MANAGEMENT AGREEMENT
Between
XXXXX & XXXXXX, 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 XXXXX & XXXXXX, 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 XXXXX X. XXXXXX & 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 XXXXX X. XXXXXX & CO. INC. for the exclusive
right of the Fund to use the name "Babson" as part of its name, so long as XXXXX
& XXXXXX, INC., or any successor in interest, continues as its Manager and XXXXX
X. XXXXXX & 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 XXXXX & XXXXXX, INC., Xx. Xxxxxx, or XXXXX X. XXXXXX & CO. INC. from granting
to another investment company managed by XXXXX & BABSON, INC. with XXXXX X.
XXXXXX & 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 "X. X. Xxxxxx" or "Xxxxxx (X. X.)" or "Xxxxx & Xxxxxx" or any
combination of these names. Should the Fund terminate either XXXXX & BABSON,
INC. or its successor as Manager for the Fund, or XXXXX X. XXXXXX & CO. INC., or
its successor, as its Investment Counsel, either XXXXX & BABSON, INC. or XXXXX
X. XXXXXX & CO. INC., or their respective successors in interest, may elect to
notify the Fund in writing that permission to use the name "Xxxxx X. Xxxxxx" (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 Xxxxx X. Xxxxxx & Co. Inc., Xx. Xxxxxx, or XXXXX &
XXXXXX, INC. If the use of the name "Xxxxx X. Xxxxxx" (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 "Xxxxx X. Xxxxxx" (or any part thereof) by Xxxxx X.
Xxxxxx & Co. Inc., or its successor in interest, or with the permission of Xxxxx
X. Xxxxxx & Co. Inc., or its successor, by XXXXX & BABSON, INC. or its
successor.
8. The agreement between XXXXX & XXXXXX, INC. and XXXXX X. XXXXXX & CO.
INC. also shall provide that, although it is not anticipated, there may occur
some unforeseen reason which would prohibit XXXXX X. XXXXXX & CO. INC., as a
matter of reasonable business necessity, continuing as an Investment Counsel to
XXXXX & 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 XXXXX & XXXXXX,
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 XXXXX X. XXXXXX & CO. INC., Xx. Xxxxxx or XXXXX &
XXXXXX, INC. In consideration for this right, XXXXX X. XXXXXX & CO. INC. and
XXXXX & XXXXXX, 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 XXXXX & XXXXXX, INC. For this right
to withdraw the name "Babson" from the use of the Fund, XXXXX X. XXXXXX & CO.
INC. will agree in its contract with XXXXX & BABSON, INC. that it will not
compete with XXXXX & XXXXXX, 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
XXXXX & BABSON, INC.
9. It is further agreed that the provisions of Paragraphs 7 and 8 shall
inure to the benefit of XXXXX X. XXXXXX & 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/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
President
ATTEST:
/s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Vice President and Secretary
XXXXX & BABSON, INC.
By/s/Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
President
ATTEST:
/s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Vice President and Secretary
