OPERATING SERVICES AGREEMENT
This Agreement is made and entered into as of July 27, 2000, by and between
CornerCap Emerging Growth Fund, through the CornerCap Group of Funds, a
Massachusetts Business Trust (the "Fund"), and CornerCap Investment Counsel,
Inc., a Georgia corporation (hereinafter referred to as "Manager").
WHEREAS, the Fund is a diversified, open-end management investment company,
registered under the Investment Company Act of 1940, as amended (the "Act"), and
authorized to issue shares representing interests in The Fund (the "Portfolio");
and
WHEREAS, Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of asset management
and the provision of certain other administrative and recordkeeping services in
connection therewith; and
WHEREAS, the Fund wishes to engage Manager, to provide, or arrange for the
provision of, certain operational services which are necessary for the
day-to-day operations of the Portfolio in the manner and on the terms and
conditions hereinafter set forth, and Manager wishes to accept such engagement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the Fund and Manager agree as follows:
1. OBLIGATIONS OF MANAGER
(a) SERVICES. The Fund hereby retains Manager to provide, or, upon
receipt of written approval of the Fund arrange for other companies to provide,
following services to the Portfolio in the manner and to the extent that such
services are reasonably necessary for the operation of the Portfolio
(collectively, the "SERVICES"):
(1) accounting services and functions, including costs and
expenses of any independent public accountants;
(2) non-litigation related legal and compliance services,
including the expenses of maintaining registration and qualification
of the Fund and the Portfolio under federal, state and any other
applicable laws and regulations;
(3) dividend disbursing agent, dividend reinvestment agent,
transfer agent, and registrar services and functions (including
answering inquiries related to shareholder Portfolio accounts);
(4) custodian and depository services and functions;
(5) independent pricing services;
(6) preparation of reports describing the operations of the
Portfolio, including the costs of providing such reports to
broker-dealers, financial institutions and other organizations which
render services and assistance in connection with the distribution of
shares of the Portfolio;
(7) sub-accounting and recordkeeping services and functions
(other than those books and records required to be maintained by
Manager under the Investment Advisory Agreement between the Fund and
Manager dated July 27, 2000), including maintenance of shareholder
records and shareholder information concerning the status of their
Portfolio accounts by investment advisers, broker-dealers, financial
institutions, and other organizations on behalf of Manager;
(8) shareholder and board of directors communication
services, including the costs of preparing, printing and distributing
notices of shareholders' meetings, proxy statements, prospectuses,
statements of additional information, Portfolio reports, and other
communications to the Fund's Portfolio shareholders, as well as all
expenses of shareholders' and board of directors' meetings, including
the compensation and reimbursable expenses of the directors of the
Fund;
(9) other day-to-day administrative services, including the
costs of designing, printing, and issuing certificates representing
shares of the Portfolio, and premiums for the fidelity bond maintained
by the Fund pursuant to Section 17(g) of the Act and rules promulgated
thereunder (except for such premiums as may be allocated to third
parties, as insureds thereunder).
(b) EXCLUSIONS FROM SERVICES. Notwithstanding the provisions of
Paragraph 1(a) above, the Services shall not include and Manager will not be
responsible for any of the following:
(1) all brokers' commissions, issue and transfer taxes, and
other costs chargeable to the Fund or the Portfolio in connection with
securities transactions to which the Fund or the Portfolio is a party
or in connection with securities owned by the Fund or the Portfolio;
(2) the interest on indebtedness, if any, incurred by the
Fund or the Portfolio;
(3) the taxes, including franchise, income, issue, transfer,
business license, and other corporate fees payable by the Fund or the
Portfolio to federal, state, county, city, or other governmental
agents;
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(4) the expenses, including fees and disbursements of
counsel, in connection with litigation by or against the Fund or the
Portfolio;
(5) distribution and /or underwriting services; and
(6) any other extraordinary expense of the Fund or
Portfolio.
(c) BOOKS AND RECORDS. All books and records prepared and maintained by
Manager for the Fund under this Agreement shall be the property of the Fund and,
upon request therefor, Manager shall surrender to the Fund such of the books and
records so requested.
(d) STAFF AND FACILITIES. Manager assumes and shall pay for maintaining
the staff, personnel, space, equipment and facilities necessary to perform its
obligations under this Agreement.
2. OBLIGATIONS OF THE FUND
(a) FEE. The Fund will pay to Manager on the last day of each month an
annual fee equal to .90% of average net asset value of the Portfolio, such fee
to be computed daily based upon the net asset value of the Portfolio as
determined by a valuation made in accordance with the Fund's procedure for
calculating Portfolio net asset value as described in the Fund's Prospectus
and/or Statement of Additional Information. During any period when the
determination of a Portfolio's net asset value is suspended by the directors of
the Fund, the net asset value of a share of that Portfolio as of the last
business day prior to such suspension shall, for the purpose of this Paragraph
2(a), be deemed to be the net asset value at the close of each succeeding
business day until it is again determined.
(b) INFORMATION. The Fund will, from time to time, furnish or otherwise
make available to Manager such information relating to the business and affairs
of the Portfolio as Manager may reasonably require in order to discharge its
duties and obligations hereunder.
3. TERM. This Agreement shall remain in effect until no later than July
27, 2002, and from year to year thereafter provided such continuance is approved
at least annually by the vote of a majority of the directors of the Fund who are
not parties to this Agreement or "interested persons" (as defined in the Act) of
any such party, which vote must be cast in person at a meeting called for the
purpose of voting on such approval; provided, however, that:
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(a) the Fund may, at any time and without the payment of any
penalty, terminate this Agreement upon 120 days written notice to
Manager;
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(b) the Agreement shall immediately terminate in the event
of its assignment (within the meaning of the Act and the Rules
thereunder); and
(c) Manager may terminate this Agreement without payment of
penalty on 120 days written notice to the Fund.
4. MISCELLANEOUS
(a) PERFORMANCE REVIEW. Manager will permit representatives of the
Fund, including the Fund's independent auditors, to have reasonable access to
the personnel and records of Manager in order to enable such representatives to
monitor the quality of services being provided and the level of fees due Manager
pursuant to this Agreement. In addition, Manager shall promptly deliver to the
board of directors of the Fund such information as may reasonably be requested
from time to time to permit the board of directors to make an informed
determination regarding continuation of this Agreement and the payments
contemplated to be made hereunder.
(b) NOTICES. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed post-paid, to the other party at the
principal office of such party.
(c) CHOICE OF LAW. This Agreement shall be construed in accordance with
the laws of the State of Georgia and the applicable provisions of the Act. To
the extent the applicable law of the State of Georgia or any of the provisions
herein conflict with the applicable provisions of the Act, the latter shall
control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
CORNERCAP EMERGING GROWTH
FUND, CORNERCAP GROUP OF FUNDS
ATTEST: /s/ Xxxx Xxxxx Xxxxxxx
------------------------- By: /s/ Xxxxxx Xxxxx
------------------------- -----------------------------------
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CORNERCAP INVESTMENT COUNSEL,
INC.
ATTEST: /s/ Xxxx Xxxxx Xxxxxxx
-------------------------- By: /s/ Xxxxxx Xxxxx
-------------------------- -----------------------------------
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