DISTRIBUTION AND SHAREHOLDER SERVICE AGREEMENT
THIS AGREEMENT made as of the 1st day of January, 1996 between The Oberweis
Funds, a Massachusetts business trust (the "Fund"), and The Chicago Corporation,
a Delaware corporation ("TCC");
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 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 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 two portfolios ("Shares"), the
Emerging Growth Portfolio and the Micro-Cap Portfolio (collectively referred to,
together with such other series as may hereafter be designated by the Board of
Trustees and as have approved the Plan, as the "Portfolios" and individually
referred to as a "Portfolio"); and
WHEREAS, the Fund, in accordance with the Plan, desires to retain TCC as
the principal distributor for Shares of the Fund and the primary shareholder
service agent for the Fund and TCC 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 TCC as the
principal distributor of the Shares of the Fund upon the terms and for the
periods set forth in this Agreement. TCC 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 TCC as distributor under this Agreement:
(a) The Fund agrees to sell Shares through TCC, 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) TCC 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) TCC shall not be obligated to sell any certain number of Shares.
(d) In performing its duties hereunder, TCC 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 Fair Practice of the National Association
of Securities Dealers, Inc.
(e) TCC 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, TCC may also serve the Fund in other
capacities; that officers or employees of TCC may serve as officers or Trustees
of the Fund to the extent permitted by law; and TCC 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,
TCC 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 TCC 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 an regulatory authorities.
(b) Compensation of any personnel of TCC for activities in connection
with the distribution or sale of the Shares.
4. Representations. Neither TCC 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
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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. TCC agrees that any other
information or representations other than those specified above which it or any
dealer or other person who distributes Shares through TCC may make in connection
with the offer or sale of Shares shall be made entirely without liability on the
part of the Fund. TCC 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 TCC
as the primary shareholder service agent for the Fund upon the terms and for the
periods set forth in this Agreement. TCC 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
TCC 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. TCC 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 TCC for
TCC'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 TCC of the services contemplated by this Agreement ("Reimbursable
Expenses"). TCC shall submit to the Fund a monthly report setting forth in
reasonable detail and Reimbursable Expenses of TCC 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,
TCC will be notified of any discernable errors, discrepancies or omissions.
4. Record Retention and Confidentiality. TCC 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, TCC 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, TCC will maintain
all records it is
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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, TCC 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 TCC in its performance of
services hereunder. TCC 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 TCC may in its
discretion appoint broker-dealer and other firms to assist TCC in providing
distribution services to the Fund, including literature distribution,
advertising and promotion. TCC 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 TCC 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 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 TCC 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.
ARTICLE IV:
FEES, EXPENSES AND REPORTS
1. Annual Fee. For all the services to be provided by TCC hereunder, each
Portfolio shall pay TCC 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.
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2. Fees to Firms. From the foregoing annual fee, TCC 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 TCC under
this Agreement.
4. Reports. TCC shall prepare reports for the Trustees of the Fund on a
quarterly basis showing amounts expended by TCC 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 TCC 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 TCC would
otherwise be subject by reason of TCC'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 TCC 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 TCC'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 TCC even though paid by TCC.
2. Indemnification.
(a) Subject to the conditions set forth below, the Fund agrees to
indemnify and hold harmless TCC, its officers and employees, and each person, if
any, who controls TCC 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 TCC furnished to the Fund by or on behalf of TCC expressly for
use in the Fund's Registration Statement,
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prospectus, statement of additional information or any amendment or supplement
thereof or any advertisement or sales literature. If any action is brought
against TCC or any controlling person thereof in respect of which indemnity may
be sought against the Fund pursuant to the foregoing, TCC 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. TCC, 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 TCC 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 TCC 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) TCC 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 TCC furnished in writing to the
Fund by or on behalf of TCC 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 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 TCC, TCC 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 TCC 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
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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 TCC. This Agreement may be terminated by TCC 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). TCC 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 TCC.
5. Authority of TCC. TCC 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 TCC
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.
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 --------------------------------
Its President
--------------------------------
Attest:
--------------------------------
Its Executive Vice President
--------------------------
THE CHICAGO CORPORATION
By --------------------------------
Its
--------------------------------
Attest:
--------------------------------
Its
--------------------------
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EXHIBIT A
TO DISTRIBUTION AND
SHAREHOLDER SERVICE AGREEMENT
SERVICE TO BE RENDERED CHARGE TO FUND
----------------------
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 TCC...................................... 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 TCC 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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