EXHIBIT 15.5.2
DISTRIBUTION AND SHAREHOLDER SERVICE AGREEMENT
THIS AGREEMENT made as of the 2nd day of January, 1997 between The Oberweis
Funds, a Massachusetts business trust (the "Fund"), and Oberweis Brokerage,
Inc., an Illinois corporation ("Oberweis Brokerage");
WITNESSETH:
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 ("Units") of which are registered under the Securities
Act of 1933, as amended; and
WHEREAS, the Fund is authorized to issue Units in separate series with each
such series representing the interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund currently issues Units in three portfolios ("Shares"),
the Emerging Growth Portfolio, the Micro-Cap Portfolio and the Mid-Cap Portfolio
(collectively referred to, together with such other series as may hereafter be
designated by the Board of Trustees and adopt the Agreement, as the "Portfolios"
and individually referred to as a "Portfolio"); and
WHEREAS, the Fund has adopted a plan ("Plan") pursuant to Rule 12b-1 of the
1940 Act in order to provide for the payment of certain distribution costs by
the Fund; and
WHEREAS, the Fund, in accordance with the Plan, desires to retain Oberweis
Brokerage as the principal distributor for Shares of the Fund and the primary
shareholder service agent for the Fund and Oberweis Brokerage is willing to act
in such capacities;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions hereinafter set forth, the parties hereto agree as follows:
ARTICLE I:
DISTRIBUTION
1. Appointment of Distributor. The Fund hereby appoints Oberweis Brokerage
as the principal distributor of the Shares of the Fund upon the terms and for
the periods set forth in this Agreement. Oberweis Brokerage hereby accepts such
appointment and agrees to render the services and perform the duties of
distributor as set forth herein.
2. Duties of Distributor. The following provisions shall apply to the
obligations of Oberweis Brokerage as distributor under this Agreement:
(a) The Fund agrees to sell Shares through Oberweis Brokerage, as
agent, from time to time during the term of this Agreement upon the terms and at
the current offering price described in the Fund's prospectus. Such sales may,
however, be suspended whenever in the judgment of the Fund it is in the best
interests to do so.
(b) Oberweis Brokerage will hold itself available to receive or will
arrange for the receipt of orders for the purchase of Shares and will (and shall
have the authority to) receive and accept or reject or arrange for the receipt
and acceptance or rejection of such orders on behalf of the Fund in accordance
with the provisions of the Fund's prospectus.
(c) Oberweis Brokerage shall not be obligated to sell any certain
number of Shares.
(d) In performing its duties hereunder, Oberweis Brokerage shall act
in conformity with the Fund's Agreement and Declaration of Trust, By-Laws,
Registration Statement and prospectus, and with the instructions and directions
of the officers and Trustees of the Fund, and shall comply with and conform to
the requirements of the 1940 Act, the Securities Act of 1933, the Securities
Exchange Act of 1934, and all other applicable federal and state laws,
regulations and rulings and Rules of the National Association of Securities
Dealers, Inc.
(e) Oberweis Brokerage shall be free to render to others services
different from or similar to those rendered to the Fund hereunder so long as the
services hereunder are not impaired thereby. It further is understood and agreed
that by separate agreement with the Fund, Oberweis Brokerage may also serve the
Fund in other capacities; that officers or employees of Oberweis Brokerage may
serve as officers or Trustees of the Fund to the extent permitted by law; and
Oberweis Brokerage or its officers or employees are not prohibited from engaging
in any other business activity or from rendering services to any other entity,
or from serving as officers, directors or trustees of any other organizations,
including investment companies.
3. Unreimbursable Distribution Costs. During the term of this Agreement,
Oberweis Brokerage will pay from the fees provided under paragraph 1 of Article
IV of this Agreement without further reimbursement by the Fund the following
costs related to the distribution of the Fund's Shares:
(a) Costs of all sales presentations, mailing, advertising and any
other distribution efforts which may be undertaken by Oberweis Brokerage in its
sole discretion with respect to the Shares. Such costs shall not be deemed to
include the costs of preparing and setting in type prospectuses, statement of
additional information, proxy materials, reports and notices or the costs of
printing and distributing the same to existing shareholders and regulatory
authorities .
(b) Compensation of any personnel of Oberweis Brokerage for activities
in connection with the distribution or sale of the Shares.
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4. Representations. Neither Oberweis Brokerage nor any other person is
authorized by the Fund to give any information or to make any representation
relative to the Shares other than those contained in the Fund's Registration
Statement, prospectus or statement of additional information filed with the
Securities and Exchange Commission as either may be amended from time to time,
or in any supplemental information to said prospectus or statement of additional
information approved by the Fund. Oberweis Brokerage agrees that any other
information or representations other than those specified above which it or any
dealer or other person who distributes Shares through Oberweis Brokerage may
make in connection with the offer or sale of Shares shall be made entirely
without liability on the part of the Fund. Oberweis Brokerage agrees that in
offering or selling Shares as agent of the Fund, it will submit to the Fund's
legal counsel or other representative, as may be designated by the Fund's Board
of Trustees, copies of all sales literature and other similar materials before
using the same, and will not use such sales literature if disapproved by the
Fund.
ARTICLE II:
SHAREHOLDER SERVICES
1. Appointment of Shareholder Service Agent. The Fund hereby appoints
Oberweis Brokerage as the primary shareholder service agent for the Fund upon
the terms and for the periods set forth in this Agreement. Oberweis Brokerage
hereby accepts such appointment and agrees to render the services and perform
the duties of shareholder service agent as set forth herein.
2. Services of Shareholder Service Agent. The services to be performed by
Oberweis Brokerage as shareholder service agent are set forth in Exhibit A
hereto which may at any time or from time to time be modified or amended by
agreement of the parties in the form of an amended or supplemental schedule
initialed by their authorized representatives. Oberweis Brokerage also agrees to
perform such additional services within its capacity of shareholder service
agent as may, from time to time, be requested by the Fund, provided that such
additional services are the subject of a supplement to Schedule A hereto.
3. Costs and Expenses of Performance. The Fund will reimburse Oberweis
Brokerage for Oberweis Brokerage's approximate out-of-pocket cost, if any, of
providing certain of the services contemplated by this Agreement as set forth in
Exhibit A, including the costs of postage, data entry, modification and
printout, stationery, tax forms, and all other external forms or printed
material which may be required for performance by Oberweis Brokerage of the
services contemplated by this Agreement ("Reimbursable Expenses"). Oberweis
Brokerage shall submit to the Fund a monthly report setting forth in reasonable
detail and Reimbursable Expenses of Oberweis Brokerage paid or incurred during
such month. The Fund agrees to cause all such reports to be reviewed promptly
(in no event less frequently than quarterly) after receipt. Immediately
thereafter, Oberweis Brokerage will be notified of any discernable errors,
discrepancies or omissions.
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4. Record Retention and Confidentiality. Oberweis Brokerage shall keep and
maintain on behalf of the Fund all records which are required to be maintained
pursuant to Rule 12b-1 and Rule 31a-1 under the 1940 Act that pertain to the
activities under this Agreement and to preserve such records for the time
periods prescribed therein; provided, however, Oberweis Brokerage shall not be
required to maintain those records which would duplicate records required to be
maintained pursuant to any other agreement entered into by the Fund. In
addition, Oberweis Brokerage will maintain all records it is required to
maintain pursuant to any applicable statutes, rules and regulations relating to
the maintenance of records in connection with the services to be performed
hereunder. Notwithstanding the foregoing, Oberweis Brokerage shall maintain, for
a period of at least six (6) years, all records and documents which may be
needed or required to support or document the entries made by Oberweis Brokerage
in its performance of services hereunder. Oberweis Brokerage agrees that all
records required to be maintained under this paragraph shall be the property of
the Fund, shall be maintained in such fashion as to preserve the confidentiality
thereof, and to comply with applicable rules and regulations of federal and/or
state securities laws, and shall, in whole or any specified part, be available
for inspection by or surrender to the Fund at any reasonable time after receipt
of an appropriate written request.
ARTICLE III:
APPOINTMENT OF FIRMS
1. Appointment of Firms. It is understood and agreed that Oberweis
Brokerage may in its discretion appoint broker-dealer and other firms to assist
Oberweis Brokerage in providing distribution services to the Fund, including
literature distribution, advertising and promotion. Oberweis Brokerage may also
appoint broker-dealer and other firms (including depository institutions such as
commercial banks and savings and loan associations) to provide administrative
services for their clients as shareholders of the Fund. The agreements between
Oberweis Brokerage and such other firms are collectively referred to as "Service
Agreements" and shall be substantially in the form of the agreement attached
hereto as Exhibit B or Exhibit C or in a form otherwise approved by the Board of
Trustees of the Fund. Such firms shall not be representatives or agents of the
Fund and shall have no direct contractual relationship with the Fund.
2. Services of Firms. The aforementioned broker-dealer and other firms
(collectively "Firms") shall provide, among other things, office space and
equipment, telephone facilities, personnel and assistance to Oberweis Brokerage
in servicing accounts of such Firm's clients who own Fund Shares. Such services
and assistance may include, but not be limited to, establishment and maintenance
of shareholder accounts and records; processing purchase and redemption
transactions; automatic investment in Fund's Shares of client account cash
balances; answering routine client inquiries regarding the Fund; assistance to
clients in changing dividend options, account designations and addresses; and
such other services as the Fund may reasonably request.
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ARTICLE IV:
FEES, EXPENSES AND REPORTS
1. Annual Fee. For all the services to be provided by Oberweis
Brokerage hereunder, each Portfolio shall pay Oberweis Brokerage compensation at
the annual rate of .25 of 1% of its average daily net assets, computed and
accrued daily and payable monthly. This compensation shall be in addition to
certain expense reimbursements provided for under Article II, paragraph 3
hereof.
2. Fees to Firms. From the foregoing annual fee, Oberweis Brokerage
may pay compensation to the Firms, if any, who shall be providing services under
the Service Agreements.
3. Expenses. The Fund shall assume and pay all charges and expenses
of its operations not specifically assumed or otherwise to be provided by
Oberweis Brokerage under this Agreement.
4. Reports. Oberweis Brokerage shall prepare reports for the Trustees
of the Fund on a quarterly basis showing amounts expended by Oberweis Brokerage
under this Agreement and the purposes for such expenditures, including amounts
paid to the various Firms, if any, and such other information as from time to
time shall be reasonably requested by the Trustees of the Fund.
ARTICLE V:
GENERAL
1. Limitation of Liability. Neither Oberweis Brokerage 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 Oberweis Brokerage would otherwise be subject by reason of Oberweis
Brokerage's willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement. Any person, even though also an
officer, employee or agent of Oberweis Brokerage 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 series, or acting on any business of the Fund or
of any series (other than services or business in connection with Oberweis
Brokerage's duties as hereunder) to be rendering such services to or acting
solely for the Fund or series and not as an officer, director, employee or agent
or one under the control or direction of Oberweis Brokerage even though paid by
Oberweis Brokerage.
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2. Indemnification.
(a) Subject to the conditions set forth below, the Fund agrees to
indemnify and hold harmless Oberweis Brokerage, its officers and employees, and
each person, if any, who controls Oberweis Brokerage 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, or otherwise (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
Registration Statement, the prospectus, or statement of additional information
or any amendment or supplement thereof, 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 with respect to Oberweis
Brokerage furnished to the Fund by or on behalf of Oberweis Brokerage expressly
for use in the Fund's Registration Statement, prospectus, statement of
additional information or any amendment or supplement thereof or any
advertisement or sales literature. If any action is brought against Oberweis
Brokerage or any controlling person thereof in respect of which indemnity may be
sought against the Fund pursuant to the foregoing, Oberweis Brokerage 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. Oberweis Brokerage, 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 Oberweis Brokerage or such 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 Oberweis Brokerage of the commencement of any litigation or
proceedings against 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) Oberweis Brokerage 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
Registration 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 with respect to Oberweis
Brokerage furnished in writing to the Fund by or on behalf of Oberweis
Brokerage 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. In case any action shall be brought
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against the Fund or any other person so indemnified based on the Fund's
Registration Statement, prospectus or statement of additional information or any
amendment or supplement thereof and in respect of which indemnity may be sought
against Oberweis Brokerage, Oberweis Brokerage 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 Oberweis Brokerage 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.
3. Duration and Termination. This Agreement shall continue, unless
sooner terminated as provided herein, until one year from the date hereof, and
shall thereafter continue in force from year to year so long as each such
continuance is approved at least annually by the vote of the Board of Trustees
of the Fund, including a majority of the Trustees of the Fund who are not
interested persons (as defined in the 0000 Xxx) of the Fund and who have no
direct or indirect financial interest in the operation of the Plan or any
agreement related thereto. This Agreement may be terminated by the Fund at any
time, without the payment of any penalty, upon the vote of a majority of the
Trustees of the Fund who are not interested persons (as defined in the 0000 Xxx)
of the Fund and who have no direct or indirect financial interest in the
operation of the Plan or any agreement related thereto or by the vote of a
majority of the outstanding voting securities of the Fund (as defined in the
0000 Xxx) on 60 days written notice to Oberweis Brokerage. This Agreement may be
terminated by Oberweis Brokerage at any time, without the payment of any
penalty, on 60 days written notice to the Fund.
4. 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). Oberweis Brokerage 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
Oberweis Brokerage.
5. Authority of Oberweis Brokerage. Oberweis Brokerage hereby
represents and warrants to the Fund that no consent or approval of, or other
action by, any United States federal or state regulatory authority or other
person or entity, which has not been obtained or taken, is required for the
execution, delivery or performance by Oberweis Brokerage of this Agreement.
6. Amendment of Agreement. This Agreement may be amended by mutual
consent of the parties hereto, but the consent of the Fund must be by the vote
of the Board of Trustees of the Fund, including a majority of the Trustees who
are not interested persons (as defined in the 0000 Xxx) of the Fund and who have
no direct or indirect financial interest in the operation of the Plan or any
agreement related thereto.
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7. 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
provision 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 8 of this Article below which
shall be construed in accordance with the laws of 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 3 of this Article.
8. Limitation of Shareholder and Trustee Liability. All parties
hereto are expressly put on notice of The Oberweis Funds Agreement and
Declaration of Trust dated July 7, 1986 and all amendments thereto, all of which
are on file with the Secretary of the Commonwealth of Massachusetts, and the
limitation of shareholder and trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representative
as such representative and not individually, and the obligations of the Fund
hereunder are not binding upon any of the trustees, officers or shareholders of
the Fund individually, but are binding upon only the assets and property of the
Fund.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
THE OBERWEIS FUNDS
By /s/Xxxxx X. Xxxxxxxx
----------------------
Its President
-------------------------
Attest:
/s/Xxxxx X. Xxxxxx
--------------------------
Its Secretary
---------------------
OBERWEIS BROKERAGE, INC.
By /s/Xxxxx X. Xxxxxxxx
------------------------
Its President
------------------------
Attest:
/s/Xxxxxxx X. Xxxxx
---------------------
Its Executive Vice President
------------------------
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EXHIBIT A
TO DISTRIBUTION AND
SHAREHOLDER SERVICE AGREEMENT
SERVICE TO BE RENDERED CHARGE TO FUND
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I. SHAREHOLDER ACCOUNTS
1. Open accounts, as necessary, and assist in
maintaining on the records of the Fund's transfer
agent current records for Fund shareholder
accounts showing as to each shareholder (to the
extent such information is available or obtainable):
A. Name(s) and address(es) with zip code(s)
B. Type of account and taxpayer
identification or social security number
C. Number of Fund Shares currently owned
D. Account transaction history, including
records of initial and additional purchases,
redemptions, dividends and other
distributions, and related tax
information....................................... Annual Fee*
2. Maintain files of account applications, requests
and correspondence from or on behalf of
shareholders in relation to Fund Shares as well as
copies of all written responses thereto................ Annual Fee
3. Process with the Fund's transfer agent account
records to show all changes or corrections to
shareholders' registration and address records
authorized in writing by or on behalf of the
shareholder............................................ Annual Fee
--------------------
* Annual Fee as used in this Exhibit A refers to the fee set forth in
Paragraph 2 of Article IV of the Agreement.
** The term "Cost" as used in this Exhibit A refers to approximate out-of-
pocket tangible expenses such as postage and printing of forms.
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SERVICE TO BE RENDERED CHARGE TO FUND
---------------------- --------------
4. Assist the Fund's transfer agent in maintaining
records of shareholders' transactions in Fund
Shares for federal and state tax and securities law
purposes........................................... Annual Fee
II. PURCHASES AND REDEMPTIONS
1. Conversion of monies to Federal funds.............. Annual Fee
2. Prepare and transmit by mail to each shareholder,
confirmations as may be required by law of all
purchases and redemptions of Fund Shares Annual Fee
effected through Oberweis Brokerage ............... plus Cost**
3. Assist the Fund's transfer agent to prepare and
transmit by mail to each shareholder periodic
statements reflecting all purchases, dividends and Annual Fee
redemption of Fund Shares.......................... plus Cost
4. Receive, ascertain the adequacy of, and transmit
to the Fund's transfer agent all purchase orders
or redemption requests received by Oberweis
Brokerage in accordance with the requirements
set forth in the current prospectus of the Fund.... Annual Fee
5. Requisition from the Fund's custodian and remit
the proceeds of redemption as directed by the
individual shareholder in accordance with the
current prospectus of the Fund..................... Annual Fee
III. SHAREHOLDER COMMUNICATIONS & SERVICES
1. Provide, maintain and man telephone
communication systems for shareholder inquiries
concerning the administration of their Fund
account............................................ Annual Fee
2. Receive and answer promptly all correspondence
or similar inquiries from or on behalf of
shareholders concerning the administration of
their Fund accounts................................ Annual Fee
3. Refer to the Fund's investment adviser questions
or matters related to its function................. Annual Fee
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SERVICE TO BE RENDERED CHARGE TO FUND
---------------------- --------------
4. Prepare such reports and summaries of
shareholder communications as may be requested
by the Fund's officers for the preparation of
reports to the Fund's trustees and appropriate
regulatory authorities................................. Annual Fee
5. Provide and maintain a terminal with on-line
facilities to provide information regarding Fund Annual Fee
shareholder accounts................................... plus Cost
IV. PROXY MATERIALS, ANNUAL AND OTHER REPORTS
1. Transmit (but not prepare) notices of meetings
and proxy statements, prospectuses, annual, semi-
annual and quarterly reports as shall be requested
by the Fund and coordinate such mailings to
appropriate categories of Fund shareholders............ Cost
2. Assist the Fund's transfer agent to furnish to the
Fund, by series if applicable, a list of Fund
shareholders eligible to vote at shareholder
meetings showing addresses of record and Shares
held together with an affidavit or other
appropriate certificate of the mailing of proxy
materials............................................. Annual Fee
V. TAX MATTERS
1. Assist the Fund's transfer agent to prepare and
transmit federal and state tax informational
returns relating to Share transactions to Annual Fee
shareholders and governmental agencies................. plus Cost
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