalf of
itself to the Adviser shall be in the form of a resolution or resolutions
adopted by the Board of Directors of the Company.
5. COMPENSATION OF ADVISER. For the services to be furnished by the Adviser
hereunder, the Company shall pay the Adviser, and the Adviser agrees to accept
as full compensation for all services rendered hereunder, an Advisory Fee. The
Advisory Fee shall be calculated by applying a daily rate, based on the annual
percentage rates as set forth in Schedule A of the net asset value of the
Company determined and payable as of the close of business on each business day.
Anything to the contrary herein notwithstanding, the Adviser may at any time and
from time to time waive any part or all of any fee payable to it pursuant to
this Agreement.
6. STANDARD OF CARE; INDEMNIFICATION.
(a) In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Adviser, the Adviser shall not be subject to liability to the Company or to any
shareholder for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security. The Adviser makes no representation
or warranty, express or implied, that any level of performance or investment
results will be achieved by the Company or that the Company will perform
comparably with any standard or index, including other clients of the Adviser,
whether public or private.
(b) The Adviser agrees to indemnify the Company with respect to any loss,
liability, judgment, cost or penalty which the Company may directly or
indirectly suffer or incur as a result of a material breach by the Adviser of
its standard of care set forth in Paragraph 6(a). The Company agrees to
indemnify the Adviser with respect to any loss, liability, judgment, cost or
penalty which the Adviser may directly or indirectly suffer or incur in any way
arising out of the performance of its duties under this Agreement, except to the
extent that such loss, liability, judgment, cost or penalty was a result of a
material breach by the Adviser of its standard of care set forth in Paragraph
6(a).
7. DURATION AND TERMINATION. The following shall apply with respect to the
duration and termination of this Agreement:
(a) This Agreement shall begin as of the date this Agreement is first
executed (provided that the Agreement is initially approved by the Company's
Board of Directors and shareholder(s) as required by Section 15 of the 1940 Act)
and shall continue in effect for two years. Thereafter, this Agreement shall
remain in effect, for successive periods of one year, subject to the provisions
for termination and all of the other terms and conditions hereof if: (i) such
continuation shall be specifically approved at least annually by (A) either the
Company's Board of Directors or a majority of the Company's outstanding voting
securities, and in either case (B) a majority of the Company's Directors who are
not parties to this Agreement or interested persons of any such party other than
as Directors of the Company (the "Independent Directors"), cast in person at a
meeting called for that purpose; and (ii) the Adviser shall not have notified
the Company in writing at least sixty (60) days prior to the anniversary date of
this Agreement in any year thereafter that it does not desire such continuation.
Prior to voting on the renewal of this Agreement, the Company's Board of
Directors may request and evaluate, and the Adviser shall furnish, such
information as may reasonably be necessary to enable the Company's Board of
Directors to evaluate the terms of this Agreement.
(b) Notwithstanding whatever may be provided herein to the contrary, this
Agreement may be terminated at any time, without payment of any penalty, by
affirmative vote of a majority of the Company's Board of Directors, or by vote
of a majority of the outstanding voting securities of the Company, as defined in
Section 2(a)(42) of the 1940 Act, or by the Adviser, in each case, upon sixty
(60) days' written notice to the other party and shall terminate automatically
in the event of its "assignment" (as that term is defined in the 1940 Act). No
assignment shall be deemed to result from any changes in the directors, officers
or employees of the Adviser except as may be provided to the contrary in the
1940 Act or the rules or regulations thereunder.
8. AMENDMENT. Except to the extent permitted by the 1940 Act or the rules
or regulations thereunder or pursuant to exemptive relief granted by the SEC,
this Agreement may be amended by the parties only if such amendment, if
material, is specifically approved by the vote of a majority of the outstanding
voting securities of the Company (unless such approval is not required by
Section 15 of the 1940 Act as interpreted by the SEC or its staff or unless the
SEC has granted an exemption from such approval requirement) and by the vote of
a majority of the Board of Directors of the Company, including a majority of the
Independent Directors, cast in person at a meeting called for the purpose of
voting on such approval.
9. NOTICE. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed and
delivered, or mailed postpaid to the other party at the principal place of
business of such party.
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of
Maryland, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
11. USE OF THE ADVISER'S NAME. The Company shall have the non-exclusive
right to use the name [SPECIFY NAME, IF APPLICABLE] only so long as the Adviser
serves as the investment adviser to the Company hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed as of the day and year first stated above.
[NAME OF FUND COMPANY]
By
---------------------------------------
Name:
Title:
JONES & BABSON, INC.
By
---------------------------------------
Name:
Title:
SCHEDULE A
(amended most recently , 20 )
Compensation pursuant to Paragraph 5 of this Agreement shall be
calculated in accordance with the following schedules:
Name of Company Annual Fee Rate
D.L. BABSON TAX-FREE INCOME FUND,
INC. Eighty-five one-hundredths of one
percent (85/100 of 1%) of the
average total net assets of the
Fund.
ATTEST:
D.L. BABSON TAX-FREE INCOME FUND, INC. JONES & BABSON, INC.
By By
------------------------------- ---------------------------------------
Name: Name:
Title: Title:
SCHEDULE A
(amended most recently , 20 )
Compensation pursuant to Paragraph 5 of this Agreement shall be
calculated in accordance with the following schedules:
Name of Company Annual Fee Rate
BABSON ENTERPRISE FUND, INC. One hundred forty one-hundredths
of one percent
(140/100 of 1%) of the average
total net assets of the Fund that
do not exceed thirty million
dollars ($30,000,000).
Ninety one-hundredths of one percent
(90/100 of 1%) of the average total
net assets of the Fund that exceed
thirty million dollars ($30,000,000).
ATTEST:
BABSON ENTERPRISE FUND, INC. JONES & BABSON, INC.
By By
------------------------------- ---------------------------------------
Name: Name:
Title: Title:
SCHEDULE A
(amended most recently , 20 )
Compensation pursuant to Paragraph 5 of this Agreement shall be
calculated in accordance with the following schedules:
Name of Company Annual Fee Rate
BABSON ENTERPRISE FUND II, INC. One hundred forty one-hundredths
of one percent (140/100 of 1%) of
the average total net assets of the
Fund that do not exceed thirty
million dollars ($30,000,000).
Ninety one-hundredths of one
percent (90/100 of 1%) of the
average total net assets of the
Fund that exceed thirty million
dollars ($30,000,000).
ATTEST:
BABSON ENTERPRISE FUND II, INC. JONES & BABSON, INC.
By By
------------------------------- ---------------------------------------
Name: Name:
Title: Title:
SCHEDULE A
(amended most recently , 20 )
Compensation pursuant to Paragraph 5 of this Agreement shall be
calculated in accordance with the following schedules:
Name of Company Annual Fee Rate
DAVID L. BABSON GROWTH FUND, INC. Seventy-five one-hundredths of
(75/100 of 1%) of the average total
net assets of the Fund that do not
exceed two hundred fifty million
dollars ($250,000,000).
Sixty one-hundredths of one
percent (60/100 of 1%) of the
average total net assets of the
Fund that exceed two hundred
fifty million dollars
($250,000,000).
ATTEST:
DAVID L. BABSON GROWTH FUND, INC. JONES & BABSON, INC.
By By
------------------------------- ---------------------------------------
Name: Name:
Title: Title:
SCHEDULE A
(amended most recently , 20 )
Compensation pursuant to Paragraph 5 of this Agreement shall be
calculated in accordance with the following schedules:
Name of Company Annual Fee Rate
SHADOW STOCK FUND, INC. Ninety one-hundredths of one percent
(90/100 of 1%) of the average total
net assets of the Fund.
ATTEST:
SHADOW STOCK FUND, INC. JONES & BABSON, INC.
By By
------------------------------- ---------------------------------------
Name: Name:
Title: Title:
SCHEDULE A
(amended most recently , 20 )
Compensation pursuant to Paragraph 5 of this Agreement shall be
calculated in accordance with the following schedules:
Name of Company Annual Fee Rate
BABSON VALUE FUND, INC. Eighty-five one-hundredths of one percent
(85/100 of 1%) of the average total net
assets of the Fund.
ATTEST:
BABSON VALUE FUND, INC. JONES & BABSON, INC.
By By
------------------------------- ---------------------------------------
Name: Name:
Title: Title:
SCHEDULE A
(amended most recently , 20 )
Compensation pursuant to Paragraph 5 of this Agreement shall be
calculated in accordance with the following schedules:
Name of Company Annual Fee Rate
BABSON-STEWART IVORY INTERNATIONAL FUND, INC. Eighty-five one-hundredths of
one percent (85/100 of 1%) of
the average total net assets
of the Fund.
ATTEST:
BABSON-STEWART IVORY INTERNATIONAL
FUND, INC. JONES & BABSON, INC.
By By
------------------------------- ---------------------------------------
Name: Name:
Title: Title:
SCHEDULE A
(amended most recently , 20 )
Compensation pursuant to Paragraph 5 of this Agreement shall be
calculated in accordance with the following schedules:
Name of Company Annual Fee Rate
D.L. BABSON MONEY MARKET FUND, INC. Seventy-five one-hundredths of one
percent (75/100 of 1%) of the
average total net assets of the
Fund.
ATTEST:
D.L. BABSON MONEY
MARKET FUND, INC. JONES & BABSON, INC.
By By
------------------------------- ---------------------------------------
Name: Name:
Title: Title:
EXHIBIT C
FORM OF PROPOSED NEW INVESTMENT
COUNSEL AGREEMENT
MARKED TO SHOW CHANGES FROM
CURRENT INVESTMENT COUNSEL AGREEMENT:
DELETIONS IN BRACKETS; ADDITIONS
UNDERLINED
INVESTMENT COUNSEL AGREEMENT
Between
JONES & BABSON, INC.
and
DAVID L. BABSON & [CO.] COMPANY INC.
-------
THIS AGREEMENT by and between JONES & BABSON, INC., a Missouri corporation
with its principal office at [Three Crown Center, 2440 Pershing Road] the BMA
Tower, 700 Karnes Boulevard, Kansas City, Missouri 64108 (the "Manager"), and
- -------------------------------------------------------------------
DAVID L. BABSON & COMPANY INC., a Massachusetts corporation with its principal
office at One Memorial Drive, Cambridge, Massachusetts 02142 (the "Investment
Counsel"), is made pursuant to the approval and direction of the parties'
respective Board of Directors and 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 Manager and ____________ FUND, INC. (the "Fund") were parties
- --------------------------------------------------------------------------------
to a Management Agreement under which the Manager provided management services,
- --------------------------------------------------------------------------------
including investment advisory services to the Fund; and
- --------------------------------------------------------------------------------
WHEREAS, the Manager and Investment Counsel were parties to an Investment
- --------------------------------------------------------------------------------
Counsel Agreement under which the Investment Counsel provided the following
- --------------------------------------------------------------------------------
services related to the management of the assets of the Fund:
- --------------------------------------------------------------------------------
[WHEREAS, the Manager has entered into a Management Agreement with the ____
____________ (Fund) of concurrent date to provide management services, including
investment advisory services, the Manager desires the assistance of the
Investment Counsel which can supply the following services:]
Research, analysis, advice and recommendations with respect to the purchase
and sale of securities and the making of investment commitments; statistical
information and reports as may reasonably be required, and general assistance in
the supervision of the investments of the Fund, subject to the control of (i)
-----
the Directors of the Fund and [the Directors of JONES & BABSON, INC.] (ii) the
---------
Manager; and
- --------
WHEREAS, following a change of control of the Manager and resulting
- --------------------------------------------------------------------------------
termination of the prior Management and Investment Counsel Agreements, the
- --------------------------------------------------------------------------------
parties hereto desire to enter into this new Investment Counsel Agreement under
- --------------------------------------------------------------------------------
which the Investment Counsel will continue to provide the aforementioned
- --------------------------------------------------------------------------------
services relating to the management of the Fund's assets.
- --------------------------------------------------------------------------------
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, the Manager 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 in the amount of:
-----------------
___________________________ of one percent (__/100 of 1%) of the average
daily total net assets of the Fund.
3. Provided this Agreement is approved by a majority of the outstanding
- --------------------------------------------------------------------------------
voting securities of the Fund, the Agreement shall become effective and run
- -----------------------------------
concurrently with the [Management] Investment Advisory Agreement of the same
---------------------
date between the Manager and the Fund, an executed copy of which shall be
supplied [the] to Investment Counsel.
---
4. This Agreement shall continue for a period of two years from the date of
- --------------------------------------------------------------------------------
its initial effectiveness. [The last day of the initial period of this Agreement
- --------------------------
shall coincide with the last day of the Management Agreement which shall be the
31st day of October, 1996.] Thereafter this Agreement may be renewed [in
conjunction with the Management Agreement] 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
Investment Company Act of 1940, as amended, (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 (as defined by the Act) 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] this
Agreement. This Agreement may be terminated at any time, without the
- --------------------------------------------------------------------------------
payment of any penalty, by the Board of Directors or by the vote of a
- --------------------------------------------------------------------------------
majority of the outstanding voting securities of the Fund, or by the Manager
- --------------------------------------------------------------------------------
or the Investment Counsel upon sixty days written notice to the other party.
- --------------------------------------------------------------------------------
This Agreement will automatically terminate with the [Management] Investment
Advisory 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] Investment Advisory Agreement. This Agreement shall
--------------------
automatically terminate in the event of its assignment or
assignment of the [Management] Investment Advisory 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. The Manager shall promptly notify the Investment
Counsel of any notice of termination or of any circumstances that are likely to
result in a termination of the [Management] Investment Advisory Agreement. This
------------------- -----
Agreement may be amended at any time by agreement of the parties, provided that
- --------------------------------------------------------------------------------
the amendment shall be approved in the manner required by the Act. For purposes
- --------------------------------------------------------------------------------
of this Agreement, the terms "assignment" and "majority of the outstanding
- --------------------------------------------------------------------------------
voting securities" shall have the meanings set forth in the Act.
- --------------------------------------------------------------------------------
5. It is 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 Manager of 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.
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] Investment Counsel agrees with Manager that, subject
----------------------------------------------------
to the terms and conditions of Paragraphs 8 and 9 of this Agreement, the Fund
- --------------------------------------------------------------------------------
has the exclusive right to use the names David L. Babson, D.L. Babson, Babson
- --------------------------------------------------------------------------------
(D.L.) and Babson, (the "Babson Name") as part of the Fund's name so long as
- --------------------------------------------------------------------------------
DAVID L. BABSON & COMPANY INC., or any successor in interest, continues as
- --------------------------------------------------------------------------------
Investment Counsel. The term "exclusive right" of the Fund appearing herein
- --------------------------------------------------------------------------------
means that no other investment company (or series thereof) registered under the
- --------------------------------------------------------------------------------
Act will be entitled to use the Babson Name as part of its name so long as the
- --------------------------------------------------------------------------------
Fund has the right to use it as part of its name. But nothing herein shall
- --------------------------------------------------------------------------------
prohibit DAVID L. BABSON & COMPANY INC. from granting to another investment
- --------------------------------------------------------------------------------
company, which is managed by the Manager with DAVID L. BABSON & COMPANY INC. as
- --------------------------------------------------------------------------------
its Investment Counsel and which has investment objectives and policies
- --------------------------------------------------------------------------------
different from those of the Fund, the right to use the Babson Name in that
- --------------------------------------------------------------------------------
fund's name. Should (i) the Fund or Manager terminate DAVID L. BABSON & COMPANY
- --------------------------------------------------------------------------------
INC., or its successor in interest, as Investment Counsel, (ii) DAVID L. BABSON
- --------------------------------------------------------------------------------
& COMPANY INC., or its successor in interest, be terminated as Investment
- --------------------------------------------------------------------------------
Counsel to the Babson Value Fund, Inc., Babson Enterprise Fund, Inc. or Babson
- --------------------------------------------------------------------------------
Enterprise Fund II, Inc. or (iii) the Babson Value Fund, Inc., Babson Enterprise
- --------------------------------------------------------------------------------
Fund, Inc. or Babson Enterprise Fund II,Inc. cease using the Babson name as part
- --------------------------------------------------------------------------------
of such funds' name, DAVID L. BABSON & COMPANY INC., or its successors in
- --------------------------------------------------------------------------------
interest, may elect to notify the Fund in writing that permission to use the
- --------------------------------------------------------------------------------
Babson Name has been withdrawn for the Fund. If so notified, it is understood
- --------------------------------------------------------------------------------
and agreed that JONES & BABSON, INC., or its successor in interest, in its
- --------------------------------------------------------------------------------
capacity as Manager will 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 action [which] that would indicate the Fund's continued association with
----
DAVID L. BABSON & [CO.] COMPANY INC. If the use of the [name "David L. Babson"
--------
(or any part thereof)]Babson Name 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)] Babson Name by DAVID L.
------------
BABSON & [CO.] COMPANY 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.] COMPANY INC., as a matter of
--------
reasonable business necessity, continuing as Investment Counsel. Should such
circumstances occur, DAVID L. BABSON & [CO.] COMPANY 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)] Babson Name and continue
------------
JONES & BABSON, INC., or its successor in interest, as Manager with DAVID L.
------------
BABSON & [CO.] COMPANY INC., or its successor in interest, as Investment
-------- -------------
Counsel. If such termination occurs, 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] from DAVID L. BABSON & COMPANY, INC., or its
---------------------------------------------
successor in interest, it is understood and agreed that JONES & BABSON, INC., or
- --------------------------------------------------------------------------------
its successor in interest, in its capacity as Manager will take all necessary
- -------------------------------------------------------------
corporate action [and] to proceed expeditiously to change the name of the Fund
(but, if necessary, it may take up to one year from the effective date of [the
-------
termination of the Management Agreement)] such written withdrawal request), and
the Fund will not use any other name or take any other action [which] that would
--------- -----
indicate the Fund's continued association with DAVID L. BABSON & [CO.] COMPANY
--------
INC. In consideration for this right, DAVID L. BABSON & [CO.] COMPANY INC.
--------
agrees that, should it so request the withdrawal of the [name "David L. Babson"
(or any part thereof)] Babson Name, 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 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 constituted meeting of the shareholders of JONES & BABSON, INC.] (or series
----------
thereof) registered under Act to use the Babson Name (except for those funds,
- --------------------------------------------------------------------------------
managed by Jones & Babson, Inc. or its successor in interest, that retain the
- --------------------------------------------------------------------------------
right to use the Babson Name under a separate Investment Counsel Agreement) as
- --------------------------------------------------------------------------------
part of its name for a period of two years subsequent to the effective date of
- --------------------------------------------------------------------------------
the written withdrawal request, unless this prohibition is waived or modified by
- --------------------------------------------------------------------------------
the vote of a majority of the directors of the Fund. For this right to withdraw
- --------------------------------------------------------------------------------
the Babson Name from the use of the Fund, DAVID L. BABSON & COMPANY INC. agrees
- --------------------------------------------------------------------------------
that it will not compete with JONES & BABSON, INC., or its successor in
- --------------------------------------------------------------------------------
interest, for the management of the Fund during said two-year period, unless
- --------------------------------------------------------------------------------
this no-compete provision is waived by JONES & BABSON, INC., or its successor in
- --------------------------------------------------------------------------------
interest.
- ---------
Each party hereby executes this Agreement as of the [30th day of June,
1995] _____ day of ____________, 2003, pursuant to the authority granted by its
---------------------------------
Board of Directors.
DAVID L. BABSON & [CO.] COMPANY INC.
--------
By:
-------------------------------------
ATTEST:
JONES & BABSON, INC.
By:
-------------------------------------
ATTEST:
Accepted and Agreed by:
- -----------------------
____________ FUND, INC.
- -----------------------
By _________________________
- ------------------------
Name:
- - -------------------------
Title:
- - -------------------------
FEE SCHEDULE
BABSON TAX-FREE INCOME FUND, INC.
twenty-five one-hundredths of one percent (25/100 of 1%) of the average daily
total net assets of the Fund
FEE SCHEDULE
D.L. BABSON MONEY MARKET FUND, INC.
Twenty-one hundredths of one percent (20/100 of 1%) of the average daily net
assets of the Fund
FEE SCHEDULE
BABSON ENTERPRISE FUND, INC.
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)
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)
FEE SCHEDULE
BABSON ENTERPRISE FUND II, INC.
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)
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)
FEE SCHEDULE
DAVID L. BABSON GROWTH FUND, INC.
Thirty one-hundredths of one percent (30/100 of 1%) of the average daily total
net assets of the Fund which do not exceed one hundred million dollars
($100,000,000)
Twenty-five one-hundredths of one percent (25/100 of 1%) of the average daily
total net assets of the Fund which exceed one hundred million dollars
($100,000,000), but that do not exceed two hundred fifty million dollars
($250,000,000)
Twenty one-hundredths of one percent (20/100 of 1%) of the average daily total
net assets of the Fund that exceed two hundred fifty million dollars
($250,000,000)
FEE SCHEDULE
SHADOW STOCK FUND, INC.
Twenty-five one-hundredths of one percent (25/100 of 1%) of the average daily
total net assets of the Fund
FEE SCHEDULE
BABSON VALUE FUND, INC.
Thirty-five one-hundredths of one percent (35/100 of 1%) of the average daily
total net assets of the Fund
EXHIBIT D
FORM OF PROPOSED NEW INVESTMENT
COUNSEL AGREEMENT
MARKED TO SHOW CHANGES FROM
CURRENT INVESTMENT COUNSEL
AGREEMENT: DELETIONS IN
BRACKETS; ADDITIONS UNDERLINED
INVESTMENT COUNSEL AGREEMENT
Between
JONES & BABSON, INC.
and
S.I. INTERNATIONAL ASSETS
THIS AGREEMENT by and between JONES & BABSON, INC., a Missouri corporation with
its principal office at the BMA Tower, 700 Karnes Boulevard, Kansas City,
Missouri 64108 ([hereinafter referred to as] the "Manager"), and S.I.
INTERNATIONAL ASSETS (formerly, Babson-Stewart Ivory International), a
Massachusetts general partnership with its principal office at One Memorial
Drive, Cambridge, Massachusetts 02142 ([hereinafter referred to as] the
"Investment Counsel"), is made pursuant to the approval and direction of the
parties' respective Board of Directors and 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 Manager has entered into a Management Agreement with BABSON-
STEWART IVORY INTERNATIONAL FUND, INC. ("Fund") to provide management services,
including investment advisory services, the Manager desires the assistance of
the Investment Counsel which can supply the following services:]
WHEREAS, the Manager and BABSON-STEWART IVORY INTERNATIONAL FUND, INC. (the
- --------------------------------------------------------------------------------
"Fund") were parties to a Management Agreement under which the Manager provided
- --------------------------------------------------------------------------------
management services, including investment advisory services to the Fund; and
- --------------------------------------------------------------------------------
WHEREAS, the Manager and Investment Counsel were parties to an Investment
- --------------------------------------------------------------------------------
Counsel Agreement under which the Investment Counsel provided the following
- --------------------------------------------------------------------------------
services related to the management of the assets of the Fund:
- --------------------------------------------------------------------------------
Research, analysis, advice and recommendations with respect to the purchase and
sale of securities and the making of investment commitments; statistical
information and reports as may reasonably be required, and general assistance in
the supervision of the investments of the Fund, subject to the control of (i)
----
the Directors of the Fund and [the Directors of] (ii) the Manager; and
---- ---
WHEREAS, following a change of control of the Manager and resulting termination
- --------------------------------------------------------------------------------
of the prior Management and Investment Counsel Agreements, the parties hereto
- --------------------------------------------------------------------------------
desire to enter into this new Investment Counsel Agreement under which the
- --------------------------------------------------------------------------------
Investment Counsel will continue to provide the aforementioned services relating
- --------------------------------------------------------------------------------
to the management of the Fund's assets.
- ---------------------------------------
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, the Manager 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 in the amount of:
-----------------
four hundred seventy-five one-thousandths of one percent (475/100
of 1%) of the average daily total net assets of the Fund.
3. Provided this Agreement is approved by a majority of the outstanding voting
-----------------------------------------------------------------------------
securities of the Fund, the Agreement shall become effective and run
- --------------------------------------------------------------------------------
concurrently with the Investment Advisory Agreement of the same date between the
- --------------------------------------------------------------------------------
Manager and the Fund, an executed copy of which shall be supplied to Investment
- --------------------------------------------------------------------------------
Counsel. [This Agreement shall become effective upon its approval by
shareholders
- --------
of the Fund.]
4. [The initial period of this Agreement shall be two years from its
effectiveness.] This Agreement shall continue for a period of two years from the
date of its
- --------------------------------------------------------------------------------
initial effectiveness. Thereafter [, or at an earlier date determined by the
- -----------------------
Board,] this Agreement 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 of the Fund or by a vote of the
majority of the outstanding voting securities of the Fund as prescribed by the
Investment Company Act of 1940, as amended, (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 (as defined by the Act) 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
and] this Agreement. This Agreement may be terminated at any time,
----------------------------------------------
without the payment of any penalty, by the Board of Directors
- --------------------------------------------------------------------------------
or by the vote of a majority of the outstanding voting securities of the
- --------------------------------------------------------------------------------
Fund, or by the Manager or the Investment Counsel upon sixty days written
- --------------------------------------------------------------------------------
notice to the other party. This Agreement will automatically terminate
- --------------------------
with the [Management] Investment Advisory 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] Investment Advisory Agreement. This Agreement shall
--------------------
automatically terminate in the event of its assignment or assignment
of the [Management] Investment Advisory 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. The Manager shall promptly notify the Investment Counsel of any
notice of termination or of any circumstances [which] that are likely to result
----
in a termination of the [Management] Investment Advisory Agreement.
--------------------
This Agreement may be amended at any time by agreement of the parties,
- -----------------------------------------------------------------------------
provided that the amendment shall be approved in the manner required by
- ----------------------------------------------------------------------------
the Act. For purposes of this Agreement, the terms "assignment" and "majority
- ----------------------------------------------------------------------------
of the outstanding voting securities" shall have the meanings set
- ----------------------------------------------------------------------------
forth in the Act.
- -----------------
5. It is 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 Manager of 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.
8. [In compliance with the provisions of the Management Agreement between the
Fund and the Manager,] Investment Counsel agrees with Manager that, subject to
the terms and conditions of [this Paragraph 8] Paragraphs 8 and 9
------------------
of this Agreement, the Fund [may use the name of "David L. Babson" (or any part
- -------------------
thereof) as part of its name so long as the Manager, or any successor in
interest, continues as Manager and BABSON-STEWART IVORY INTERNATIONAL, or any
successor in interest, continues as Investment Counsel. Should the Fund
terminate either the Manager, or its successor as Manager, or BABSON-STEWART
IVORY INTERNATIONAL, or its successor as Investment Counsel, either the Manager,
or BABSON-STEWART IVORY INTERNATIONAL, 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 Funds has, in its Management Agreement with the Manager,
expressly agreed that it, its officers, directors and shareholders]
has the exclusive right to use the names David L. Babson, D.L. Babson,
- --------------------------------------------------------------------------------
Babson (D.L.) and Babson, (the "Babson Name") as part of the Fund's name
- --------------------------------------------------------------------------------
so long as S.I. INTERNATIONAL ASSETS, or any successor in interest, continues
- --------------------------------------------------------------------------------
as Investment Counsel. The term "exclusive right" of the Fund appearing
- --------------------------------------------------------------------------------
herein means that no other investment company (or series thereof) registered
- --------------------------------------------------------------------------------
under the Act will be entitled to use the Babson Name as part of its name
- --------------------------------------------------------------------------------
so long as the Fund has the right to use it as part of its name. But nothing
- --------------------------------------------------------------------------------
herein shall prohibit DAVID L. BABSON & COMPANY INC. from granting to
- --------------------------------------------------------------------------------
another investment company, which is managed by the Manager with S.I.
- --------------------------------------------------------------------------------
INTERNATIONAL ASSETS as its Investment Counsel and which has investment
- --------------------------------------------------------------------------------
objectives and policies different from those of the Fund, the right
- --------------------------------------------------------------------------------
to use the Babson Name in that fund's name. Should (i) the Fund or Manager
- --------------------------------------------------------------------------------
terminate S.I. INTERNATIONAL ASSETS, or its successor in interest, as Investment
- --------------------------------------------------------------------------------
Counsel, (ii) DAVID L. BABSON & COMPANY INC., or its successor in interest, be
- --------------------------------------------------------------------------------
terminated as Investment Counsel to the Babson Value Fund, Inc., Babson
- --------------------------------------------------------------------------------
Enterprise Fund, Inc. or Babson Enterprise Fund II, Inc. or (iii) the Babson
- --------------------------------------------------------------------------------
Value Fund, Inc., Babson Enterprise Fund, Inc. or Babson Enterprise Fund II,
- --------------------------------------------------------------------------------
Inc. cease using the Babson name as part of such funds' name, DAVID L. BABSON &
- --------------------------------------------------------------------------------
COMPANY INC., or its successors in interest, may elect to notify the Fund in
- --------------------------------------------------------------------------------
writing that permission to use the Babson Name has been withdrawn for the Fund.
- --------------------------------------------------------------------------------
If so notified, it is understood and agreed that JONES & BABSON, INC., or its
- --------------------------------------------------------------------------------
successor in interest, in its capacity as Manager will 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 action [which] that would indicate
----
the Fund's continued association with S.I. INTERNATIONAL ASSETS.
If the use of the [name "David L. Babson" (or any part thereof)] Babson Name
------------
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 BABSON-STEWART IVORY INTERNATIONAL, or its successor in
interest, or by the Manager or its successor in interest.] Babson Name by S.I.
---------------------
INTERNATIONAL ASSETS, or its successor in interest.
- ---------------------------------------------------
9. Although it is not anticipated, there may occur some unforeseen reason which
would prohibit S.I. INTERNATIONAL ASSETS, as a matter of reasonable business
necessity, continuing as Investment Counsel. Should such circumstances occur,
S.I. INTERNATIONAL ASSETS, 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 to use the Manager, or its successor, as
manager with BABSON-STEWART IVORY INTERNATIONAL, or its successor, as Investment
Counsel.] Babson Name and continue JONES & BABSON, INC., or its successor in
- --------------------------------------------------------------------------------
interest, as Manager with S.I. INTERNATIONAL ASSETS, or its successor in
- --------------------------------------------------------------------------------
interest, 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 the Manager, for the benefit of BABSON-STEWART
IVORY INTERNATIONAL, to]
If such termination occurs, upon receipt of written notice from S.I.
- ---------------------------------------------------------------------
INTERNATIONAL ASSETS, or its successor in interest, it is understood and agreed
- --------------------------------------------------------------------------------
that JONES & BABSON, INC., or its successor in interest, in its capacity as
- ----------------------------------------------------------------------------
Manager will take all necessary corporate action [and] to proceed expeditiously
- ------------- --
to change the name of the Fund (but, if necessary, it may take up to one year
-------
from the effective date [of the termination of the Management Agreement) and]
of such written withdrawal request), and the Fund will not use any other name or
- ------------------------------------------------------
take any other action [which] that would indicate the Fund's continued
----
association with S.I. INTERNATIONAL ASSETS. In consideration for this right,
DAVID L. BABSON & COMPANY INC. agrees that, should it so request the withdrawal
of the [name "David L. Babson" (or any part thereof)] Babson Name, it will not
------------
permit another investment company (or series thereof) [whether or not]
---------------------
registered under the Act to use the [name "David L. Babson" (or any part
thereof)] Babson Name (except for those funds, managed by Jones & Babson, Inc.
---------------------------------------------------------------------
or its successor in interest, that retain the right to use the Babson Name
- -------------------------------------------------------------------------------
under a separate Investment Counsel Agreement) as part of its name for a
- ------------------------------------------------
period of [five] two 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 the Manager.]
the vote of a majority of the directors of the Fund. For this right to withdraw
- ----------------------------------------------------
the [name "David L. Babson" or any part thereof)]Babson Name from the use of the
-----------
Fund, S.I. INTERNATIONAL ASSETS agrees that it will not
compete with [the Manager] JONES & BABSON, INC., or its
------------------------------
successor in interest, for the management of the Fund during said [five]
- ----------------------
two-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 the Manager.] JONES & BABSON, INC., or its successor in interest.
---------------------------------------------------
Each party hereby executes this Agreement as of the [ day of , 2002]
_____ day of ____________, 2003, pursuant to the authority granted by its
- ---------------------------------
Board of Directors.
S.I. INTERNATIONAL ASSETS
By
------------------------------
ATTEST:
JONES & BABSON, INC.
By
-------------------------------------
ATTEST:
Accepted and Agreed by:
- -----------------------
Babson-Stewart Ivory International Fund, Inc.
- ---------------------------------------------
By____________________________________
- ---------------------------------------------
Name:
- ---------------------------------------------
Title:
- ---------------------------------------------
EXHIBIT E
FORM OF PROPOSED NEW INVESTMENT
COUNSEL AGREEMENT
MARKED TO SHOW CHANGES FROM
CURRENT INVESTMENT COUNSEL
AGREEMENT: DELETIONS IN
BRACKETS; ADDITIONS UNDERLINED
INVESTMENT COUNSEL AGREEMENT
Between
JONES & BABSON, INC.
and
ANALYTIC SYSTEMS, INC.
THIS AGREEMENT by and between JONES & BABSON, INC., a Missouri corporation with
its principal office at [Three Crown Center, 2440 Pershing Road] the BMA Tower,
--------------
700 Karnes Boulevard, Kansas City, Missouri 64108 ([hereinafter referred to as]
- -----------------------
the "Manager"), and ANALYTIC SYSTEMS, INC., an Illinois corporation with its
principal office at 625 North Michigan Avenue, Chicago, Illinios 60611
([hereinafter referred to as] the "Investment Counsel"), is made pursuant to the
approval and direction of the parties' respective Board of Directors and 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 Manager has entered into a Management Agreement with the SHADOW
STOCK FUND, INC. (Fund) of concurrent date to provide management services,
including investment advisory services, and the Manager desires the assistance
of the Investment Counsel which can supply the following services:]
WHEREAS, the Manager and SHADOW STOCK FUND, INC. (the "Fund") were parties to a
- --------------------------------------------------------------------------------
Management Agreement under which the Manager provided management services,
- --------------------------------------------------------------------------------
including investment advisory services to the Fund; and
- --------------------------------------------------------
WHEREAS, the Manager and Investment Counsel were parties to an Investment
- --------------------------------------------------------------------------------
Counsel Agreement under which the Investment Counsel provided the following
- --------------------------------------------------------------------------------
services related to the management of the assets of the Fund:
- -------------------------------------------------------------
Research, analysis, advice and recommendations with respect to the purchase and
sale of securities and the making of investment commitments; statistical
information and reports as may reasonably be required, and general assistance in
the supervision of the investments of the Fund, subject to the control of (i)
---
the Directors of the Fund and [the Directors of JONES & BABSON, INC.]
(ii) the Manager; and
- -----------------
WHEREAS, following a change of control of the Manager and resulting termination
- --------------------------------------------------------------------------------
of the prior Management and Investment Counsel Agreements, the parties hereto
- --------------------------------------------------------------------------------
desire to enter into this new Investment Counsel Agreement under which the
- --------------------------------------------------------------------------------
Investment Counsel will continue to provide the aforementioned services relating
- --------------------------------------------------------------------------------
to the management of the Fund's assets.
- ---------------------------------------
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, the Manager 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 in the amount of:
-----------------
Twenty one-hundredths of one percent (20/100 of 1%) of the average
daily total net assets of the Fund.
3. Provided this Agreement is approved by a majority of the outstanding voting
- --------------------------------------------------------------------------------
securities of the Fund, the Agreement shall become effective and run
- --------------------------
concurrently with the [Management] Investment Advisory Agreement of the same
--------------------
date between the Manager and the Fund, an executed copy of which shall be
supplied to Investment Counsel.
4. [The last day of the initial period of this Agreement shall coincide with the
last day of the Management Agreement which shall be the 31st day of October,
1996.] This Agreement shall continue for a period of two years from the date
----------------------------------------------------------------------
of its initial effectiveness. Thereafter this Agreement may be renewed [in
- ------------------------------
conjunction with the Management Agreement] 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
Investment Company Act of 1940, as amended, (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 (as defined by the Act) 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] this
Agreement. This Agreement may be terminated at any time,
--------------------------------------------------
without the payment of any penalty, by the Board of Directors or by the
- ---------------------------------------------------------------------------
vote of a majority of the outstanding voting securities of the Fund,
- ------------------------------------------------------------------------
or by the Manager or the Investment Counsel upon sixty days written notice
- ----------------------------------------------------------------------------
to the other party. This Agreement will automatically terminate with the
- -------------------
[Management] Investment Advisory 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]
Investment Advisory Agreement. This Agreement shall automatically
- -------------------
terminate in the event of its assignment or assignment of the [Management]
Investment Advisory 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. The
Manager shall promptly notify the Investment Counsel of any notice of
termination or of any circumstances [which] that are
----
likely to result in a termination of the [Management] Investment Advisory
--------------------
Agreement. This Agreement may be amended at any time by agreement of the
parties,
- --------------------------------------------------------------------------------
provided that the amendment shall be approved in the manner required by
- --------------------------------------------------------------------------------
the Act. For purposes of this Agreement, the terms "assignment" and
- --------------------------------------------------------------------------------
"majority of the outstanding voting securities" shall have the meanings set
- --------------------------------------------------------------------------------
forth in the Act.
- -----------------
5. It is 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 Manager of 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.
8. [In compliance with the provisions of the Management Agreement between SHADOW
STOCK FUND, INC. 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 "Shadow Stock" as part of its name, so long as JONES & BABSON,
INC., or any successor in interest, continues as its manager and ANALYTIC
SYSTEMS, INC., or any successor in interest, continues as an investment counsel
to the manager. Should the Fund terminate either JONES & BABSON, INC. or its
successor as manager for the Fund, or ANALYTIC SYSTEMS, INC., or its successor,
as an investment counsel, either JONES & BABSON, INC. or ANALYTIC SYSTEMS, INC.,
or their respective successors in interest, may elect to notify the Fund in
writing that permission to use the name "Shadow Stock" 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,]
Investment Counsel agrees with Manager that, subject to the terms and
- --------------------------------------------------------------------------------
conditions of Paragraphs 8 and 9 of this Agreement, the Fund has the exclusive
- --------------------------------------------------------------------------------
right to use the "Shadow Stock" name as part of the Fund's name so long as
- --------------------------------------------------------------------------------
ANALYTIC SYSTEMS, INC., or any successor in interest, continues as Investment
- --------------------------------------------------------------------------------
Counsel. The term "exclusive right" of the Fund appearing herein means that no
- --------------------------------------------------------------------------------
other investment company (or series thereof) registered under the Act will be
- --------------------------------------------------------------------------------
entitled to use Shadow Stock as part of its name so long as the Fund has the
- --------------------------------------------------------------------------------
right to use it as part of its name. Should the Fund or Manager terminate
- --------------------------------------------------------------------------------
ANALYTIC SYSTEMS, INC., or its successor in interest, as Investment Counsel,
- --------------------------------------------------------------------------------
ANALYTIC SYSTEMS, INC., or its successors in interest, may elect to notify the
- --------------------------------------------------------------------------------
Fund in writing that permission to use the Shadow Stock name has been withdrawn
- --------------------------------------------------------------------------------
for the Fund. If so notified, it is understood and agreed that JONES & BABSON,
- --------------------------------------------------------------------------------
INC., or its successor in interest, in its capacity as Manager
- --------------------------------------------------------------------------------
will 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 action
[which] that would indicate the Fund's continued association with ANALYTIC
----
SYSTEMS, INC. [, JONES & BABSON, INC. or DAVID L. BABSON & CO. INC.] If the use
of the [name "Shadow Stock"] Shadow Stock name 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
"Shadow Stock" by ANALYTIC SYSTEMS, INC., or its successor in interest, or with
the permission of ANALYTIC SYSTEMS, INC., by JONES & BABSON, INC. or DAVID L.
BABSON & CO. INC. or their respective successors.] it is understood and agreed
-----------------------------
that there shall be no limitation with respect to the future use of the
- ------------------------------------------------------ -------------------------
Shadow Stock name by ANALYTIC SYSTEMS, INC., or its successor in interest.
- --------------------------------------------------------------------------------
9. Although it is not anticipated, there may occur some unforeseen reason which
would prohibit ANALYTIC SYSTEMS, INC., as a matter of reasonable business
necessity, continuing as Investment Counsel [to JONES & BABSON, INC.]. Should
such circumstances occur, ANALYTIC SYSTEMS, INC., or its successor may elect to
terminate its services, even though the Fund would want to continue to use the
[name "Shadow Stock"] Shadow Stock name and continue JONES &
-----------------
BABSON, INC., or its successor in interest, as Manager with ANALYTIC
------------ --------------
SYSTEMS, INC., or its successor in interest, as Investment Counsel. If such
- ----------------------------------------------------------------------------
termination occurs, 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., to] from ANALYTIC SYSTEMS, INC.,
----------------------------
or its successor in interest, it is understood and agreed that JONES &
- -------------------------------------------------------------------------
BABSON, INC., or its successor in interest, in its capacity as Manager will
- ---------------------------------------------------------------------------
take all necessary corporate action [and] to proceed expeditiously to
--
change the name of the Fund [(but, if necessary, to take up to one year from the
effective date of the termination of this Investment Counsel Agreement) and not
use any other name or take any other action which would indicate the Fund's
continued association with ANALYTIC SYSTEMS, INC. In consideration for this
right, ANALYTIC SYSTEMS, INC. agrees that should the name "Shadow Stock" be
withdrawn, it will not permit another investment company, whether or not
registered under the Investment Company Act of 1940, as amended, to use the name
"Shadow Stock" 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.] (but, if necessary, it may take up to one year from the effective
- --------------------------------------------------------------------------------
date of such written withdrawal request), and the Fund will not use any other
- ----------------------------------------------------------------------------
name or take any other action that would indicate the Fund's continued
- -----------------------------------------------------------------------
association with ANALYTIC SYSTEMS, INC.In consideration for this right, ANALYTIC
- --------------------------------------------------------------------------------
SYSTEMS, INC. agrees that, should it so request the withdrawal of the
- -------------------------------------------------------------------------------
Shadow Stock name it will not permit another investment company (or series
- -------------------------------------------------------------------------------
thereof) registered under the Act to use the Shadow Stock name as part
- -------------------------------------------------------------------------------
of its name for a period of two years subsequent to the effective date of
- -------------------------------------------------------------------------------
the written withdrawal request, unless this prohibition is waived or
- -------------------------------------------------------------------------------
modified by the vote of a majority of the directors of the Fund.
- -------------------------------------------------------------------------------
For this right to withdraw the [name "Shadow Stock"] Shadow Stock name from the
-----------------
use of the Fund, ANALYTIC SYSTEMS, INC. agrees [with JONES & BABSON, INC.]
that it will not compete with JONES & BABSON, INC., or its successor in
----------------------------
interest, for the management of the Fund during said [five-year] two-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., or its successor in interest.
-----------------------------
Each party hereby executes this Agreement as of the [30th day of June, 1995]
_____ day of ____________, 2003, pursuant to the authority granted by its
- ----------------------------------
Board of Directors.
ANALYTIC SYSTEMS, INC.
By
-------------------------------------
ATTEST:
JONES & BABSON, INC.
By
-------------------------------------
ATTEST:
Accepted and Agreed by:
- -----------------------
Shadow Stock Fund, Inc.
- -----------------------
By____________________________________
- -----------------------
Name:
- -----------------------
Title:
- -----------------------
[BABSON FUNDS LOGO]
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE VOTE YOUR PROXY.....TODAY
This EzVote Consolidated Proxy covers all of your accounts registered to the
same Social Security or Tax I.D. number at this address. You may vote all of
these accounts on the consolidated ballot at the bottom of the page or you may
cast a consolidated vote by phone or on the Internet using your EzVote Control
Number. If you desire to vote each of your accounts separately, use the
individual ballots on the reverse side of this card.
VOTING HAS NEVER BEEN EASIER!
VOTING ON THE INTERNET
Your EzVote Control Number is -Read the Proxy Statement and have this card
XXX XXX XXX XXX XX at hand
-Log on to www.proxyweb.com
----------------
-Enter your EzVote Control Number and
follow the on-screen instructions
-Do not return this paper ballot
VOTING BY PHONE
-Read the Proxy Statement and have this card
at hand
-Call toll-free 1-888-221-0697
-Enter your EzVote Control Number and
follow the recorded instructions
-Do not return this paper ballot
- - ------------------------------------------------------------------------------
EzVote(SM)
CONSOLIDATED PROXY BALLOT SPECIAL MEETING OF SHAREHOLDERS MARCH 28, 2003
[LABEL]
The undersigned hereby revokes all previous proxies for his or her shares and
appoints Stephen S. Soden, P. Bradley Adams and Martin A. Cramer, and each of
them, proxies of the undersigned with full power of substitution to vote all
shares of the Babson Fund(s) that the undersigned is entitled to vote at the
Special Meeting of Shareholders, including any adjournments thereof (the
"Meeting"), to be held at the offices of Jones & Babson, Inc., on the 19th floor
of the BMA Tower, 700 Karnes Boulevard, Kansas City, Missouri at 1:00 p.m.,
Central Time, on March 28, 2003, upon such business as may properly be brought
before the Meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE BABSON FUNDS.
IF THIS PROXY IS SIGNED AND RETURNED AND NO SPECIFICATION IS MADE, IT WILL BE
VOTED FOR ALL PROPOSALS. IF OTHER BUSINESS SHOULD PROPERLY COME BEFORE THE
MEETING, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS
NAMED IN THE ACCOMPANYING PROXY.
The Board of Directors recommends that you vote in favor of Proposals 1, 2,
3.a., 3.b. and 3.c.
Receipt of the Notice of the Special Meeting and the accompanying Proxy
Statement is hereby acknowledged.
Please fill in box(es) as shown using black
or blue ink or number 2 pencil. [X] PLEASE
DO NOT USE FINE POINT PENS.
- - ------------------------------------------------------------------------------
CONSOLIDATED BALLOT
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
FOR ALL FUNDS:
-------------
l. To elect four Directors (seven Directors with respect to [ ] [ ] [ ]
Babson Enterprise Fund II, Inc.) to hold office until
their successors are duly elected and qualified or until
their earlier resignation or removal:
(01) T. Geron Bell, (03) Ronald James, (05) William H. Russell,*
(02) Sandra J. Hale, (04) Jay H. Wein, (06) H. David Rybolt*
(07) Stephen S. Soden
*(BABSON ENTERPRISE FUND II, INC. ONLY)
- -------------------------------------------------------------------
**INSTRUCTIONS: To withhold authority to vote for an individual
nominee(s), mark the box "FOR ALL EXCEPT" and write that nominee(s)
number(s) on the line above.
FOR AGAINST ABSTAIN
---- ------- --------
2. To approve a New Investment Advisory Agreement [ ] [ ] [ ]
between each Fund and Jones & Babson, Inc.
FOR ALL FUNDS (EXCEPT BABSON-STEWART IVORY INTERNATIONAL FUND, INC.):
3a. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and David L. Babson & Company Inc.;
FOR BABSON-STEWART IVORY INTERNATIONAL FUND, INC. ONLY:
3b. To approve a New Investment Counsel Agreement between Jones & Babson, [ ] [ ] [ ]
Inc. and S.I. International Assets (formerly Babson-Stewart Ivory
International);
FOR THE SHADOW STOCK FUND, INC. ONLY:
- - -------------------------------------
3c. To approve a New Investment Counsel Agreement between Jones & Babson, [ ] [ ] [ ]
Inc. and Analytic Systems, Inc.
4. To transact such other business as may properly come before the Special
Meeting and any adjournments thereof.
Date: _________________________
You are urged to date and sign this proxy and return it promptly. This will save
the expense of follow-up letters to shareholders who have not responded.
--------------------------------------------
Signature(s) (Please sign in box)
NOTE: Please sign exactly as your name appears on the proxy. If signing for
estates, trusts or corporations, title or capacity should be stated. Joint
owners should each sign.
IF YOU HAVE VOTED THIS CONSOLIDATED BALLOT YOUR VOTING IS COMPLETED
INDIVIDUAL PROXY BALLOTS
IMPORTANT: USE THESE BALLOTS ONLY IF YOU WISH TO VOTE EACH FUND SEPARATELY
DIRECTOR NOMINEES: (01) T. Geron Bell, (03) Ronald James, (05) William H. Russell*,
(02) Sandra J. Hale, (04) Jay H. Wein, (06) H. David Rybolt* and
(07) Stephen S. Soden*
*(BABSON ENTERPRISE FUND II, INC. ONLY)
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS. [X]
- - --------------------------------
XXX XXXXXXXXXXX XXX
ACCOUNT REGISTRATION
PRINTS HERE
CONTROL NUMBER
XXX XXX XXX XXX XX
FUND NAME PRINTS HERE
1. ELECTION OF DIRECTORS (REFER TO NOMINEES AT TOP OF PAGE)
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
[ ] [ ] [ ]
**EXCEPT# __________________
**INSTRUCTIONS: To withhold authority to vote for an individual
nominee(s), mark the box "FOR ALL EXCEPT" and write that nominee(s)
number(s) on the line above.
FOR AGAINST ABSTAIN
---- ------- --------
2. To approve a New Investment Advisory Agreement [ ] [ ] [ ]
between the Fund and Jones & Babson, Inc.
3a. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and David L. Babson & Company Inc. (EXCEPT FUND 028);
3b. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and S.I. International Assets (ONLY FUND 028);
3c. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and Analytic Systems, Inc. (ONLY FUND 008).
4. To transact such other business as may properly come before the Special
meeting and any adjournments thereof.
- - --------------------------------
XXX XXXXXXXXXXX XXX
ACCOUNT REGISTRATION
PRINTS HERE
CONTROL NUMBER
XXX XXX XXX XXX XX
FUND NAME PRINTS HERE
1. ELECTION OF DIRECTORS (REFER TO NOMINEES AT TOP OF PAGE)
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
[ ] [ ] [ ]
**EXCEPT# __________________
**INSTRUCTIONS: To withhold authority to vote for an individual
nominee(s), mark the box "FOR ALL EXCEPT" and write that nominee(s)
number(s) on the line above.
FOR AGAINST ABSTAIN
---- ------- --------
2. To approve a New Investment Advisory Agreement [ ] [ ] [ ]
between the Fund and Jones & Babson, Inc.
3a. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and David L. Babson & Company Inc. (EXCEPT FUND 028);
3b. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and S.I. International Assets (ONLY FUND 028);
3c. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and Analytic Systems, Inc. (ONLY FUND 008).
4. To transact such other business as may properly come before the Special
meeting and any adjournments thereof.
- - --------------------------------
XXX XXXXXXXXXXX XXX
ACCOUNT REGISTRATION
PRINTS HERE
CONTROL NUMBER
XXX XXX XXX XXX XX
FUND NAME PRINTS HERE
1. ELECTION OF DIRECTORS (REFER TO NOMINEES AT TOP OF PAGE)
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
[ ] [ ] [ ]
**EXCEPT# __________________
**INSTRUCTIONS: To withhold authority to vote for an individual
nominee(s), mark the box "FOR ALL EXCEPT" and write that nominee(s)
number(s) on the line above.
FOR AGAINST ABSTAIN
---- ------- --------
2. To approve a New Investment Advisory Agreement [ ] [ ] [ ]
between the Fund and Jones & Babson, Inc.
3a. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and David L. Babson & Company Inc. (EXCEPT FUND 028);
3b. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and S.I. International Assets (ONLY FUND 028);
3c. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and Analytic Systems, Inc. (ONLY FUND 008).
4. To transact such other business as may properly come before the Special
meeting and any adjournments thereof.
- - --------------------------------
XXX XXXXXXXXXXX XXX
ACCOUNT REGISTRATION
PRINTS HERE
CONTROL NUMBER
XXX XXX XXX XXX XX
FUND NAME PRINTS HERE
1. ELECTION OF DIRECTORS (REFER TO NOMINEES AT TOP OF PAGE)
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT**
[ ] [ ] [ ]
**EXCEPT# __________________
**INSTRUCTIONS: To withhold authority to vote for an individual
nominee(s), mark the box "FOR ALL EXCEPT" and write that nominee(s)
number(s) on the line above.
FOR AGAINST ABSTAIN
---- ------- --------
2. To approve a New Investment Advisory Agreement [ ] [ ] [ ]
between the Fund and Jones & Babson, Inc.
3a. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and David L. Babson & Company Inc. (EXCEPT FUND 028);
3b. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and S.I. International Assets (ONLY FUND 028);
3c. To approve a New Investment Counsel Agreement between Jones & [ ] [ ] [ ]
Babson, Inc. and Analytic Systems, Inc. (ONLY FUND 008).
4. To transact such other business as may properly come before the Special
meeting and any adjournments thereof.
Date: ________________
NOTE: Please sign exactly as your name appears on the proxy. If signing for
estates, trusts or corporations, title or capacity should be stated. Joint
owners should each sign.
---------------------------------
Signature(s) (Please sign in box)