Exhibit(d)(4)
INVESTMENT MANAGEMENT AGREEMENT
This Agreement is made this 29/th/ day of December, 1998, by and between
Heartland Group, Inc. ("HGI"), a Maryland corporation registered under the
Investment Company Act of 1940 ("1940 Act") as an open-end management investment
company, and Heartland Advisors, Inc. ("Manager"), a Wisconsin corporation
registered under the Investment Advisers Act of 1940 as an investment
adviser.
1. Appointment. HGI hereby appoints Manager to furnish investment advisory and
portfolio management services with respect to the portion of its assets
represented by the shares of common stock issued in each series listed in
Schedule A hereto, as such schedule may be amended from time to time (each
such series hereinafter referred to as a "Fund"). Manager accepts such
appointment and agrees to perform the services described herein. Manager
shall use its best efforts and judgment in rendering the advice and
performing the services contemplated by this Agreement. Manager shall for
all purposes be deemed to be an independent contractor and not an agent of
HGI and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent HGI in any way.
2. Investment Management Services.
(a) Manager shall manage the investment operations of HGI and each Fund,
subject to the terms of this Agreement and to the supervision and
control of HGI's Board of Directors. Manager agrees to perform, or
arrange for the performance of, the following services with respect to
each Fund:
(1) to obtain and evaluate such information relating to economies,
industries, and businesses; securities and commodities markets;
individual securities, commodities, and indices; and any other
information deemed appropriate, whether economic or non-economic
in nature, as it may deem necessary or useful in discharging its
responsibilities hereunder;
(2) to formulate and maintain a continuing investment program in a
manner consistent with and subject to (i) HGI's articles of
incorporation and bylaws; (ii) the Fund's investment objectives,
policies, and restrictions as set forth in the Fund's current
registration statement filed with the Securities and Exchange
Commission ("SEC") and in other written documents furnished by
HGI to Manager; (iii) all securities, commodities, and tax laws
and regulations applicable to the Fund and HGI; and (iv) any
other written limits or directions furnished by HGI's Board of
Directors to Manager;
(3) unless otherwise directed by HGI's Board of Directors, to
determine from time to time securities, commodities interests, or
other investments to be purchased, sold, retained, or lent by the
Fund, to effect borrowings on behalf of the Fund, and to
implement those decisions, including the selection of entities
with or through which such purchases, sales, loans, or borrowings
are to be effected;
(4) to use its best efforts to manage the Fund so that it will
qualify as a regulated investment company under subchapter M of
the Internal Revenue Code of 1986, as amended;
(5) to make recommendations as to the manner in which voting rights,
rights to consent to HGI or Fund action, and any other rights
pertaining to HGI or the Fund shall be exercised; and
(6) to the extent required by law, to furnish to regulatory
authorities any information or reports relating to the services
provided pursuant this Agreement.
(b) Custody of Fund assets will be maintained by a custodian bank (the
"Custodian") designated by HGI. HGI will authorize the Custodian to
honor orders and instructions from duly authorized employees of
Manager. No assets may be withdrawn from the Custodian other than for
settlement of investment transactions on behalf of the Fund, except
upon the written authorization of duly authorized officers of HGI.
(c) Manager shall supervise the business and affairs of HGI and each Fund,
and shall provide such services and facilities as may be required for
effective administration of HGI and Funds as are not provided by
employees or other agents engaged by HGI; provided that Manager shall
not have any obligation to provide under this Agreement any such
services which are the subject of a separate agreement or arrangement
between HGI and Manager, any affiliate of Manager, or any other third
party.
3. Execution of Investment Transactions.
(a) Except as otherwise instructed from time to time by HGI's Board of
Directors, and in conformity with any policies regarding investment
transactions set forth in HGI's registration statement filed with the
Securities and Exchange Commission ("SEC"), with respect to execution
of investment transactions for HGI on behalf of a Fund, Manager shall
place, or arrange for the placement of, all orders for purchases,
sales, loans, borrowings, or other transactions either directly with
the issuer or with a broker or dealer, or other counterparty or agent
selected by Manager.
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(b) Investment transactions may be effected through Manager and its
affiliates to the extent permitted by applicable law and subject to
such policies and procedures established by HGI's Board of Directors
from time to time. In connection with the selection of all such
parties for the placement of all such orders, Manager shall attempt to
obtain most favorable execution and price, but may nevertheless in its
sole discretion as a secondary factor, purchase and sell portfolio
securities from and to brokers or dealers who provide research and
analysis to Manager which Manager may lawfully and appropriately use
in its investment management and advisory capacities, whether or not
such research and analysis may also be useful to Manager in connection
with its services to other clients. In recognition of such services or
brokerage services provided by a broker or dealer, Manager is hereby
authorized to pay such broker or dealer a commission or spread in
excess of that which might be charged by another broker or dealer for
the same transaction if Manager determines in good faith that the
commission or spread is reasonable in relation to the value of the
services so provided. Subject to the provisions of this subparagraph
and such policies and procedures as shall be established by HGI's
Board of Directors from time to time, Manager may also consider sales
of shares of a Fund as a factor in the selection of a broker or dealer
to effect investment transactions for that Fund.
(c) Manager may, where it deems advisable, aggregate orders for its other
clients together with any securities of the same type to be sold or
purchased for one or more Funds in order to obtain best execution or
lower brokerage commissions. In such event, Manager shall allocate the
shares so purchased or sold, as well as the expense incurred in the
transaction, in a manner it considers to be equitable and fair, and
consistent with its fiduciary obligations to HGI, the Funds, and
Manager's other clients. Manager may also effect agency cross-
transactions by and among one or more Funds and other clients of
Manager subject to such policies and procedures as shall be
established by HGI's Board of Directors from time to time.
4. Use of Affiliated Companies and Subcontractors; Retention of Subadviser.
(a) In connection with the services to be provided by Manager under this
Agreement, Manager may, to the extent it deems appropriate, and
subject to compliance with the requirements of applicable laws and
regulations and upon receipt of written approval of HGI's Board of
Directors, make use of (i) its affiliated companies, if any, and their
directors, officers, and employees and (ii) subcontractors selected by
Manager, provided that Manager shall supervise and remain fully
responsible for the services of all such third parties in accordance
with and to the extent provided by this Agreement. All costs and
expenses associated with services provided by any such third parties
shall be borne by Manager or such parties.
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(b) Subject to obtaining the initial and periodic approvals required under
Section 15 of the 1940 Act, Manager may retain one or more subadvisers
at Manager's own cost and expense for the purpose of furnishing one or
more of the services described in Section 2 hereof with respect to HGI
or one or more Funds. Retention of a subadviser shall in no way reduce
the responsibilities or obligations of Manager under this Agreement,
and Manager shall be responsible to HGI and its Funds for all acts or
omissions of any subadviser in connection with the performance of
Manager's duties hereunder.
5. Expenses Borne by HGI. Except to the extent expressly assumed by Manager
herein or under a separate agreement between HGI and Manager and except to
the extent required by law to be paid by Manager, Manager shall not be
obligated to pay any costs or expense incidental to the organization,
operations, or business of HGI. Without limitation, such costs and expense
shall include, but not be limited to:
(a) all charges of depositories, custodians, and other agencies for the
safekeeping and servicing of its cash, securities, and other property;
(b) all expenses of maintaining and servicing shareholder accounts,
including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit of
the Funds (including, without limitation, fund accounting and
administration agents);
(c) all charges for equipment or services used for obtaining price
quotations or for communication between Manager and HGI and the
custodian, transfer agent, or any other agent selected by HGI;
(d) all charges for administrative and accounting services provided to HGI
by Manager, or any other provider of such services;
(e) all charges for services of HGI's independent auditors and for
services to HGI by legal counsel;
(f) all compensation of directors and officers of HGI, other than those
who are employees or affiliates of Manager, all expenses of HGI's
directors and officers incurred in connection with their services to
HGI, and all expenses of meetings of the Board of Directors or
committees thereof;
(g) all expenses incidental to holding meetings of shareholders of the
Fund ("Shareholders") required by applicable law or regulations,
including printing and supplying to each record-date Shareholder
notice and proxy solicitation material, and all other proxy
solicitation expense;
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(h) all expenses of printing of annual or more frequent revisions of HGI
prospectus(es), statements of additional information, and shareholder
reports, and of supplying to each then existing Shareholder copies of
such materials as required by applicable law;
(i) all expenses related to preparing and transmitting certificates, if
any, representing shares of HGI;
(j) all expenses of bond and insurance coverage required by law or deemed
advisable by the Board of Directors;
(k) all brokers' commissions and other normal charges incident to the
purchase, sale, or lending of portfolio securities;
(l) all taxes and governmental fees payable to federal, state, or other
governmental agencies, domestic or foreign, including all stamp or
other transfer taxes;
(m) all expenses of registering and maintaining the registration of HGI
under the 1940 Act and, to the extent no exemption is available,
expenses of registering shares under the Securities Act of 1933, and
of registration and qualification of HGI under all other laws
applicable to HGI or its business activities;
(n) all interest on indebtedness and commitment fees for lines of credit,
if any, incurred by HGI or a Fund; and
(o) all fees, dues, and other expenses incurred by HGI in connection with
membership of HGI in any trade association or other investment company
organization.
6. Allocation of Expenses Borne by HGI. Any expenses borne by HGI that are
attributable solely to the organization, operation, or business of a Fund
shall be paid solely out of Fund assets. Any expense borne by HGI which is
not solely attributable to a Fund, nor solely to any other series of shares
of HGI, shall be apportioned in such manner as Manager determines is fair
and appropriate, or as otherwise specified by the Board of Directors.
7. Expenses Borne by Manager.
(a) Manager at its own expense shall furnish all executive and other
personnel, office space, and office facilities required to render the
services set forth in this Agreement; and all salaries, expenses, and
fees of the officers and directors of HGI who are employees or
affiliates of Manager. However, Manager shall not be required to pay
or provide any credit for services provided by HGI's custodian or
other agents without additional cost to HGI.
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(b) In the event that Manager pays or assumes any expense of HGI or a Fund
not required to be paid or assumed by Manager under this Agreement,
Manager shall not be obligated hereby to pay or assume the same or
similar expense in the future; provided, however, that nothing
contained herein shall be deemed to relieve Manager of any obligation
to HGI or a Fund under any separate agreement or arrangement between
the parties.
8. Management Fee. For the services rendered, personnel and facilities
provided, and charges assumed and paid by Manager hereunder, HGI shall pay
to Manager out of the assets of each Fund fees at the annual rate for such
Fund set forth in Schedule B to this Agreement. For each Fund, the
management fee shall accrue on each calendar day, and shall be payable
monthly on the first business day of the next succeeding calendar month.
The daily fee accrual shall be computed by multiplying the fraction of one
divided by the number of days in the calendar year by the applicable annual
rate of fee, and multiplying this product by the net assets of the Fund,
determined in the manner established by the Board of Directors, as of the
close of business on the last preceding business day on which the Fund's
net asset value was determined.
9. Nonexclusivity. The services of Manager to HGI hereunder are not to be
deemed exclusive, and Manager shall be free to render similar services to
others.
10. Standard of Care. Neither Manager, nor any of its directors, officers,
shareholders, agents, or employees shall be liable to HGI or its
Shareholders for any error of judgment, mistake of law, loss arising out of
any investment, or any other act or omission in the performance by Manager
of its duties under this Agreement, except for loss or liability resulting
from willful misfeasance, bad faith, or gross negligence on Manager's part
or from reckless disregard by Manager of its obligations and duties under
this Agreement. Nothing in this Agreement shall be construed to protect any
officer of Manager from liability for violation of Section 17(h) or (i) of
the 1940 Act.
11. Ownership of Records; Delivery of Information.
(a) All records required to be maintained and preserved by HGI pursuant to
the provisions of rules or regulations of the SEC under Section 31(a)
of the 1940 Act or other applicable laws or regulations that are
maintained and preserved by Manager on behalf of HGI, and any other
records the parties mutually agree shall be maintained by Manager on
behalf of HGI, are the property of HGI and shall be surrendered by
Manager promptly on request by HGI; provided, however, that Manager
may at its own expense make and retain copies of any such records.
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(b) HGI shall furnish Manager, from time to time, with copies, properly
certified or otherwise authenticated, of all amendments of or
supplements to the articles of incorporation, by-laws, and
registration statements of HGI and any other documents relating to
each Fund's investment program. Any such amendments, supplements, or
documents will not be deemed effective with respect to Manager until
Manager's receipt thereof. Manager shall be deemed to have received a
copy of any document prepared by its employees or agents, or under
their direction. HGI shall provide Manager such additional information
as Manager may reasonably request in order to discharge its
obligations under this Agreement.
(c) Manager shall prepare and furnish to HGI its Form ADV as filed with
the SEC, its Code of Ethics, Fund statistical data, and such other
information in such form at such intervals as HGI may reasonably
request.
12. Amendment. This Agreement may be amended at any time by mutual agreement of
the parties in writing, subject to the requirements of the 1940 Act, and
rules and regulations promulgated and orders for exemptive relief granted
thereunder.
13. Effective Date and Termination. This Agreement shall become effective with
respect to any Fund as of the effective date for that Fund specified in
Schedule A hereto. This Agreement may be terminated at any time, without
payment of any penalty, as to any Fund by the Board of Directors of HGI, or
by a vote of a majority of the outstanding shares of that Fund, upon at
least sixty (60) days' written notice to Manager. This Agreement may be
terminated by Manager at any time upon at least sixty (60) days' written
notice to HGI. This Agreement shall terminate automatically in the event of
its "assignment" (as defined in the 1940 Act), subject to such exceptions
as may be granted by the SEC by rule, regulation, or order. Unless
terminated as hereinbefore provided, this Agreement shall continue in
effect with respect to any Fund until the end of the initial term
applicable to that Fund specified in Schedule A and thereafter from year to
year only so long as such continuance is specifically approved with respect
to the Fund at least annually (a) by a majority of those Directors who are
not interested persons of HGI or Manager, voting in person at a meeting
called for the purpose of voting on such approval, and (b) by either the
Board of Directors or HGI, or by a "vote of a majority of the outstanding
shares" of the Fund.
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Notice. Any notice under this Agreement shall be in writing, addressed and
delivered in person or sent by certified mail, postage prepaid, to the
other party at such address as such other party may designate for the
receipt of such notices. Until further notice, it is agreed that the
address of both HGI and Manager is 000 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx 00000, Attention: Secretary. With respect to any notice given
hereunder to HGI, a copy shall be delivered to Xxxxxxx & Xxxxx LLP, 000
Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: Xxxxxx X.
Xxxxxxxx, Esq., and with respect to any notice given hereunder to Manager,
a copy shall be delivered to Heartland Advisors, Inc., 000 Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, Attention: General Counsel.
15. Headings. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this Agreement.
16. Governing Law. This Agreement shall be governed by the laws of the State of
Wisconsin.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the day and year first above written.
HEARTLAND GROUP, INC.
By:
------------------------------
Xxxxxxx X. Xxxxxxxxx
President
Attest:
----------------------------
Xxxx X. Xxxxxxxxxxxx
Secretary
HEARTLAND ADVISORS, INC.
By:
------------------------------
Xxxxxxx X. Xxxxxxxxx
President
Attest:
----------------------------
Xxxx X. Xxxxxxxxxxxx
Secretary
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HEARTLAND GROUP, INC.
INVESTMENT MANAGEMENT AGREEMENT
SCHEDULE A
The Funds of Heartland Group, Inc. currently subject to this Agreement are:
Effective End of
Date Initial Term
--------- ------------
Heartland Taxable Short Duration Municipal Fund 12/29/98 4/30/00
Dated: December 29, 1998
HEARTLAND GROUP, INC.
By:
------------------------------
Xxxxxxx X. Xxxxxxxxx
President
Attest:
----------------------------
Xxxx X. Xxxxxxxxxxxx
Secretary
HEARTLAND ADVISORS, INC.
By:
------------------------------
Xxxxxxx X. Xxxxxxxxx
President
Attest:
----------------------------
Xxxx X. Xxxxxxxxxxxx
Secretary
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HEARTLAND GROUP, INC.
INVESTMENT MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Section 8 of this Agreement shall be 0.45 of 1% of the
average daily net assets of the Heartland Taxable Short Duration Municipal
Fund.
Dated: December 29, 1998
HEARTLAND GROUP, INC.
By:
------------------------------
Xxxxxxx X. Xxxxxxxxx
President
Attest:
----------------------------
Xxxx X. Xxxxxxxxxxxx
Secretary
HEARTLAND ADVISORS, INC.
By:
------------------------------
Xxxxxxx X. Xxxxxxxxx
President
Attest:
----------------------------
Xxxx X. Xxxxxxxxxxxx
Secretary
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