MANAGEMENT AGREEMENT
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AGREEMENT made as of this 1st day of October, 1994 between OBERWEIS
EMERGING GROWTH FUND, a Massachusetts business trust (hereinafter called the
"Fund") and OBERWEIS ASSET MANAGEMENT, INC., an Illinois corporation
(hereinafter called "Manager").
WHEREAS, the Fund is an open-end, diversified management investment company
registered under the Investment Company Act of 1940 (the "1940 Act"), the units
of beneficial interest ("Shares") of which are registered under the Securities
Act of 1933; and
WHEREAS, the Fund is authorized to issue Shares in separate series with
each such series representing the interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund currently offers Shares in one portfolio, the Emerging
Growth Portfolio (the "Initial Portfolio"), together with any other Fund
portfolios which may be established later and served by Manager hereunder, being
herein referred to collectively as the "Portfolios" and individually referred to
as a "Portfolio"; and
WHEREAS, the Fund desires at this time to retain Manager to provide the
Fund and the Initial Portfolio with certain non-investment advisory management
and administrative services (the "Services"), and Manager is willing to render
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Initial Appointment of Manager. The Fund hereby appoints Manager as
its Manager to provide it and the Initial Portfolio with the Services. In
addition, it is understood that the persons employed by Manager to assist in the
performance of its services and duties hereunder will not devote their full time
to such services and nothing herein contained shall be deemed to limit or
restrict the right of Manager to engage in and devote time and attention to
other businesses or to render services of whichever kind or nature as long as
the Services provided hereunder are not impaired thereby.
2. Subsequent Appointments of Manager. In the event that the Fund
establishes one or more portfolios other than the Initial Portfolio with respect
to which it desires to retain Manager to render the Services hereunder, it shall
notify Manager in writing. If Manager is willing to render such Services, it
shall notify the Fund in writing, whereupon such portfolio or portfolios shall
become a Portfolio or Portfolios hereunder.
3. Delivery of Documents. The Fund has delivered (or will deliver as
soon as is possible) to Manager copies of each of the following documents and
will deliver to Manager all future amendments and supplements:
(a) Agreement and Declaration of Trust of the Fund dated July 7, 1986
(such Agreement and Declaration of Trust, as presently in effect and as amended
from time to time, is herein called the "Trust Agreement"), a copy of which also
is on file with the Secretary of the Commonwealth of Massachusetts.
(b) By-Laws of the Fund (such By-Laws, as presently in effect and as
amended from time to time, are herein called the "By-Laws").
(c) Certified resolutions of the Trustees and Shareholders of the Fund
authorizing the appointment of Manager as its Manager and approving this
Agreement.
(d) Registration Statement under the 1933 Act and under the 1940 Act
on Form N-1A (the "Registration Statement") as filed with the Securities and
Exchange Commission and all amendments thereto.
(e) Current prospectus and statement of additional information of the
Fund (such prospectus and statement of additional information as then in effect
and as amended, supplemented and/or superseded from time to time, are herein
collectively called the "Prospectus").
4. Acceptance of Appointment. Manager hereby accepts such appointment
and agrees to perform the services and duties as set forth in paragraph 5 below.
5. Services and Duties of Manager. As Manager, subject to the
supervision and control of the Fund's Board of Trustees, Manager will provide
the Fund with office space and facilities; accounting and bookkeeping,
recordkeeping and data processing facilities and services; internal compliance
services relating to accounting and legal matters; and personnel to carry out
certain administrative services required for operation of the business and
affairs of the Fund other than those investment advisory functions that are to
be performed by the Fund's investment advisor pursuant to its agreement with the
Fund, the services of the underwriter/distributor, those services to be
performed by the Fund's custodian and transfer agent, those fund accounting
services to be performed by one or more service providers under a fund
accounting or similar agreement, and those services normally performed by the
Fund's counsel and independent auditors. Manager's responsibilities include
without limitation the following services:
(a) Preparing and updating the Fund's SEC and state registration
statements and filings, reports to shareholders, and other documents;
(b) Paying the compensation of all officers and personnel of the Fund
for their services to the Fund and the Trustees of the Fund who are
interested persons of the Fund;
(c) Overseeing the performance of the Fund's custodian, transfer agent
and accounting agent;
(d) Providing information and certain administrative services to
shareholders of each Portfolio of the Fund, including but not limited to,
transmitting redemption requests to the Fund's Transfer Agent and
transmitting the proceeds of redemption of
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shares of the Fund pursuant to a shareholder's instructions when such
redemption is effected through Manager, providing telephone and written
communications with respect to its shareholders account inquiries,
assisting its shareholders in altering privileges and ownership of their
accounts and serving as a source of information for its existing
shareholders in answering questions concerning the Fund and their
transactions with the Fund.
(e) Manager shall oversee the maintenance by the Fund's custodian and
transfer agent of the books and records of the Fund required under the 1940
Act, in connection with the performance of the Fund's agreement with such
entities.
(f) In providing the Services, Manager will act in conformity with the
Trust Declaration, By-laws and Prospectus and with the instructions and
directions of the Board of Trustees of the Fund and will conform to and
comply with the requirements of the 1940 Act and all other applicable
federal or state laws and regulations.
6. Books and Records. Manager agrees that all records that it maintains
for the Fund are the property of the Fund and it will surrender promptly to the
Fund any of such records upon the Fund's request.
7. Subcontractors. It is understood that Manager may from time to time
employ or associate with itself such person or persons as Manager may believe to
be particularly fitted to assist in the performance of this Agreement; provided,
however, that the compensation of such person or persons shall be paid by
Manager and that Manager shall be as fully responsible to the Fund for the acts
and omissions of any subcontractor as it is for its own acts and omissions.
8. Compensation. For the services provided pursuant to this Agreement,
the Fund will pay Manager at the end of each calendar month, a fee of .40% of
the average daily net assets of each Portfolio plus out-of-pocket expenses in
connection with its shareholder servicing activities, such as postage, data
entry, stationery, tax forms and other printed material. For the month and year
in which this Agreement becomes effective or terminates, there shall be an
appropriate proration on the basis of the number of days that the Agreement is
in effect during the month and year, respectively.
9. Expenses. Except as otherwise stated in paragraph 8 and this paragraph
9, Manager shall pay all expenses incurred by it in providing the Services. All
other expenses incurred in the operation of the Fund will be borne by the Fund,
except to the extent specifically assumed by others. In addition to the
management fee of Manager, the Fund shall assume and pay any fees and expenses
incurred under an investment advisory agreement, any distribution fees incurred
under a distribution agreement, any expenses for services rendered by a
custodian for the safekeeping of the Fund's securities or other property, for
keeping its books of account and for any other charges of the Custodian, as
provided in the Prospectus of the Fund. Manager shall not be required to pay
and the Fund shall assume and pay the charges and expenses of its operations,
including compensation of the Trustees (other than those affiliated with
Manager), charges and expenses of independent auditors, of legal counsel, of any
transfer or dividend disbursing agent, and of any registrar of the Fund, costs
of Fund accounting services, costs of acquiring and disposing of Portfolio
securities, interest, if any, on obligations incurred by the
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Fund, costs of share certificates and of reports, membership dues in the
Investment Company Institute or any similar organization, costs of reports and
notices to shareholders, stationery, printing, postage, other like miscellaneous
expenses and all taxes and fees payable to federal, state or other governmental
agencies on account of the registration of securities issued by the Fund, filing
of trust documents or otherwise. The Fund shall not pay or incur any obligation
for any expenses for which the Fund intends to seek reimbursement from Manager
as herein provided without first obtaining the written approval of Manager.
Manager shall arrange, if desired by the Fund, for officers and employees of
Manager to serve, without compensation from the Fund, as trustees, officers or
agents of the Fund if duly elected or appointed to such positions and subject to
their consent and to any limitations imposed by law.
In the event the operating expenses of a Portfolio on an accrual basis,
including all investment advisory, management and administrative fees, for any
fiscal year of the Fund during which this Agreement is in effect exceed either
(i) the expense limitations applicable to the Fund imposed by the securities
laws or regulations thereunder of any state in which the Fund's Shares are
qualified for sale, as such limitations may be raised or lowered from time to
time, or (ii) the following amounts expressed as a percentage of the Portfolio's
average daily net assets:
2.0% of the first $25,000,000; plus
1.8% of the next $25,000,000; plus
1.6% average daily net assets in excess of $50,000,000,
the Manager shall reimburse the Fund for 100% of such excess; provided, however,
there shall be excluded from such expenses the amount of any interest, taxes,
brokerage commissions, and extraordinary expenses (including but not limited to
legal claims and liabilities and litigation costs and any indemnification
related thereto) paid or payable by the Fund; provided further, however that
fees and expenses relating to meetings of the Fund's shareholders and related
proxy solicitation shall not be deemed to be extraordinary. Such reimbursement,
if any, shall be computed and accrued daily, shall be settled on a monthly basis
and shall be based upon the expenses and average net assets computed through the
last business day of the month. As of the end of the Fund's fiscal year,
however, the aggregate amount of reimbursements, if any, by the Manager to the
Fund in excess of the amount necessary to limit the operating expenses on an
annual basis to said expense limitation shall be refunded to the Manager. If
this Agreement is in effect during only part of a fiscal year, the expenses of
the Fund during such part of the year shall be annualized for purposes of
applying the foregoing expense limitation. In the event that two or more
Portfolios are subject to this Agreement, the expense limitation guarantee shall
be allocated to each Portfolio upon a reimbursement based upon the relative
average daily net assets of each such Portfolio. Should expense limitations
applicable to the Fund be imposed by two or more states as of the end of the
last business day of the month, that expense limitation which results in the
larger reimbursement shall be applicable.
The net asset value for each Portfolio shall be calculated in accordance
with the provisions of the Fund's prospectus or at such other time or times as
the Trustees may determine in accordance with the provisions of the 1940 Act.
On each day when net asset value is not calculated, the net asset value of a
share of a Portfolio shall be deemed to be the net asset value of such a share
as of the close of business on the last day on which such calculation was made
for the purpose of the foregoing computations.
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Notwithstanding anything in the foregoing to the contrary, Manager shall
not be obligated to reimburse the Fund in an amount exceeding the aggregate of
its fee plus any fee paid to Manager for investment advisory services for the
period, except to the extent required by applicable law.
10. Limitation of Liability. Neither Manager nor any of its agents or
employees shall be liable for any error of judgment or mistake of law or for any
loss suffered by the Fund in connection with the matters to which this Agreement
relates, except liability to the Fund or its Shareholders to which Manager would
otherwise be subject by reason of Manager's willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reasons of its reckless
disregard of its obligations and duties under this Agreement. Any person, even
though also an officer, employee or agent of Manager who may be or become an
officer, Trustee, employee or agent of the Fund, shall be deemed, when rendering
services to the Fund or to any Portfolio, or acting on any business of the Fund
or of any Portfolio (other than services or business in connection with
Manager's duties as hereunder) to be rendering such services to or acting solely
for the Fund or Portfolio and not as an officer, director, employee or agent or
one under the control or direction of Manager even though paid by Manager.
11. Indemnification.
(a) Subject to the conditions set forth below, the Fund agrees to indemnify
and hold harmless the Manager, its officers and employees, and each person, if
any, who controls the Manager within the meaning of Section 15 of the Securities
Act of 1933 and Section 20 of the Securities Exchange Act of 1934 against any
and all loss, liability, claim, damage and expense whatsoever jointly and
severally (including, but not limited to, any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Fund's Registraiton Statement or the prospectus or any
amendment or supplement thereto, or any advertisement or sales literature
authorized by the Fund, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Fund by or on
behalf of the Manager expressly for use in the Fund's Registration Statement,
prospectus, or statement of additional information or any amendment or
supplement thereof or any advertisement or sales literature. If any action is
brought against the Manager or any controlling person thereof in respect of
which indemnity may be sought against the Fund pursuant to the foregoing, the
Manager shall promptly notify the Fund in writing of the institution of such
action and the Fund shall assume the defense of such action, including the
employment of counsel selected by the Fund and payment of expenses. The
Manager, or any such controlling person thereof, shall have the right to employ
separate counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of the Manager or controlling person unless the
employment of such counsel shall have been authorized in writing by the Fund in
connection with the defense of such action or the Fund shall not have employed
counsel to have charge of the defense of such action, in which event such fees
and expenses shall be borne by the Fund. Anything in this subparagraph to the
contrary notwithstanding, the Fund shall not be liable for any settlement of any
such claim or action effected without its written consent. The Fund agrees
promptly to notify the Manager of the commencement of any litigation or
proceedings against
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the Fund or any of its officers or directors or controlling persons in
connection with the issue and sale of shares or in connection with the Fund's
Registration Statement, prospectus or statement of additional information, or
any advertisement or sales literature.
(b) The Manager agrees to indemnify and hold harmless the Fund, each of
its Trustees, each of its officers and each other person, if any, who controls
the Fund within the meaning of Section 15 of the Securities Act of 1933, with
respect to statements or omissions, if any, made in the Fund's Registraiton
Statement, prospectus or statement of additional information or any amendment or
supplement thereof or any advertisement or sales literature in reliance upon and
in conformity with information in writing furnished to the Fund with respect to
the Manager by or on behalf of the Manager expressly for use in the Fund's
Registration Statement, prospectus, or statement of additional information or
any amendment or supplement thereof or any advertisement or sales literature and
in respect of which indemnity may be sought against the Manager, the Manager
shall have the rights and duties given to the Fund and the Fund and each other
person so indemnified shall have the rights and duties given to the Manager by
the provisions of subparagraph (a) above.
(c) Nothing herein contained shall be deemed to protect any person against
liability to the Fund or its shareholders to which such person would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of the duties of such person or by reason of the reckless
disregard by such person of the obligations and duties of such person under this
Agreement.
12. Duration and Termination. This Agreement shall become effective as of
the date hereof with respect to the Initial Portfolio, and with respect to any
additional Portfolio, on the date of receipt by the Fund of notice from Manager
in accordance with paragraph 2 hereof, provided that this Agreement (as
supplemented by the terms specified in any notice and agreement pursuant to
paragraph 2 hereof) shall have been approved by the shareholders of the
Portfolios in accordance with the requirements of the 1940 Act and unless sooner
terminated as provided herein, shall continue in effect until September 30,
1996. This Agreement shall continue in force from year to year thereafter with
respect to each Portfolio, but only as long as such continuance is specifically
approved for each Portfolio at least annually in the manner required by the 1940
Act and the rules and regulations thereunder; provided however, that if the
continuation of this Agreement is not approved for a Portfolio, Manager may
continue to serve in such capacity for such Portfolio in the manner and to the
extent permitted by the 1940 Act and the rules and regulations thereunder. This
Agreement may be terminated with respect to all or any of the Portfolios by the
Fund at any time, without the payment of any penalty, by vote of a majority of
the Trustees of the Fund or by vote of a majority of the outstanding Shares (as
so defined) representing the interests in each Portfolio with respect to which
this Agreement is to be terminated on sixty (60) days written notice to Manager,
or by Manager at any time without the payment of any penalty on sixty (60) days
written notice to the Fund. This Agreement may be terminated with respect to
any Portfolio at any time without the payment of any penalty by the Board of
Trustees or by vote of a majority of the outstanding voting securities of such
Portfolio in the event that it shall have been established by a court of
competent jurisdiction that Manager or any officer or director of Manager has
taken any action which results in a breach of the covenants of Manager set forth
herein.
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13. Assignment. This Agreement will automatically and immediately
terminate in the event of its "assignment" (as defined in Section 2(a)(4) of the
1940 Act). Manager shall notify the Fund in writing sufficiently in advance of
any proposed change of control, as defined in Section 2(a)(9) of the 1940 Act,
as will enable the Fund to consider whether an "assignment" will occur, and to
take the steps necessary to enter into a new contract with Manager.
14. Status of Manager as Independent Contractor. Manager shall for all
purposes herein be deemed to be an independent contractor, and shall, unless
otherwise expressly provided herein or authorized by the Trustees of the Fund
from time to time, have no authority to act for or represent the Fund in any way
or otherwise be deemed an agent of the Fund.
15. Affiliations. Subject to applicable statutes and regulations, it is
understood that trustees, officers or agents of the Fund are or may be
interested in Manager as officers, directors, agents, shareholders or otherwise,
and that the officers, directors, shareholders and agents of Manager may be
interested in the Fund otherwise than as a trustee, officer or agent.
16. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Fund must be (a) by vote of a majority of those
Trustees of the Fund who are not parties to this Agreement or interested persons
(as defined in the 0000 Xxx) of any such party at a meeting called for the
purpose of voting on such amendment, and (b) by vote of a majority of the
outstanding Shares (as defined with respect to voting securities in the 1940
Act) representing the interests in each Portfolio affected by such amendment.
17. Limitation of Shareholder and Trustee Liability. This Agreement is
executed by or on behalf of the Fund and Manager is hereby expressly put on
notice of the limitation of Shareholder and trustee liability as set forth in
the Trust Agreement, and agrees that the obligations assumed by the Fund
pursuant to this Agreement shall be limited in all cases to the Fund and its
assets, and Manager shall not seek satisfaction of any such obligations from the
Shareholders or any Shareholder of the Fund. In addition, Manager shall not
seek satisfaction of any such obligations from the trustees or officers of the
Fund or any individual trustee or officer.
18. Arbitration. Any disputes or controversies between the parties to
this Agreement involving the construction or application of any of the terms,
provisions, or conditions of this Agreement shall be submitted to arbitration.
The arbitration shall be conducted in Chicago, Illinois in accordance with the
Rules of the American Arbitration Association. The parties shall each appoint
one person to hear and determine the dispute and, if they are unable to agree,
then the two persons so chosen shall select a third impartial arbitrator whose
decision shall be final and conclusive upon both parties. The decision rendered
in arbitration shall be borne by the losing party or in such proportions as the
arbitrator shall decide.
19. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provisions of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be construed in accordance with
applicable federal law and (except as to paragraph 17 hereof which shall be
construed in accordance with the laws of
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the Commonwealth of Massachusetts) the laws of the State of Illinois, and shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors, subject to paragraph 13 hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
OBERWEIS EMERGING GROWTH FUND
By: /s/ Xxxxx X. Xxxxxxxx
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Its: President
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Attest:
/s/ Xxxxx X. Xxxx
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Its: Secretary
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OBERWEIS ASSET MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Its: Executive Vice President
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Attest:
/s/ Xxxxxx X. Xxxxxxxx
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Its: Vice President
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