EXHIBIT 99(6)(A)
EXPENSE LIMITATION AGREEMENT
This Agreement is made by and between each of the Babson Funds listed
on Schedule A (each a "Fund" or collectively, "Funds"), and Xxxxx & Xxxxxx,
Inc., a Missouri corporation.
RECITALS
WHEREAS, each Fund is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, each Fund and Xxxxx & Babson, Inc. have entered into an
Investment Advisory Agreement dated May 1, 2003 (the "Advisory Agreement") and
Administrative Services Agreement dated May 1, 2003 (the "Administrative
Services Agreement") pursuant to which Xxxxx & Xxxxxx, Inc. provides services to
each Fund for compensation based on the value of the average daily net assets of
each Fund; and
WHEREAS, each Fund and Xxxxx & Babson, Inc. have determined that it is
appropriate and in the best interests of each Fund and its shareholders to
maintain the expenses of each Fund at a level below the level to which each Fund
may otherwise be subject.
NOW THEREFORE, in consideration of the mutual covenants contained in.
this Agreement, the parties agree as follows:
1. Expense Limitation.
1.1 Fund Operating Expenses; Excess Amount. To the extent that the
"Annual Fund Operating Expenses" (within the meaning of Item 3 of Form N-lA)
incurred by each Fund in any fiscal year, but excluding brokerage and other
investment-related costs, interest, taxes, dues, fees and other charges of
governments and their agencies including the cost of qualifying each Fund's
shares for sale in any jurisdiction, extraordinary expenses such as litigation
(including legal and audit fees and other costs in contemplation of or incident
thereto) and indemnification and other expenses not incurred in the ordinary
course of each Fund's business ("Fund Operating Expenses"), exceed the Operating
Expense Limit (as defined in Section 1.2 below), Xxxxx & Xxxxxx, Inc. shall be
obligated to reimburse each Fund for such excess amount (the "Excess Amount").
1.2. Operating Expense Limit. The Operating Expense Limit in any fiscal
year with respect to each Fund shall be the amount, expressed as a percentage of
the average daily net assets of each Fund, set forth in Schedule A.
1.3. Method of Computation. To determine Xxxxx & Babson, Inc.'s
obligation with respect to the Excess Amount, each day the Fund Operating
Expenses for each Fund shall be annualized. If the annualized Fund Operating
Expenses for any day of a Fund exceed the Operating Expense Limit for the Fund,
Xxxxx & Xxxxxx, Inc. shall remit to the respective Fund an amount that, together
with any offset of waived or reduced advisory or administrative services fees,
is sufficient to pay that day's Excess Amount. Each Fund may offset amounts owed
to the Fund pursuant to this Agreement against the fees payable to Xxxxx &
Babson, Inc. pursuant to the Advisory Agreement or the Administrative Services
Agreement.
1.4. Year-End Adjustment. If necessary, on or before the last day of
the first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the services fees waived or
reduced and other payments remitted by Xxxxx & Xxxxxx, Inc. to the respective
Fund with respect to the previous fiscal year shall equal the Excess Amount.
2. Recoupment of Fee Waivers and Expense Reimbursements.
2.1. Recoupment. If on any day during which this Agreement is in
effect, the estimated annualized Fund Operating Expenses of a Fund for that day
are less than the Operating Expense Limit, Xxxxx & Babson, Inc. shall be
entitled to recoup from the Fund the services fees waived or reduced and other
payments remitted by Xxxxx & Xxxxxx, Inc. to he respective Fund pursuant to
Section 1 of this Agreement (the "Recoupment Amount") during any of the previous
thirty-six (36) months, to the extent that the respective Fund's annualized Fund
Operating Expenses plus the amount so recouped equals, for such day, the
Operating Expense Limit provided in Schedule A, provided that such amount paid
to Xxxxx & Babson, Inc. will in no event exceed the total Recoupment Amount and
will not include any amounts previously recouped. In no event may any fees
waived or expenses reimbursed during the initial two years of this Agreement
ever be recouped.
2.2. Year-End Adiustment. If necessary, on or before the last day of
the first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses of the
respective Fund for the prior fiscal year (including any recoupment payments
with respect to such fiscal year) do not exceed the Operating Expense Limit.
3. Term and Termination of Agreement. This Agreement shall become
effective on May 1, 2003 and shall continue for an initial period of two years.
Thereafter, this Agreement may be terminated by each Fund at any time, without
the payment of any penalty, or by Xxxxx & Xxxxxx, Inc. upon 60 days' prior
written notice to the respective Fund. In addition, this Agreement shall
automatically terminate upon the termination of the Advisory Agreement, unless
such termination of the Advisory Agreement occurs in connection with a transfer
of the advisory relationship to an affiliate of Xxxxx & Babson, Inc.
4. Notice. Any notice under this Agreement shall be in writing, addressed,
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate in writing for receipt of such notice.
5. Interpretation; Governing Law. This Agreement shall be subject to and
interpreted in accordance with all applicable provisions of law including, but
not limited to, the 1940 Act, and the rules and regulations promulgated under
the 1940 Act. To the extent that the provisions of this Agreement conflict with
any such applicable provisions of law, the latter shall control. The laws of the
State of Minnesota shall otherwise govern the construction, validity and effect
of this Agreement.
6. Amendments. This Agreement may be amended only by a written agreement
signed by each of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers as of May 1, 2003.
X.X. XXXXXX TAX-FREE INCOME FUND, INC.
By: _________________________________
Name: ________________________________
Title: _______________________________
X.X. XXXXXX MONEY MARKET FUND, INC.
By: _________________________________
Name: ________________________________
Title: _______________________________
X.X. XXXXXX BOND TRUST
By: _________________________________
Name: ________________________________
Title: _______________________________
BABSON ENTERPRISE FUND, INC.
By: _________________________________
Name: ________________________________
Title: _______________________________
BABSON ENTERPRISE FUND II, INC.
By: _________________________________
Name: ________________________________
Title: _______________________________
XXXXX X. XXXXXX GROWTH FUND, INC.
By: _________________________________
Name: ________________________________
Title: _______________________________
BABSON VALUE FUND, INC.
By: _________________________________
Name: ________________________________
Title: _______________________________
SHADOW STOCK FUND, INC.
By: _________________________________
Name: ________________________________
Title: _______________________________
XXXXXX-XXXXXXX IVORY INTERNATIONAL
FUND, INC.
By: _________________________________
Name: ________________________________
Title: _______________________________
XXXXX & BABSON INC..
By: _________________________________
Name: ________________________________
Title: _______________________________
Schedule A
----------
FUND OPERATING EXPENSE LIMIT
Xxxxx X. Xxxxxx Growth Fund, Inc. see below
Shadow Stock Fund, Inc. see below
Babson Enterprise Fund, Inc. see below
Babson Enterprise Fund II, Inc. see below
Babson Value Fund, Inc. see below
X. X. Xxxxxx Money Market Fund, Inc. see below
X. X. Xxxxxx Tax-Free Income Fund, Inc. see below
X. X. Xxxxxx Bond Trust see below
Xxxxxx-Xxxxxxx Ivory International Fund, Inc. see below
In the case of each Babson Fund (except Portfolio S of X. X. Xxxxxx
Bond Trust), the annual Operating Expense Limit shall be the amount of
that Fund's contractual management fee as of the fiscal year ended June
30, 2002 (as that fee would have been adjusted up and down as a result
of any breakpoints in such fee, if asset levels of the Fund during the
term of this Agreement were applied to such breakpoints), combined with
the amount of annual Fund operating expenses experienced by the Fund
during the fiscal year ended June 30, 2002.
With respect to Portfolio S of X. X. Xxxxxx Bond Trust, the annual
Operating Expense Limit shall be .65%, combined with the amount of
annual Portfolio S operating expenses experienced by Portfolio S of
X.X. Xxxxxx Bond Trust during the fiscal year ended June 30, 2002.
