As filed with the Securities and Exchange Commission on September 16, 1997
Securities Act Registration No. 333-29687
Investment Company Act Registration No. 811-8267
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 2 [X]
Post-Effective Amendment No. ____ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 [ ]
Amendment No. 2 [X]
KOPP FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7701 France Avenue South
Suite 500 55435
Edina, Minnesota (Zip Code)
(Address of Principal Executive
Offices)
Registrant's Telephone Number, including Area Code:
(612) 920-3322
Kathleen S. Tillotson
Kopp Funds, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
(Name and Address of Agent for Service)
Copies to:
Carol A. Gehl
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
Approximate date of proposed public offering: As soon
as practicable after the Registration Statement becomes
effective.
In accordance with Rule 24f-2 under the Investment
Company Act of 1940, Registrant declares that an
indefinite number of shares of its common stock, $.01
par value, is being registered by this Registration
Statement.
The Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to
delay its effective date until the Registrant shall
file a further amendment which specifically states that
this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may
determine.
<PAGE>
CROSS REFERENCE SHEET
(Pursuant to Rule 481 showing the location in
the Prospectus and the Statement of Additional
Information of the responses to the Items of Parts A
and B of Form N-1A).
Caption or Subheading in
Prospectus or Statement
Item No. on Form N-1A of Additional Information
PART A - INFORMATION REQUIRED IN PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Investor Expenses;
Highlights
3. Condensed Financial *
Information
4. General Description of Investment Strategy;
Registrant Implementation of
Policies and Risks; Investment
Objective and Restrictions;
Fund Organization and
Management
5. Management of the Fund Fund Organization and
Management
5A. Management's Discussion
of Fund Performance *
6. Capital Stock and Other Highlights; Fund
Securities Organization and
Management; Dividends, Capital
Gains Distributions and
Tax Treatment
7. Purchase of Securities Fund Organization and
Being Offered Management; Your Account;
Determination of Net Asset
Value; Distribution and
Shareholder Servicing Plan
8. Redemption or Repurchase Your Account;
Determination of Net Asset
Value
9. Pending Legal Proceedings *
PART B - INFORMATION REQUIRED IN STATEMENT OF
ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information *
and History
<PAGE>
13. Investment Investment Objective and
Objectives and Policies Restrictions; Investment
Policies and Techniques; Fund
Transactions and Brokerage
14. Management of the Directors and Officers
Fund
15. Control Persons and Principal Shareholders;
Principal Holders of Directors and Officers
Securities
16. Investment Advisory Investment Advisor; Fund
and Other Services Organization and Management
(in Prospectus);
Distributor and Plan of
Distribution; Custodian,
Transfer Agent and Dividend-
Disbursing Agent; Independent
Accountants
17. Brokerage Allocation Fund Transactions and
and Other Practices Brokerage
18. Capital Stock and Included in Prospectus
Other Securities under the heading Fund
Organization and Management
19. Purchase, Redemption and Included in Prospectus
Pricing of Securities Being under the headings Your
Offered Account; Determination of Net
Asset Value; and in the
Statement of Additional
Information under the heading
Distributor and Plan of
Distribution
20. Tax Status Included in Prospectus
under the heading
Dividends, Capital Gains
Distributions and Tax
Treatment; and in the
Statement of Additional
Information under the heading
Taxes
21. Underwriters Distributor and Plan
of Distribution
22. Calculations of Performance
Performance Data Information
23. Financial Statements Financial Statements
________________________
* Answer negative or inapplicable.
<PAGE>
PROSPECTUS
September __, 1997
[Logo]
Kopp Funds
Kopp Emerging Growth Fund
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Telephone: 1-888-533-KOPP
Facsimile: 1-612-841-0411
Website: www.koppfunds.com
Kopp Funds ("Corporation") is an open-end, non-
diversified management investment company, commonly
referred to as a mutual fund. The Corporation
currently comprises one portfolio: the Kopp Emerging
Growth Fund ("Fund"). The Fund's investment objective
is long-term capital appreciation. The Fund seeks to
achieve its investment objective by investing primarily
in common stocks of companies that Kopp Investment
Advisors ("Advisor") believes have the potential for
superior growth. When the Fund's assets total $1
billion, no new accounts, other than certain qualified
retirement plan accounts, will be accepted. If you are
a shareholder of record at that time, however, you will
be able to continue to add to your account through new
purchases, including purchases through reinvestment of
dividends or capital gains distributions.
You may invest in the Fund by purchasing either
Class A or Class I shares. Fund shares may be
purchased at a price equal to their net asset value (i)
plus an initial charge imposed at the time of purchase
("Class A shares") or (ii) without any initial sales
charge if the minimum investment is $5 million ("Class
I shares"). Certain purchasers of Class A shares may
have the initial sales charge waived but become subject
to a contingent deferred sales charge ("CDSC") on early
redemptions of the shares. The Class A shares are also
subject to a Rule 12b-1 plan pursuant to which an
aggregate annual fee of 0.35% is charged on the average
net assets of the Fund attributable to that class.
The Fund is a long-term investment, intended to
complement your other investments. Under federal
securities laws, the Fund is "not diversified." As a
result, it may be more vulnerable than a "diversified"
fund to fluctuations in the value of the companies in
the Fund's portfolio.
This Prospectus contains information you should
consider before you invest in the Fund. Please read it
carefully and keep it for future reference. A
Statement of Additional Information ("SAI") for the
Fund, dated September __, 1997, contains further
information, is incorporated by reference into this
Prospectus, and has been filed with the Securities and
Exchange Commission ("SEC"). The SAI, which may be
revised from time to time, is available without charge
upon request to the above-noted address, telephone
number, or website.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
INVESTOR EXPENSES
The following information is provided to help you
understand the various costs and expenses that you, as
an investor in the Fund, will bear directly or
indirectly.
Class A Class I
($5,000 ($5 million
minimum) minimum)
Shareholder Transaction Expenses(1)
Maximum sales charge imposed on purchases
(as a percentage of offering price) 3.50%(2) None
Maximum sales charge imposed on reinvested amounts None None
Deferred sales charge imposed on redemptions
(as a percentage of amount redeemed) 1.00%(3) None
Redemption fee None 1.00%(4)
Exchange fee None None
Annual Fund Operating Expenses (after waivers or
reimbursements)
(as a percentage of average net assets)
Management fee 1.00% 1.00%
Rule 12b-1 fees(5) 0.35% None
Other expenses (after waivers or reimbursements)(6) 0.15% 0.15%
Total operating expenses(6) 1.50% 1.15%
____________
(1)In addition to these expenses, shareholders who
choose to redeem shares by wire will be charged a
$12 service fee. See "Your Account."
(2)This sales charge is the maximum applicable to
purchases of Class A shares. Certain investors may
not have to pay this sales charge, and reduced
sales charges are available under certain
circumstances. See "Your Account."
(3)A CDSC of 1% may be imposed on redemptions of
certain Class A shares which were purchased without
a sales charge and redeemed within 24 months of
purchase. See "Your Account."
(4)A redemption fee of 1% may be imposed on
redemptions of Class I shares made within 24 months
of purchase. This fee becomes the property of the
Fund. See "Your Account."
(5)See "Distribution and Shareholder Servicing Plan"
for detailed information relating to the Rule 12b-1
distribution and shareholder servicing plan
("Plan"). The Rule 12b-1 fee applicable to Class A
shares is currently set at 0.35% of the average
daily net asset value; however, the Plan allows the
Fund to pay up to 0.50% in such fees. Furthermore,
while the Fund currently has no intention of paying
any Rule 12b-1 fees in connection with the Class I
shares, the Plan allows the Fund to pay up to 0.50%
in such fees. Consistent with the National
Association of Securities Dealers, Inc.'s ("NASD")
rules, Rule 12b-1 fees could cause long-term
investors in the Fund to pay more than the economic
equivalent of the maximum front-end sales charges
permitted under those rules.
(6)For the fiscal year ending September 30, 1998,
Advisor has agreed to waive its management fee
and/or reimburse the Fund's operating expenses to
the extent necessary to ensure that (i) the total
operating expenses for the Class A shares do not
exceed 1.50% and (ii) the total operating expenses
for the Class I shares do not exceed 1.15%. "Other
expenses" have been estimated for the current
fiscal year since the Fund did not begin operations
until October 1 1997, and are presented net of
reimbursements. Absent these reimbursements, other
expenses and total operating expenses for the Class
A shares are estimated to be 0.40% and 1.75%,
respectively, and other expenses and total
operating expenses for the Class I shares are
estimated to be 0.40% and 1.40%, respectively. For
additional information, see "Fund Organization and
Management."
<PAGE>
Example
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return.
<TABLE>
<CAPTION>
Class A (1)+ Class A (2)+ Class A (1)++ ClassA (2)++ Class I (3)+ Class I++
<S> <C> <C> <C> <C> <C> <C>
After 1 year $50 $26 $50 $15 $22 $12
After 3 years $81 $47 $81 $47 $37 $37
__________
</TABLE>
+ Assumes redemption at end of period.
++Assumes no redemption at end of period.
(1)Only the 3.50% maximum sales charge
imposed on purchases of Class A shares is
reflected in the Example.
(2)Only the 1% CDSC imposed on certain
redemptions of Class A shares is reflected in
the Example.
(3)The 1% redemption fee imposed on certain
redemptions of Class I shares is reflected in
the Example.
The Example is based on the above-described "Total
operating expenses." The amounts in the Example may
increase absent waivers or reimbursements. REMEMBER
THAT THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND THAT
ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE
SHOWN. The assumption in the Example of a 5% annual
return is required by SEC regulations. The assumed 5%
annual return is not a prediction of, and does not
represent, the projected or actual performance of the
Fund's shares.
<PAGE>
CONTENTS
INVESTOR EXPENSES inside front cover
HIGHLIGHTS 5
INVESTMENT STRATEGY 7
IMPLEMENTATION OF POLICIES AND RISKS 7
INVESTMENT OBJECTIVE AND RESTRICTIONS 9
PRIOR PERFORMANCE OF INVESTMENT ADVISOR 9
FUND ORGANIZATION AND MANAGEMENT 12
YOUR ACCOUNT 14
DETERMINATION OF NET ASSET VALUE 22
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN 22
TAX-SHELTERED RETIREMENT PLANS 23
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX
TREATMENT 24
FUND PERFORMANCE 25
ADDITIONAL INFORMATION outside back cover
No person has been authorized to give any
information or to make any representations other than
those contained in this Prospectus and the SAI, and if
given or made, such information or representations may
not be relied upon as having been authorized by the
Fund. This Prospectus does not constitute an offer to
sell securities in any state or jurisdiction in which
such offering may not lawfully be made.
<PAGE>
HIGHLIGHTS
What is the objective of the Fund?
The Fund's goal is long-term capital appreciation.
The Fund seeks to achieve its goal by investing
primarily in common stocks of companies that Advisor
believes have the potential for revenue and earnings
growth superior to that of companies with similar
market or business characteristics. Advisor will not
consider dividend or interest income in the selection
of investments. See "Investment Strategy" and
"Investment Objective and Restrictions."
In what types of companies/securities will the Fund
invest?
Advisor intends to invest primarily in emerging
and re-emerging growth companies with small-to-medium
market capitalizations and significant potential for
accelerating earnings growth. An emerging growth
company is a newer business organized to address an
industry niche, which may have unstable cash reserves,
but the potential to experience accelerating returns.
A re-emerging growth company is a more established firm
experiencing a potential resurgence in sales and
earnings due to new industry leadership, restructuring,
or both. Advisor believes that, as part of a complete
investment program, these types of companies may
present an opportunity for significant long-term
appreciation in an investor's wealth.
Under normal circumstances, the Fund will be fully
invested in common stocks, except that a small portion
of the Fund's assets may be held in short-term money
market securities and cash to pay redemption requests
and Fund expenses. Under unusual circumstances, as a
defensive technique, the Fund may retain a larger
portion of cash and/or invest more assets in money
market instruments deemed by Advisor to be consistent
with a temporary defensive posture. The Fund may but
does not intend to leverage its assets or invest in
options, futures, derivative contracts, or other exotic
securities or arrangements. See "Implementation of
Policies and Risks."
What are the potential risks of investing in the Fund?
Because the Fund will invest primarily in small-to-
medium capitalization stocks, which are more volatile
than investments in large companies, you should expect
that the value of the Fund's shares will be more
volatile than the shares of a fund that invests in
large capitalization stocks. Thus, especially in the
short term, the share price will fluctuate and may, at
redemption, be worth more, or less, than the initial
purchase price. In addition, because the Fund has
elected not to be subject to the diversification rules
of the Investment Company Act of 1940, as amended
("1940 Act"), a relatively larger percentage of the
Fund's assets may be invested in relatively fewer
companies than is typical of other mutual funds. This
concentration may increase volatility. Because the
Fund intends to qualify as a regulated investment
company under federal income tax laws, it will be
subject to the diversification requirements of the
Internal Revenue Code of 1986, as amended ("Code").
Other risks associated with investing in the Fund
include:
Certain securities may be difficult or
Liquidity impossible to sell at the time and price
Risk: that the Fund seeks.
Market The market value of a security will move
Risk: up and down, sometimes rapidly and
unpredictably due to sector rotation or
other market trends.
Opportunity An investment opportunity may be missed
Risk: because the assets necessary to take
advantage of it are tied up in less
advantageous investments.
Management A strategy used by Advisor may fail to
Risk: produce the intended result.
See "Implementation of Policies and Risks."
<PAGE>
Is an investment in the Fund appropriate for me?
The Fund is suitable for long-term investors only.
It is not a short-term investment vehicle. An
investment in the Fund may be appropriate if you:
seek long-term capital appreciation;
seek a mutual fund for the aggressive equity
portion of your portfolio;
have no immediate financial requirements for this
investment; and
are willing to accept a high degree of volatility.
The Fund is designed for investors who have the
financial ability to undertake greater risk in exchange
for the opportunity to realize greater financial gains
in the future. See "Investment Objective and
Restrictions."
Who will manage my investment?
Kopp Investment Advisors serves as investment
advisor to the Fund. As of August 8, 1997, Advisor
managed over $3.5 billion for individual and
institutional clients. See "Prior Performance of
Investment Advisor" and "Fund Organization and
Management."
How can I buy or redeem Fund shares?
Class A shares are offered at net asset value plus
a maximum initial sales charge of 3.50% of the offering
price. The sales charge may be waived and/or reduced
under certain circumstances. If purchased with a sales
load, Class A shares may be redeemed at net asset value
without the payment of a redemption charge. A CDSC of
1% may be imposed upon redemptions of Class A shares
made within 24 months of purchase if the purchase was
exempt from the initial sales charge because the amount
of the purchase was between $1 and $5 million. For
minimum investments of $5 million, Class I shares of
the Fund are offered without a sales charge. However,
a 1% redemption fee may be imposed upon Class I shares
sold within 24 months of purchase. In addition, the
Fund has adopted a distribution and shareholder
servicing plan under Rule 12b-1 of the 1940 Act, which
authorizes the Fund to pay a yearly distribution fee of
up to 0.25% and a yearly shareholder servicing fee of
up to 0.25% of the average daily net assets of the Fund
attributable to each class. For the foreseeable
future, the Fund (i) intends to pay distribution fees
of 0.10% and servicing fees of 0.25% of the average
daily net assets attributable to the Class A shares and
(ii) intends to pay no Rule 12b-1 fees with respect to
the Class I shares. See "Your Account" and
"Distribution and Shareholder Servicing Plan."
The minimum initial investment in Class A shares
is $5,000 ($2,000 for retirement accounts), with a
minimum subsequent investment of $100. The minimum
initial investment in Class I shares is $5 million,
with no minimum subsequent investment requirement. The
minimum initial investment using the Automatic
Investment Plan, which is only available for purchases
of Class A shares, is $3,000 with a minimum automatic
monthly investment of $50. These minimums may be
changed or waived at any time by the Fund. See "Your
Account."
What is the policy regarding dividends and other
distributions?
You should not expect income from this Fund.
However, as required by law, to avoid double taxation,
the Fund will distribute substantially all of its net
realized capital gains and net investment income, if
any, to shareholders annually in the form of a
distribution and/or dividend, taxable to you as capital
gain or ordinary income. In the absence of specific
instructions to the contrary, distributions and
dividends will be reinvested in additional Fund shares
and will not be available for the payment of taxes. To
the extent possible, Advisor intends to minimize tax
consequences to investors by minimizing portfolio
turnover. See "Implementation of Policies and Risks"
and "Dividends, Capital Gains Distributions and Tax
Treatment."
<PAGE>
Who should I contact if I have questions?
Any communications regarding a shareholder account
should be directed to your registered representative at
your broker-dealer. General inquiries regarding the
Fund can be addressed to either your investment
professional or the Fund at the address, telephone
number, or website listed on the cover page of this
Prospectus.
INVESTMENT STRATEGY
Advisor seeks investments in high-growth companies
that have a small-to-medium market capitalization. A
small-cap company would typically have a market
capitalization of up to $1 billion, while a medium-cap
company would have a market capitalization of up to $3
billion. Advisor's general strategy is to be fully
invested, holding securities for their long-term growth
potential over a three- to five-year time frame.
Although Advisor's investment strategy is based on
company fundamentals, companies considered by Advisor
to be "high growth" are often in the same or related
market sectors. Thus, the Fund may be heavily invested
in a single sector. One sector, however, like
technology, may include numerous subsectors or
industries, like networking, telecommunications,
software, semiconductors, or voice-processing. The
Fund may be concentrated in one sector, while being
diversified among several industries. In addition, the
Fund may take relatively large positions in a single
issuer. To the extent the Fund is concentrated, it
will be susceptible to adverse economic, political,
regulatory, or market developments affecting a single
sector, industry, or issuer.
When making purchase decisions for the Fund,
Advisor uses a "buy discipline" that involves three key
components: research, fundamentals, and valuation.
Advisor gathers research on potential investment
candidates from a wide variety of sources. To further
qualify prospective investments, it analyzes
information from corporate contacts, industry
conferences, and visits with company management. Once
the research phase is complete, Advisor reviews certain
fundamental attributes that it believes a "buy"
candidate should possess, including (i) management
excellence, (ii) leading industry position or product,
(iii) projected annual revenue or sales growth of 15%
or more and projected earnings growth of 20% or more,
(iv) significant investment in research and
development, and (v) strong financial position
including a low debt to total capital ratio. Finally,
Advisor values companies by considering price to sales
ratios and price to earnings ratios within a peer
group. For companies with earnings, the price to
earnings ratio relative to a company's forecasted
growth rate is the most important measure in Advisor's
quantitative analytical process. Advisor then
constructs a list of securities for the Fund and
purchases them when their prices are within a pre-
determined range. Companies are monitored continually
for variations from expectations.
Advisor makes sell decisions for the Fund based on
a number of factors, including significant
deterioration in a company's underlying fundamentals,
strong price appreciation suggesting an overweighted
position or overvalued security, change in theme or
sector orientation, or better relative value in other
securities.
IMPLEMENTATION OF POLICIES AND RISKS
In implementing its investment strategy, the Fund
may use the following securities and investment
techniques. Some of these securities and investment
techniques involve special risks, which are described
below, elsewhere in this Prospectus, and in the Fund's
SAI.
Common Stocks and Other Equity Securities
The Fund will invest in common stocks and other
equity securities. Other equity securities may include
depositary receipts and warrants and other securities
convertible or exchangeable into common stock. Common
stocks and other equity securities generally increase
or decrease in value based on the earnings of a company
and on general industry and market conditions. A fund
that invests a significant amount of its assets in
common stocks and other equity securities is likely to
have greater fluctuations in share price than a fund
that invests a significant portion of its assets in
fixed-income securities.
<PAGE>
Small Capitalization Companies
Not only will the Fund invest in common stocks,
but it will invest a substantial portion of its assets
in the common stocks of small companies. While
companies with a smaller market capitalization have the
potential for significant capital appreciation, the
equity securities of these companies also involve
greater risks than larger, more established companies.
Small-cap companies may lack the management experience
or depth, financial resources, product diversification,
and competitive strength of large-cap companies. The
market for small-cap securities is generally less
liquid and subject to greater price volatility than the
market for large-cap securities.
Non-Diversification and Sector Concentration
As a "non-diversified" fund, the Fund is permitted
to invest its assets in a more limited number of
issuers than other investment companies. Under the
Code, however, for income tax purposes, the Fund (i)
may not invest more than 25% of its assets in the
securities of any one company or in the securities of
any two or more companies controlled by the Fund which,
pursuant to regulations under the Code, may be deemed
to be engaged in the same, similar, or related trades
or businesses and (ii) with respect to 50% of its
assets, may not invest more than 5% of its assets in
the securities of any one company and may not own more
than 10% of the outstanding voting securities of a
single company. Thus, as a "non-diversified" fund
under the 1940 Act, the Fund may invest up to 50% of
its assets in the securities of as few as two
companies, up to 25% each, so long as the Fund does not
control the two companies or so long as the two
companies are engaged in different businesses, and up
to 50% of its assets in the securities of as few as ten
companies, up to 5% each, provided that, in any event,
the Fund does not own in excess of 10% of any company's
outstanding voting stock. This practice involves an
increased risk of loss to the Fund if the market value
of a security should decline or its issuer were
otherwise unable to meet its obligations.
The Fund intends to invest more than 25% of its
assets in securities of companies in one or more market
sectors, such as the technology or health-care sector.
A market sector may be made up of companies in a number
of different industries. The Fund will only
concentrate its investments in a particular market
sector if Advisor believes that the potential
investment return justifies the additional risk
associated with concentration in that sector.
Portfolio Turnover
A change in the investments held by the Fund is
known as "portfolio turnover." Portfolio turnover
generally involves some expense to the Fund, including
brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and
reinvestment in other securities. Such sales may
result in realization of taxable capital gains. Under
normal market conditions, the anticipated portfolio
turnover rate for the Fund is expected to be under 50%
annually.
Temporary Strategies
Prior to investing the proceeds from sales of Fund
shares, to meet ordinary daily cash needs, and to
retain the flexibility to respond promptly to changes
in market and economic conditions, Advisor may hold
cash and/or invest all or a portion of the Fund's
assets in money market instruments, which are short-
term fixed-income securities issued by private and
governmental institutions. It is impossible to predict
when or for how long Advisor may employ such
strategies. Money market instruments in which the Fund
may invest include securities issued or guaranteed by
the U.S. government or its agencies (Treasury bills,
notes, and bonds); obligations of banks subject to
regulation by the U.S. government; obligations of
savings banks and savings and loan associations; fully
insured certificates of deposit; commercial paper rated
within the two highest grades by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's
Corporation ("S&P") or, if not rated, issued by a
company having an outstanding debt issue rated Aaa by
Moody's or AAA by S&P; and securities issued by
registered investment companies holding themselves out
as money market funds. See the SAI for a more detailed
description of the money market instruments in which
the Fund may invest.
<PAGE>
INVESTMENT OBJECTIVE AND RESTRICTIONS
The Fund's investment objective is to seek long-
term capital appreciation. This investment objective
is fundamental and cannot be changed without
shareholder approval. Under normal market conditions,
the Fund will attempt to achieve this objective by
investing at least 65% of its assets in common stocks
of emerging and re-emerging growth companies. In
general, investments in these types of companies
involve greater risks than investments in more
established companies. Because of the risks inherent
in this investment strategy, there can be no assurance
that the Fund will meet its investment objective or
that shares in the Fund will be worth more at
redemption than at acquisition. The Fund may also hold
cash and money market instruments to provide the Fund
with liquidity and flexibility.
In addition, the Fund has adopted certain
fundamental investment restrictions on its investments
and other activities that, like the Fund's investment
objective, may not be changed without shareholder
approval.
Limitation on Industry Concentration: The Fund
may not invest more than 25% of its assets in
securities of companies in any one industry. This
restriction does not apply to obligations issued or
guaranteed by the U.S. government, its agencies, or
instrumentalities.
Limitation on "Senior Securities": The Fund may
not issue senior securities, except as permitted under
the 1940 Act.
These fundamental investment restrictions,
together with all of the Fund's fundamental investment
restrictions and non-fundamental investment policies,
are described in greater detail in the Fund's SAI.
PRIOR PERFORMANCE OF INVESTMENT ADVISOR
The following table shows Advisor's historical
composite performance data for all actual, fee paying,
discretionary private accounts managed by Advisor, for
the periods indicated, that have investment objectives,
policies, strategies, and risks substantially similar
to those of the Fund. Since inception of Advisor
through 1996, these accounts have shown an annual return
of approximately 36%. The private accounts that are included
in Advisor's composite are not subject to the same types of
expenses to which the Fund is subject nor to the specific
tax restrictions and investment limitations imposed on the
Fund by the Code and the 1940 Act. Consequently, the
performance results for Advisor's composite could have
been adversely affected if the private accounts included
in the composite had been regulated as investment
companies under the federal tax and securities laws.
The data is provided to illustrate the past performance
of Advisor in managing substantially similar accounts
as measured against specified market indices and does not
represent the performance of the Fund. Investors should
not consider this performance data as an indication of the
future performance of the Fund or Advisor.
Advisor's performance information has been
calculated in accordance with recommended standards of
the Association for Investment Management and Research
("AIMR"), retroactively applied to all time periods.
All returns presented were calculated on a total return
basis and include all dividends and interest, if any,
accrued income, if any, and realized and unrealized
gains and losses. Cash and equivalents are included in
performance returns. Total return is calculated
monthly in accordance with the "time-weighted" rate of
return method provided for by the AIMR standards,
accounted for on a trade-date and accrual basis. No
leveraged positions were utilized. Principal additions
and withdrawals are weighted in computing the monthly
returns based on the timing of these transactions. The
monthly returns are geometrically linked to derive
annual total returns.
As required by the SEC, the following performance information
reflects the deduction of estimated total operating expenses of
1.75% for the Class A shares of the Fund before waivers or
reimbursements to the Fund by Advisor which, through September
30, 1998, will reduce the total operating expenses of the Class A
shares to 1.5%. This performance information does not reflect
expenses actually incurred by the private accounts whose historical
performance forms the basis for this information. See "Investor
Expenses" and "Fund Organization and Management."
<PAGE>
Private Account Performance History
Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Annual
Return
1990 * * -27.12% 28.61% *
1991 32.69% 4.20% 10.54% 31.43% 102.13%
1992 -10.94% -4.33% 17.38% 33.73% 34.23%
1993 -2.52% 30.30% 21.13% 2.63% 58.65%
1994 -10.65% -6.76% 22.14% 23.39% 25.91%
1995 5.31% 17.00% 13.93% -7.21% 30.68%
1996 -0.42% 9.40% 1.10% 0.16% 10.48%
1 Year Rate of Return (12/31/95 - 10.48%
12/31/96)
3 Year Rate of Return - Annualized 22.05%
(12/31/93 - 12/31/96)
5 Year Rate of Return - Annualized 31.10%
(12/31/91 - 12/31/96)
* Not applicable
<PAGE>
Growth of a Unit Value
December 31, 1991 - December 31, 1996
The graphic on page 11 of the Prospectus contains
a chart which plots the 5 year growth of $10,000
invested on December 31, 1991. The graphic compares
the Advisor's composite performance of this investment
to the Russell 2000. In addition, the information
presented assumes payment of the maximum Class A sales
charge of 3.50% at the time of initial investment The
plot points for the graphic are as follows (numbers are
in thousands):
Time Period Advisor Russell 2000
12-31-91 $9.65 $10.00
12-31-91 to 03-31-92 8.60 10.73
03-31-92 to 06-30-92 8.22 9.93
06-30-92 to 09-30-92 9.65 10.16
09-30-92 to 12-31-92 12.91 11.64
12-31-92 to 03-31-93 12.58 12.07
03-31-93 to 06-30-93 16.40 12.29
06-30-93 to 09-30-93 19.86 13.32
09-30-93 to 12-31-93 20.38 13.61
12-31-93 to 03-31-94 18.21 13.22
03-31-94 to 06-30-94 16.98 12.65
06-30-94 to 09-30-94 20.74 13.49
09-30-94 to 12-31-94 25.59 13.18
12-31-94 to 03-31-95 26.95 13.73
03-31-95 to 06-30-95 31.53 14.93
06-30-95 to 09-30-95 35.93 16.34
09-30-95 to 12-31-95 33.34 16.64
12-31-95 to 03-31-96 33.20 17.42
03-31-96 to 06-30-96 36.32 18.25
06-30-96 to 09-30-96 36.72 18.24
09-30-96 to 12-31-96 36.78 19.09
Advisor Composite Performance (US$)
RUSSELL 2000 (US$)
<PAGE>
Average Annualized Return in Percent
Period Ending
December 31, 1996 Advisor Composite Russell 2000
Performance
1 Year 10.48% 14.76%
2 Years 20.16% 20.35%
3 Years 22.05% 11.93%
4 Years 30.33% 13.18%
5 Years 31.10% 13.81%
6 Years 40.93% 18.32%
Annualized Rate of Return
December 31, 1991, through December 31, 1996
The graphic on page 12 of the Prospectus contains
a bar chart which shows the annualized rate of return
from December 31, 1991 through December 31, 1996 for
the Advisor composite versus the NASDAQ OTC Index, the
Russell 2000 and the S&P 500 Index. The annualized
rate of return for the Advisor composite was 31.10%
versus 17.10%, 13.18% and 15.20% for the NASDAQ OTC
Index, the Russell 2000 Index and the S&P 500 Index,
respectively.
FUND ORGANIZATION AND MANAGEMENT
Organization
The Fund is a series of common stock of a
corporation, Kopp Funds, Inc. ("Corporation"), a
Minnesota company incorporated on June 12, 1997. The
Corporation is authorized to issue shares of common
stock in series and classes. Each share of common
stock of each class of shares of the Fund is entitled
to one vote, and each share is entitled to participate
equally in dividends and capital gains distributions by
the respective class of shares and in the residual
assets of the respective class of shares in the event
of liquidation. However, each class of shares bears
its own expenses, is subject to its own sales charges,
if any, and has exclusive voting rights on matters
pertaining to the Rule 12b-1 plan as it relates to that
class. No certificates will be issued for shares held
in your account. You will, however, have full
shareholder rights. Generally, the Fund will not hold
annual shareholders' meetings unless required by the
1940 Act or Minnesota Law. As of September 30, 1997,
Advisor owned a controlling interest in the Fund.
Management
Under the laws of the State of Minnesota, the
Board of Directors of the Corporation is responsible
for managing its business and affairs. The Corporation
has entered into an Investment Advisory Agreement with
Advisor under which Advisor manages the Fund's
investments and business affairs, subject to the
supervision of the Corporation's Board of Directors.
Kopp Holding Company ("KHC"), which is wholly-owned by
LeRoy C. Kopp, provides office space for the
Corporation and pays the salaries, fees, and expenses
of all the Corporation's officers and interested
directors.
Advisor. Advisor is a Minnesota corporation
organized in March 1990. Advisor is a wholly-owned
subsidiary of KHC and controlled by LeRoy C. Kopp, the
President and Chief Investment Officer of Advisor and
the sole shareholder of KHC. Under the Investment
Advisory Agreement, the Corporation pays Advisor an
annual management fee of 1.00% of the Fund's average
daily net assets attributable to each class of shares.
The advisory fee is accrued daily and paid monthly.
For the fiscal year ending September 30, 1998, Advisor
has agreed to waive its management fee and/or reimburse
Fund operating expenses to the extent necessary to
ensure that (i) the total operating expenses for the
Class A shares do not exceed 1.50% of average daily net
assets and (ii) the total operating
<PAGE>
expenses for the
Class I shares do not exceed 1.15% of average daily net
assets. Total operating expenses exclude taxes,
interest, and extraordinary expenses. After fiscal
1998, Advisor may from time to time voluntarily (but is
not required to) waive all or a portion of its fee
and/or reimburse all or a portion of class operating
expenses. Any waivers or reimbursements will have the
effect of lowering the overall expense ratio for the
applicable class and increasing its overall return to
investors at the time any such amounts were waived
and/or reimbursed.
Under the Investment Advisory Agreement, not only
is Advisor responsible for management of the Fund's
assets, but also for portfolio transactions and
brokerage. Advisor may consider sales of shares of the
Fund as a factor in the selection of broker-dealers to
execute portfolio transactions for the Fund, subject to
the requirements of best execution. Please refer to
the SAI for more details. Advisor has no prior experience
advising mutual funds.
Portfolio Managers. The following individuals are
co-managers of the Fund:
President and Chief Investment Officer of Advisor,
LeRoy C. Kopp, is a graduate of the University of
Minnesota, where he received a Bachelor's Degree with
Distinction in Business Administration. Prior to
founding Advisor in 1990, Mr. Kopp spent 30 years with
Dain Bosworth Inc., where he was the manager of the
Edina, Minnesota, branch and a Senior Vice President.
Mr. Kopp has received a number of business and
community honors and awards, including Upper Midwest
Entrepreneur of the Year for Emerging Companies.
Senior Vice President of Advisor, Sally A.
Anderson, graduated from Northwestern University with a
B.S. in Business Administration/Finance. Prior to
joining Advisor in 1991, Ms. Anderson served as
Assistant Director of Research for Dain Bosworth Inc.,
with whom she was associated for 26 years. Ms.
Anderson is a Chartered Financial Analyst and a member
of the Twin Cities Society of Security Analysts, where
she served as President in 1997.
Vice President of Advisor, Steven F. Crowley, is a
graduate of the University of Chicago, where he earned
a B.A. in Economics. Before joining Advisor in 1994,
Mr. Crowley was Executive Vice President and Director
of Research at Summit Investment Corporation in
Minneapolis, Minnesota, a position he held for one
year, where he served as the Senior Analyst covering
emerging growth companies in the health care,
environmental, and technology sectors. For four years
before that, Mr. Crowley was a Vice President of
Research at Craig Hallum, Inc., in Minneapolis. He has
also been associated with J.P. Morgan Investment
Management and Market Guide, Inc. in an investment
research capacity. Mr. Crowley is a Chartered
Financial Analyst and a member of the Twin Cities
Society of Security Analysts.
Custodian and Transfer Agent
Firstar Trust Company ("Firstar") acts as
custodian of the Fund's assets ("Custodian") and as
transfer agent for the Fund ("Transfer Agent").
Firstar serves as custodian, transfer agent, or both,
to over 250 registered investment companies,
representing approximately $68 billion in total assets.
Administrator
Pursuant to an Administration Servicing Agreement,
Firstar also performs certain compliance and tax
reporting functions for the Fund. For these services,
Firstar receives from the Fund a fee, computed daily
and payable monthly, based on the Fund's average net
assets at the annual rate of .06 of 1% on the first
$100 million, .05 of 1% on the next $400 million, and
.03 of 1% on average net assets in excess of $500
million, subject to an annual minimum of $50,000, plus
out-of-pocket expenses.
Distributor
Centennial Lakes Capital, Inc., a registered
broker-dealer and member of the NASD, acts as
distributor of the Fund's shares ("Distributor"). As
compensation for its services, the Distributor may
retain a portion of (i) the initial sales charge from
purchases of Class A shares, (ii) the CDSC from
redemptions of Class A shares, if applicable, and (iii)
the Rule 12b-1 fees payable with respect to Class A
shares.
<PAGE>
From time to time, the Distributor may implement
programs to promote the sale of Class A shares under
which a sales force may be eligible to win nominal
awards for certain sales efforts or under which the
Distributor will reallow to sponsors of or participants
in sales contests or recognition programs all or a
portion of the total applicable sales charges on the
sales generated at the public offering price during
such programs. Also, in its discretion, the
Distributor may from time to time, pursuant to
objective criteria it establishes, pay fees to, and
sponsor business seminars for, qualifying brokers for
certain services or activities that are primarily
intended to result in sales of Class A shares. Fees
may include payment for travel expenses, including
lodging, incurred in connection with trips taken by
invited registered representatives and members of their
families to locations within or outside the United
States for meetings or seminars of a business nature.
All of the foregoing payments are made by the
Distributor out of its own assets. These programs will
not change the price you will pay for shares or the
amount that the Fund will receive from such a sale. No
such programs or additional compensation will be
offered to the extent that they are prohibited by the
laws of any state or any self-regulatory agency with
jurisdiction over the Distributor, such as the NASD.
The Distributor is an affiliate of Advisor.
Fund Expenses
The Fund is responsible for its own expenses,
including interest charges; taxes; brokerage
commissions; organizational expenses; expenses of
registering or qualifying shares for sale with the
states and the SEC; expenses of issue, sale,
repurchase, or redemption of shares; expenses of
printing and distributing reports and prospectuses to
existing shareholders; charges of custodians; expenses
for accounting, administrative, audit, and legal
services; fees for outside directors; expenses of
fidelity bond coverage and other insurance; expenses of
indemnification; extraordinary expenses; and costs of
shareholder and director meetings.
YOUR ACCOUNT
Choosing a Class
The Fund offers two classes of shares: Class A
and Class I. Class A shares are designed for "retail"
investors, with a minimum initial investment of $5,000
($2,000 for retirement accounts). Class I shares are
designed for "institutional" investors, with a minimum
initial investment of $5 million. Each class has its
own cost structure.
Class A Class I
Front-end sales No front-end sales
charges with break charges.
points and certain
exceptions. Redemption fee
payable on certain
Contingent redemptions.
deferred sales charge
imposed on certain No current Rule
redemptions. 12b-1 expenses.
Current Rule 12b-1
expenses, 0.35% of
average net assets.
<PAGE>
Class A Shares
Class A shares are offered and sold on a continual
basis at the next offering price ("Offering Price"),
which is the sum of the net asset value per share and
the sales charge indicated below:
Total Sales
Charge
Portion of
As a Percentage As a Percentage Offering Price
Your Investment of Offering of Your Retained by
Price Investment Broker-Dealers*
Up to $100,000 3.50% 3.63% 3.00%
$100,001 - 3.00% 3.09% 2.50%
$250,000
$250,001 - 2.00% 2.04% 1.50%
$500,000
$500,001 - 1.00% 1.01% 0.50%
$1,000,000
$1,000,001 - None None None***
$5,000,000**
____________
*At the discretion of the Distributor, all sales
charges may at times be paid to the broker-dealer, if
any, involved in the trade. A broker-dealer paid all
or substantially all of the sales charges may be deemed
an "underwriter" under the Securities Act of 1933, as
amended.
**A 1% CDSC may be imposed on redemptions of all or
part of an investment of $1 million or more in Class A
shares redeemed within 24 months of purchase.
***The Distributor may, in its discretion, pay a 1%
commission to broker-dealers who initiate and are
responsible for purchases of Class A shares between $1
- - $5 million.
No sales charge is imposed on the reinvestment of
dividends or capital gains or on certain exchange
transactions. For information on how to reduce the
sales charge payable upon the purchase of Fund shares
or whether you qualify to purchase shares at net asset
value, see "Class A Front-End Sales Charge Waivers and
Reductions." Class A shares are also currently subject
to Rule 12b-1 fees in an aggregate amount of 0.35% of
the average daily net assets attributable to such
shares, although the Plan, which is described in more
detail under "Distribution and Shareholder Servicing
Plan," permits the payment of up to 0.50% in such fees.
Investments in Class A shares above $1 million are
not assessed an initial sales load. However, you will
be charged a 1% CDSC on shares redeemed within 24
months of purchase. For purposes of the CDSC, all
purchases made during a calendar month are counted as
having been made on the last day of that month. The
CDSC is based on the lesser of the current market value
or the actual purchase price of the shares being sold,
and is not imposed on shares acquired by reinvesting
dividends or capital gains. To avoid the imposition of
the CDSC, the Fund will first sell any shares held in
your account that are not subject to the CDSC. The
imposition of the CDSC may be waived by the
Distributor. See "Class A CDSC Waivers."
Class I Shares
Class I shares are offered and sold on a continual
basis at their net asset value without any initial
sales charge. However, you may be charged a redemption
fee of 1% of the value of the shares redeemed on
redemptions made within 24 months of purchase. In
addition, as described in more detail under
"Distribution and Shareholder Servicing Plan," the Fund
has adopted a Rule 12b-1 plan with respect to the Class
I shares which permits the payment of up to 0.50% in
Rule 12b-1 fees. For the foreseeable future, however,
the Fund has no intention of paying any distribution or
servicing fees in connection with the Class I shares.
Class A Front-End Sales Charge Waivers and Reductions
Waivers for Certain Investors. Class A shares are
offered at net asset value to the following individuals
and institutions due to anticipated economies of scale
in sales efforts and expense:
certain retirement plans, such as profit-sharing,
pension, 401(k), and simplified employee pension plans
(SEP's and SIMPLE's), subject to minimum requirements
with respect to the number of employees or
<PAGE>
amount of
purchase, which may be established by the Distributor
(currently, those criteria require that the employer
establishing the plan have 200 or more eligible
employees or that the amount invested total at least $1
million within 13 months of the initial investment);
persons who have taken a distribution from a
retirement plan invested in Class A or Class I shares
of the Fund, to the extent of the distribution,
provided that, the distribution is reinvested within 90
days of the payment date;
government entities that are prohibited from
paying mutual fund sales charges;
registered broker-dealers who have entered into a
selling or service agreement with the Distributor and
who have achieved certain sales objectives of the Fund,
for their investment accounts only, and certain
employees of such broker-dealers, and their spouses,
children, grandchildren, and parents, in accordance
with the internal policies and procedures of the
employing broker-dealer;
owners of private accounts managed by Advisor who
either purchase Fund shares within one year of the
Fund's inception or who at any time, within the Advisor's
sole discretion, are no longer eligible for separate account
management by Advisor and who in either case completely
liquidate their private account and purchase Fund shares with
the proceeds within 90 days of the liquidation;
trust companies investing $1 million or more for
common trust or collective investment funds;
registered investment companies;
any person who purchases shares of the Fund with
redemption proceeds from a money market fund; provided,
however, that the sales charge waiver provided by this
exception shall only be available (i) for one such
purchase within 12 months of the redemption, (ii) to
persons who immediately prior to their investment in
the money market fund were shareholders of the Fund,
and (iii) to the extent of the investment in the money
market fund being redeemed;
"wrap accounts" for the benefit of clients of
registered broker-dealers having a selling or service
agreement with the Distributor; and
any person who purchases shares of the Fund with
redemption proceeds from a registered investment
company other than the Fund and on which the investor
paid either a front-end sales charge or a contingent
deferred sales charge; provided that the proceeds are
invested in the Fund within 10 days of the redemption.
Please contact your investment professional, the
Distributor, or the Transfer Agent for more information
on purchases at net asset value.
Reducing Sales Charges. If you are not eligible
for a waiver, there are two ways that you can combine
multiple purchases of Class A shares to take advantage
of the breakpoints in the sales charge schedule.
Rights of Accumulation. The Fund offers a Right
of Accumulation ("ROA") allowing you to purchase Class
A shares at the sales charge applicable to the sum of
(a) the dollar amount then being purchased, plus (b)
the higher of either (i) the current market value
(calculated at the applicable Offering Price) or (ii)
the actual purchase price of all Fund shares already
held by you and your spouse and minor children or you
and members of a qualified group. A "qualified group"
is one that was formed at least one year prior to the
ROA purchase, has a purpose other than buying Fund
shares at a discount, has more than 10 members, can
arrange meetings between the Distributor and group
members, agrees to include Fund literature in mailings
to its members, agrees to arrange for payroll
deductions or other bulk transmissions of investments
to the Fund, and meets other uniform criteria that
allow the Distributor to achieve cost savings in
distributing shares of the Fund. To receive an ROA, at
the time of purchase,
<PAGE>
you must give your investment
professional, the Distributor, or the Transfer Agent
sufficient information to determine whether the
purchase will qualify for the reduced sales charge.
Letter of Intent. You may also immediately
qualify for a reduced sales charge on the purchase of
Class A shares by completing the Letter of Intent
section of the account application ( "LOI"). By
completing the LOI, you express an intention to invest
during the next 13-month period a specified amount
(minimum of at least $100,001) which, if made at one
time, would qualify for a reduced sales charge. Any
shares you own on the date you execute the LOI may be
used as a credit toward the completion of the LOI.
However, the reduced sales charge will only be applied
to new purchases. Any redemptions made during the
13-month period will be subtracted from the amount of
the purchases for purposes of determining whether the
terms of the LOI have been satisfied. If, at the end
of the 13-month period covered by the LOI, the total
amount of purchases (less redemptions) does not equal
the amount indicated, you will be required to pay the
difference between the sales charge paid at the reduced
rate and the sales charge applicable to the purchases
actually made. Shares equal to 5% of the amount
specified in the LOI will be held in escrow during the
13-month period and are subject to involuntary
redemption to assure any payment of a higher applicable
sales charge. By signing the purchase application and
checking the box labeled "Letter of Intent," you grant to
the Distributor a security interest in the reserved shares
and appoint the Distributor as attornet-in-fact to sell any
or all of the reserved shares to cover any additional sales
charges, if you do not fulfill your undertaking. Signing a
LOI does not bind you to purchase the full amount indicated,
but you must complete the intended purchase in accordance with
the terms of the LOI to obtain the reduced sales charge.
For more information on the LOI, please contact your
investment professional, the Distributor, or the
Transfer Agent.
Class A CDSC Waivers
The primary purpose of the CDSC is to encourage
long-term investing in the Fund. Accordingly, the CDSC
on Class A shares may be waived if:
the redemption results from the death or a total
and permanent disability (as defined in Section 72 of
the Code) of the shareholder occurring after the
purchase of the shares being redeemed; or
the selling broker-dealer elects to waive receipt
of the commission normally paid at the time of sale.
Investing in the Fund
Before opening an account and investing in Fund
shares, you should contact your investment
professional. Then, you should:
(1) Read this Prospectus carefully.
(2) Determine how much you would like to invest.
The minimum initial investment requirements
are:
(a) Class A shares:
Non-retirement account: $5,000
Retirement account: $2,000
Automatic Investment Plan ("AIP"): $3,000
(to maintain the plan, you must invest
at least $50 per month)
Subsequent investments: $100 or more
<PAGE>
(b) Class I shares:
All accounts: $5 million
Subsequent investments: No minimum
The Fund may change or waive these minimums
at any time; you will be given at least 30
days' notice of any increase in the minimum
dollar amount of purchases.
(3) Complete the appropriate parts of the account
application, carefully following the
instructions. If you have questions, please
contact your investment professional or the
Fund at 1-888-533-KOPP. Account applications
will be accepted by the Distributor, the
Transfer Agent, or investment professionals
who have entered into a selling or service
agreement with the Distributor.
(4) Make your initial investment, and any
subsequent investments, following the
instructions set forth below.
Buying Shares
Opening an Account. You may open an account by
completing an account application and paying for your
shares by check, exchange, or wire. All new account
applications should be given to your investment
professional or forwarded to the Distributor or the
Transfer Agent, whose addresses appear on the inside
back cover page of this Prospectus. The price per
share will be the net asset value (plus applicable
sales charge in the case of Class A shares) next
computed after the time the application and funds are
received in proper order by the Transfer Agent. See
"Determination of Net Asset Value." The Fund does not
consider the U.S. Postal Service or other independent
delivery services to be its agents; therefore, deposit
in the mail or with such services, or receipt at the
Transfer Agent's post office box, of purchase
applications does not constitute receipt by the
Transfer Agent. A confirmation indicating the details
of each purchase transaction will be sent to you
promptly. The Fund may refuse any purchase order it if
believes a previous pattern of excessive purchases and
redemptions or exchanges has been established by an
account. Excessive trading (including market timing)
can hurt a shareholder's and the Fund's performance.
Accounts under common ownership or control will be
considered one account for this purpose.
By check
Make out a check for the investment amount,
payable to "Kopp Emerging Growth Fund." Payment should
be made in U.S. funds by check drawn on a U.S. bank,
savings and loan, or credit union. Neither cash nor
third-party checks will be accepted.
You may be charged a transaction fee in addition
to the sales charge with respect to Class A shares sold
by certain broker-dealers.
If your check does not clear, you will be charged
a $20 service fee. You will also be responsible for
any losses suffered by the Fund as a result.
All applications to purchase Fund shares are
subject to acceptance by the Fund and are not binding
until so accepted. The Fund reserves the right to
decline or accept a purchase application in whole or in
part.
By exchange
You may exchange Class A shares for Class I shares
at any time if you meet the Class I minimum initial
investment requirement. The value of the shares to be
exchanged will be the net asset value (less the CDSC,
if applicable) after receipt of instructions for
exchange. Likewise, the price of the shares being
purchased will be the net asset value after receipt of
instructions for exchange.
You may also exchange shares of the Fund for
shares of the Portico Money Market Fund, a no-load
money market fund managed by an affiliate of Firstar.
The Portico Money Market Fund is unrelated to the
Corporation or the Fund. This exchange privilege is a
convenient way to buy shares in a money market fund in
order to respond to changes in your goals or market
conditions. The value of the shares to be exchanged
will be the net asset value (less the redemption fee,
if applicable, with respect to Class
<PAGE>
I shares or the
CDSC, if applicable, with respect to Class A shares)
after receipt of instructions for exchange. The price
of the shares being purchased will be at net asset
value. Before exchanging into the Portico Money Market
Fund, please read the applicable prospectus, which may
be obtained by calling 1-888-533-KOPP, and open an
account in the Portico Money Market Fund.
The Fund reserves the right to modify or terminate
the exchange privilege at any time.
Call the Transfer Agent at 1-888-533-KOPP to
request instructions for an exchange.
An exchange is not a tax-free transaction.
By wire
Instruct your bank to follow the following
instructions when wiring funds:
Wire to: Firstar Bank Milwaukee, N.A.
ABA Number 075000022
Credit: Firstar Trust Company
Account 112-952-137
Further credit: Kopp Emerging Growth Fund
(class of shares being purchased)
(shareholder account number)
(shareholder name/account registration)
Please call 1-888-533-KOPP prior to wiring any
funds to notify the Transfer Agent that the wire is
coming and to verify the proper wire instructions.
The Fund is not responsible for the consequences
of delays resulting from the banking or Federal Reserve
wire system.
Adding to an Account. You may add to your account
by check, exchange, or wire. A confirmation indicating
the details of each subsequent purchase transaction
will be sent to you promptly. Obtain your account
number by reviewing your account statement or by
calling your investment professional, the Distributor,
or the Transfer Agent.
By check
Make out a check for the investment amount,
payable to "Kopp Emerging Growth Fund." Neither cash
nor third-party checks will be accepted.
Fill out the detachable investment slip from an
account statement. If no slip is available, include a
note specifying your account number and the name(s) in
which the account is registered.
Deliver the check and your investment slip or note
to your investment professional, the Distributor, or
the Transfer Agent.
By exchange
Call the Transfer Agent at 1-888-533-KOPP to
request instructions for an exchange.
By wire
Follow the wire instructions used to open an
account.
Automatic Investment Plan. The Automatic
Investment Plan ("AIP") is a method of using dollar
cost averaging, which is an investment strategy that
involves investing a fixed amount of money at a regular
time interval. By always investing the same amount,
you will be purchasing more shares when the price is
low and fewer shares
<PAGE>
when the price is high. Since
such a program involves continuous investment
regardless of fluctuating share values, you should
consider your financial ability to continue the program
through periods of low share price levels. A program
of regular investment cannot ensure a profit or protect
against a loss from declining markets.
The AIP allows you to make regular, systematic
investments in Class A shares of the Fund from your
bank checking account. The minimum initial investment
for investors using the AIP is $3,000. If you elect
this option, all dividends and capital gains
distributions will be automatically reinvested in Fund
shares. The sales charge on future purchases may be
reduced using the Fund's ROA or LOI. See "Class A
Front-End Sales Charge Waivers and Reductions." To
establish the AIP, complete the appropriate section in
the account application. Under certain circumstances
(such as discontinuation of the AIP before the minimum
initial investment is reached), the Fund reserves the
right to close your account. Prior to closing any
account for failure to reach the minimum initial
investment, the Fund will give you written notice and
60 days in which to reinstate the AIP or otherwise
reach the minimum initial investment. Your account may
be closed in periods of declining share prices.
Under the AIP, you may choose to make investments
on certain days of each month (at least seven days
apart) in amounts of $50 or more. There is no service
fee charged by the Fund for participating in the AIP.
However, a service fee of $20 will be deducted from
your Fund account for any AIP purchase that does not
clear due to insufficient funds or, if prior to
notifying the Fund in writing or by telephone of your
intention to terminate the plan, you close your bank
account or in any manner prevent withdrawal of funds
from the designated checking account. You can set up
the AIP with most financial institutions.
Special Note on Investing in the Fund. When the
Fund's assets total $1 billion, no new accounts, other
than certain qualified retirement plans, will be
accepted. If you are a shareholder of record at that
time, however, you will be able to continue to add to
your account through new purchases, including purchases
through reinvestment of dividends or capital gains
distributions.
Redeeming Shares
To Redeem Some or All of Your Shares. You may
request redemption of part or all of your Fund shares
at any time. The price per share will be the net asset
value next computed (less the redemption fee or CDSC,
if applicable) after the time the redemption request is
received in proper form by the Transfer Agent. See
"Determination of Net Asset Value." The Fund does not
consider the U.S. Postal Service or other independent
delivery services to be its agents; therefore, deposit
in the mail or with such services, or receipt at the
Transfer Agent's post office box, of redemption
requests does not constitute receipt by the Transfer
Agent. The Fund normally will mail your redemption
proceeds within one or two business days and, in any
event, no later than seven business days after receipt
by the Transfer Agent of a redemption request in good
order. However, the Fund may hold payment until
investments which were made by check, telephone, or
pursuant to the AIP have been collected (which may take
up to 15 days from the initial investment date). What
follows is a listing of the various options for
redemptions. Redemptions may be made by written
request, telephone, wire, or exchange.
By written request
Write a letter of instruction indicating the Fund
name, your share class, your account number, the
name(s) in which the account is registered, and the
dollar value or number of shares you wish to sell.
Include all signatures and any additional
documents that may be required. See "Special
Situations," below.
Forward the materials to the Transfer Agent.
A check will be mailed to the name(s) and address
in which the account is registered, or otherwise
according to your letter of instruction.
By telephone
Fill out the "Telephone Redemption" section of
your new account application.
To place your redemption request, you may call
1-888-533-KOPP.
<PAGE>
Redemption requests by telephone are available for
redemptions of $1,000 to $75,000. Redemption requests
for less than $1,000 or more than $75,000 must be in
writing.
Proceeds redeemed by telephone will be mailed or
wired only to your address or bank of record as shown
on the records of the Transfer Agent.
In order to arrange for telephone redemptions
after an account has been opened or to change the bank,
account, or address designated to receive redemption
proceeds, a written request must be sent to the
Transfer Agent. The request must be signed by each
shareholder of the account, with the signatures
guaranteed. Further documentation may be requested
from corporations, executors, administrators, trustees,
and guardians. See "Special Situations."
The Fund reserves the right to refuse any request
made by telephone and may limit the amount involved or
the number of telephone redemptions.
Once you place a telephone redemption request, it
cannot be canceled or modified.
Neither the Fund nor the Transfer Agent will be
responsible for the authenticity of redemption
instructions received by telephone. Accordingly, you
bear the risk of loss. However, the Fund will use
reasonable procedures to ensure that instructions
received by telephone are genuine, including recording
telephonic transactions and sending written
confirmation of such transactions to investors.
You may experience difficulty in implementing a
telephone redemption during periods of drastic economic
or market changes. If you are unable to contact the
Transfer Agent by telephone, you may also redeem shares
by written request, as noted above.
By wire
Fill out the "Telephone Redemption" section of
your new account application.
To verify that the telephone redemption privilege
is in place on an account, or to request the forms to
add it to an existing account, call the Transfer Agent.
Redemption requests by telephone which are to be
transmitted via wire transfer are available for
redemptions of $75,000 or less. Redemption requests
for more than $75,000 must be in writing.
Funds will be wired on the next business day. A
$12 fee will be deducted from your account.
By exchange
See "Buying Shares - By exchange."
Special Situations. If you are acting as an
attorney-in-fact for another person, or as a trustee or
on behalf of a corporation, additional documentation
may be required in order to effect a redemption.
Questions regarding such circumstances may be directed
to your investment professional, or the Transfer Agent
by calling 1-888-533-KOPP. In addition, the Fund
requires a signature guarantee for all authorized
owners of an account: (i) when you submit a written
redemption request for more than $75,000, (ii) when you
add the telephone redemption option to your existing
account, (iii) if you transfer ownership of your
account to another individual or entity, or (iv) if you
request redemption proceeds to be sent to an address
other than the address that appears on your account. A
signature guarantee may be obtained from any eligible
guarantor institution, as defined by the SEC. These
institutions include banks, saving associations, credit
unions, brokerage firms, and others. A notary public
stamp or seal is not acceptable.
Redemption in Kind. The Fund has filed a
Notification under Rule 18f-1 under the 1940 Act,
pursuant to which it has undertaken to pay in cash all
requests for redemption by any shareholder of record,
limited in amount with respect to each shareholder
during any 90-day period to the lesser amount of (i)
$250,000, or (ii) 1% of the net asset value of the
class of shares of the Fund being redeemed, valued at
the beginning of such election period. The Fund
intends to also pay redemption proceeds in excess of
such lesser amount in cash, but reserves the right to
pay such excess amount in kind, if it is deemed to be
in the best interest of the Fund to do so. In making a
redemption in kind, the Fund reserves the right to
select from each securities holding a number of shares
which will reflect the Fund's portfolio make-up and the
value of which will approximate as closely as possible
the value of the Fund shares being redeemed, or to
select from one or more securities holdings, shares
equal in value to the total value of the Fund
<PAGE>
shares
being redeemed; any shortfall will be made up in cash.
Investors receiving an in kind distribution are advised
that they will likely incur a brokerage charge on the
disposition of such securities through a securities
dealer. The values of securities distributed in kind
will be the values used for the purpose of calculating
the per share net asset value used in valuing the Fund
shares tendered for redemption.
IRAs. Shareholders who have an Individual
Retirement Account ("IRA") or other retirement plan
must indicate on their redemption requests whether or
not to withhold federal income taxes. Redemption
requests failing to indicate an election will be
subject to withholding.
Termination of Accounts. Your account may be
terminated by the Fund if, at the time of any
redemption of shares in your account, the value of the
remaining shares in the account falls below $1,000. A
check for the proceeds of redemption will be sent to
you within seven days of the redemption.
DETERMINATION OF NET ASSET VALUE
The net asset value per share for each class is
determined as of the close of trading (generally
4:00 p.m. Eastern Standard Time) on each day the New
York Stock Exchange ("NYSE") is open for business.
Purchase orders and redemption requests received on a
day the NYSE is open for trading, prior to the close of
trading on that day, will be valued as of the close of
trading on that day. Applications for purchase of
shares and requests for redemption of shares received
after the close of trading on the NYSE will be valued
as of the close of trading on the next day the NYSE is
open. The Fund is not required to calculate its net
asset value on days during which the Fund receives no
orders to purchase or redeem shares. Net asset value
per share for each class of shares is calculated by
taking the fair value of the total assets per class,
including interest or dividends accrued, but not yet
collected, less all liabilities, and dividing by the
total number of shares outstanding in that class. The
result, rounded to the nearest cent, is the net asset
value per share.
In determining net asset value, expenses are
accrued and applied daily and securities and other
assets for which market quotations are available are
valued at fair value. Common stocks and other equity-
type securities are valued at the last sales price on
the national securities exchange or NASDAQ on which
such securities are primarily traded; however,
securities traded on a national securities exchange or
NASDAQ for which there were no transactions on a given
day, and securities not listed on a national securities
exchange or NASDAQ, are valued at the average of the
most recent bid and asked prices. Any securities or
other assets for which market quotations are not
readily available are valued at fair value as
determined in good faith by the Board of Directors of
the Corporation or its delegate. The Board of
Directors may approve the use of pricing services to
assist the Fund in the determination of net asset
value. All money market instruments held by the Fund
will be valued on an amortized cost basis.
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Fund has adopted a plan pursuant to Rule 12b-1
under the 1940 Act ( "Plan") with respect to each class
of shares pursuant to which certain distribution and
shareholder servicing fees may be paid to the
Distributor. Under the terms of the Plan, each class
of shares may be required to pay the Distributor (i) a
distribution fee for the promotion and distribution of
shares of up to 0.25% of the average daily net assets
of the Fund attributable to each class (computed on an
annual basis) and (ii) a shareholder servicing fee for
personal service provided to shareholders of up to
0.25% of the average daily net assets of the Fund
attributable to each class (computed on an annual
basis). Payments under the Plan with respect to Class
A shares are currently limited to 0.35%, which
represents a 0.10% distribution fee and a 0.25%
shareholder servicing fee; the Fund currently has no
intention of paying any Rule 12b-1 fees in connection
with the Class I shares. The Distributor is authorized
to, in turn, pay all or a portion of these fees to any
registered securities dealer, financial institution, or
other person ("Recipient") who renders assistance in
distributing or promoting the sale of Fund shares, or
who provides certain shareholder services to Fund
shareholders, pursuant to a written agreement ("Rule
12b-1 Related Agreement"). To the extent such fee is
not paid to such persons, the Distributor may use the
fee for its own distribution expenses incurred in
connection with the sale of Fund shares, or for any of
its shareholder servicing expenses. The Plan is a
"reimbursement" plan, which means that the fees paid by
the Fund under the Plan are intended to reimburse the
Distributor for services rendered and commission
<PAGE>
fees
borne up to the maximum allowable distribution and
shareholder servicing fees. If the Distributor is due
more money for its services rendered and commission
fees borne than are immediately payable because of the
expense limitation under the Plan, the unpaid amount is
carried forward from period to period while the Plan is
in effect until such time as it may be paid. No
interest, carrying, or other finance charges will be
borne by the Fund with respect to unpaid amounts
carried forward.
Payment of the distribution and servicing fees is
to be made quarterly, within 30 days after the close of
the quarter for which the fee is payable, after the
Distributor forwards to the Board of Directors of the
Corporation a written report of all amounts expensed
pursuant to the Plan; provided, however, that the
aggregate payments by the Fund with respect to the
Class A shares under the Plan to the Distributor and
all Recipients currently may not exceed 0.35% (on an
annualized basis) of the Fund's average net assets
attributable to such class of shares for that quarter.
From time to time, the Distributor may engage in
activities which jointly promote the sale of shares of
both classes, the costs of which may not be readily
identifiable as related to any one class. Generally,
the distribution expenses attributable to such joint
distribution activities will be allocated among each
class of shares on the basis of its respective net
assets, although the Board of Directors may allocate
such expenses in any other manner it deems fair and
equitable.
The Plan, including a form of the 12b-1 Related
Agreement, has been unanimously approved by the Board
of Directors of the Corporation, including all of the
members of the Board who are not "interested persons"
of the Corporation as defined in the 1940 Act and who
have no direct or indirect financial interest in the
operation of the Plan or any related agreements
("Disinterested Directors") voting separately.
The Plan, and any Rule 12b-1 Related Agreement
which is entered into, will continue in effect for a
period of more than one year only so long as its
continuance is specifically approved at least annually
by a vote of a majority of the Corporation's Board of
Directors, and of the Disinterested Directors, cast in
person at a meeting called for the purpose of voting on
the Plan, or the Rule 12b-1 Related Agreement, as
applicable. In addition, the Plan, and any Rule 12b-1
Related Agreement, may be terminated with respect to
either or both classes at any time, without penalty, by
vote of a majority of the outstanding voting securities
of the applicable class, or by vote of a majority of
Disinterested Directors (on not more than sixty (60)
days' written notice in the case of the Rule 12b-1
Related Agreement only).
TAX-SHELTERED RETIREMENT PLANS
The Fund offers through Firstar, in its capacity
as Custodian, certain qualified retirement plans for
adoption by individuals and employers. Participants in
these plans can accumulate shares of the Fund on a tax-
deferred basis. Contributions to these plans are tax-
deductible as provided by law and earnings are tax-
deferred until distributed.
Individual Retirement Accounts
Individuals under age 70 1/2 who receive
compensation or earned income, even if they are active
participants in a qualified retirement plan (or certain
similar retirement plans), may contribute money to an
IRA. In the case of a married couple filing a joint
return, up to $2,000 can be contributed to each
spouse's IRA, even if one spouse has little or no
compensation or earned income. The Fund offers a
prototype IRA plan which may be adopted by individuals
to establish a new IRA or to rollover funds from an
existing IRA.
Earnings on amounts held in an IRA are not taxed
until withdrawn. However, the amount of the deduction,
if any, allowed for IRA contributions is limited for an
individual who is, or whose spouse is, an active
participant in an employer-sponsored retirement plan
and whose income exceeds specific limits.
<PAGE>
Simplified Employee Pension Plan
The Fund also offers a simplified employee pension
("SEP") plan for employers, including self-employed
individuals who wish to purchase Fund shares with tax-
deductible contributions. Under the SEP plan, employer
contributions are made directly to the IRA accounts of
eligible participants.
Savings Incentive Match Plan for Employees of Small
Employers
The Savings Incentive Match Plan for Employees of
Small Employers ("SIMPLE Plan") is a written
arrangement established under Section 408(p) of the
Code which provides a simplified tax-favored retirement
plan for small employers. In a SIMPLE Plan, each
employee may choose whether to have the employer make
payments as contributions under the plan or to receive
these payments directly as cash. A small employer that
chooses to establish a SIMPLE Plan must make either
matching contributions or non-elective contributions.
All contributions made under a SIMPLE Plan are made to
SIMPLE IRAs. A SIMPLE IRA is an IRA to which the only
contributions that can be made are contributions under
a SIMPLE Plan.
A complete description of the above plans, as well
as a description of the applicable service fees, may be
obtained by calling 1-888-533-KOPP or writing to the
Fund at Kopp Funds, Inc., c/o Firstar Trust Company,
P.O. Box 701, Milwaukee, Wisconsin 53201-0701. Please
note that early withdrawals from a retirement plan may
result in adverse tax consequences.
DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX
TREATMENT
The Fund intends to qualify for treatment as a
"Regulated Investment Company" under Subchapter M of
the Code and, if so qualified, will not be liable for
federal income taxes to the extent earnings are
distributed to shareholders on a timely basis.
However, for federal income tax purposes, all dividends
and distributions of net realized short-term capital
gains you receive from the Fund are taxable as ordinary
income, whether reinvested in additional shares or
received in cash, unless you are exempt from taxation
or entitled to a tax deferral. Distributions of net
realized long-term capital gains you receive from the
Fund, whether reinvested in additional shares or
received in cash, are taxable as a capital gain. The
capital gain holding period is determined by the length
of time the Fund has held the security and not the
length of time you have held shares in the Fund. You
will be informed annually as to the amount and nature
of all dividends and capital gains paid during the
prior year. Such capital gains and dividends may also
be subject to state or local taxes. If you are not
required to pay taxes on your income, you are generally
not required to pay federal income taxes on the amounts
distributed to you.
Dividends and capital gains, if any, will be
distributed at least annually in December. Please
note, however, that the objective of the Fund is
capital appreciation, not the production of
distributions. You should measure the success of your
investment by the value of your investment at any given
time and not by the distributions you receive.
When a dividend or capital gain is distributed,
the Fund's net asset value decreases by the amount of
the payment. If you purchase shares shortly before a
distribution, you will be subject to income taxes on
the distribution, even though the value of your
investment (plus cash received, if any) remains the
same. All dividends and capital gains distributions
will automatically be reinvested in additional Fund
shares at the then prevailing net asset value unless
you specifically request that dividends or capital
gains or both be paid in cash. The election to receive
dividends or reinvest them may be changed by writing to
the Fund at Kopp Funds, Inc., c/o Firstar Trust
Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701.
Such notice must be received at least 10 days prior to
the record date of any dividend or capital gain
distribution.
If you do not furnish the Fund with your correct
social security number or taxpayer identification
number, the Fund is required by current federal law to
withhold federal income tax from your distributions
(including applicable Fund share reinvestments) and
redemption proceeds at a rate of 31%.
This section is not intended to be a full
discussion of federal income tax laws and the effect of
such laws on you. There may be other federal, state,
or local tax considerations applicable to a particular
investor. You are urged to consult your own tax
advisor.
<PAGE>
FUND PERFORMANCE
Each class of shares may from time to time compare
its investment results to various passive indices or
other mutual funds and cite such comparisons in reports
to shareholders, sales literature, and advertisements.
The results may be calculated on several bases,
including average annual total return, total return,
and cumulative total return.
Average annual total return and total return
figures measure both the net investment income
generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the
underlying investments in a class of shares over a
specified period of time, assuming the reinvestment of
all dividends and distributions. Average annual total
return figures are annualized and therefore represent
the average annual percentage change over the specified
period. Total return figures are not annualized and
represent the aggregate percentage or dollar value
change over the period. Cumulative total return simply
reflects the applicable class' performance over a
stated period of time. All performance figures for
Class A shares reflect the deduction of the 3.50%
maximum initial sales charge. All performance figures
for Class I shares reflect the deduction of the 1%
redemption fee.
<PAGE>
ADDITIONAL INFORMATION
DIRECTORS
LeRoy C. Kopp
Robert L. Stehlik
Thomas R. Stuart
OFFICERS
LeRoy C. Kopp, Chief Executive Officer and
President
Donald B. Cornelius, Chief Financial Officer and
Treasurer
Kathleen S. Tillotson, Executive Vice President
and Secretary
INVESTMENT ADVISOR
Kopp Investment Advisors, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
CUSTODIAN, ADMINISTRATOR, AND
TRANSFER AGENT
Firstar Trust Company
For overnight deliveries, use: For regular mail deliveries, use:
Kopp Funds, Inc. Kopp Funds, Inc.
c/o Firstar Trust Company c/o Firstar Trust Company
Mutual Fund Services P.O. Box 701
Third Floor Milwaukee, Wisconsin 53201-0701
615 E. Michigan Street
Milwaukee, WI 53202
DISTRIBUTOR
Centennial Lakes Capital, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick L.L.P.
4200 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 N. Water Street
Milwaukee, WI 53202
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[Logo]
Kopp Funds, Inc.
Kopp Emerging Growth Fund
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Telephone: 1-888-533-KOPP
Facsimile: 1-612-841-0411
Website: www.koppfunds.com
This Statement of Additional Information is not a
prospectus and should be read in conjunction with the
Prospectus of the Kopp Emerging Growth Fund ("Fund"),
dated September ___, 1997. The Prospectus, which may
be revised from time to time, is available without
charge upon request to the above-noted address,
telephone number, or website.
This Statement of Additional Information is dated September ___, 1997.
<PAGE>
CONTENTS
INVESTMENT OBJECTIVE AND RESTRICTIONS 3
INVESTMENT POLICIES AND TECHNIQUES 4
DIRECTORS AND OFFICERS 6
PRINCIPAL SHAREHOLDERS 8
INVESTMENT ADVISOR 8
FUND TRANSACTIONS AND BROKERAGE 9
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT 10
DISTRIBUTOR AND PLAN OF DISTRIBUTION 10
TAXES 11
DETERMINATION OF NET ASSET VALUE 11
SHAREHOLDER MEETINGS 12
PERFORMANCE INFORMATION 12
INDEPENDENT ACCOUNTANTS 13
FINANCIAL STATEMENTS 14
No person has been authorized to give any
information or to make any representations other than
those contained in this Statement of Additional
Information ("SAI") and the Prospectus dated September
__, 1997, and if given or made, such information or
representations may not be relied upon as having been
authorized by the Fund. This SAI does not constitute
an offer to sell securities in any state or
jurisdiction in which such offering may not lawfully be
made.
<PAGE>
INVESTMENT OBJECTIVE AND RESTRICTIONS
The Fund's investment objective is to seek long-
term capital appreciation. The Fund's investment
objective and policies are described in detail in the
Prospectus under the captions "Investment Objective and
Restrictions" and "Implementation of Policies and
Risks." The following are the Fund's fundamental
investment restrictions which cannot be changed without
shareholder approval.
The Fund:
1. May not issue senior securities, except as
permitted under the 1940 Act;
2. May not act as an underwriter of another company's
securities, except to the extent that the Fund may
be deemed to be an underwriter within the meaning
of the Securities Act of 1933, as amended ("1933
Act"), in connection with the purchase and sale of
portfolio securities;
3. May not purchase or sell physical commodities
unless acquired as a result of ownership of
securities or other instruments (but this shall
not prevent the Fund from purchasing or selling
options, futures contracts, or other derivative
instruments, or from investing in securities or
other instruments backed by physical commodities);
4. May not make loans if, as a result, more than 33
1/3% of the Fund's assets would be lent to other
persons, except through purchases of debt
securities or other debt instruments or engaging
in repurchase agreements;
5. May not invest more than 25% of its assets in
securities of companies in any one industry. This
restriction does not apply to obligations issued
or guaranteed by the U.S. government, its
agencies, or instrumentalities;
6. May not purchase or sell real estate unless
acquired as a result of ownership of securities or
other instruments (but this shall not prohibit the
Fund from purchasing or selling securities or
other instruments backed by real estate or of
issuers engaged in real estate activities);
7. May (i) borrow money from banks, and (ii) make
other investments or engage in other transactions
permissible under the Investment Company Act of
1940, as amended ("1940 Act"), which may involve a
borrowing, provided that the combination of (i)
and (ii) shall not exceed 33 1/3% of the value of
the Fund's assets (including the amount borrowed),
less the Fund's liabilities (other than
borrowings), except that the Fund may borrow up to
an additional 5% of its assets (not including the
amount borrowed) from a bank for temporary or
emergency purposes (but not for leverage or the
purchase of investments). The Fund may also
borrow money from other persons to the extent
permitted by applicable law;
8. Notwithstanding any other fundamental investment
policy or restriction, may invest all of its
assets in the securities of a single open-end
management investment company with substantially
the same fundamental investment objective,
policies, and restrictions as the Fund.
In addition to the non-fundamental operating
policies set forth in the Prospectus, the following non-
fundamental operating policies may be changed by the
Board of Directors without shareholder approval.
The Fund may not:
1. Sell securities short, unless the Fund owns or has
the right to obtain securities equivalent in kind
and amount to the securities sold short, or unless
it covers such short sale as required by the
current rules and positions of the Securities and
Exchange Commission ("SEC") or its staff, and
provided that transactions in options, futures
contracts, options on futures contracts, or other
derivative instruments are not deemed to
constitute selling securities short.
<PAGE>
2. Purchase securities on margin, except that the
Fund may obtain such short-term credits as are
necessary for the clearance of transactions; and
provided that margin deposits in connection with
futures contracts, options on futures contracts,
or other derivative instruments shall not
constitute purchasing securities on margin.
3. Invest in illiquid securities if, as a result of
such investment, more than 15% of its net assets
would be invested in illiquid securities, or such
other amounts as may be permitted under the 1940
Act.
4. Purchase securities of other investment companies
except in compliance with the 1940 Act.
5. Engage in futures or options on futures
transactions which are impermissible pursuant to
Rule 4.5 under the Commodity Exchange Act ("CEA")
and, in accordance with Rule 4.5, will use futures
or options on futures transactions solely for bona
fide hedging transactions (within the meaning of
the CEA); provided, however, that the Fund may,
in addition to bona fide hedging transactions, use
futures and options on futures transactions if the
aggregate initial margin and premiums required to
establish such positions, less the amount by which
any such options positions are in the money
(within the meaning of the CEA), do not exceed 5%
of the Fund's net assets.
6. Make any loans other than loans of portfolio
securities, except through purchases of debt
securities or other debt instruments or engaging
in repurchase agreements with respect to portfolio
securities.
7. Borrow money except from banks or through reverse
repurchase agreements or mortgage dollar rolls,
and will not purchase securities when bank
borrowings exceed 5% of its assets.
Except for the fundamental investment restrictions
listed above and the Fund's investment objective, the
other investment policies described in the Prospectus
and this SAI are not fundamental and may be changed
with approval of the Fund's Board of Directors. Unless
noted otherwise, if a percentage restriction is adhered
to at the time of investment, a later increase or
decrease in percentage resulting from a change in the
Fund's assets (i.e., due to cash inflows or
redemptions) or in market value of the investment or
the Fund's assets will not constitute a violation of
that restriction.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the
discussion of the Fund's investment objective,
strategy, and policies that are described in the
Prospectus under the captions "Investment Strategy,"
"Implementation of Policies and Risks," and "Investment
Objective and Restrictions."
Depositary Receipts
The Fund may invest in foreign securities by
purchasing depositary receipts, including American
Depositary Receipts ("ADRs") and European Depositary
Receipts ("EDRs") or other securities convertible into
securities of companies based in foreign countries.
These securities may not necessarily be denominated in
the same currency as the securities into which they may
be converted. Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in
the U.S. securities markets, while EDRs, in bearer
form, may be denominated in other currencies and are
designed for use in European securities markets. ADRs
are receipts typically issued by a U.S. bank or trust
company evidencing ownership of the underlying
securities. EDRs are European receipts evidencing a
similar arrangement. For purposes of the Fund's
investment policies, ADRs and EDRs are deemed to have
the same classification as the underlying securities
they represent. Thus, an ADR or EDR representing
ownership of common stock will be treated as common
stock.
ADR facilities may be established as either
"unsponsored" or "sponsored." While ADRs issued under
these two types of facilities are in some respects
similar, there are distinctions between them relating
to the rights and obligations of ADR holders and the
practices of market participants. For example, a non-
sponsored depositary may not provide the same
shareholder information that a sponsored depositary is
required to provide under its contractual
<PAGE>
arrangements
with the issuer, including reliable financial
statements. Under the terms of most sponsored
arrangements, depositaries agree to distribute notices
of shareholder meetings and voting instructions, and to
provide shareholder communications and other
information to the ADR holders at the request of the
issuer of the deposited securities.
Convertible Securities
The Fund may invest in convertible securities,
which are bonds, debentures, notes, preferred stocks,
or other securities that may be converted into or
exchanged for a specified amount of common stock or
warrants of the same or a different company within a
particular period of time at a specified price or
formula. A convertible security entitles the holder to
receive interest normally paid or accrued on debt or
the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted,
or exchanged. Convertible securities have unique
investment characteristics in that they generally (i)
have higher yields than common stocks, but lower yields
than comparable non-convertible securities, (ii) are
less subject to fluctuation in value than the
underlying stock (or warrant) since they have fixed
income characteristics, and (iii) provide the potential
for capital appreciation if the market price of the
underlying common stock (or warrant) increases. A
convertible security may be subject to redemption at
the option of the issuer at a price established in the
convertible security's governing instrument. If a
convertible security held by the Fund is called for
redemption, the Fund will be required to permit the
issuer to redeem the security, convert it into the
underlying common stock (or warrant), or sell it to a
third party.
Concentration
While the Fund is "non-diversified," which means
that it is permitted to invest its assets in a more
limited number of issuers than other investment
companies, the Fund intends to diversify its assets to
qualify for tax treatment as a regulated investment
company under the Internal Revenue Code of 1986, as
amended ("Code"). To so qualify (i) not more than 25%
of the total value of the Fund's assets may be invested
in securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code) or of
any two or more issuers controlled by the Fund, which,
pursuant to the regulations under the Code, may be
deemed to be engaged in the same, similar, or related
trades or businesses, and (ii) with respect to 50% of
the total value of the Fund's assets (a) not more than
5% of its total assets may be invested in the
securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code) and (b)
the Fund may not own more than 10% of the outstanding
voting securities of any one issuer (other than U.S.
Government securities and the securities of other
regulated investment companies under the Code).
In addition, the Fund has adopted a fundamental
investment restriction which prohibits the Fund from
investing more than 25% of its assets in securities of
companies in any one industry. An industry is defined
as a business-line subsector of a stock-market sector.
While the Fund may be heavily invested in a single
market sector like technology or health care, for
example, it will not invest more than 25% of its assets
in securities of companies in any one industry or
subsector of technology or health care. Technology
subsectors or industries would include networking,
telecommunications, software, semiconductors, and voice-
processing business lines. Health care industries
would include medical devices and information systems
business lines. The Fund is not a technology or
"sector" mutual fund. While Advisor may be heavily
invested in technology or any other market sector from
time to time, rotation in asset management may be
experienced.
To the extent that a relatively high percentage of
the Fund's assets may be invested in the securities of
a limited number of companies, the Fund's portfolio
securities may be more susceptible to any single
economic, political, or regulatory occurrence than the
portfolio securities of a diversified investment
company.
Temporary Strategies
As described in the Prospectus under the heading
"Implementation of Policies and Risks," prior to
investing proceeds from sales of Fund shares, to meet
ordinary daily cash needs, and to retain the
flexibility to respond promptly to changes in market
and economic conditions, the Fund may hold cash and/or
invest all or a portion of its
<PAGE>
assets in money market
instruments. The money market instruments which the
Fund may purchase include U.S. Government securities,
bank obligations, obligations of savings institutions,
fully insured certificates of deposit, commercial
paper, and securities issued by registered investment
companies holding themselves out as money market funds.
Such securities are limited to:
U.S. Government Securities. Obligations issued or
guaranteed as to principal and interest by the United
States or its agencies (such as the Export-Import Bank
of the United States, Federal Housing Administration
and Government National Mortgage Association) or its
instrumentalities (such as the Federal Home Loan Bank),
including Treasury bills, notes, and bonds;
Bank Obligations. Obligations (including
certificates of deposit, bankers' acceptances,
commercial paper (see below) and other debt
obligations) of banks subject to regulation by the U.S.
Government and having total assets of $1 billion or
more, and instruments secured by such obligations, not
including obligations of foreign branches of domestic
banks;
Obligations of Savings Institutions. Certificates
of deposit of savings banks and savings and loan
associations, having total assets of $1 billion or
more;
Fully Insured Certificates of Deposit.
Certificates of deposit of banks and savings
institutions, having total assets of less than $1
billion, if the principal amount of the obligation is
insured by the Bank Insurance Fund or the Savings
Association Insurance Fund (each of which is
administered by the Federal Deposit Insurance
Corporation), limited to $100,000 principal amount per
certificate and to 15% or less of the Fund's total
assets in all such obligations and in all illiquid
assets, in the aggregate;
Commercial Paper. Commercial paper rated within
the two highest grades by Moody's Investors Service,
Inc. ("Moody's") or Standard & Poor's Corporation
("S&P") or, if not rated, issued by a company having an
outstanding debt issue rated at least Aaa by Moody's or
AAA by S&P; and
Money Market Funds. Securities issued by
registered investment companies holding themselves out
as money market funds which attempt to maintain a
stable net asset value of $1.00 per share.
DIRECTORS AND OFFICERS
The directors and officers of the Kopp Funds, Inc.
("Corporation"), of which the Fund is a series,
together with information as to their principal
business occupations during the last five years, and
other information, are shown below. Each director and
officer who is deemed an "interested person" as defined
in the 1940 Act is indicated by an asterisk. The
directors and officers listed below have served as such
since inception of the Corporation on June 12, 1997,
except as otherwise noted.
*LeRoy C. Kopp, Chief Executive Officer,
President, and a Director of the Corporation.
Mr. Kopp, 63 years old, received a Bachelor's
Degree with Distinction in Business Administration from
the University of Minnesota in 1956. Prior to founding
Kopp Investment Advisors ("Advisor") in 1990, Mr. Kopp
spent 30 years with Dain Bosworth Inc., where he was
the Manager of the Edina, Minnesota branch and a Senior
Vice President. Mr. Kopp has received a number of
business and community honors and awards, including
Upper Midwest Entrepreneur of the Year for Emerging
Companies.
*Donald B. Cornelius, Chief Financial Officer and
Treasurer of the Corporation.
Mr. Cornelius, 65 years old, has served as Chief
Financial Officer, Chief Compliance Officer, and
Secretary of Advisor since its inception in 1990.
Before joining Advisor, Mr. Cornelius worked for more
than 30 years at Dain Bosworth Inc.
<PAGE>
*Kathleen S. Tillotson, Executive Vice President
and Secretary of the Corporation.
Ms. Tillotson, 41 years old, joined Advisor in
March 1996 as Vice President and General Counsel. In
1981, Ms. Tillotson graduated from Tulane University
School of Law magna cum laude. Before joining Advisor
in 1996, Ms. Tillotson practiced law as an associate
and principal with law firms in Boston and Minneapolis.
Robert L. Stehlik, a Director of the Corporation.
Mr. Stehlik, 59 years old, has been a Director of
the Corporation since September 8, 1997. Mr. Stehlik
has served as Senior Vice President of Richfield Bank &
Trust Co., based in Richfield, Minnesota, since April
1994. For the twenty years prior to that, he served in
various capacities at First Bank, a bank based in
Minneapolis, Minnesota, including Senior Vice
President.
Thomas R. Stuart, a Director of the Corporation.
Mr. Stuart, 52 years old, has been a Director of
the Corporation since September 8, 1997. Since May
1988, Mr. Stuart has served as Chairman and Chief
Executive Officer of the Bureau of Engraving, Inc., a
manufacturer of interconnect devices and a provider of
commercial printing and home education services based
in Minneapolis, Minnesota.
The address of Messrs. Kopp and Cornelius, and Ms.
Tillotson, is 7701 France Avenue South, Suite 500,
Edina, Minnesota 55435. Mr. Stehlik's address is 6625
Lyndale Avenue South, Richfield, Minnesota 55423. Mr.
Stuart's address is 3400 Technology Drive, Minneapolis,
Minnesota 55418.
As of September 30, 1997, officers and directors
of the Corporation did not beneficially own any of the
shares of common stock of the Fund's then outstanding
shares; however, Advisor, which is controlled by Mr.
Kopp, owned 100% of such shares. Directors and
officers of the Corporation who are also officers,
directors, employees, or shareholders of Advisor do not
receive any remuneration from the Fund for serving as
directors or officers.
The following table provides information relating
to annual compensation to be paid to directors of the
Corporation for their services as such(1):
Name Cash Other Total
Compensation(2) Compensation
LeRoy C. Kopp $0 $0 $0
Robert L. Stehlik $15,000 $0 $15,000
Thomas R. Stuart $15,000 $0 $15,000
All directors $30,000 $0 $30,000
as a group
(3 persons)
__________
(1)The amounts indicated are estimates of amounts to
be paid by the Corporation during its first fiscal
year.
(2)Each director who is not deemed an "interested
person" of the Corporation, as defined in the 1940
Act, will receive $3,500 for each Board of
Directors meeting attended by such person, a $1,000
per fiscal year stipend if all such meetings are
attended, and reimbursement of reasonable expenses
incurred in connection therewith. The Board
anticipates holding four meetings during fiscal
1998. Thus, each disinterested director is
entitled to up to $15,000 during such time period
from the Corporation, plus reasonable expenses.
Disinterested directors may elect to receive their
compensation in the form of cash, shares of the
Fund, or both.
<PAGE>
PRINCIPAL SHAREHOLDERS
As of September 30, 1997, the following persons
owned of record or are known by the Fund to own of
record or beneficially 5% or more of the outstanding
shares of the Fund:
Name and Address No. Shares Percentage
Kopp Investment Advisors, Inc. 10,000 100%
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Based on the foregoing, as of September 30, 1997,
Advisor owned a controlling interest in the Fund.
Shareholders with a controlling interest could effect
the outcome of proxy voting or the direction of
management of the Fund.
INVESTMENT ADVISOR
Kopp Investment Advisors ("Advisor") is the
investment advisor to the Fund. Advisor is a wholly-
owned subsidiary of Kopp Holding Company ("KHC") and is
controlled by LeRoy C. Kopp, the President and Chief
Investment Officer of Advisor and sole shareholder of
KHC.
The investment advisory agreement between the
Corporation and Advisor dated as of October 1, 1997
("Advisory Agreement") has an initial term of two years
and thereafter is required to be approved annually by
the Board of Directors of the Corporation or by vote of
a majority of the Fund's outstanding voting securities
(as defined in the 1940 Act). Each annual renewal must
also be approved by the vote of a majority of the
Corporation's directors who are not parties to the
Advisory Agreement or interested persons of any such
party, cast in person at a meeting called for the
purpose of voting on such approval. The Advisory
Agreement was approved by the full Board of Directors
of the Corporation on September 8, 1997 and by the
initial shareholder of the Fund on September 8, 1997.
The Advisory Agreement is terminable without penalty on
60 days' written notice by the Board of Directors, by
vote of a majority of the Fund's outstanding voting
securities, or by Advisor, and will terminate
automatically in the event of its assignment.
Under the terms of the Advisory Agreement, Advisor
manages the Fund's investments and business affairs,
subject to the supervision of the Board of Directors.
At its expense, Advisor provides office space and all
necessary office facilities, equipment, and personnel
for managing the investments of the Fund. As
compensation for its services, the Corporation pays
Advisor an annual management fee of 1.00% of the Fund's
average daily net assets attributable to each class of
shares. The advisory fee is accrued daily and paid
monthly. The organizational expenses of the Fund were
advanced by Advisor and will be reimbursed by the Fund
over a period of not more than 60 months. The
organizational expenses were approximately $58,200.
Under the terms of the Advisory Agreement, Advisor
has agreed that for the fiscal year ending
September 30 , 1998, Advisor will waive its management
fees and/or reimburse the Fund's operating expenses to
the extent necessary to ensure that (i) the total
operating expenses for the Class A shares of the Fund
do not exceed 1.50% of average daily net assets, and
(ii) the total operating expenses for the Class I
shares do not exceed 1.15% of average net assets.
After fiscal 1998, Advisor may from time to time
voluntarily (but is not required or obligated to) waive
all or a portion of its fee and/or reimburse all or a
portion of class operating expenses. Any waiver of
fees or reimbursement of expenses will be made on a
monthly basis and, with respect to the latter, will be
paid to the Fund by reduction of Advisor's fee. Any
such waiver/reimbursement is subject to later
adjustment during the term of the Advisory Agreement to
allow Advisor to recoup amounts waived/reimbursed to
the extent actual fees and expenses for a specific
month are less than the expense limitation caps. In
the event, after fiscal 1998, Advisor decides to no
<PAGE>
longer voluntarily waive and/or reimburse fees and/or
expenses, any unrecovered amounts previously waived
and/or reimbursed will be permanently forgiven by
Advisor.
FUND TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, Advisor, in its
capacity as portfolio manager, is responsible for
decisions to buy and sell securities for the Fund and
for the placement of the Fund's securities business,
the negotiation of the commissions to be paid on such
transactions, and the allocation of portfolio brokerage
business. The Fund has no obligation to deal with any
particular broker or dealer; in executing transactions,
Advisor seeks to obtain the best execution at the best
security price available with respect to each
transaction. The best price to the Fund means the best
net price without regard to the mix between purchase or
sale price and commission, if any. While Advisor seeks
reasonably competitive commission rates, the Fund does
not necessarily pay the lowest available commission.
Brokerage may be allocated based on the sale of the
Fund's shares where best execution and price may be
obtained from more than one broker or dealer.
Section 28(e) of the Securities Exchange Act of
1934, as amended ("Section 28(e)"), permits an
investment advisor, under certain circumstances, to
cause an account to pay a broker or dealer who supplies
brokerage and research services a commission for
effecting a transaction in excess of the amount of
commission another broker or dealer would have charged
for effecting the transaction. Brokerage and research
services include (a) furnishing advice as to the value
of securities, the advisability of investing,
purchasing, or selling securities, and the availability
of securities or purchasers or sellers of securities;
(b) furnishing analyses and reports concerning issuers,
industries, sectors, securities, economic factors and
trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and
performing functions incidental thereto (such as
clearance, settlement, and custody).
In selecting brokers or dealers, Advisor considers
investment and market information and other research,
such as economic, securities, and performance
measurement research provided by such brokers or
dealers and the quality and reliability of brokerage
services, including execution capability, performance,
and financial responsibility. Accordingly, the
commissions charged by any such broker or dealer may be
greater than the amount another firm might charge if
Advisor determines in good faith that the amount of
such commissions is reasonable in relation to the value
of the research information and brokerage services
provided by such broker or dealer to the Fund. Advisor
believes that the research information received in this
manner provides the Fund with benefits by supplementing
the research otherwise available to the Fund. Such
higher commissions will not be paid by the Fund unless
(a) Advisor determines in good faith that the amount is
reasonable in relation to the services in terms of the
particular transaction or in terms of Advisor's overall
responsibilities with respect to the accounts,
including the Fund, as to which it exercises investment
discretion; (b) such payment is made in compliance with
the provisions of Section 28(e) and other applicable
state and federal laws; and (c) in the opinion of
Advisor, the total commissions paid by the Fund will be
reasonable in relation to the benefits to the Fund over
the long term.
Advisor places portfolio transactions for other
advisory accounts in addition to the Fund. Research
services furnished by firms through which the Fund
effects its securities transactions may be used by
Advisor in servicing all of its accounts; not all of
such services may be used by Advisor in connection with
the Fund. Advisor believes it is not possible to
measure separately the benefits from research services
to each of the accounts (including the Fund) managed by
it. Because the volume and nature of the trading
activities of the accounts are not uniform, the amount
of commissions in excess of those charged by another
broker or dealer paid by each account for brokerage and
research services will vary. However, Advisor believes
such costs to the Fund will not be disproportionate to
the benefits received by the Fund on a continuing
basis. Advisor seeks to allocate portfolio
transactions equitably whenever concurrent decisions
are made to purchase or sell securities by the Fund and
another advisory account. In some cases, this
procedure could have an adverse effect on the price or
the amount of securities available to the Fund. There
can be no assurance that a particular purchase or sale
opportunity will be allocated to the Fund. In making
such allocations between the Fund and other advisory
accounts, certain factors considered by Advisor are the
respective investment objectives, the relative size of
portfolio holdings of the same or comparable
securities, the availability of cash for investment,
and the size of investment commitments generally held.
<PAGE>
The Fund anticipates that its annual portfolio
turnover rate will be under 50%. The annual portfolio
turnover rate indicates changes in the Fund's
securities holdings; for instance, a rate of 100% would
result if all the securities in a portfolio (excluding
securities whose maturities at acquisition were one
year or less) at the beginning of an annual period had
been replaced by the end of the period. The turnover
rate may vary from year to year, as well as within a
year, and may be affected by portfolio sales necessary
to meet cash requirements for redemptions of the Fund's
shares.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND-DISBURSING AGENT
As custodian of the Fund's assets, Firstar Trust
Company ("Firstar"), 615 East Michigan Street,
Milwaukee, Wisconsin 53202, has custody of all
securities and cash of the Fund, delivers and receives
payment for portfolio securities sold, receives and
pays for portfolio securities purchased, collects
income from investments, if any, and performs other
duties, all as directed by the officers of the
Corporation. Firstar also acts as transfer agent and
dividend-disbursing agent for the Fund.
DISTRIBUTOR AND PLAN OF DISTRIBUTION
Distributor
Under a distribution agreement dated as of October
1, 1997 ("Distribution Agreement"), Centennial Lakes
Capital, Inc. ("Distributor") acts as principal
distributor of the Fund's shares. The Distribution
Agreement provides that the Distributor will use its
best efforts to distribute the Fund's shares, which
shares are offered for sale by the Fund continuously at
(i) net asset value per share plus a maximum initial
sales charge of 3.50% of the offering price, in the
case of Class A shares, and (ii) net asset value per
share without the imposition of a sales charge, in the
case of Class I shares. Investments in Class A shares
above $1 million are not assessed an initial sales
load. However, the Distributor may impose a 1%
contingent deferred sales charge ("CDSC") on such
shares redeemed within 24 months of purchase. In
addition, redemptions of Class I shares within 24
months of purchase are charged a 1% redemption fee.
Pursuant to the terms of the Distribution Agreement,
the Distributor bears the costs of printing
prospectuses and shareholder reports which are used for
selling purposes, as well as advertising and any other
costs attributable to the distribution of Fund shares.
Certain of theses expenses may be reimbursed pursuant
to the terms of the distribution and shareholder
servicing plan discussed below.
As compensation for its services under the
Distribution Agreement, the Distributor may retain a
portion of (i) the initial sales charge from purchases
of Class A shares, (ii) the CDSC from redemptions of
Class A shares, if applicable, and (iii) the Rule 12b-1
fees payable with respect to the Class A shares (as
described below).
Distribution and Shareholder Servicing Plan
As described more fully in the Prospectus under
the heading "Distribution and Shareholder Servicing
Plan," the Fund has adopted a plan pursuant to Rule 12b-
1 under the 1940 Act ("Plan") with respect to each
class of shares pursuant to which certain distribution
and shareholder servicing fees may be paid to the
Distributor. Under the terms of the Plan, each class
of shares may be required to pay the Distributor (i) a
distribution fee for the promotion and distribution of
shares of up to 0.25% of the average daily net assets
of the Fund attributable to each such class (computed
on an annual basis), and (ii) a shareholder servicing
fee for personal service provided to shareholders of up
to 0.25% of the average daily net assets of the Fund
attributable to each such class (computed on an annual
basis). Payments under the Plan with respect to Class
A shares are currently limited to 0.35%, which
represents a 0.10% distribution fee and a 0.25%
shareholder servicing fee; the Fund currently has no
intention of paying any Rule 12b-1 fees in connection
with the Class I shares. The Distributor is authorized
to pay all or a portion of these fees to any securities
dealer, financial institution or any other person
("Recipient") who renders assistance in distributing or
promoting the sale of Fund shares, or who provides
certain shareholder services to Fund shareholders,
pursuant to a written agreement ("Rule 12b-1 Related
Agreement"). To the extent such fee is not paid to
such persons, the
<PAGE>
Distributor may use the fee for its
own distribution expenses incurred in connection with
the sale of Fund shares, or for any of its shareholder
servicing expenses. The Plan is a "reimbursement"
plan, which means that the fees paid by the Fund under
the Plan are intended to reimburse the Distributor for
services rendered and commission fees borne up to the
maximum allowable distribution and shareholder
servicing fees. If the Distributor is due more money
for its services rendered and commission fees borne
than are immediately payable because of the expense
limitation under the Plan, the unpaid amount is carried
forward from period to period while the Plan is in
effect until such time as it may be paid. No interest,
carrying, or other finance charges will be borne by the
Fund with respect to unpaid amounts carried forward.
Anticipated Benefits to the Fund
The Board of Directors of the Corporation
considered various factors in connection with its
decision to approve the Plan, including: (a) the
nature and causes of the circumstances which make
implementation of the Plan necessary and appropriate;
(b) the way in which the Plan would address those
circumstances, including the nature and potential
amount of expenditures; (c) the nature of the
anticipated benefits; (d) the merits of possible
alternative plans or pricing structures; (e) the
relationship of the Plan to other distribution efforts
of the Fund, including the sales load on Class A
shares; and (f) the possible benefits of the Plan to
any other person relative to those of the Fund.
Based upon its review of the foregoing factors and
the material presented to it, and in light of its
fiduciary duties under relevant state law and the 1940
Act, the Board of Directors determined, in the exercise
of its business judgment, that the Plan was reasonably
likely to benefit the Fund and its shareholders in at
least one or several potential ways. Specifically, the
Board concluded that the Distributor and any Recipients
operating under Rule 12b-1 Related Agreements would
have little or no incentive to incur promotional
expenses on behalf of the Fund if a Rule 12b-1 plan
were not in place to reimburse them, thus making the
adoption of the Plan important to the initial success
and thereafter, continued viability of the Fund. In
addition, the Board determined that the payment of Rule
12b-1 fees to these persons should motivate them to
provide an enhanced level of service to Fund
shareholders, which would, of course, benefit such
shareholders. Finally, the adoption of the Plan would
help to increase net assets under management in a
relatively short amount of time, given the marketing
efforts on the part of the Distributor and Recipients
to sell Fund shares, which should result in certain
economies of scale.
While there is no assurance that the expenditure
of Fund assets to finance distribution of Fund shares
will have the anticipated results, the Board of
Directors believes there is a reasonable likelihood
that one or more of such benefits will result, and
since the Board will be in a position to monitor the
distribution and shareholder servicing expenses of the
Fund, it will be able to evaluate the benefit of such
expenditures in deciding whether to continue the Plan.
TAXES
As indicated under "Dividends, Capital Gains
Distributions, and Tax Treatment" in the Prospectus,
the Fund intends to qualify annually as a "regulated
investment company" under the Code. This qualification
does not require government supervision of the Fund's
management practices or policies.
A dividend or capital gains distribution received
shortly after the purchase of shares reduces the net
asset value of shares by the amount of the dividend or
distribution and, although in effect a return of
capital, will be subject to income taxes. Net gains on
sales of securities when realized and distributed are
taxable as capital gains. If the net asset value of
shares were reduced below a shareholder's cost by
distribution of gains realized on sales of securities,
such distribution would be a return of investment
although taxable as indicated above.
<PAGE>
DETERMINATION OF NET ASSET VALUE
As set forth in the Prospectus under the same
heading, the net asset value of each class of shares of
the Fund will be determined as of the close of trading
on each day the New York Stock Exchange ("NYSE") is
open for trading. The Fund does not determine net
asset value on days the NYSE is closed and at other
times described in the Prospectus. The NYSE is closed
on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, and Christmas Day. Additionally, if any of the
aforementioned holidays falls on a Saturday, the NYSE
will not be open for trading on the preceding Friday
and when such holiday falls on a Sunday, the NYSE will
not be open for trading on the succeeding Monday,
unless unusual business conditions exist, such as the
ending of a monthly or the yearly accounting period.
SHAREHOLDER MEETINGS
Minnesota law permits registered investment
companies, such as the Corporation, to operate without
an annual meeting of shareholders, unless an annual
meeting has not been held during the immediately
preceding 15 months and a shareholder or shareholders
holding 3% or more of the outstanding voting shares of
the Corporation demand such a meeting. In addition,
special meetings may be called at any time and for any
purpose by one or more shareholders holding 10% or more
of the outstanding voting shares of the Corporation,
except that a special meeting for the purpose of
considering any action to change or otherwise affect
the composition of the board of directors for that
purpose, must be called by 25% or more of the
outstanding voting shares of the Corporation.
PERFORMANCE INFORMATION
As described in the "Fund Performance" section of
the Fund's Prospectus, the Fund's historical
performance or return may be shown in the form of
various performance figures. The Fund's performance
figures are based upon historical results and are not
necessarily representative of future performance.
Factors affecting the Fund's performance include
general market conditions, operating expenses, and
investment management.
Total Return
The average annual total return of each class of
shares of the Fund is computed by finding the average
annual compounded rates of return over the periods that
would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P(1+T)n = ERV
P = a hypothetical initial
payment of $1,000.
T = average annual total
return.
n = number of years.
ERV = ending redeemable value of
a hypothetical $1,000 payment made at
the beginning of the stated periods at
the end of the stated periods.
Performance for a specific period is calculated by
first taking an investment (assumed to be $1,000)
("initial investment") in a class of shares on the
first day of the period and computing the "ending
value" of that investment at the end of the period.
The total return percentage is then determined by
subtracting the initial investment from the ending
value and dividing the remainder by the initial
investment and expressing the result as a percentage.
With respect to the Class A shares, this calculation
reflects the deduction of the maximum 3.50% initial
sales charge and, with respect to the Class I shares,
this calculation reflects the deduction of the 1%
redemption fee. In addition, the calculation assumes
that all income and capital gains dividends paid by the
Fund have been reinvested at the net asset
<PAGE>
value of the
applicable class of shares on the reinvestment dates
during the period. Total return may also be shown as
the increased dollar value of the hypothetical
investment over the period.
Cumulative total return represents the simple
change in value of an investment over a stated period
and may be quoted as a percentage or as a dollar
amount. Total returns may be broken down into their
components of income and capital (including capital
gains and changes in share price) in order to
illustrate the relationship between
these factors and their contributions to total return.
Comparisons
From time to time, in marketing and other Fund
literature, the performance of one or both classes of
shares may be compared to the performance of other
mutual funds in general or to the performance of
particular types of mutual funds with similar
investment goals, as tracked by independent
organizations. Among these organizations, Lipper
Analytical Services, Inc. ("Lipper"), a widely used
independent research firm which ranks mutual funds by
overall performance, investment objectives, and assets,
may be cited. Lipper performance figures are based on
changes in net asset value, with all income and capital
gains dividends reinvested. Such calculations do not
include the effect of any sales charges. Each class of
shares of the Fund will be compared to Lipper's
appropriate fund category, that is, by fund objective
and portfolio holdings.
The Fund's performance may also be compared to the
performance of other mutual funds by Morningstar, Inc.
("Morningstar"), which ranks funds on the basis of
historical risk and total return. Morningstar's
rankings range from five stars (highest) to one star
(lowest) and represent Morningstar's assessment of the
historical risk level and total return of a fund as a
weighted average for 3, 5, and 10 year periods.
Rankings are not absolute or necessarily predictive of
future performance.
Evaluations of the Fund's performance made by
independent sources may also be used in advertisements
concerning the Fund, including reprints of or
selections from, editorials or articles about the Fund.
Sources for Fund performance and articles about the
Fund may include publications such as Money, Forbes,
Kiplinger's, Financial World, Business Week, U.S. News
and World Report, the Wall Street Journal, Barron's,
and a variety of investment newsletters.
The Fund may compare the performance of one or
both classes of shares to a wide variety of indices and
measures of inflation. There are differences and
similarities between the investments that the Fund may
purchase and the investments measured by these indices.
Investors may want to compare the performance of
one or both classes of shares to that of certificates
of deposit offered by banks and other depository
institutions. Certificates of deposit may offer fixed
or variable interest rates and principal is guaranteed
and may be insured. Withdrawal of the deposits prior
to maturity normally will be subject to a penalty.
Rates offered by banks and other depository
institutions are subject to change at any time
specified by the issuing institution.
Investors may also want to compare performance of
one or both classes of shares to that of money market
funds. Money market fund yields will fluctuate and
shares are not insured, but share values usually remain
stable.
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick L.L.P., 4200 Norwest Center, 90
South Seventh Street, Minneapolis, Minnesota 55402,
have been selected as the independent accountants for
the Fund.
<PAGE>
FINANCIAL STATEMENTS
The following financial statements of the Fund are
contained herein:
(a) Report of Independent Accountants.
(b) Statement of Assets and Liabilities.
(c) Notes to Statement of Assets and
Liabilities.
<PAGE>
Independent Auditors' Report
The Shareholder and Board of Directors of
Kopp Funds, Inc.:
We have audited the accompanying statement of assets
and liabilities of Kopp Emerging Growth Fund (the
OFundO), a series of Kopp Funds, Inc., a Minnesota
corporation, as of September 2, 1997. This financial
statement is the responsibility of the FundOs
management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free
of material misstatement. An audit of a financial
statement includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statement. Our procedures included confirmation of
cash owned with the custodian. An audit also includes
assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement
presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities
referred to above presents fairly, in all material
respects, the financial position of Kopp Emerging
Growth Fund as of September 2, 1997, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick L.L.P.
Minneapolis, Minnesota
September 2, 1997
<PAGE>
The Kopp Funds, Inc.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 2, 1997
Kopp Emerging
Growth Fund
ASSETS:
Cash $100,000
Unamortized organizational costs (Note 4) 58,197
Prepaid registration expenses 25,077
Total Assets 183,274
LIABILITIES:
Payable to Advisor 83,274
Total Liabilities 83,274
NET ASSETS $100,000
Capital stock, $.01 par value; 100,000,000,000 shares
authorized;10,000 institutional shares outstanding $100,000
Offering and redemption price/net asset value per share
(based on 10,000 shares of capital stock issued and
outstanding) $10.00
The accompanying notes to the financial statement are
an integral part of this statement.
<PAGE>
The Kopp Funds, Inc.
The Kopp Emerging Growth Fund
NOTES TO FINANCIAL STATEMENT
SEPTEMBER 2, 1997
1. The Kopp Emerging Growth Fund (the "Fund") is a
mutual fund created by The Kopp Funds, Inc. (the
"Corporation") which was incorporated under the
laws of Minnesota on June 12, 1997. The Fund is
the only series of common stock of the Corporation
and consists of both a Retail and Institutional
class. Each class of shares represents interests
in the assets of the Fund and have identical
voting, dividend, liquidation and other rights on
the same terms and conditions, except that each
class of shares bears its own expenses, is subject
to it own sales charges, if any, and has exclusive
voting rights on matters pertaining to the Rule
12b-1 plan as it relates to that class. The Fund
is an open-end, non-diversified management
investment company registered under the Investment
Company Act of 1940, as amended. The Fund has had
no operations to date other than those relating to
organization matters and the sale of 10,000 shares
of its common stock to Kopp Investment Advisors,
Inc. (the "Advisor").
2. The Kopp Funds, Inc. has an agreement with the
Advisor, with whom certain officers and directors
of the Fund are affiliated, pursuant to which the
Advisor manages the Fund's investments and
business affairs, subject to the supervision of
the Corporation's Board of Directors. Under the
agreement, the Corporation, on behalf of the Fund,
compensates the Advisor for its investment
advisory services at the annual rate of 1.00% of
the Fund's average daily net assets. The Advisor
has voluntarily agreed to waive its management fee
and/or reimburse the operating expenses to the
extent necessary to ensure that the Retail class'
and Institutional class' total operating expenses
do not exceed 1.50% and 1.15%, respectively, of
the Fund's average daily net assets. The Fund has
adopted a reimbursement plan pursuant to Rule
12b-1 under the Investment Company Act (the
"Plan") for both classes of shares computed as a
percentage of the Fund's average daily net assets
computed on an annual basis. The Rule 12b-1 fee
applicable to the Retail class is currently set at
0.35% of the average daily net asset value;
however, the Plan allows the Fund to pay up to
0.50% in such fees. Furthermore, while the Fund
currently has no intention of paying any Rule
12b-1 fees in connection with the Institutional
class, the Plan allows the Fund to pay up to 0.50%
in such fees.
3. The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the reported amounts
of assets and liabilities at the date of the
financial statements. Actual results differ from
those estimates.
4. Organizational costs are being deferred and
amortized over the period of benefit, but not to
exceed sixty months from the Fund's commencement
of operations. These costs were advanced by the
Advisor and will be reimbursed by the Fund. The
proceeds of any redemption of the initial shares
by the original shareholders or any transferee
will be reduced by a pro-rata portion of any then
unamortized organizational expenses in the same
proportion as the number of initial shares being
redeemed bears to the number of initial shares
outstanding at the time of such redemption.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements (Included in Parts A and B)
Report of Independent Accountants
Statement of Assets and Liabilities
Notes to Statement of Assets and Liabilities
(b) Exhibits
(1.1) Registrant's Articles of Incorporation(1)
(1.2) Certificate of Amendment to
Registrant's Articles of Incorporation
(2) Registrant's By-Laws(1)
(3) None
(4) None
(5) Investment Advisory Agreement
(6.1) Distribution Agreement
(6.2) Form of Selected Dealer Agreement
(7) None
(8) Custodian Agreement
(9.1) Transfer Agency Agreement
(9.2) Administration Agreement
(9.3) Fund Accounting Agreement
(9.4) Fulfillment Servicing Agreement
(10) Opinion and Consent of
Godfrey & Kahn, S.C.
<PAGE>
(11) Consent of KPMG Peat
Marwick L.L.P.
(12) None
(13) Subscription Agreement
(14) Individual Retirement Account
Disclosure Statement and Custodial Account
(15.1) Rule 12b-1 Distribution and
Shareholder Servicing Plan
(15.2) Form of 12b-1 Related Agreement
(16) None
(17) None
(18) Rule 18f-3 Multi-Class Plan
(19) Powers of Attorney for Directors and
Officers (see signature page)
- -----------------
(1) Incorporated by reference to the Registrant's
Registration Statement on Form N-1A as filed with the
Securities and Exchange Commission on June 20, 1997.
Item 25. Persons Controlled by or under Common Control
with Registrant
Registrant neither controls any person nor is
under common control with any other person.
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Securities as of September 8, 1997
Common Stock, $.01 par value 1
Item 27. Indemnification
Article VIII of Registrant's Articles of
Incorporation provides as follows:
(a) The Corporation shall indemnify such persons
for such expenses and liabilities, in such manner,
under such circumstances, and to the full extent
permitted by Section 302A.521 of the MBCA, as now
enacted or hereafter amended.
(b) A director of the Corporation shall not be
personally liable to the Corporation or its
shareholders for monetary damages for breach of
fiduciary duty as a director, except for (i)
liability based on a breach of duty of loyalty to
the Corporation or the shareholders; (ii)
liability for acts or omissions not in good faith
or that involve intentional misconduct or a
knowing violation of law; (iii) liability based on
the payment of an
<PAGE>
improper dividend or an improper
repurchase of the Corporation's stock under MBCA
Section 302A.559 or on the sale of unregistered
securities or securities fraud under MBCA 80A.23;
or (iv) liability for any transaction from which
the director derived an improper personal benefit.
If the MBCA is hereafter amended to authorize the
further elimination or limitation of the liability
of directors, then the liability of a director of
the Corporation, in addition to the limitation on
personal liability provided herein, shall be
limited to the fullest extent permitted by the
MBCA, as amended. Any repeal or modification of
this Article VIII by the shareholders of the
Corporation shall be prospective only and shall
not adversely affect any limitation on the
personal liability of a director of the
Corporation existing at the time of such repeal or
modification.
(c) Paragraphs (a) and (b) of this Article VIII
are qualified by Section 17(h) of the 1940 Act
which provides that neither the articles of
incorporation nor the bylaws of any registered
investment company may contain any provision which
protects or purports to protect any director or
officer of such company against any liability to
the company or its security holders to which such
officer or director would otherwise be subject by
reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties
involved in the conduct of his or her office.
Item 28. Business and Other Connections of Investment
Advisor
Besides serving as investment advisor to the
Registrant and other private accounts, Advisor is not
currently and has not during the past two fiscal years
engaged in any other business, profession, vocation, or
employment of a substantial nature. Information
regarding the business, profession, vocation, or
employment of a substantial nature of Advisor's
directors and officers is hereby incorporated by
reference from the information contained under "Fund
Organization and Management-Management" in the
Prospectus.
Item 29. Principal Underwriters
(a) None.
(b) The principal business address of
Centennial Lakes Capital, Inc.
("Centennial"), the Registrant's principal
underwriter, is 7701 France Avenue South,
Suite 500, Edina, Minnesota 55435. The
following information relates to each
director and officer of Centennial:
Positions
And Offices Positions and Offices
Name With Underwriter With Registrant
Donald James President None
Donald Cornelius Secretary and Chief Financial
Treasurer Officer and Treasurer
(c) None.
Item 30. Location of Accounts and Records
All accounts, books or other documents required to
be maintained by Section 31(a) of the Investment
Company Act of 1940, as amended, and the rules
promulgated thereunder are in the possession of Kopp
Investment Advisors, Registrant's investment advisor,
at Registrant's corporate offices, except records held
and maintained by Firstar Trust Company, 615 East
Michigan Street, Milwaukee, Wisconsin 53202, relating
to its function as custodian, transfer agent,
administrator, and fund accountant.
<PAGE>
Item 31. Management Services
All management-related service contracts entered
into by Registrant are discussed in Parts A and B of
this Registration Statement.
Item 32. Undertakings.
(a) Registrant undertakes to file a post-
effective amendment to this Registration
Statement which will contain financial
statements (which need not be certified) no
later than 60 days after the end of the four
to six month period after effectiveness of
this Registration Statement.
(b) Registrant undertakes to conform the prior
performance information included in the Prospectus,
which is a part of this Registration Statement, to
any future SEC staff interpretations relating thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the Investment Company Act of 1940, the
Registrant has duly caused this Pre-Effective Amendment
No. 2 to the Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Edina and State of Minnesota
on the 8th day of September, 1997.
KOPP FUNDS, INC.
(Registrant)
By: /s/ LeRoy C. Kopp
---------------------------
LeRoy C. Kopp
Chief Executive
Officer and President
Each person whose signature appears below
constitutes and appoints LeRoy C. Kopp his true and
lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to
sign any and all amendments to this Registration
Statement and to file the same, with all exhibits
thereto, and any other documents in connection
therewith, with the Securities and Exchange Commission
and any other regulatory body, granting unto said
attorney-in-fact and agent, full power and authority to
do and perform each and every act and thing requisite
and necessary to be done, as fully to all intents and
purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact
and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act
of 1933, this Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A has been signed
below by the following persons in the capacities and on
the date(s) indicated.
Name Title Date
/s/LeRoy C. Kopp Chief Executive Officer September 8, 1997
- --------------------- and President and Director
LeRoy C. Kopp
/s/ Robert L. Stehlik Director September 8, 1997
- ----------------------
Robert L. Stehlik
/s/ Thomas R. Stuart Director September 8, 1997
- ----------------------
Thomas R. Stuart
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
(1.1) Registrant's Articles of
Incorporation(1)
(1.2) Certificate of Amendment to Registrant's
Articles of Incorporation
(2) Registrant's By-Laws(1)
(3) None
(4) None
(5) Investment Advisory Agreement
(6.1) Distribution Agreement
(6.2) Form of Selected Dealer Agreement
(7) None
(8) Custodian Agreement
(9.1) Transfer Agency Agreement
(9.2) Administration Agreement
(9.3) Fund Accounting Agreement
(9.4) Fulfillment Servicing Agreement
(10) Opinion and Consent of Godfrey & Kahn, S.C.
(11) Consent of KPMG Peat Marwick L.L.P.
(12) None
(13) Subscription Agreement
(14) Individual Retirement Account
Disclosure Statement and Custodial Account
(15.1) Rule 12b-1 Distribution and Shareholder
Servicing Plan
(15.2) Form of 12b-1 Related Agreement
(16) None
(17) None
(18) Rule 18f-3 Multi-Class Plan
(19) Powers of Attorney for Directors and
Officers (see signature page)
___________________
(1) Incorporated by reference to the
Registrant's Registration Statement on Form N-1A
as filed with the Securities and Exchange
Commission on June 20, 1997.
CERTIFICATE OF AMENDMENT
OF
KOPP FUNDS, INC.
The undersigned, the duly elected Secretary of
Kopp Funds, Inc., a Minnesota corporation (the
"Corporation"), hereby certifies that the following is
a true, complete and correct copy of resolutions duly
adopted by consent of the Board of Directors of the
Corporation pursuant to Chapter 302A of the Minnesota
Statutes on September 5, 1997:
Increase in the Number of Authorized Shares
WHEREAS, the total number of authorized shares of
the Corporation is ten billion (10,000,000,000), all of
which shares are common shares, par value $0.01 per
share, as set forth in the Corporation's Articles of
Incorporation (the "Articles");
WHEREAS, all such shares have been designated in
the Articles as Common Stock consisting of a single
class; and
WHEREAS, the Board of Directors of the Corporation
has determined that it is in the best interests of the
Corporation to increase the total number of authorized
shares of the Corporation.
NOW, THEREFORE, BE IT RESOLVED, that the total
number of authorized shares of the Corporation is
hereby increased by ninety billion (90,000,000,000)
shares, from ten billion (10,000,000,000) shares to one
hundred billion (100,000,000,000) shares, all of which
shares shall be common shares, $0.01 par value per
share.
BE IT FURTHER RESOLVED, that the officers of the
Corporation are hereby authorized and directed to file
with the office of the Secretary of State of Minnesota
Articles of Amendment, or such other similar document,
setting forth the text of these resolutions, as
required by Section 302A.139 of the Minnesota Business
Corporation Act.
Designation of Class A Series A and Series I Common Shares
WHEREAS, pursuant to Article III of the Articles,
the common shares of the Corporation may be classified
by the Board of Directors into one or more classes with
such relative rights and preferences as shall be stated
or expressed in a resolution or resolutions providing
for the issue of any such class as may be adopted from
time to time by the Board of Directors of the
Corporation; and
WHEREAS, pursuant to Article III of the Articles,
the common shares of the Corporation may be further
classified by the Board of Directors into one or more
series with such relative rights and preferences as
shall be stated or expressed in a resolution or
resolutions providing for the issue of any such series
as may be adopted from time to time by the Board of
Directors of the Corporation.
NOW, THEREFORE, BE IT RESOLVED, that of the one
hundred billion (100,000,000,000) authorized and
undesignated common shares of the Corporation, ten
billion (10,000,000,000) shares are hereby designated
as Class A Common Shares, and the remaining ninety
billion (90,000,000,000) authorized common shares shall
remain undesignated as to class and series.
BE IT FURTHER RESOLVED, that of the ten billion
(10,000,000,000) shares designated as Class A Common
Shares, three billion (3,000,000,000) shares are hereby
designated as Class A, Series A Common Shares, three
billion (3,000,000,000) shares are hereby designated as
Class A, Series I Common Shares, and the remaining four
billion (4,000,000,000) Class A Common Shares shall
remain undesignated as to series.
BE IT FURTHER RESOLVED, that the Class A, Series A
Common Shares and the Class A, Series I Common Shares
designated by these resolutions shall have the relative
rights and preferences set forth in Article VI of the
Articles.
BE IT FURTHER RESOLVED, that the officers of the
Corporation are hereby authorized and directed to file
with the office of the Secretary of State of Minnesota
a Certificate of Designation, or such other similar
document, setting forth the relative rights and
preferences of the Class A, Series A Common Shares and
the Class A, Series I Common Shares designated hereby,
as required by Section 302A.401, Subd. 3(b) of the
Minnesota Business Corporation Act.
IN WITNESS WHEREOF, the undersigned has executed
this Certificate of Amendment on behalf of the
Corporation this 8th day of September, 1997.
/s/ Kathleen S. Tillotson
--------------------------------
Kathleen S. Tillotson, Secretary
This instrument was drafted by:
Dennis F. Connolly
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
KOPP FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is entered into as of the 1st day
of October, 1997, between Kopp Funds, Inc.
("Corporation") and Kopp Investment Advisors, Inc.
("Advisor"), each a Minnesota corporation.
W I T N E S S E T H
WHEREAS, the Corporation is an open-end investment
company registered under the Investment Company Act of
1940, as amended ("1940 Act"). The Corporation is
authorized to create separate series and classes
thereof, each with its own separate investment
portfolio ("Funds"), and the beneficial interest in
each such series and class thereof will be represented
by a separate series, and class, of shares ("Shares").
WHEREAS, the Advisor is a registered investment
advisor, engaged in the business of rendering
investment advisory services.
WHEREAS, in managing the Corporation's assets, as
well as in the conduct of certain of its affairs, the
Corporation seeks the benefit of the Advisor's services
and its assistance in performing certain managerial
functions. The Advisor desires to furnish such
services and to perform the functions assigned to it
under this Agreement for the consideration provided for
herein.
NOW THEREFORE, the parties mutually agree as
follows:
1. Appointment of the Advisor. The Corporation
hereby appoints the Advisor as investment advisor for
each of the Funds of the Corporation on whose behalf
the Corporation executes an Exhibit to this Agreement,
and the Advisor, by execution of each such Exhibit,
accepts the appointment. Subject to the direction of
the Board of Directors ("Directors") of the
Corporation, the Advisor shall manage the investment
and reinvestment of the assets of each Fund in
accordance with the Fund's investment objective and
policies and limitations, for the period and upon the
terms herein set forth. The investment of funds shall
also be subject to all applicable restrictions of the
Articles of Incorporation and Bylaws of the Corporation
as may from time to time be in force.
2. Expenses Paid by the Advisor. In addition to
the expenses which the Advisor may incur in the
performance of its responsibilities under this
Agreement, and the expenses which it may expressly
undertake to incur and pay, the Advisor shall incur and
pay all reasonable compensation, fees and related
expenses of the Corporation's officers and its
Directors, except for such Directors who are not
interested persons (as that term is defined in Section
2(a)(19) of the 1940 Act) of the Advisor, and all
expenses related to the rental and maintenance of the
principal offices of the Corporation.
3. Investment Advisory Functions. In its
capacity as investment advisor, the Advisor shall have
the following responsibilities:
(a) To furnish continuous advice and
recommendations to the Funds, as to the acquisition,
holding or disposition of any or all of the securities
or other assets which the Funds may own or contemplate
acquiring from time to time;
(b) To cause its officers to attend meetings
and furnish oral or written reports, as the Corporation
may reasonably require, in order to keep the Directors
and officers of the Corporation fully informed as to
the condition of the investments of the Funds, the
investment recommendations of the Advisor, and the
investment considerations which have given rise to
those recommendations; and
(c) To supervise the purchase and sale of
securities or other assets as directed by the
appropriate officers of the Corporation.
The services of the Advisor are not to be deemed
exclusive and the Advisor shall be free to render
similar services to others as long as its services for
others does not in any way hinder, preclude or prevent
the Advisor from performing its duties and obligations
under this Agreement. In the absence of willful
misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the
part of the Advisor, the Advisor shall not be subject
to liability to the Corporation, the Funds, or to any
shareholder for any act or omission in the course of,
or in connection with, rendering services hereunder or
for any losses that may be sustained in the purchase,
holding or sale of any security.
4. Obligations of the Corporation. The
Corporation shall have the following obligations under
this Agreement:
(a) To keep the Advisor continuously and
fully informed as to the composition of the Funds'
investments and the nature of all of their respective
assets and liabilities;
(b) To furnish the Advisor with a copy of
any financial statement or report prepared for it by
certified or independent public accountants, and with
copies of any financial statements or reports made to
the Funds' shareholders or to any governmental body or
securities exchange;
(c) To furnish the Advisor with any further
materials or information which the Advisor may
reasonably request to enable it to perform its
functions under this Agreement; and
(d) To compensate the Advisor for its
services in accordance with the provisions of paragraph
5 hereof.
5. Compensation. The Corporation will pay the
Advisor a fee for its services with respect to each
Fund ("Advisory Fee") at the annual rate set forth on
the Exhibits hereto. The Advisory Fee shall be accrued
each calendar day during the term of this Agreement and
the sum of the daily fee accruals shall be paid monthly
as soon as practicable following the last day of each
month. The daily fee accruals will be computed by
multiplying 1/365 by the annual rate and multiplying
the product by the net asset value of the Fund as
determined in accordance with the Corporation's
registration statement as of the close of business on
the previous day on which the Fund was open for
business, or in such other manner as the parties agree.
The Advisor may from time to time and for such periods
as it deems appropriate voluntarily reduce its
compensation hereunder (and/or voluntarily assume
expenses) for one or more of the Funds. The Advisor
may, at any later date, recoup such amounts after such
time as the Advisor is no longer reducing its
compensation and/or assuming expenses for one or more
of the Funds.
6. Expenses Paid by Corporation.
(a) Except as provided in this paragraph,
nothing in this Agreement shall be construed to impose
upon the Advisor the obligation to incur, pay, or
reimburse the Corporation for any expenses not
specifically assumed by the Advisor under paragraph 2
above. Each Fund shall pay or cause to be paid all of
its expenses and the Fund's allocable share of the
Corporation's expenses, including, but not limited to,
investment advisor fees; any compensation, fees, or
reimbursements which the Corporation pays to its
Directors who are not interested persons (as that
phrase is defined in Section 2(a)(19) of the 1940 Act)
of the Advisor; fees and expenses of the custodian,
transfer agent, registrar or dividend disbursing agent;
current legal, accounting and printing expenses;
administrative, clerical, recordkeeping and bookkeeping
expenses; brokerage commissions and all other expenses
in connection with the execution of Fund transactions;
interest; all federal, state and local taxes (including
stamp, excise, income and franchise taxes); expenses of
shareholders' meetings and of preparing, printing and
distributing proxy statements, notices and reports to
shareholders; expenses of preparing and filing reports
and tax returns with federal and state regulatory
authorities; and all expenses incurred in complying
with all federal and state laws and the laws of any
foreign country applicable to the issue, offer, or sale
of Shares of the Funds, including but not limited to,
all costs involved in the registration or qualification
of Shares of the Funds for sale in any jurisdiction and
all costs involved in preparing, printing and
distributing prospectuses and statements of additional
information to existing shareholders of the Funds.
(b) If expenses borne by a Fund in any
fiscal year exceed those set forth in any statutory or
regulatory formula applicable to the Fund, the Advisor
will reimburse the Fund for any excess in accordance
with the applicable statutory or regulatory formula.
7. Brokerage Commissions. For purposes of this
Agreement, brokerage commissions paid by a Fund upon
the purchase or sale of securities shall be considered
a cost of the securities of the Fund and shall be paid
by the respective Fund. The Advisor is authorized and
directed to place Fund transactions only with brokers
and dealers who render satisfactory service in the
execution of orders at the most favorable prices and at
reasonable commission rates; provided, however, that
the Advisor may pay a broker or dealer an amount of
commission for effecting a securities transaction in
excess of the amount of commission another broker or
dealer would have charged for effecting that
transaction, if the Advisor determines in good faith
that such amount of commission was reasonable in
relation to the value of the brokerage and research
services provided by such broker or dealer viewed in
terms of either that particular transaction or the
overall responsibilities of the Advisor, and, in the
opinion of the Advisor, the total commissions paid by a
Fund is reasonable in relation to the benefits to the
Fund over the long term. In placing Fund business with
such broker or dealers, the Advisor shall seek the best
execution of each transaction, and all such brokerage
placement shall be made in compliance with Section
28(e) of the Securities Exchange Act of 1934, as
amended, and other applicable state and federal laws.
Notwithstanding the foregoing, the Corporation shall
retain the right to direct the placement of all Fund
transactions, and the Directors may establish policies
or guidelines to be followed by the Advisor in placing
transactions for the Funds pursuant to the foregoing
provisions. The Advisor may consider sales of Fund
shares as a factor in the selection of brokers or
dealers to execute Fund portfolio transactions, subject
to the requirements of best execution.
8. Proprietary Rights. The Advisor has
proprietary rights in each Fund's name and the
Corporation's name. The Advisor may withdraw the use
of such names from the Funds or the Corporation.
9. Termination. This Agreement may be
terminated at any time, without penalty, by the
Directors of the Corporation or by the shareholders of
a Fund acting by the vote of at least a majority of its
outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the 1940 Act), provided
in either case that 60 days' written notice of
termination be given to the Advisor at its principal
place of business. This Agreement may also be
terminated by the Advisor at any time by giving 60
days' written notice of termination to the Corporation,
addressed to its principal place of business.
10. Assignment. This Agreement shall terminate
automatically in the event of any assignment (as the
term is defined in Section 2(a)(4) of the 1940 Act) of
this Agreement.
11. Term. This Agreement shall begin for each
Fund as of the date of execution of the applicable
Exhibit and shall continue in effect with respect to
each Fund (and any subsequent Funds added pursuant to
an Exhibit during the initial term of this Agreement)
for two years from the date of this Agreement and
thereafter for successive periods of one year, subject
to the provisions for termination and all of the other
terms and conditions hereof, if such continuation shall
be specifically approved at least annually (i) by the
vote of a majority of the Directors of the Corporation,
including a majority of the Directors who are not
parties to this Agreement or "interested persons" of
any such party (as defined in the 1940 Act), cast in
person at a meeting called for that purpose or (ii) by
the vote of a majority of the outstanding voting
securities (as that phrase is defined in Section
2(a)(42) of the 1940 Act) of each Fund. If a Fund is
added after the first approval as described above, this
Agreement will be effective as to that Fund upon
execution of the applicable Exhibit and will continue
in effect until the next annual approval of this
Agreement by the Directors or Fund shareholders and
thereafter for successive periods of one year, subject
to approval as described above.
12. Amendments. This Agreement may be amended by
the mutual consent of the parties, provided that the
terms of each such amendment shall be approved by the
Directors or by the affirmative vote of a majority of
the outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the 1940 Act) of each
Fund.
13. Governing Law. This Agreement shall be
governed by and construed in accordance with the
internal laws of the State of Minnesota; provided,
however that nothing herein shall be construed in a
manner that is inconsistent with the 1940 Act, the
Investment Advisers Act of 1940, as amended, or the
rules and regulations promulgated with respect to such
respective Acts.
This Agreement will become binding on the parties
hereto upon their execution of the Exhibit(s) to this
Agreement.
EXHIBIT A
to the
Investment Advisory Agreement
KOPP EMERGING GROWTH FUND
For all services rendered by the Advisor
hereunder, the Corporation shall pay the Advisor, on
behalf of the above-named Fund, and the Advisor agrees
to accept as full compensation for all services
rendered hereunder, an annual investment advisory fee
equal to 1.00% of the average daily net assets of the
Fund.
The annual investment advisory fee shall be
accrued daily at the rate of 1/365th of 1.00% applied
to the daily net assets of the Fund. The advisory fee
so accrued shall be paid by the Corporation to the
Advisor monthly.
Executed as of this 1st day of October, 1997.
The Advisor:
KOPP INVESTMENT ADVISORS, INC.
By: /s/ LeRoy C. Kopp
------------------------------
LeRoy C. Kopp, President
The Corporation:
KOPP FUNDS, INC.
By: /s/ Kathleen S. Tillotson
---------------------------------
Kathleen S. Tillotson, Secretary
KOPP FUNDS, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is entered into as of the 1st day
of October, 1997 between Kopp Funds, Inc., a Minnesota
corporation (the "Corporation") and Centennial Lakes
Capital, Inc., a Minnesota corporation (the
"Distributor").
W I T N E S S E T H
WHEREAS, the Corporation is an open-end investment
company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Corporation is
authorized to create separate series and classes
thereof, each with its own separate investment
portfolio (the "Funds"), and the beneficial interest in
each such series and class thereof will be represented
by a separate series, and class, of shares (the
"Shares").
WHEREAS, the Distributor is a registered broker-
dealer under state and federal laws and regulations and
is a member of the National Association of Securities
Dealers, Inc. (the "NASD").
WHEREAS, the Corporation desires to retain the
Distributor as the principal distributor of Shares of
certain Funds of the Corporation.
NOW, THEREFORE, the Corporation and the
Distributor mutually agree and promise as follows:
1. Appointment of the Distributor; Acceptance of
Appointment. The Corporation hereby appoints the
Distributor as its agent for the distribution of Shares
for each of the Funds on whose behalf the Corporation
executes an Exhibit to this Agreement in jurisdictions
wherein the Shares may lawfully be offered for sale,
and the Distributor, by execution of each such Exhibit,
hereby accepts such appointment.
2. Exclusive Nature of Distribution Services.
The Distributor shall be the exclusive representative
of the Corporation to act as the principal distributor
of each Fund's Shares, except that the exclusive rights
granted to the Distributor to sell Shares shall not
apply to (i) Shares issued by the Corporation directly
to Fund investors upon such terms and conditions and
for such consideration, if any, as the Corporation may
determine, whether in connection with the reinvestment
of dividends or capital gains distributions or through
the exercise of any exchange privilege, or otherwise,
and (ii) purchases made by investors through Firstar
Trust Company, the Corporation's transfer and dividend
disbursing agent (the "Transfer Agent"), or any
successor Transfer Agent, in the manner set forth in
the Prospectus of the Corporation. The term
"Prospectus" shall mean the Prospectus and Statement of
Additional Information included as part of the
Corporation's Registration Statement, as such
Prospectus and Registration Statement may be amended
from time to time, and the term "Registration
Statement" shall mean the Registration Statement on
Form N-1A filed by the Corporation with the Securities
and Exchange Commission (the "SEC") and effective under
the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act, as may be amended from time to
time.
3. Services of the Distributor.
(a) Distribution of Shares. The Distributor
shall use its best efforts to solicit orders for the
sale of such part of the authorized Shares of each Fund
remaining unissued as from time to time shall be
effectively registered under the 1933 Act, at prices
determined as hereinafter provided and on terms
hereinafter set forth, all subject to applicable
federal and state laws and regulations and to the
Articles of Incorporation, Bylaws and Registration
Statement of the Corporation; provided, however, the
Distributor is not obligated to sell any specific
number of Shares. In addition, the Distributor shall
undertake such advertising and promotion as it believes
is reasonable in connection with such solicitation.
(b) Selected Dealer Agreements. The Distributor
may enter into selected dealer agreements with
registered and qualified dealers and other financial
institutions of its choice for the sale of Shares (the
"Selected Dealers"), provided that the Corporation
shall approve the form of such agreements and provided
further that, in entering into any such agreement, the
Distributor shall act only on its own behalf as
principal and not as agent for the Corporation. Shares
sold to Selected Dealers by the Distributor shall be
for resale by such dealers only at the prices as set
forth herein.
(c) Transmission of Sales Orders. The
Distributor shall transmit any order received by it for
the purchase of Shares to the Transfer Agent. Any
order may be rejected by the Transfer Agent, upon
instructions from the Corporation; provided, however
that the Corporation will not arbitrarily or without
reasonable cause refuse to accept orders for the
purchase of Shares. The Corporation will cause the
Transfer Agent to confirm orders for Shares upon their
receipt and make appropriate book entries therefor
pursuant to the instructions of the Distributor. The
Distributor shall cause payment for Shares and
instructions as to book entries to be delivered
promptly to the Transfer Agent. With respect to Shares
sold by any Selected Dealer, the Distributor is
authorized to direct the Transfer Agent to receive
instructions directly from the Selected Dealer on
behalf of the Distributor as to the registration of
Shares in the names of investors and to confirm the
issuance of such Shares to such investors. The
Distributor is also authorized to instruct the Transfer
Agent to receive payment directly from a Selected
Dealer on behalf of the Distributor for the purchase
price of the Shares. In such event, the Transfer Agent
will obtain from the Selected Dealer and maintain a
record of such registration and payments.
(d) Suspension of Sales. The Distributor
acknowledges that, whenever in the judgment of the
Corporation's officers such action is warranted for any
reason, including, without limitation, market, economic
or political conditions, the Corporation's officers may
decline to accept orders for, or make any sales of,
Shares of a Fund or Funds until such time as those
officers deem it advisable to accept such orders and to
make such sales.
(e) Redemption of Shares. The Distributor is
authorized, as agent for the Corporation, to repurchase
Shares held in an investor's account with a Fund or
Funds in accordance with applicable provisions in the
Prospectus. The Distributor shall promptly transmit to
the Transfer Agent of the Corporation, for redemption,
all such orders for the repurchase of Shares. Payment
for such Shares repurchased may be made by the Transfer
Agent directly for the account of the investor and the
Distributor shall, under no circumstances, be
responsible for transmitting funds or crediting a
client's account. The Distributor shall, however, be
responsible for the accuracy of the instructions
transmitted to the Transfer Agent in connection with
all such repurchases. With respect to Shares tendered
for redemption by any Selected Dealer on behalf of an
investor, the Distributor is authorized to instruct the
Transfer Agent to accept orders for redemption directly
from the Selected Dealer on behalf of the Distributor
and to instruct the Corporation to transmit payments
for such redemptions directly to the Selected Dealer
for the account of the investor and, in such
circumstances, the Distributor shall be solely
responsible for the transmission of funds or crediting
of a client's account by the Selected Dealer. The
Transfer Agent will obtain from the Selected Dealer and
maintain a record of all such orders.
(f) Rule 12b-1 Plan Reports. In connection with
the distribution services provided hereunder and with
respect to a Rule 12b-1 Plan (the "Rule 12b-1 Plan")
adopted by the Corporation on behalf of the Funds, the
Distributor shall provide the Corporation such
information as may be reasonably requested concerning
the Distributor's activities and the costs incurred in
performing such activities with respect to the Funds.
(g) Exclusive Services. The services of the
Distributor hereunder are exclusive, it being
understood that the Distributor may not act as
principal distributor for other registered investment
companies. It is also understood, however, that the
Selected Dealers may sell shares for other registered
investment companies in addition to the Corporation.
(h) Use of Unauthorized Information. Neither the
Distributor nor any Selected Dealer shall give any
information or make any representations, other than
those contained in the Registration Statement or
Prospectus and any sales literature specifically
approved by officers of the Corporation.
(i) Compliance with Applicable Law. The
Distributor will in all material respects conform its
activities hereunder to the requirements of applicable
state and federal laws and all applicable rules of the
NASD. In addition, the Distributor will observe and be
bound by all the provisions of the Corporation's
Articles of Incorporation, Bylaws and Registration
Statement which at any time in any way require, limit,
restrict, or prohibit or otherwise regulate any action
on the part of the Distributor.
4. Price of Shares.
(a) Sales. Shares offered for sale or sold by
the Distributor or any Selected Dealer for the account
of a Fund shall be so offered or sold at a price per
Share determined in accordance with the Prospectus
relating to the sale of such Shares. The price the
Corporation shall receive for any Shares purchased by
an investor from the Corporation through the
Distributor or a Selected Dealer shall be the net asset
value (the "NAV") used in determining the public
offering price applicable to the sale of such Shares,
as calculated in the manner set forth in the
Prospectus. Any excess amounts paid by an investor for
the purchase of Shares shall be allocated as set forth
in Paragraph 6(a) below.
(b) Redemptions. Shares tendered for redemption
by the Distributor or a Selected Dealer on behalf of an
investor shall be redeemed in accordance with the
applicable provisions as set forth in the Prospectus at
a price equal to the NAV of the Fund as determined in
accordance with the procedures set forth in the
Prospectus, less any applicable contingent deferred
sales charge or redemption fee.
5. Duties of the Corporation.
(a) Registration of Shares with SEC. The
Corporation agrees that it will use its best efforts to
keep effectively registered under the 1933 Act for sale
as herein contemplated such Shares as the Distributor
shall reasonably request and as the SEC shall permit to
be so registered.
(b) Qualification of Shares with States;
Registration of Corporation. The Corporation agrees to
execute any and all documents, furnish any and all
information and take any other actions which may be
reasonably necessary in connection with the
qualification of Shares for sale, including the
qualification of the Corporation as a broker or dealer
where necessary or advisable, in such states as the
Distributor may reasonably request (it being understood
that the Corporation shall not be required without its
consent to comply with any requirement which in its
opinion is unduly burdensome).
(c) Available Information. At the expense of the
Distributor, the Corporation shall furnish to the
Distributor copies of all information, financial
statements, annual and interim reports, and other
papers which the Distributor may reasonably request for
use in connection with the distribution of Shares.
6. Payments to the Distributor.
(a) Front-End Sales Charge. With respect to
Funds which impose a front-end sales charge, the
Distributor shall receive and may retain any portion of
any front-end sales charge which is imposed on such
sales and not reallocated by the Distributor to
Selected Dealers as set forth in the Prospectus,
subject to applicable NASD rules.
(b) Contingent Deferred Sales Charge. With
respect to Funds which impose a contingent deferred
sales charge ("CDSC"), the Distributor shall receive
and may retain any portion of any CDSC which is imposed
on such redemptions, subject to applicable NASD rules.
(c) Rule 12b-1 Fee. Pursuant to the terms of
the Rule 12b-1 Plan, the Corporation may pay the
Distributor up to 0.50% per annum of each Fund's
average daily net assets to the extent specified under
the Rule 12b-1 Plan. The Distributor may pay all or a
portion of this fee to Selected Dealers or any other
qualified persons who render assistance in distributing
or promoting the sale of Shares pursuant to a written
agreement, provided the form of such agreement shall be
approved by the Corporation and provided further that
in entering into any such agreement, the Distributor
shall act only on its own behalf as principal and not
as agent for the Corporation. To the extent such fee
is not paid to such persons, the Distributor may use
the fee for its own distribution and shareholder
servicing expenses incurred in connection with its
services to the Corporation hereunder to the extent
specified under the Rule 12b-1 Plan.
7. Expenses.
(a) Payable by the Corporation. The Corporation
shall bear the expenses of (i) registering the Shares
under the 1933 Act, (ii) qualifying or continuing the
qualification of Shares for sale under the laws of such
states as may be designated by the Distributor under
the conditions herein specified, (iii) qualifying or
continuing the qualification of the Corporation as a
broker or dealer under the laws of such states as may
be designated by the Distributor under the conditions
herein specified, and (iv) issuing Shares, such as
issue taxes and fees of the transfer agent.
(b) Payable by the Distributor. Other than the
expenses payable by the Corporation as set forth in
paragraph 7(a) above or as otherwise provided herein,
the Distributor shall bear all expenses incident to the
sale and distribution of the Shares issued or sold
hereunder, including, without limitation, (i) any sales
commissions or other expenses payable to Selected
Dealers and others for their services in connection
with the sale of Shares, (ii) the expenses of printing
and distributing Prospectuses and any other literature,
advertising and selling aids used in connection with
the offering of Shares for sale (except that such
expenses shall not include expenses incurred by the
Corporation in connection with the preparation,
printing and distribution of any prospectus, report or
other communication to holders of Shares in their
capacity as such), and (iii) the expenses of
advertising in connection with the offering of Shares.
In addition, so long as the Rule 12b-1 Plan continues
in effect, any expenses incurred by the Distributor
hereunder may be paid from amounts the Distributor and
any Selected Dealer or other person are entitled to
receive from the Corporation under such plan.
8. Indemnification.
(a) By the Corporation. The Corporation agrees
to indemnify the Distributor and its officers,
directors and controlling persons (within the meaning
of the federal securities laws), and the officers and
directors of its controlling persons, for any liability
and expenses, including reasonable attorneys' fees,
which may be sustained by any of the indemnitees as a
result of (i) any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement, Prospectus or Statement of
Additional Information with respect to the Shares, (ii)
any omission or alleged omission to state a material
fact required to be stated in the Registration
Statement, Prospectus or Statement of Additional
Information or necessary to make the statements in any
of them not misleading, or (iii) the Corporation's
willful misfeasance, bad faith, gross negligence, or
reckless disregard of its duties and obligations
hereunder; provided, however, that the Corporation
shall not be required to indemnify the Distributor or
any of its officers, directors or controlling persons,
or the officers and directors of its controlling
persons, for any liability or expenses arising out of
or based upon any statements or representations made by
the Distributor or its agents other than such
statements or representations as are contained in the
Registration Statement, Prospectus or Statement of
Additional Information with respect to the Shares
(other than statements or omissions relating to the
Distributor) and in such other financial and other
statements as are furnished to the Distributor pursuant
to paragraph 5(c) hereof.
(b) By the Distributor The Distributor agrees to
indemnify the Corporation and its officers, directors
and controlling persons (within the meaning of the
federal securities laws) for any liability and
expenses, including reasonable attorneys' fees, which
may be sustained by any of the indemnitees as a result
of (i) any alleged or actual material misrepresentation
or omission by the Distributor or its agents, or (ii)
the Distributor's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its duties and
obligations hereunder.
9. Duration and Termination.
(a) Duration. This Agreement shall become
effective for each Fund as of the date of execution of
the applicable Exhibit and shall continue in effect
with respect to each Fund (and any subsequent Funds
added pursuant to an Exhibit during the initial term of
this Agreement) for two years from the date of this
Agreement and thereafter for successive periods of one
year, subject to the provisions for termination and all
other terms and conditions hereof, if such continuation
shall be specifically approved at least annually (i) by
the vote of a majority of the Board of Directors of the
Corporation, including a majority of the Directors who
are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of any such
party, cast in person at a meeting called for that
purpose or (ii) by a vote of a majority of the
outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the 1940 Act) of each
Fund. If a Fund is added after the first approval as
described above, this Agreement will be effective as to
that Fund upon execution of the applicable Exhibit and
will continue in effect until the next annual approval
of this Agreement by the Board of Directors of the
Corporation or Fund shareholders and thereafter for
successive periods of one year, subject to approval as
described above.
(b) Termination. Notwithstanding whatever may be
provided herein to the contrary, this Agreement may be
terminated at any time, without penalty, by the Board
of Directors of the Corporation or by the shareholders
of a Fund acting by the vote of at least "a majority of
its outstanding voting securities" (as that phrase is
defined in Section 2(a)(42) of the 1940 Act), or by the
Distributor, in each case, on not more than 60 days'
written notice to the other party. In addition, this
Agreement shall automatically terminate in the event of
its "assignment" (as defined in Section 2(a)(4) of the
1940 Act).
10. Notice. Any notice under this Agreement
shall be in writing, delivered or mailed, postage
prepaid, or transmitted by facsimile with
acknowledgment of receipt, to the other party at such
party's principal place of business, which may from
time to time be changed by one party by notice to the
other party.
11. Miscellaneous.
(a) Governing Law. This Agreement shall be
construed in accordance with the laws of the State of
Minnesota, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act,
the 1933 Act, the Securities Exchange Act of 1934, as
amended, or any rule or order of the SEC under such
Acts or any rule of the NASD.
(b) Captions. The captions of this Agreement are
included for convenience only and in no way define or
limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) Severability. 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 and, to
this extent, the provisions of this Agreement shall be
deemed to be severable.
This Agreement will become binding on the parties
hereto upon their execution of the Exhibit(s) to this
Agreement.
EXHIBIT A
to the
Distribution Agreement
KOPP EMERGING GROWTH FUND
The Corporation hereby appoints the Distributor,
and the Distributor hereby accepts such appointment, as
the Corporation's exclusive agent for the distribution
of Shares of the above-named Fund, subject to the terms
of the Distribution Agreement of which this Exhibit is
a part.
Executed as of this 1st day of October, 1997.
The Corporation:
KOPP FUNDS, INC.
By: /s/ LeRoy C. Kopp
---------------------------
LeRoy C. Kopp, President
The Distributor:
CENTENNIAL LAKES CAPITAL, INC.
By: /s/ Donald P. James
------------------------------
Donald P. James, President
date
Selected Dealer Agreement
company
address
city/state
zip
RE: Kopp Funds, Inc.
Ladies and Gentlemen:
As the principal underwriter of shares in
registered investment companies managed by Kopp
Investment Advisors, Inc., we invite you to participate
as principal in the distribution of one or more series
and classes of the shares of Kopp Funds, Inc., a
Minnesota corporation ("Fund" or "Funds"), upon the
following terms and conditions:
1. You will offer and sell shares only at the
public offering prices that are currently in effect, in
accordance with the terms of the then current
prospectus of the Fund. You agree to act only as
principal in such transactions and have no authority to
act as agent for the Funds, for us, or for any other
dealer in any respect. All orders are subject to
acceptance by us and become effective only upon
confirmation by us.
2. Upon each purchase of shares by you from us,
the total sales charges and discount to selected
dealers shall be as stated in each Fund's then current
prospectus. Such sales charges and discount to
selected dealers are subject to waiver or reduction
under a variety of circumstances as described in each
Fund's then current prospectus. To obtain a waiver or
reduction, we must be satisfactorily informed at the
time a qualifying purchase occurs.
3. As a selected dealer, you are authorized to
place orders directly with the Funds for their shares
to be sold by us to you subject to the applicable terms
and conditions governing the placement of orders set
forth in the Distribution Agreement between each Fund
and us and further subject to the applicable
compensation provisions set forth in each Fund's then
current prospectus. You may tender shares directly to
the Funds or their transfer agent, Firstar Trust Fund,
for redemption.
4. Redemption and repurchase of shares will be
made at the net asset value of such shares in
accordance with the then current prospectus of the
Fund.
5. You represent that you are a member in good
standing of the National Association of Securities
Dealers, Inc. (NASD), and are therefore subject to the
Rules of the NASD.
6. This Agreement is in all respects subject to
Rule 2830 of the Conduct Rules of the NASD, which shall
control any provisions to the contrary in this
Agreement.
7. In addition to the other provisions in this
Agreement, you expressly agree:
(a) to purchase shares from us only for the
purpose of covering purchase orders previously received
or for your own bona fide investment;
(b) that you will not purchase any shares
from your customers at a price lower than the
redemption or repurchase price next quoted by the Fund;
(c) that you will not withhold
placing customers' orders so as to profit as a result
of such withholding; and
(d) that if any shares confirmed to you
hereunder are redeemed or repurchased by a Fund within
thirty business days after such confirmation of your
original order, you will refund to us the full discount
reallowed to you on such sale. We will pay to the
appropriate Fund our share of the charge on the
original sale and will also pay to such Fund the refund
from you as herein provided.
8. We accept no conditional orders for shares.
Shares purchased shall be issued only against receipt
of the purchase price, subject to deduction for the
discount reallowed to you and our portion of the sales
charge on such sale. If payment for the shares
purchased is not received within the time customary for
such payment, the sale may be canceled without any
responsibility or liability on our part or on the part
of the Fund (in which case you will be responsible for
any loss, including loss of profit, suffered by the
Fund resulting from your failure to make payment as
aforesaid) or, at our option, we may sell the shares
ordered back to the Fund (in which case we may hold you
responsible for any loss, including loss of profit,
suffered by us resulting from your failure to make
payment as aforesaid).
9. You will offer and sell shares in compliance
with applicable federal and state securities laws. You
will furnish to each person to whom any such offer or
sale is made a copy of the then current prospectus for
the Fund, and, with respect to persons who purchase
shares, you agree to deliver to such purchasers copies
of each Fund's annual and interim reports and proxy
solicitation materials. We shall be under no liability
to you except for obligations expressly assumed by us
in this Agreement. Nothing herein contained shall be
deemed to be a condition, stipulation, or provision
binding any persons acquiring any security to waive
compliance with any applicable provision of federal or
state securities law.
10. No person is authorized to make any
representations concerning shares of the Funds except
those contained in the current prospectus and printed
information issued by each Fund or by us as information
supplemental to each prospectus. We shall supply
reasonable quantities of prospectuses, supplemental
sale literature, and additional information as issued.
You agree not to use other advertising or sales
material relating to the Funds unless approved in
writing by us in advance of such use. Any printed
information furnished by us other than the current
prospectus for each Fund, periodic reports, and proxy
solicitation materials, if any, are our sole
responsibility and not the responsibility of the Fund.
You agree that each Fund shall have no liability to you
unless expressly assumed otherwise. All expenses
incurred by you under this Agreement shall be borne by
you.
11. Either party to this Agreement may cancel
this Agreement by giving written notice to the other.
Such notice shall be deemed to have been given on the
date on which it was either delivered personally to the
other party or was received by the other party at its
address as shown in this Agreement. This Agreement may
be amended by us at any time, and your placing of an
order after the effective date of any such amendment
constitutes your acceptance thereof.
12. This Agreement constitutes the entire
agreement between us and shall not be assignable by
you. It shall be construed in accordance with the laws
of the State of Minnesota and shall be binding upon
both parties when signed by us and accepted by you in
the space provided below. Please return one signed
copy of this Agreement.
Sincerely yours,
CENTENNIAL LAKES CAPITAL, INC.
By:__________________________
Donald F. James, President
Accepted: company
By:______________________
Authorized Signer
Date:_____________________
CUSTODIAN SERVICING AGREEMENT
THIS AGREEMENT made as of October 1, 1997,
between Kopp Funds, Inc., a Minnesota corporation
(hereinafter called the "Company"), and Firstar Trust
Company, a corporation organized under the laws of the
State of Wisconsin (hereinafter called "Custodian").
WHEREAS, the Company is an open-end management
investment company which is registered under the
Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create
separate series, each with its own separate investment
portfolio; and
WHEREAS, the Company desires that the
securities and cash of the Emerging Growth Fund (the
"Fund") and each additional series of the Company
listed on Exhibit A attached hereto, as may be amended
from time to time, shall be hereafter held and
administered by Custodian pursuant to the terms of this
Agreement.
NOW, THEREFORE, in consideration of the mutual
agreements herein made, the Company and Custodian agree
as follows:
1. Definitions
The word "securities" as used herein includes
stocks, shares, bonds, debentures, notes, mortgages or
other obligations, and any certificates, receipts,
warrants or other instruments representing rights to
receive, purchase or subscribe for the same, or
evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a
request or direction or certification in writing signed
in the name of the Company by any two of the President,
a Vice President, the Secretary and the Treasurer of
the Company, or any other persons duly authorized to
sign by the Board of Directors.
The word "Board" shall mean Board of Directors
of the Kopp Funds, Inc.
2. Names, Titles, and Signatures of the Company's
Officers
An officer of the Company will certify to
Custodian the names and signatures of those persons
authorized to sign the officers' certificates described
in Section 1 hereof, and the names of the members of
the Board of Directors, together with any changes which
may occur from time to time.
3. Receipt and Disbursement of Money
A. Custodian shall open and maintain a
separate account or accounts in the name of the
Company, subject only to draft or order by Custodian
acting pursuant to the terms of this Agreement.
Custodian shall hold in such account or accounts,
subject to the provisions hereof,
all cash received by it from or for the account of the
Company. Custodian shall make payments of cash to, or
for the account of, the Company from such cash only:
(a)for the purchase of securities for the portfolio of
the Fund upon the delivery of such
securities to Custodian, registered in the
name of the Company or of the nominee of
Custodian referred to in Section 7 or in
proper form for transfer;
(b)for the purchase or redemption of shares of the
common stock of the Fund upon delivery
thereof to Custodian, or upon proper
instructions from the Company;
(c)for the payment of interest, dividends, taxes,
investment adviser's fees or operating
expenses (including, without limitation
thereto, fees for legal, accounting,
auditing and custodian services and
expenses for printing and postage);
(d)for payments in connection with the conversion,
exchange or surrender of securities owned
or subscribed to by the Fund held by or to
be delivered to Custodian; or
(e)for other proper corporate purposes certified by
resolution of the Board of Directors of
the Company.
Before making any such payment, Custodian shall
receive (and may rely upon) an officers' certificate
requesting such payment and stating that it is for a
purpose permitted under the terms of items (a), (b),
(c), or (d) of this Subsection A, and also, in respect
of item (e), upon receipt of an officers' certificate
specifying the amount of such payment, setting forth
the purpose for which such payment is to be made,
declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such
payment is to be made, provided, however, that an
officers' certificate need not precede the disbursement
of cash for the purpose of purchasing a money market
instrument, or any other security with same or next-day
settlement, if the President, a Vice President, the
Secretary or the Treasurer of the Company issues
appropriate oral or facsimile instructions to Custodian
and an appropriate officers' certificate is received by
Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse
and collect all checks, drafts or other orders for the
payment of money received by Custodian for the account
of the Company.
C. Custodian shall, upon receipt of proper
instructions, make federal funds available to the
Company as of specified times agreed upon from time to
time by the Company and the Custodian in the amount of
checks received in payment for shares of the Fund which
are deposited into the Fund's account.
D. If so directed by the Company, Custodian
will invest any and all available cash in overnight
cash-equivalent investments as specified by the
investment manager.
4. Segregated Accounts
Upon receipt of proper instructions, the
Custodian shall establish and maintain a segregated
account(s) for and on behalf of the Fund, into which
account(s) may be transferred cash and/or securities.
5. Transfer, Exchange, Redelivery, etc. of Securities
Custodian shall have sole power to release or
deliver any securities of the Company held by it
pursuant to this Agreement. Custodian agrees to
transfer, exchange or deliver securities held by it
hereunder only:
(a)for sales of such securities for the account of the
Fund upon receipt by Custodian of payment
therefore;
(b)when such securities are called, redeemed or retired
or otherwise become payable;
(c)for examination by any broker selling any such
securities in accordance with "street
delivery" custom;
(d)in exchange for, or upon conversion into, other
securities alone or other securities and
cash whether pursuant to any plan of
merger, consolidation, reorganization,
recapitalization or readjustment, or
otherwise;
(e)upon conversion of such securities pursuant to their
terms into other securities;
(f)upon exercise of subscription, purchase or other
similar rights represented by such
securities;
(g)for the purpose of exchanging interim receipts or
temporary securities for definitive
securities;
(h)for the purpose of redeeming in kind shares of
common stock of the Fund upon delivery
thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant
to items (a), (b), (d), (e), (f), and (g), securities
or cash receivable in exchange therefor shall be
deliverable to Custodian.
Before making any such transfer, exchange or
delivery, Custodian shall receive (and may rely upon)
an officers' certificate requesting such transfer,
exchange or delivery, and stating that it is for a
purpose permitted under the terms of items (a), (b),
(c), (d), (e), (f), (g), or (h) of this Section 5 and
also, in respect of item (i), upon receipt of an
officers' certificate specifying the securities to be
delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be
made, provided, however, that an officers' certificate
need not precede any such transfer, exchange or
delivery of a money market instrument, or any other
security with same or next-day settlement, if the
President, a Vice President, the Secretary or the
Treasurer of the Company issues appropriate oral or
facsimile instructions to Custodian and an appropriate
officers' certificate is received by Custodian within
two business days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an
officers' certificate to the contrary, Custodian shall:
(a) present for payment all coupons and other income
items held by it for the account of the Fund, which
call for payment upon presentation and hold the cash
received by it upon such payment for the account of the
Fund; (b) collect interest and cash dividends received,
with notice to the Company, for the account of the
Fund; (c) hold for the account of the Fund hereunder
all stock dividends, rights and similar securities
issued with respect to any securities held by it
hereunder; and (d) execute, as agent on behalf of the
Company, all necessary ownership certificates required
by the Internal Revenue Code of 1986, as amended (the
"Code") or the Income Tax Regulations (the
"Regulations") of the United States Treasury Department
(the "Treasury Department") or under the laws of any
state now or hereafter in effect, inserting the
Company's name on such certificates as the owner of the
securities covered thereby, to the extent it may
lawfully do so.
7. Registration of Securities
Except as otherwise directed by an officers'
certificate, Custodian shall register all securities,
except such as are in bearer form, in the name of a
registered nominee of Custodian as defined in the
Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder or in any
provision of any subsequent federal tax law exempting
such transaction from liability for stock transfer
taxes, and shall execute and deliver all such
certificates in connection therewith as may be required
by such laws or regulations or under the laws of any
state. All securities held by Custodian hereunder
shall be at all times identifiable in its records held
in an account or accounts of Custodian containing only
the assets of the Company.
The Company shall from time to time furnish to
Custodian appropriate instruments to enable Custodian
to hold or deliver in proper form for transfer, or to
register in the name of its
registered nominee, any securities which it may hold
for the account of the Company and which may from time
to time be registered in the name of the Company.
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian
shall vote any of the securities held hereunder by or
for the account of the Fund, except in accordance with
the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and
delivered, to the Company all notices, proxies and
proxy soliciting materials with respect to such
securities, such proxies to be executed by the
registered holder of such securities (if registered
otherwise than in the name of the Company), but without
indicating the manner in which such proxies are to be
voted.
9. Transfer Tax and Other Disbursements
The Company shall pay or reimburse Custodian
from time to time for any transfer taxes payable upon
transfers of securities made hereunder, and for all
other necessary and proper disbursements and expenses
made or incurred by Custodian in the performance of
this Agreement.
Custodian shall execute and deliver such
certificates in connection with securities delivered to
it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and
any Regulations of the Treasury Department issued
thereunder, or under the laws of any state, to exempt
from taxation any exempt transfers and/or deliveries of
any such securities.
10. Concerning Custodian
Custodian shall be paid as compensation for its
services pursuant to this Agreement such compensation
as may from time to time be agreed upon in writing
between the two parties. Until modified in writing,
such compensation shall be as set forth in Exhibit A
attached hereto.
Custodian shall not be liable for any action
taken in good faith upon any certificate herein
described or certified copy of any resolution of the
Board, and may rely on the genuineness of any such
document which it may in good faith believe to have
been validly executed.
The Company agrees to indemnify and hold
harmless Custodian and its nominee from all taxes,
charges, expenses, assessments, claims and liabilities
(including reasonable counsel fees) incurred or
assessed against it or by its nominee in connection
with the performance of this Agreement, except such as
may arise from its or its nominee's own bad faith,
negligent action, negligent failure to act or willful
misconduct. Custodian is authorized to
charge any account of the Fund for such items. In the
event of any advance of cash for any purpose made by
Custodian resulting from orders or instructions of the
Company, or in the event that Custodian or its nominee
shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in
connection with the performance of this Agreement,
except such as may arise from its or its nominee's own
bad faith, negligent action, negligent failure to act
or willful misconduct, any property at any time held
for the account of the Company shall be security
therefor.
Custodian agrees to indemnify and hold harmless the
Company from all charges, expenses, assessments, and
claims/liabilities (including reasonable counsel fees)
incurred or assessed against it in connection with the
performance of this Agreement, except such as may arise
from the Fund's own bad faith, negligent action,
negligent failure to act, or willful misconduct.
11. Subcustodians
Custodian is hereby authorized to engage
another bank or trust company as a subcustodian for all
or any part of the Company's assets, so long as any
such bank or trust company is itself qualified under
the 1940 Act and the rules and regulations thereunder
and provided further that, if the Custodian utilizes
the services of a subcustodian, the Custodian shall
remain fully liable and responsible for any losses
caused to the Company by the subcustodian as fully as
if the Custodian was directly responsible for any such
losses under the terms of this Agreement.
Notwithstanding anything contained herein, if
the Company requires the Custodian to engage specific
subcustodians for the safekeeping and/or clearing of
assets, the Company agrees to indemnify and hold
harmless Custodian from all claims, expenses and
liabilities incurred or assessed against it in
connection with the use of such subcustodian in regard
to the Company's assets, except as may arise from
Custodian's own bad faith, negligent action, negligent
failure to act or willful misconduct.
12. Reports by Custodian
Custodian shall furnish the Company
periodically as agreed upon with a statement
summarizing all transactions and entries for the
account of Company. Custodian shall furnish to the
Company, at the end of every month, a list of the
portfolio securities for the Fund showing the aggregate
cost of each issue. The books and records of Custodian
pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by
officers of, and by auditors employed by, the Company.
13. Termination or Assignment
This Agreement may be terminated by the
Company, or by Custodian, on ninety (90) days notice,
given in writing and sent by registered mail to:
Firstar Trust Company
Attn.: Mutual Fund Services
615 East Michigan Street
Milwaukee, WI 53202
or to the Company at:
Kopp Investment Advisors
Attn.: Kathleen S. Tillotson, Esq.
7701 France Avenue South, Suite 500
Edina, MN 55435
as the case may be. Upon any termination of this
Agreement, pending appointment of a successor to
Custodian or a vote of the shareholders of the Fund to
dissolve or to function without a custodian of its
cash, securities and other property, Custodian shall
not deliver cash, securities or other property of the
Fund to the Company, but may deliver them to a bank or
trust company of its own selection that meets the
requirements of the 1940 Act as a Custodian for the
Company to be held under terms similar to those of this
Agreement, provided, however, that Custodian shall not
be required to make any such delivery or payment until
full payment shall have been made by the Company of all
liabilities constituting a charge on or against the
properties then held by Custodian or on or against
Custodian, and until full payment shall have been made
to Custodian of all its fees, compensation, costs and
expenses, subject to the provisions of Section 10 of
this Agreement.
This Agreement may not be assigned by Custodian
without the consent of the Company, authorized or
approved by a resolution of its Board of Directors.
14. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed
to prevent the use by Custodian of a central securities
clearing agency or securities depository, provided,
however, that Custodian and the central securities
clearing agency or securities depository meet all
applicable federal and state laws and regulations, and
the Board of Directors of the Company approves by
resolution the use of such central securities clearing
agency or securities depository.
15. Records
Custodian shall keep records relating to its
services to be performed hereunder, in the form and
manner, and for such period, as it may deem advisable
and is agreeable to the Company but not inconsistent
with the rules and regulations of appropriate
government authorities, in particular Section 31 of the
1940 Act and the rules thereunder. Custodian agrees
that all such records prepared or maintained by the
Custodian relating to the services performed by
Custodian hereunder are the property of the Company and
will be preserved, maintained, and
made available in accordance with such section and
rules of the 1940 Act and will be promptly surrendered
to the Company on and in accordance with its request.
16. Governing Law
This Agreement shall be governed by Wisconsin
law. However, nothing herein shall be construed in a
manner inconsistent with the 1940 Act or any rule or
regulation promulgated by the Securities and Exchange
Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed as of the date
first above-written by their respective officers
hereunto duly authorized.
Executed in several counterparts, each of which
is an original.
Kopp funds, Inc. FIRSTAR TRUST COMPANY
By: /s/ LeRoy C. Kopp By: /s/ Joe Neuberger
- -------------------------- ---------------------------
LeRoy C. Kopp Joe Neuberger
Attest: /s/ Carol A. Gehl Attest: /s/ Carol A. Gehl
- -------------------------- ----------------------------
Custody Services
Annual Fee Schedule - Domestic Funds
Exhibit A
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund October 1, 1997
Class A
Class I
Annual fee based upon market value
2 basis points per year
Minimum annual fee per fund - $3,000
Investment transactions (purchase, sale, exchange,
tender, redemption, maturity, receipt, delivery):
$12.00 per book entry security (depository or
Federal Reserve system)
$25.00 per definitive security (physical)
$25.00 per mutual fund trade
$75.00 per Euroclear
$ 8.00 per principal reduction on pass-
through certificates
$35.00 per option/futures contract
$15.00 per variation margin
$15.00 per Fed wire deposit or withdrawal
Variable Amount Demand Notes: Used as a short-term
investment, variable amount notes offer safety and
prevailing high interest rates. Our charge, which is
1/4 of 1%, is deducted from the variable amount note
income at the time it is credited to your account.
Plus out-of-pocket expenses, and extraordinary expenses
based upon complexity
Fees are billed monthly, based upon market value at the
beginning of the month
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
1st day of October, 1997, by and between Kopp Funds,
Inc., a Minnesota corporation (hereinafter referred to
as the "Company") and Firstar Trust Company, a
corporation organized under the laws of the State of
Wisconsin (hereinafter referred to as the "Agent").
WHEREAS, the Company is an open-end management
investment company which is registered under the
Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create
separate series, each with its own separate investment
portfolio;
WHEREAS, the Agent is a trust company and, among
other things, is in the business of administering
transfer and dividend disbursing agent functions for
the benefit of its customers; and
WHEREAS, the Company desires to retain the Agent to
provide transfer and dividend disbursing agent services
to the Emerging Growth Fund (the "Fund") and each
additional series of the Company listed on Exhibit A
attached hereto, as may be amended from time to time.
NOW, THEREFORE, the Company and the Agent do
mutually promise and agree as follows:
1. Terms of Appointment; Duties of the Agent
Subject to the terms and conditions set forth in
this Agreement, the Company hereby employs and appoints
the Agent to act as transfer agent and dividend
disbursing agent for the Fund.
The Agent shall perform all of the customary
services of a transfer agent and dividend disbursing
agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including
without limitation any periodic investment plan or
periodic withdrawal program), including but not limited
to:
A.Receive orders for the purchase of shares;
B.Process purchase orders with prompt delivery, where
appropriate, of payment and supporting
documentation to the Company's custodian, and
issue the appropriate number of uncertificated
shares with such uncertificated shares being
held in the appropriate shareholder account;
C.Process redemption requests received in good order
and, where relevant, deliver appropriate
documentation to the Company's custodian;
D.Pay monies upon receipt from the Company's custodian,
where relevant, in accordance with the
instructions of redeeming shareholders;
E.Process transfers of shares in accordance with the
shareholder's instructions;
F.Process exchanges between funds and/or classes of
shares of funds both within the same family of
funds and with the Portico Money Market Fund,
if applicable;
G.Prepare and transmit payments for dividends and
distributions declared by the Company with
respect to the Fund;
H.Make changes to shareholder records, including, but
not limited to, address changes in plans
(i.e., systematic withdrawal, automatic
investment, dividend reinvestment, etc.);
I.Record the issuance of shares of the Fund and
maintain, pursuant to Rule 17ad-10(e)
promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), a
record of the total number of shares of the
Fund which are authorized, issued and
outstanding;
J.Prepare shareholder meeting lists and, if applicable,
mail, receive and tabulate proxies;
K.Mail shareholder reports and prospectuses to current
shareholders;
L.Prepare and file U.S. Treasury Department Forms 1099
and other appropriate information returns
required with respect to dividends and
distributions for all shareholders;
M.Provide shareholder account information upon request
and prepare and mail confirmations and
statements of account to shareholders for all
purchases, redemptions and other confirmable
transactions as agreed upon with the Company;
N.Provide a Blue Sky System which will enable the
Company to monitor the total number of shares
of the Fund sold in each state. In addition,
the Company or its agent, including the Agent,
shall identify to the Agent in writing those
transactions and assets to be treated as
exempt from the Blue Sky reporting for each
state. The responsibility of the Agent for
the Company's Blue Sky state registration
status is solely limited to the initial
compliance by the Company and the reporting of
such transactions to the Company or its agent;
O.Answer telephone calls and correspondence from
shareholders relating to their accounts during
the Agent's normal business hours. Agent
shall strive to respond to all such telephonic
or written inquiries from shareholders within
three business days. Copies of all
correspondence from shareholders involving
complaints about the management of the
Company, services provided by or for the
Company, the Agent or others, shall be
forwarded to the Company. Agent shall keep
records of substantive shareholders telephone
calls and correspondence and replies thereto,
and of the lapse of time between receipt of
such calls and correspondence and replies.
Agent shall record and maintain for three
months recordings of all telephone calls from
shareholders;
P.Monitor the Company's policies with respect to the
charging of front-end sales loads, contingent
deferred sales loads and redemption fees, all
as set forth in the Fund's current prospectus,
to ensure that such charges are properly
applied or waived, as the case may be; and
Q.Prepare such reports as may be requested from time to
time by the Company relating to (1) fees paid
out under the Fund's Rule 12b-1 plan and (2)
charges applied or waived, as the case may be,
in connection with the purchase and redemption
of Fund shares. Customized reporting, if
necessary, will be assessed to the Company as
a programming out-of-pocket expense
reimbursement, subject to prior approval from
the Company.
2. Compensation
The Company agrees to pay the Agent for the
performance of the duties listed in this agreement as
set forth on Exhibit A attached hereto; the fees and
out-of-pocket expenses include, but are not limited to
the following: printing, postage, forms, stationery,
record retention (if requested by the Company),
mailing, insertion, programming (if requested by the
Company), labels, shareholder lists and proxy expenses.
These fees and reimbursable expenses may be changed
from time to time subject to mutual written agreement
between the Company and the Agent.
The Company agrees to pay all fees and reimbursable
expenses within ten (10) business days following the
receipt of the billing notice.
3. Representations of Agent
The Agent represents and warrants to the Company
that:
A. It is a trust company duly organized, existing and in
good standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange
Act.
C. It is duly qualified to carry on its business in the
State of Wisconsin;
D. It is empowered under applicable laws and by its
charter and bylaws to enter into and perform
this Agreement;
E. All requisite corporate proceedings have been taken
to authorize it to enter and perform this
Agreement;
F. It has and will continue to have access to the
necessary facilities, equipment and personnel
to perform its duties and obligations under
this Agreement; and
G. It will comply with all applicable requirements of
the Securities Act of 1933, as amended, and
the Exchange Act, the 1940 Act, and any laws,
rules, and regulations of governmental
authorities having jurisdiction.
4. Representations of the Company
The Company represents and warrants to the Agent
that:
A. The Company is an open-ended non diversified
investment company under the 1940 Act;
B. The Company is a corporation organized, existing, and
in good standing under the laws of Minnesota;
C. The Company is empowered under applicable laws and by
its Articles of Incorporation and Bylaws to
enter into and perform this Agreement;
D. All necessary proceedings required by the Articles of
Incorporation have been taken to authorize it
to enter into and perform this Agreement;
E. The Company will comply with all applicable
requirements of the Securities Act, the
Exchange Act, the 1940 Act, and any laws,
rules and regulations of governmental
authorities having jurisdiction; and
F. A registration statement under the Securities Act
will be made effective and will remain
effective, and appropriate state securities
law filings have been made and will continue
to be made, with respect to all shares of the
Company being offered for sale.
5. Covenants of the Company and Agent
The Company shall furnish the Agent a certified
copy of the resolution of the Board of Directors of
the Fund authorizing the appointment of the Agent and
the execution of this Agreement. The Company shall
provide to the Agent a copy of its Articles of
Incorporation and Bylaws, and all amendments thereto.
The Agent shall keep records relating to the
services to be performed hereunder, in the form and
manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act, and the rules
thereunder, the Agent agrees that all such records
prepared or maintained by the Agent relating to the
services to be performed by the Agent hereunder are the
property of the Company and will be preserved,
maintained and made available in accordance with such
section and rules and will be surrendered to the
Company on and in accordance with its request.
6. Performance of Service; Limitation of Liability
The Agent shall exercise reasonable care in the
performance of its duties under this Agreement. The
Agent shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company
in connection with matters to which this Agreement
relates, including losses resulting from mechanical
breakdowns or the failure of communication or power
supplies beyond the Agent's control, except a loss
resulting from the Agent's refusal or failure to comply
with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the
performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement,
the Company shall indemnify and hold harmless the Agent
from and against any and all claims, demands, losses,
expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the Agent
may sustain or incur or which may be asserted against
the Agent by any person arising out of any action taken
or omitted to be taken by it in performing the services
hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral
instruction provided to the Agent by any duly
authorized officer of the Company, such duly authorized
officer to be included in a list of authorized officers
furnished to the Agent and as amended from time to time
in writing by resolution of the Board of Directors of
the Company.
The Agent shall indemnify and hold the Company
harmless from and against any and all claims, demands,
losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the
Company may sustain or incur or which may be asserted
against the Company by any person arising out of any
action taken or omitted to be taken by the Agent as a
result of the Agent's refusal or failure to comply with
the terms of this Agreement, its bad faith, negligence,
or willful misconduct.
In the event of a mechanical breakdown or failure
of communication or power supplies beyond its control,
the Agent shall take all reasonable steps to minimize
service interruptions for any period that such
interruption continues beyond the Agent's control. The
Agent will make every reasonable effort to restore any
lost or damaged data and correct any errors resulting
from such a breakdown at the expense of the Agent. The
Agent agrees that it shall, at all times, have
reasonable contingency plans with appropriate parties,
making reasonable provision for emergency use of
electrical data processing equipment to the extent
appropriate equipment is available. Representatives of
the Company shall be entitled to inspect the Agent's
premises and operating capabilities at any time during
regular business hours of the Agent, upon reasonable
notice to the Agent.
Regardless of the above, the Agent reserves the
right to reprocess and correct administrative errors at
its own expense.
In order that the indemnification provisions
contained in this section shall apply, it is understood
that if in any case the indemnitor may be asked to
indemnify or hold the the indemnitee harmless, the
indemnitor shall be fully and promptly advised of all
pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will
use all reasonable care to notify the indemnitor
promptly concerning any situation which presents or
appears likely to present the probability of a claim
for indemnification. The indemnitor shall have the
option to defend the indemnitee against any claim which
may be the subject of this indemnification. In the
event that the indemnitor so elects, it will so notify
the indemnitee and thereupon the indemnitor shall take
over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification
under this section. The indemnitee shall in no case
confess any claim or make any compromise in any case in
which the indemnitor will be asked to indemnify the
indemnitee except with the indemnitor's prior written
consent.
7. Confidentiality
The Agent agrees on behalf of itself and its
directors, officers, and employees to treat
confidentially and as proprietary information of the
Company all records and other information relative to
the Company and prior, present, or potential
shareholders (and clients of said shareholders) and not
to use such records and information for any purpose
other than the performance of its responsibilities and
duties hereunder, except after prior notification to
and approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be
withheld where the Agent may be exposed to civil or
criminal contempt proceedings for failure to comply
after being requested to divulge such information by
duly constituted authorities, or when so requested by
the Company.
8. Wisconsin Law to Apply
This Agreement shall be construed and the
provisions thereof interpreted under and in accordance
with the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or
regulation promulgated by the Securities and Exchange
Commission thereunder.
9. Amendment, Assignment, Termination and Notice
A. This Agreement may be amended by the mutual written
consent of the parties.
B. This Agreement may be terminated upon ninety (90)
days' written notice given by one party to the
other.
C. This Agreement and any right or obligation hereunder
may not be assigned by either party without
the signed, written consent of the other
party.
D. Any notice required to be given by the parties to
each other under the terms of this Agreement
shall be in writing, addressed and delivered,
or mailed to the principal place of business
of the other party. If to the Agent, such
notice should to be sent to:
Firstar Trust Company
Attn.: Mutual Fund Services
615 East Michigan Street
Milwaukee, WI 53202
If to the Company, such notice should be sent to:
Kopp Investment Advisors
Attn.: Kathleen S. Tillotson, Esq.
7701 France Avenue South, Suite 500
Edina, MN 55435
E. In the event that the Company gives to the Agent its
written intention to terminate and appoint a
successor transfer agent, the Agent agrees to
cooperate in the transfer of its duties and
responsibilities to the successor, including
any and all relevant books, records and other
data established or maintained by the Agent
under this Agreement.
F. Should the Company exercise its right to terminate,
all reasonable out-of-pocket expenses
associated with the movement of records and
material will be paid by the Company.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer or one or more counterparts as of the day and
year first written above.
Kopp funds, Inc. FIRSTAR TRUST COMPANY
By: /s/ LeRoy C. Kopp By: /s/ Joe Neuberger
- ------------------------- --------------------------
LeRoy C. Kopp Joe Neuberger
Attest: /s/ Carol A. Gehl Attest: /s/ Carol A. Gehl
- -------------------------- ----------------------------
Transfer Agent and Shareholder Servicing
Annual Fee Schedule
Exhibit A
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund October 1, 1997
Class A
Class I
Annual Fee
$16.00 per shareholder account -- load fund
$14.00 per shareholder account -- no-load fund
Minimum annual fees of $35,500 for both
classes
Minimum annual fees of $10,000 for each
additional fund or class
Plus Out-of-Pocket Expenses, including but not limited
to:
Telephone - toll-free lines
Proxies
Postage
Retention of records (with prior approval)
Programming (with prior approval)
Microfilm/fiche of records
Stationery/envelopes
Special reports
Mailing
ACH fees
Insurance
NSCC charges
ACH Shareholder Services
$125.00 per month per fund group
$ .50 per account setup and/or change
$ .50 per item for AIP purchases
$ .35 per item for EFT payments and purchases
$ 3.50 per correction, reversal, return item
Qualified Plan Fees (Billed to Investors)
Annual maintenance fee per account $12.50/acct.(Cap at $25.00 per SSN)
Transfer to successor trustee $15.00/trans.
Distribution to participant $15.00/trans.(Exclusive of SWP)
Refund of excess contribution $15.00/trans.
Additional Shareholder Fees (Billed to Investors)
Any outgoing wire transfer $12.00/wire
Return check fee $20.00/item
Stop payment $20.00/stop
(Liquidation, dividend, draft check)
Research fee $ 5.00/item
(For requested items of the second calendar
year [or previous] to the request)(Cap at $25.00)
NSCC and DAZL
Out-of-Pocket Charges
NSCC Interfaces
Setup
Fund/SERV, Networking ACATS, Exchanges $5,000 setup (one time)
Commissions $5,000 setup (one time)
Processing
Fund/SERV $ 50/month
Networking $ 250/month
CPU Access $ 40/month
Fund/SERV Transactions $.35/trade
Networking - per item $.025/monthly dividend fund
Networking - per item $.015/non-mo. dividend fund
First Data $.10/next-day Fund/SERV trade
First Data $.15/same-day Fund/SERV trade
NSCC Implementation
8 to 10 weeks lead time (target availability10/1/97)
DAZL (Direct Access Zip Link - Electronic mail
interface to financial advisor network)
Setup $5,000/fund group-Waived for FIRSTAR
Monthly Usage $1,000/month
Transmission $ .015/price record
$ .025/other record
Enhancement $ 125/hour
Fees and out-of-pocket expenses are billed to the fund monthly
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
1st day of October, 1997, by and between Kopp Funds,
Inc., a Minnesota corporation (hereinafter referred to
as the "Company") and Firstar Trust Company, a
corporation organized under the laws of the State of
Wisconsin (hereinafter referred to as "FTC").
WHEREAS, the Company is an open-end management
investment company which is registered under the
Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Company is authorized to create
separate series, each with its own separate investment
portfolio;
WHEREAS, FTC is a trust company and, among other
things, is in the business of providing fund
administration services for the benefit of its
customers; and
WHEREAS, the Company desires to retain FTC to act
as Administrator for the Emerging Growth Fund (the
"Fund") and for each additional series of the Company
listed on Exhibit A attached hereto, as may be amended
from time to time.
NOW, THEREFORE, the Company and FTC do mutually
promise and agree as follows:
I.Appointment of Administrator
The Company hereby appoints FTC as Administrator of the
Company on the terms and conditions set forth in
this Agreement, and FTC hereby accepts such
appointment and agrees to perform the services and
duties set forth in this Agreement in
consideration of the compensation provided for
herein.
II.Duties and Responsibilities of FTC
A. General Fund Management
1.Act as liaison among all Fund service providers
2.Coordinate board communication by:
a.Assisting Company counsel in establishing meeting
agendas
b.Preparing board reports based on financial and
administrative data
c.Evaluating independent auditor
d.Securing and monitoring fidelity bond and director
and officer liability coverage, and
making the necessary SEC filings
relating thereto
e.Preparing minutes of meetings of the board and
shareholders
3.Audits
a.Prepare appropriate schedules and assist independent
auditors
b.Provide information to SEC and facilitate audit
process
c.Provide office facilities
4.Assist in overall operations of the Fund
5.Pay Fund expenses upon written authorization from the
Company
B.Compliance
1.Regulatory Compliance
a.Monitor compliance with 1940 Act requirements,
including:
1) Asset diversification tests
2) Total return and SEC yield
calculations
3) Maintenance of books and records under
Rule 31a-3
4) Code of Ethics for the disinterested
directors of the Fund
b.Monitor Fund's compliance with the policies and
investment limitations of the Company as
set forth in its Prospectus and
Statement of Additional Information
2.Blue Sky Compliance
a.Prepare and file with the appropriate state
securities authorities any and all
required compliance filings relating to
the registration of the securities of
the Company so as to enable the Company
to make a continuous offering of its
shares in all states
b.Monitor status and maintain registrations in each
state
3.SEC Registration and Reporting
a.Assist Company counsel in updating Prospectus and
Statement of Additional Information and
in preparing proxy statements and
Rule 24f-2 notices
b.Prepare annual and semiannual reports
c.Coordinate the printing of publicly disseminated
Prospectuses and reports
d.File fidelity bond under Rule 17g-1
e.File shareholder reports under Rule 30b2-1
4.IRS Compliance
a.Monitor Company's status as a regulated investment
company under Subchapter M through
review of the following:
1)Asset diversification requirements
2)Qualifying income requirements
3)Distribution requirements
b.Monitor short-short testing
c.Calculate required distributions (including excise
tax distributions)
C.Financial Reporting
1.Provide financial data required by Fund's Prospectus
and Statement of Additional Information
2.Prepare financial reports for shareholders, the
board, the SEC, and independent auditors
3.Supervise the Company's Custodian and Company
Accountants in the maintenance of the
Company's general ledger and in the
preparation of the Fund's financial
statements, including oversight of expense
accruals and payments, of the determination
of net asset value of the Company's net
assets and of the Company's shares, and of
the declaration and payment of dividends
and other distributions to shareholders
D.Tax Reporting
1.Prepare and file on a timely basis appropriate
federal and state tax returns including
Forms 1120/8610 with any necessary
schedules
2.Prepare state income breakdowns where relevant
3.File Form 1099 Miscellaneous for payments to
directors and other service providers
4.Monitor wash losses
5.Calculate eligible dividend income for corporate
shareholders
III.Compensation
The Company, on behalf of the Fund, agrees to pay FTC
for the performance of the duties listed in this
Agreement, the fees and out-of-pocket expenses as
set forth in the attached Exhibit A.
These fees may be changed from time to time, subject to
mutual written Agreement between the Company and
FTC.
The Company agrees to pay all fees and reimbursable
expenses within ten (10) business days following
the receipt of the billing notice.
IV.Performance of Service; Limitation of Liability
A.FTC shall exercise reasonable care in the performance
of its duties under this Agreement. FTC shall not
be liable for any error of judgment or mistake of
law or for any loss suffered by the Company in
connection with matters to which this Agreement
relates, including losses resulting from
mechanical breakdowns or the failure of
communication or power supplies beyond FTC's
control, except a loss resulting from FTC's
refusal or failure to comply with the terms of
this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance
of its duties under this Agreement.
Notwithstanding any other provision of this
Agreement, the Company shall indemnify and hold
harmless FTC from and against any and all claims,
demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of
any and every nature (including reasonable
attorneys' fees) which FTC may sustain or incur or
which may be asserted against FTC by any person
arising out of any action taken or omitted to be
taken by it in performing the services hereunder
(i) in accordance with the foregoing standards, or
(ii) in reliance upon any written or oral
instruction provided to FTC by any duly authorized
officer of the Company, such duly authorized
officer to be included in a list of authorized
officers furnished to FTC and as amended from time
to time in writing by resolution of the Board of
Directors of the Company.
FTC shall indemnify and hold the Company
harmless from and against any and all claims,
demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of
any and every nature (including reasonable
attorneys' fees) which the Company may sustain or
incur or which may be asserted against the Company
by any person arising out of any action taken or
omitted to be taken by FTC as a result of FTC's
refusal or failure to comply with the terms of
this Agreement, its bad faith, negligence, or
willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its
control, FTC shall take all reasonable steps to
minimize service interruptions for any period that
such interruption continues beyond FTC's control.
FTC will make every reasonable effort to restore
any lost or damaged data and correct any errors
resulting from such a breakdown at the expense of
FTC. FTC agrees that it shall, at all times, have
reasonable contingency plans with appropriate
parties, making reasonable provision for emergency
use of electrical data processing equipment to the
extent appropriate equipment is available.
Representatives of the Company shall be entitled
to inspect FTC's premises and operating
capabilities at any time during regular business
hours of FTC, upon reasonable notice to FTC.
Regardless of the above, FTC reserves the right to
reprocess and correct administrative errors at its
own expense.
B.In order that the indemnification provisions
contained in this section shall apply, it is
understood that if in any case the indemnitor may
be asked to indemnify or hold the indemnitee
harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning
the situation in question, and it is further
understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly
concerning any situation which presents or appears
likely to present the probability of a claim for
indemnification. The indemnitor shall have the
option to defend the indemnitee against any claim
which may be the subject of this indemnification.
In the event that the indemnitor so elects, it
will so notify the indemnitee and thereupon the
indemnitor shall take over complete defense of the
claim, and the indemnitee shall in such situation
initiate no further legal or other expenses for
which it shall seek indemnification under this
section. The indemnitee shall in no case confess
any claim or make any compromise in any case in
which the indemnitor will be asked to indemnify
the indemnitee except with the indemnitor's prior
written consent.
V.Proprietary and Confidential Information
FTC agrees on behalf of itself and its directors,
officers, and employees to treat confidentially
and as proprietary information of the Company all
records and other information relative to the
Company and prior, present, or potential
shareholders of the Company (and clients of said
shareholders), and not to use such records and
information for any purpose other than the
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be
withheld where FTC may be exposed to civil or
criminal contempt proceedings for failure to
comply, when requested to divulge such information
by duly constituted authorities, or when so
requested by the Company.
VI.Data Necessary to Perform Services
The Company or its agent, which may be FTC, shall
furnish to FTC the data necessary to perform the
services described herein at times and in such
form as mutually agreed upon.
VII.Terms of the Agreement
This Agreement shall become effective as of the date
hereof and, unless sooner terminated as provided
herein, shall continue automatically in effect for
successive annual periods. The Agreement may be
terminated by either party upon giving ninety (90)
days prior written notice to the other party or
such shorter period as is mutually agreed upon by
the parties.
The terms of this Agreement shall not be waived,
altered, modified, amended, or supplemented in any
manner whatsoever except by a written instrument
signed by FTC and the Company.
VIII. Duties in the Event of Termination
In the event that, in connection with termination, a
successor to any of FTC's duties or
responsibilities hereunder is designated by the
Company by written notice to FTC, FTC will
promptly, upon such termination and at the expense
of the Company, transfer to such successor all
relevant books, records, correspondence, and other
data established or maintained by FTC under this
Agreement in a form reasonably acceptable to the
Company (if such form differs from the form in
which FTC has maintained, the Company shall pay
any expenses associated with transferring the data
to such form), and will cooperate in the transfer
of such duties and responsibilities, including
provision for assistance from FTC's personnel in
the establishment of books, records, and other
data by such successor.
IX.Choice of Law
This Agreement shall be construed in accordance with
the laws of the State of Wisconsin. However,
nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or
regulation promulgated by the SEC thereunder.
X.Notices
Notices of any kind to be given by either party to the
other party shall be in writing and shall be duly
given if mailed or delivered as follows: Notice
to FTC shall be sent to:
Firstar Trust Company
Attn.: Mutual Fund Services
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Company shall be sent to:
Kopp Investment Advisors
Attn.: Kathleen S. Tillotson, Esq.
7701 France Avenue South, Suite 500
Edina, MN 55435
XI.Records
FTC shall keep records relating to the services to be
performed hereunder, in the form and manner, and
for such period as it may deem advisable and is
agreeable to the Company but not inconsistent with
the rules and regulations of appropriate
government authorities, in particular, Section 31
of the 1940 Act and the rules thereunder. FTC
agrees that all such records prepared or
maintained by FTC relating to the services to be
performed by FTC hereunder are the property of the
Company and will be preserved, maintained, and
made available in accordance with such section and
rules of the 1940 Act and will be promptly
surrendered to the Company on and in accordance
with its request.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer or one or more counterparts as of the day and
year first written above.
Kopp Funds, Inc. FIRSTAR TRUST COMPANY
By: /s/ LeRoy C. Kopp By: /s/ Joe Neuberger
- ------------------------- -------------------------
LeRoy C. Kopp Joe Neuberger
Attest: /s/ Carol A. Gehl Attest: /s/ Carol A. Gehl
- -------------------------- --------------------------
Fund Administration and Compliance
Annual Fee Schedule - Domestic Funds
Exhibit A
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund October 1, 1997
Class A
Class I
Annual fee based upon average net fund assets per class
6 basis points on the first $100 million
5 basis points on the next $400 million
3 basis points on the balance
Minimum annual fee: $30,000 first fund
$20,000 /fund next three funds
$15,000 /fund additional funds
Plus out-of-pocket expense reimbursements, including
but not limited to:
Postage
Programming*
Stationery
Proxies*
Retention of records*
Special reports*
Federal and state regulatory filing fees
Certain insurance premiums
Expenses from board of directors meetings
Auditing and legal expenses*
* If in excess of $1,000 in any month, such
expenses must be pre-approved by the Company.
Fees and out-of-pocket expense reimbursements are
billed monthly
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
1st day of October, 1997, by and between Kopp Funds,
Inc., a Minnesota corporation (hereinafter referred to
as the "Company") and Firstar Trust Company, a
corporation organized under the laws of the State of
Wisconsin (hereinafter referred to as "FTC").
WHEREAS, the Company is an open-end management
investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Company is authorized to create
separate series, each with its own separate investment
portfolio;
WHEREAS, FTC is in the business of providing, among
other things, mutual fund accounting services to
investment companies; and
WHEREAS, the Company desires to retain FTC to
provide accounting services to the Emerging Growth Fund
(the "Fund") and each additional series of the Company
listed on Exhibit A attached hereto, as it may be
amended from time to time.
NOW, THEREFORE, the parties do mutually promise and
agree as follows:
1. Services. FTC agrees to provide the following
mutual fund accounting services to the Fund:
A.Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis
using security trade information communicated
from the investment manager.
(2) For each valuation date, obtain prices from a
pricing source approved by the Board of
Directors of the Company and apply those
prices to the portfolio positions. For those
securities where market quotations are not
readily available, the Board of Directors of
the Company shall approve, in good faith, the
method for determining the fair value for such
securities.
(3) Identify interest and dividend accrual balances as
of each valuation date and calculate gross
earnings on investments for the accounting
period.
(4) Determine gain/loss on security sales and identify
them as, short-term or long-term; account for
periodic distributions of gains or losses to
shareholders and maintain undistributed gain
or loss balances as of each valuation date.
B.Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense
accrual amounts as directed by the Company as
to methodology, rate or dollar amount.
(2) Record payments for Fund expenses upon receipt of
written authorization from the Company.
(3) Account for Fund expenditures and maintain
expense accrual balances at the level of
accounting detail, as agreed upon by FTC and
the Company.
(4) Provide expense accrual and payment reporting.
C.Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales,
exchanges, transfers, dividend reinvestments,
and other Fund share activity as reported by
the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the
Company.
(3) Determine net investment income (earnings) for the
Fund as of each valuation date. Account for
periodic distributions of earnings to
shareholders and maintain undistributed net
investment income balances as of each
valuation date.
(4) Maintain a general ledger and other accounts,
books, and financial records for the Fund in
the form as agreed upon.
(5) Determine the net asset value of the Fund
according to the accounting policies and
procedures set forth in the Fund's Prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts
reflective of Fund operations at such time as
required by the nature and characteristics of
the Fund.
(7) Communicate, at an agreed upon time, the per share
price for each valuation date to parties as
agreed upon from time to time.
(8) Prepare monthly reports which document the
adequacy of accounting detail to support month-
end ledger balances.
D.Tax Accounting Services:
(1) Maintain accounting records for the investment
portfolio of the Fund to support the tax
reporting required for IRS-defined regulated
investment companies.
(2) Maintain tax lot detail for the investment
portfolio.
(3) Calculate taxable gain/loss on security sales
using the tax lot relief method designated by
the Company.
(4) Provide the necessary financial information to
support the taxable components of income and
capital gains distributions to the transfer
agent to support tax reporting to the
shareholders.
E.Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the
Fund's accounting records available to the
Company, the Securities and Exchange
Commission, and the outside auditors.
(2) Maintain accounting records according to the 1940
Act and regulations provided thereunder.
2. Pricing of Securities. For each valuation
date, obtain prices from a pricing source selected by
FTC but approved by the Company's Board of Directors
and apply those prices to the portfolio positions of
the Fund. For those securities where market quotations
are not readily available, the Company's Board of
Directors shall approve, in good faith, the method for
determining the fair value for such securities.
If the Company desires to provide a price which
varies from the pricing source, the Company shall
promptly notify and supply FTC with the valuation of
any such security on each valuation date. All pricing
changes made by the Company will be in writing and must
specifically identify the securities to be changed by
CUSIP, name of security, new price or rate to be
applied, and, if applicable, the time period for which
the new price(s) is/are effective.
3. Changes in Accounting Procedures. Any
resolution passed by the Board of Directors of the
Company that affects accounting practices and
procedures under this Agreement shall be effective upon
written receipt and acceptance by the FTC.
4. Changes in Equipment, Systems, Service, Etc.
FTC reserves the right to make changes from time to
time, as it deems advisable, relating to its services,
systems, programs, rules, operating schedules and
equipment, so long as such changes do not adversely
affect the service provided to the Company under this
Agreement.
5. Compensation. FTC shall be compensated for
providing the services set forth in this Agreement in
accordance with the Fee Schedule attached hereto as
Exhibit A and as mutually agreed upon and amended from
time to time. The Company agrees to pay all fees and
reimbursable expenses within ten (10) business days
following the receipt of the billing notice.
6. Performance of Service; Limitation of
Liability
A.FTC shall exercise reasonable care in the performance
of its duties under this Agreement. FTC shall
not be liable for any error of judgment or
mistake of law or for any loss suffered by the
Company in connection with matters to which
this Agreement relates, including losses
resulting from mechanical breakdowns or the
failure of communication or power supplies
beyond FTC's control, except a loss resulting
from FTC's refusal or failure to comply with
the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part
in the performance of its duties under this
Agreement. Notwithstanding any other
provision of this Agreement, the Company shall
indemnify and hold harmless FTC from and
against any and all claims, demands, losses,
expenses, and liabilities (whether with or
without basis in fact or law) of any and every
nature (including reasonable attorneys' fees)
which FTC may sustain or incur or which may be
asserted against FTC by any person arising out
of any action taken or omitted to be taken by
it in performing the services hereunder (i) in
accordance with the foregoing standards, or
(ii) in reliance upon any written or oral
instruction provided to FTC by any duly
authorized officer of the Company, such duly
authorized officer to be included in a list of
authorized officers furnished to FTC and as
amended from time to time in writing by
resolution of the Board of Directors of the
Company.
FTC shall indemnify and hold the Company harmless from
and against any and all claims, demands,
losses, expenses, and liabilities (whether
with or without basis in fact or law) of any
and every nature (including reasonable
attorneys' fees) which the Company may sustain
or incur or which may be asserted against the
Company by any person arising out of any
action taken or omitted to be taken by FTC as
a result of FTC's refusal or failure to comply
with the terms of this Agreement, its bad
faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its
control, FTC shall take all reasonable steps
to minimize service interruptions for any
period that such interruption continues beyond
FTC's control. FTC will make every reasonable
effort to restore any lost or damaged data and
correct any errors resulting from such a
breakdown at the expense of FTC. FTC agrees
that it shall, at all times, have reasonable
contingency plans with appropriate parties,
making reasonable provision for emergency use
of electrical data processing equipment to the
extent appropriate equipment is available.
Representatives of the Company shall be
entitled to inspect FTC's premises and
operating capabilities at any time during
regular business hours of FTC, upon reasonable
notice to FTC.
Regardless of the above, FTC reserves the right to
reprocess and correct administrative errors at
its own expense.
B.In order that the indemnification provisions
contained in this section shall apply, it is
understood that if in any case the indemnitor
may be asked to indemnify or hold the
indemnitee harmless, the indemnitor shall be
fully and promptly advised of all pertinent
facts concerning the situation in question,
and it is further understood that the
indemnitee will use all reasonable care to
notify the indemnitor promptly concerning any
situation which presents or appears likely to
present the probability of a claim for
indemnification. The indemnitor shall have
the option to defend the indemnitee against
any claim which may be the subject of this
indemnification. In the event that the
indemnitor so elects, it will so notify the
indemnitee and thereupon the indemnitor shall
take over complete defense of the claim, and
the indemnitee shall in such situation
initiate no further legal or other expenses
for which it shall seek indemnification under
this section. Indemnitee shall in no case
confess any claim or make any compromise in
any case in which the indemnitor will be asked
to indemnify the indemnitee except with the
indemnitor's prior written consent.
7. No Agency Relationship. Nothing herein
contained shall be deemed to authorize or empower FTC
to act as agent for the other party to this Agreement,
or to conduct business in the name of, or for the
account of the other party to this Agreement.
8. Records. FTC shall keep records relating to
the services to be performed hereunder, in the form and
manner, and for such period as it may deem advisable
and is agreeable to the Company but not inconsistent
with the rules and regulations of appropriate
government authorities, in particular, Section 31 of
the 1940 Act, and the rules thereunder. FTC agrees
that all such records prepared or maintained by FTC
relating to the services to be performed by FTC
hereunder are the property of the Company and will be
preserved, maintained, and made available in accordance
with such section and rules of the 1940 Act and will be
promptly surrendered to the Company on and in
accordance with its request.
9. Proprietary and Confidential Information. FTC
agrees on behalf of itself and its directors, officers,
and employees to treat confidentially and as
proprietary information of the Company all records and
other information relative to the Company and prior,
present, or potential shareholders of the Company (and
clients of said shareholders), and not to use such
records and information for any purpose other than the
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be
withheld where FTC may be exposed to civil or criminal
contempt proceedings for failure to comply, when
requested to divulge such information by duly
constituted authorities or when so requested by the
Company.
10. Data Necessary to Perform Services. The
Company or its agent, which may be FTC, shall furnish
to FTC the data necessary to perform the services
described herein at such times and in such form as
mutually agreed upon. If FTC is also acting as the
transfer agent for the Company, nothing herein shall be
deemed to relieve FTC of any of its obligations under
the Transfer Agent Servicing Agreement.
11. Notification of Error. The Company will notify
FTC of any balancing or control error caused by FTC
within three (3) business days after receipt of any
reports rendered by FTC to the Company, or within three
(3) business days after discovery of any error or
omission not covered in the balancing or control
procedure, or within three (3) business days of
receiving notice from any shareholder.
12. Term of Agreement. This Agreement may be
terminated by either party upon giving ninety (90) days
prior written notice to the other party or such shorter
period as is mutually agreed upon by the parties.
However, this Agreement may be replaced or modified by
a subsequent agreement between the parties.
13. Duties in the Event of Termination. In the
event that in connection with termination, a successor
to any of FTC's duties or responsibilities hereunder is
designated by the Company by written notice to FTC, FTC
will promptly, upon such termination and at the expense
of the Company transfer to such successor all relevant
books, records, correspondence and other data
established or maintained by FTC under this Agreement
in a form reasonably acceptable to the Company (if such
form differs from the form in which FTC has maintained
the same, the Company shall pay any expenses associated
with transferring the same to such form), and will
cooperate in the transfer of such duties and
responsibilities, including provision for assistance
from FTC's personnel in the establishment of books,
records and other data by such successor.
14. Notices. Notices of any kind to be given by
either party to the other party shall be in writing and
shall be duly given if mailed or delivered as follows:
Notice to FTC shall be sent to:
Firstar Trust Company
Attn.: Mutual Fund Services
615 East Michigan Street
Milwaukee, WI 53202
and notice to the Company shall be sent to:
Kopp Investment Advisors
Attn.: Kathleen S. Tillotson, Esq.
7701 France Avenue South, Suite 500
Edina, MN 55435
15. Choice of Law. This Agreement shall be
construed in accordance with the laws of the State of
Wisconsin. However, nothing herein shall be construed
in a manner inconsistent with the 1940 Act or any rule
or regulation promulgated by the Securities and
Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer on one or more counterparts as of the day and
year first written above.
KOPP FUNDS, INC. FIRSTAR TRUST COMPANY
By: /s/ LeRoy C. Kopp By: /s/ Joe Neuberger
- ----------------------- ------------------------
LeRoy C. Kopp Joe Neuberger
Attest: /s/ Carol A. Gehl Attest: /s/ Carol A. Gehl
- -------------------------- ---------------------------
Fund Accounting Services
Annual Fee Schedule
Exhibit A
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund October 1, 1997
Class A
Class I
Domestic Equity Funds
$27,500 for the first $40 million
1.25/100 of 1% (1.25 basis points) on the next $200 million
.625/100 of 1% (.625 basis points) on average net assets
exceeding $240 million
Plus out-of-pocket expenses, including pricing service:
Domestic and Canadian Equities $.15
Options $.15
Corp/Gov/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80
All fees are billed monthly
FULFILLMENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this
1st day of October, 1997, by and between Kopp Funds,
Inc., a Minnesota corporation (hereinafter referred to
as the "Company"), Firstar Trust Company, a
corporation organized under the laws of the State of
Wisconsin (hereinafter referred to as "FTC"), Kopp
Investment Advisors, Inc., a Minnesota corporation
(hereinafter referred to as the "Adviser"), and
Centennial Lakes Capital, Inc., a Minnesota corporation
(hereinafter referred to as the "Distributor").
WHEREAS, the Adviser is a registered investment
adviser under the Investment Advisers Act of 1940, as
amended;
WHEREAS, the Adviser serves as investment adviser
to the Company, a registered investment company under
the Investment Company Act of 1940, as amended, which
is authorized to create separate series of funds;
WHEREAS, the Distributor is a registered broker-
dealer under the Securities Exchange Act of 1934, as
amended, and serves as principal distributor of Company
shares;
WHEREAS, FTC provides fulfillment services to
mutual funds;
WHEREAS, the Adviser, the Distributor, and the
Company desire to retain FTC to provide fulfillment
services for the Emerging Growth Fund (the "Fund") and
each additional series of the Company listed on
Exhibit A attached hereto, as may be amended from time
to time.
NOW, THEREFORE, the parties agree as follows:
1. Duties and Responsibilities of FTC
1.Answer all prospective shareholder calls
concerning the Fund.
2.Send all available Fund material requested by the
prospect within 24 hours from time of call.
3.Receive and update all Fund fulfillment
literature so that the most current information is sent
and quoted.
4.Provide 24 hour answering service to record prospect
calls made after hours (7 p.m. to 8 a.m. CT).
5.Maintain and store Fund fulfillment inventory.
6.Send periodic fulfillment reports to the Company as
agreed upon between the parties.
2. Duties and Responsibilities of the Company
1.Provide Fund fulfillment literature updates
to FTC as necessary.
2.File with the NASD, SEC and State Regulatory
Agencies, as appropriate, all
fulfillment literature that the Fund requests FTC
send to prospective shareholders.
3.Supply FTC with sufficient inventory of
fulfillment materials as requested from time to time by FTC.
4.Provide FTC with any sundry information about the
Fund in order to answer prospect questions.
3. Indemnification
The Company agrees to indemnify FTC from any liability
arising out of the distribution of fulfillment
literature which has not been approved by the
appropriate Federal and State Regulatory Agencies. FTC
agrees to indemnify the Company from any liability
arising from the improper use of fulfillment literature
during the performance of duties and responsibilities
identified in this agreement.
4. Compensation
The Company, if permissible under any Rule 12b-1 plan
in effect from time to time for the benefit of the Fund
and only to the extent consistent with the terms of
such plan, or the Adviser, or the Distributor, agrees
to compensate FTC for the services performed under this
Agreement in accordance with the attached Exhibit A.
All invoices shall be paid within ten days of receipt.
5. Proprietary and Confidential Information
FTC agrees on behalf of itself and its directors,
officers, and employees to treat confidentially and as
proprietary information of the Company all records and
other information relative to the Company and prior,
present, or potential shareholders of the Company (and
clients of said shareholders), and not to use such
records and information for any purpose other than the
performance of its responsibilities and duties
hereunder, except after prior notification to and
approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be
withheld where FTC may be exposed to civil or criminal
contempt proceedings for failure to comply, when
requested to divulge such information by duly
constituted authorities, or when so requested by the
Company.
6. Termination
This Agreement may be terminated by either party upon
30 days written notice.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by a duly authorized
officer or one or more counterparts as of the day and
year first written above.
KOPP FUNDS, INC. FIRSTAR TRUST COMPANY
By: /s/ LeRoy C. Kopp By: /s/ Joe Neuberger
- ----------------------- -----------------------
LeRoy C. Kopp Joe Neuberger
Attest: /s/ Carol A. Gehl Attest: /s/ Carol A. Gehl
- -------------------------- --------------------------
KOPP INVESTMENT ADVISERS, INC. CENTENNIAL LAKES CAPITAL, INC.
By: /s/ LeRoy C. Kopp By: /s/ Donald P. James
- ------------------------ ---------------------------
LeRoy C. Kopp Donald P. James
Attest: /s/ Carol A. Gehl Attest: /s/ Carol A. Gehl
- -------------------------- ---------------------------
Literature Fulfillment Services
Annual Fee Schedule
Exhibit A
Separate Series of Kopp Funds, Inc.
Name of Series Date Added
Emerging Growth Fund October 1, 1997
Class A
Class I
Customer Service
State registration compliance edits
Literature database
Record prospect request and profile
Prospect servicing 8:00 am to 7:00 pm CT
Recording and transcription of requests
received off-hours
Periodic reporting of leads to client
Service Fee: $.99 / minute
$100 / month minimum
$780 one-time setup
Assembly and Distribution of Literature Requests
Generate customized prospect letters
Assembly and insertion of literature items
Inventory tracking
Inventory storage, reporting
Periodic reporting of leads by state, items
requested, market source
Service Fee: $.45 / lead -insertion of up to 4 items/lead
$.15 / additional inserts
Fees and out-of-pocket expenses are billed to the fund
monthly
GODFREY & KAHN, S.C.
780 North Water Street
Milwaukee, WI 53202-3590
Tel. (414) 273-3500
Fax. (414) 273-5198
September 8, 1997
Kopp Funds, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
Ladies and Gentlemen:
We have acted as your counsel in connection
with the preparation of a Registration Statement on
Form N-1A (Registration Nos. 333-29687 and 811-8267)
(the "Registration Statement") relating to the sale by
you of an indefinite number of shares of Kopp Funds,
Inc. (the "Company") common stock, $0.01 par value (the
"Shares"), in the manner set forth in the Registration
Statement (and the prospectus included therein).
We have examined: (a) the Registration
Statement (and the prospectus included therein), (b)
the Company's Articles of Incorporation, as amended,
and By-Laws, (c) certain resolutions of the Company's
Board of Directors, and (d) such other proceedings,
documents and records as we have deemed necessary to
enable us to render this opinion.
Based upon the foregoing, we are of the
opinion that the Shares, when sold as contemplated in
the Registration Statement, will be duly authorized and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an
exhibit to the Registration Statement. In giving this
consent, however, we do not admit that we are "experts"
within the meaning of Section 11 of the Securities Act
of 1933, as amended, or within the category of persons
whose consent is required by Section 7 of said Act.
Very truly yours,
/s/ Godfrey & Kahn, S.C.
GODFREY & KAHN, S.C.
CONSENT OF INDEPENDENT AUDITORS
The Shareholders and Board of Directors of
Kopp Funds, Inc.:
We consent to the use of our report included herein and
to the reference to our Firm in the Statement of
Additional Information under the heading "Independent
Accountants".
/s/ KPMG Peat Marwick L.L.P.
Minneapolis, Minnesota
September 8, 1997
KOPP FUNDS, INC.
SUBSCRIPTION AGREEMENT
To the Board of Directors of Kopp Funds, Inc.:
The undersigned purchaser (the "Purchaser") hereby
subscribes to the number of Class I shares (the
"Shares") of common stock of Kopp Funds, Inc. (the
"Company") as follows:
Aggregate
Purchase
Class Number of Shares Price
Kopp Emerging Growth Fund: Class I 10,000 $100,000
It is understood that a certificate representing
the Shares shall not be issued to the undersigned, but
such ownership shall be recorded on the books and
records of the Company's transfer agent.
Notwithstanding the fact that a certificate
representing ownership will not be issued, the Shares
will be deemed fully paid and nonassessable.
The Purchaser agrees that the Shares are being
purchased for investment with no present intention to
resell or redeem the Shares.
The Purchaser acknowledges that costs incurred by
the Company in connection with its organization,
registration and initial public offering of Shares of
the Company have been deferred and are being amortized
over a period of five years from the date upon which
the Company commences its investment activities.
The Purchaser agrees that in the event any of the
Shares purchased under this Subscription Agreement are
redeemed during this five year period, the Company is
authorized to reduce the redemption proceeds to cover
any unamortized organizational expenses in the same
proportion as the number of Shares being redeemed bears
to the number of Shares outstanding at the time of the
redemption. If, for any reason, the reduction of
redemption proceeds is not in fact made by the Company
in the event of such a redemption, the Purchaser agrees
to reimburse the Company immediately for any
unamortized organizational expenses in the proportion
stated above.
Dated and effective as of the 2nd day of September,
1997.
Purchaser: Kopp Investment Advisors, Inc.
By: /s/ LeRoy C. Kopp
---------------------------
LeRoy C. Kopp
Its: President
ACCEPTANCE
The foregoing subscription is hereby accepted.
Dated and effective as of the 2nd day of September,
1997.
KOPP FUNDS, INC.
/s/ LeRoy C. Kopp
-----------------------
By: LeRoy C. Kopp,
Chief Executive Officer and President
/s/ Kathleen S. Tillotson
--------------------------
Attest: By: Kathleen S. Tillotson, Secretary
__________________________
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
Please read the following information together
with the Individual Retirement Account Custodial Agreement and
the Prospectus(es) for the fund(s) you select for investment of your
IRA contributions.
You may revoke this account any time within seven
calendar days after it is established by mailing or delivering a
written request for revocation to: ____________________, c/o
Firstar Trust Company, 615 East Michigan Street, 3rd Floor,
Milwaukee, Wisconsin 53202, Attention: Mutual Fund Department.
If your revocation is mailed, the date of the postmark (or the
date of certification if sent by certified or registered mail)
will be considered your revocation date. Upon proper
revocation, you will receive a full refund of your initial
contribution, without any adjustments for items such as administrative
fees or fluctuations in market value.
1. General. Your IRA is a custodial
account created for your exclusive benefit, and __________ serves as
custodian. Your interest in the account is nonforfeitable.
2. Investments. Contributions made to your
IRA will be invested in one or more of the regulated investment
companies for which _______________________ serves as investment
advisor or any other regulated investment company designated by
________________. No part of your account may be invested in
life insurance contracts; further, the assets of your account
may not be commingled with other property.
3. Eligibility. Employees and self-
employed individuals are eligible to contribute to an IRA. Employers
may also contribute to employer-sponsored IRAs established for the benefit
of their employees. You may also establish an IRA to receive
rollover contributions and transfers from another IRA custodian
or trustee or from certain other retirement plans.
4. Time of Contribution. You may make
regular contributions to your IRA any time up to and including the due date
for filing your tax return for the year, not including extensions.
You may continue to make regular contributions to your IRA up
to (but not including) the calendar year in which you reach 70-1/2.
Employer contributions to a SEP - IRA plan may be continued
after you attain age 70-1/2. Rollover contributions and transfers
may be made at any time, including after you reach age
70-1/2.
5. Amount of Contribution. You may make
annual regular contributions to an IRA in any amount up to 100% of
your compensation for the year or $2,000, whichever is less.
Qualifying rollover contributions and transfers are not
subject to this limitation. In addition, if you are married
and file a joint return, you may make contributions to your
spouse's IRA. However, the maximum amount contributed to both your
own and to your spouse's IRA may not exceed 100% of your combined
compensation or $4,000, whichever is less. Moreover, the annual
contribution to either your account or your spouse's
account may not exceed $2,000. Note that a different rule for
spousal IRAs applied for tax years beginning before January 1, 1997.
6. Rollovers and Transfers. You are
allowed to "roll over" a distribution or transfer your assets from one
individual retirement account to another without any tax liability.
Rollovers between IRAs may be made once per year and must be accomplished
within 60 days after the distribution. Also, under certain conditions,
you may roll over (tax free) all or a portion of a distribution received
from a qualified plan or tax-sheltered annuity in which you participate
or in which your deceased spouse participated. However, strict limitations
apply to such rollovers, and you should seek competent advice in order
to comply with all of the rules governing rollovers.
Most distributions from qualified retirement
plans will be subject to a 20% withholding requirement. The 20%
withholding can be avoided by directly transferring the amount of
the distribution to an individual retirement account or to certain
other types of retirement plans. You should receive more information
regarding these new withholding rules and whether your distribution can
be transferred to an IRA from the plan administrator prior to receiving
your distribution.
7. Tax Deductibility of Annual Contributions. Although
you may make an IRA contribution within the limitations described
above, all or a portion of your contribution may be nondeductible.
No deduction is allowed for a rollover contribution or transfer. If you
are not married and are not an "active participant" in an employer-sponsored
retirement plan, you may make a fully deductible IRA contribution in any
amount up to $2,000 or 100% of your compensation for the year,
whichever is less. The same limits apply if you are married and
file a joint return with your spouse and neither you nor your spouse is
an "active participant" in an employer-sponsored retirement plan.
An employer-sponsored retirement plan
includes any of the following types of retirement plans:
-- a qualified pension, profit-sharing, or
stock bonus plan established in accordance with IRC 401(a) or 401(k),
-- a Simplified Employee Pension Plan (SEP)
(IRC 408(k)),
-- a deferred compensation plan maintained
by a governmental unit or agency,
-- tax-sheltered annuities and custodial
accounts (IRC 403(b) and 403(b)(7)),
-- a qualified annuity plan under IRC
Section 403(a).
-- a Savings Incentive Match Plan for
Employees of Small Employers (SIMPLE Plan).
Generally, you are considered an "active
participant" in a defined contribution plan if an employer contribution
or forfeiture was credited to your account during the year. You
are considered an "active participant" in a defined benefit plan
if you are eligible to participate in a plan, even though you elect not
to participate. You are also treated as an "active participant" if you
make a voluntary or mandatory contribution to any type of plan, even if
your employer makes no contribution to the plan.
If you (or your spouse, if filing a joint tax
return) are covered by an employer-sponsored retirement plan, your
IRA contribution is fully deductible if your adjusted gross
income (or combined income if you file a joint tax return)
does not exceed certain limits. For this purpose, your adjusted
gross income (1) is determined without regard to the exclusions from
income arising under Section 135 (exclusion of certain savings
bond interest), 137 (exclusion of certain employer provided
adoption expenses) and 911 (certain exclusions applicable to
U.S. citizens or residents living abroad) of the Code, (2) is
not reduced for any deduction that you may be entitled to for
IRA contributions, and (3) takes into account the passive loss
limitations under Section 469 of the Code and any taxable
benefits under the Social Security Act and Railroad Retirement
Act as determined in accordance with Section 86 of the Code.
If you (or your spouse, if filing a joint tax
return) are covered by an employer-sponsored retirement plan, the
deduction for your IRA contribution is reduced proportionately
for adjusted gross income which exceeds the applicable dollar
amount. The applicable dollar amount for an individual
is $25,000 and $40,000 for married couples filing a joint
tax return. The applicable dollar limit for married individuals
filing separate returns if $0. If your adjusted gross income
exceeds the applicable dollar amount by $10,000 or less, you may
make a deductible IRA contribution. The deductible amount, however,
will be less than $2,000.
To determine the amount of your deductible
contribution, use the following calculations:
1) Subtract the applicable dollar amount
from your adjusted gross income. If the result is $10,000 or more, you
can only make a nondeductible contribution to your IRA.
2) Divide the above figure by $10,000, and
multiply that percentage by $2,000.
3) Subtract the dollar amount (result from
#2 above) from $2,000 to determine the amount which is deductible.
If the deduction limit is not a multiple of
$10 then it should be rounded up to the next $10. There is a $200 minimum
floor on the deduction limit if your adjusted gross income does not
exceed $35,000 (for a single taxpayer), $50,000 (for married taxpayers
filing jointly) or $10,000 (for a married taxpayer filing separately).
Even if your income exceeds the limits
described above, you may make a contribution to your IRA up to the
contribution limitations described in Section 5 above. To the
extent that your contribution exceeds the deductible limits, it
will be nondeductible. However, earnings on all IRA contributions are
tax deferred until distribution.
8. Excess Contributions. Contributions
which exceed the allowable maximum for federal income tax purposes are
treated as excess contributions. A nondeductible penalty tax of
6% of the excess amount contributed will be added to your income
tax for each year in which the excess contribution remains in your
account.
9. Correction of Excess Contribution. If
you make a contribution in excess of your allowable maximum, you
may correct the excess contribution and avoid the 6% penalty tax for
that year by withdrawing the excess contribution and its earnings on or
before the date, including extensions, for filing your tax return for
the tax year for which the contribution was made. Any earnings on the
withdrawn excess contribution will be taxable in the year the excess
contribution was made and may be subject to a 10% early distribution
penalty tax if you are under age 59 1/2. In addition, in certain cases
an excess contribution may be withdrawn after the time for filing
your tax return. Finally, excess contributions for one year may
be carried forward and applied against the contribution limitation
in succeeding years.
10. Simplified Employee Pension Plan. An
IRA may also be used in connection with a Simplified Employee Pension Plan
established by your employer (or by you if you are self-employed). In
addition, if your SEP Plan as in effect on December 31, 1996 permitted salary
reduction contributions, you may elect to have your employer make salary
reduction contributions. Several limitations on the amount that may be
contributed apply. First, salary reduction contributions (for plans that
are eligible) may not exceed $9,500 per year (certain lower limits may apply
for highly compensated employees). The $9,500 limit applies for 1997 and is
adjusted periodically for cost of living increases. Second, the combination
of all contributions for any year (including employer contributions and, if
your SEP Plan is eligible, salary reduction contributions) cannot exceed 15
percent of compensation (disregarding for this purpose compensation in excess
of $160,000 per year). The $160,000 compensation limit applies for
1997 and is adjusted periodically for cost of living increases. A number of
special rules apply to SEP Plans, including a requirement that contributions
generally be made on behalf of all employees of the employer (including for
this purpose a sole proprietorship or partnership) who satisfy certain
minimum participation requirements. It is your responsibility and that
of your employer to see that contributions in excess of normal IRA limits
are made under and in accordance with avalid SEP Plan.
11. Savings and Incentive Match Plan for
Employees of Small Employers ("SIMPLE"). An IRA may also be used in
connection with a SIMPLE Plan established by your employer (or by
you if you are self-employed). Under a SIMPLE Plan, you may elect to
have your employer make salary reduction contributions of up to $6,000
per year to your SIMPLE IRA. The $6,000 limit applies for 1997 and is
adjusted periodically for cost of living increases. In addition, your
employer will contribute certain amounts to your SIMPLE IRA, either as a
matching contribution to those participants who make salary reduction
contributions or as a non-elective contribution to all eligible participants
whether or not making salary reduction contributions. A number of special
rules apply to SIMPLE Plans, including (1) a SIMPLE Plan generally is
available only to employers with fewer than 100 employees, (2) contributions
must be made on behalf of all employees of the employer (other than bargaining
unit employees) who satisfy certain minimum participation requirements,
(3) contributions are made to a special SIMPLE IRA that is separate
and apart from your other IRAs, (4) if you withdraw from your SIMPLE IRA
during the 2 year period during which you first began participation in the
SIMPLE Plan, the early distribution excise tax (if otherwise applicable) is
increased to 25 percent; and (5) during this two year period, any amount
withdrawn may be rolled over tax-free only into another SIMPLE IRA (and
not to a "regular" IRA). It is your responsibility and that of your employer
to see that contributions in excess of normal IRA limits are made under and
in accordance with a valid SIMPLE Plan.
12. Form of Distributions. Distributions
may be made in any
one of three methods:
(a) a lump-sum distribution,
(b) installments over a period not extending
beyond your life expectancy (as determined by actuarial tables), or
(c) installments over a period not extending
beyond the joint life expectancy of you and your designated beneficiary
(as determined by actuarial tables).
You may also use your account balance to
purchase an annuity contract, in which case your custodial account will
terminate.
13. Latest Time to Withdraw. You must begin
receiving the assets in your account no later than April 1 following
the calendar year in which you reach age 70-1/2 (your "required
beginning date"). In general, the minimum amount that must be
distributed each year is equal to the amount obtained by dividing the
balance in your IRA on the last day of the prior year (or the last day
of the year prior to the year in which you attain age 70-1/2) by your life
expectancy, the joint life expectancy of you and your beneficiary, or the
specified payment term, whichever is applicable. A federal tax penalty
may be imposed against you if the required minimum distribution is not
made for the year you reach age 70-1/2 and for each year thereafter.
The penalty is equal to 50% of the amount by which the actual distribution
is less than the required minimum.
Unless you or your spouse elects otherwise,
your life expectancy and/or the life expectancy of your spouse will be
recalculated annually. An election not to recalculate life expectancy(ies)
is irrevocable and will apply to all subsequent years. The life expectancy
of a nonspouse beneficiary may not be recalculated.
If you have two or more IRAs, you may satisfy
the minimum distribution requirements by receiving a distribution from one
of your IRAs in an amount sufficient to satisfy the minimum distribution
requirements for your other IRAs. You must still calculate the required
minimum distribution separately for each IRA, but then such amounts may be
totalled and the total distribution taken from one or more of your individual
IRAs.
Distribution from your IRA must satisfy the
special "incidental death benefit" rules of the Internal Revenue Code.
These provisions set forth certain limitations on the joint life expectancy
of you and your beneficiary. If your beneficiary is not your spouse, your
beneficiary will be generally considered to be no more than 10 years younger
than you for the purpose of calculating the minimum amount that must be
distributed.
14. Distribution of Account Assets After Death. If you die
before receiving the balance of your account, distribution of your remaining
account balance is subject to several special rules. If you die on or after
your required beginning date, distribution must continue in a method at least
as rapid as under the method of distribution in effect at your death. If
you die before your required beginning date, your remaining interest will,
at the election of your beneficiary or beneficiaries, (i) be distributed by
December 31 of the year in which occurs the fifth anniversary of your death, or
(ii) commence to be distributed by December 31 of the year following your
death over a period not exceeding the life or life expectancy of your
designated beneficiary or beneficiaries.
Two additional distribution options are
available if your spouse is the beneficiary: (i) payments to your spouse
may commence as late as December 31 of the year you would have attained age
70-1/2 and be distributed over a period not exceeding the life or life
expectancy of your spouse, or (ii) your spouse can simply elect to treat
your IRA as his or her own, in which case distributions will be required to
commence by April 1 following the calendar year in which your spouse attains
age 70-1/2.
15. Tax Treatment of Distributions. Amounts
distributed to you are generally includable in your gross income in the
taxable year you receive them and are taxable as ordinary income. To
the extent, however, that any part of a distribution constitutes a return of
your nondeductible contributions, it will not be included in your income.
The amount of any distribution excludable from income is the portion that
bears the same ratio as your aggregate nondeductible contributions bear to
the balance of your IRA at the end of the year (calculated after adding back
distributions during the year). For this purpose, all of your IRAs are treated
as single IRA. Furthermore, all distributions from an IRA during a taxable year
are to be treated as one distribution. The aggregate amount of distributions
excludable from income for all years cannot exceed the aggregate nondeductible
contributions for all calendar years.
No distribution to you or anyone else from
your account can qualify for capital gains treatment under the federal
income tax laws. Similarly, you are not entitled to the special five- or
ten-year averaging rule for lump-sum distributions available to persons
receiving distributions from certain other types of retirement plans. All
distributions are taxed to the recipient as ordinary income except the portion
of a distribution which represents a return of nondeductible contributions.
The tax on excess distributions (but not the additional estate tax
payable with respect to excess accumulations) under Section 4980A of the
Code does not apply with respect to distributions made in 1997, 1998 and 1999.
Any distribution which is properly rolled over will not be
includable in your gross income.
16. Early Distributions. Distributions from your IRA made before
age 59-1/2 will be subject to a 10% nondeductible penalty tax unless the
distribution is a return of nondeductible contributions or is made because of
your death, disability, as part of a series of substantially equal periodic
payments over your life expectancy or the joint life expectancy of you and
your beneficiary, or the distribution is made for medical expenses in excess of
7.5% of adjusted gross income, is made for reimbursement of medical premiums
while you are unemployed, or is an exempt withdrawal of an excess contribution.
The penalty tax may also be avoided if the distribution is rolled over to
another individual retirement account. See paragraph 11 above for special
rules applicable to distributions from a SIMPLE IRA.
17. Qualification of Plan. Your Individual
Retirement Account Plan has been approved as to form by the Internal Revenue
Service. The Internal Revenue Service approval is a determination only as to
the form of the Plan and does not represent a determination of the merits of
the Plan as adopted by you. You may obtain further information with respect
to your Individual Retirement Account from any district office of the
Internal Revenue Service.
18. Prohibited Transactions. If you engage
in a "prohibited transaction," as defined in section 4975 of the
Internal Revenue Code, your account will be disqualified, and the entire
balance in your account will be treated as if distributed to you and
will be taxable to you as ordinary income. Examples of prohibited transactions
are:
(a) the sale, exchange, or leasing of any
property between you and your account,
(b) the lending of money or other extensions
of credit between you and your account,
(c) the furnishing of goods, services, or
facilities between you and your account.
If you are under age 59-1/2, you may also be subject to
the 10% penalty tax on early distributions.
19. Penalty for Pledging Account. If you
use (pledge) all or part of your IRA as security for a loan, then the
portion so pledged will be treated as if distributed to you and
will be taxable to you as ordinary income during the year in which you
make such pledge. The 10% penalty tax on early distributions may also apply.
20. Reporting for Tax Purposes. Deductible
contributions to your IRA may be claimed as a deduction on your IRS form
1040 for the taxable year contributed. If any nondeductible contributions
are made by you during a tax year, such amounts must be reported on Form
8606 and attached to your Federal Income Tax Return for the year contributed.
If you report a nondeductible contribution to your IRA and do not make the
contribution, you will be subject to a $100 penalty for each overstatement
unless a reasonable cause is shown for not contributing. Other reporting
will be required by you in the event that special taxes or penalties described
herein are due. You must also file Treasury Form 5329 with the IRS for
each taxable year in which the contribution limits are exceeded, a premature
distribution takes place, or less than the required minimum amount is
distributed from your IRA.
21. Allocation of Earnings. The method of
computing and allocating annual earnings is set forth in Article VIII, Section
1 of the Individual Retirement Account Custodial Agreement. The growth in
value of your IRA is neither guaranteed or projected.
22. Income Tax Withholding. You must
indicate on distribution requests whether or not federal income taxes should
be withheld. Redemption request not indicating an election not to have
federal income tax withheld will be subject to withholding.
23. Other Information. Information about
the shares of each mutual fund available for investment by your IRA must
be furnished to you in the form of a prospectus governed by rules
of the Securities and Exchange Commission. Please refer to the prospectus
for detailed information concerning your mutual fund. You may obtain further
information concerning IRAs from any District Office of the Internal Revenue
Service.
Fees and other expenses of maintaining your
account may be charged to you or your account. The Custodian's current fee
schedule is included as part of these materials.
__________________________
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement
establishing an Individual Retirement Account (under Section 408(a) of
the Internal Revenue Code) between the Depositor and the Custodian.
ARTICLE I
The Custodian may accept additional cash
contributions on behalf of the Depositor for a tax year of the Depositor.
The total cash contributions are limited to $2,000 for the tax year
unless the contribution is a rollover contribution described in Section
402(c) (but only after December 31, 1992), 403(a)(4), 403(b)(8), 408(d)(3),
or an employer contribution to a simplified employee pension plan as described
in Section 408(k). Rollover contributions before January 1, 1993, include
rollovers described in Section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4),
403(b)(8), 408(d)(3), or an employer contribution to a simplified employee
pension plan as described in Section 408(k).
ARTICLE II
The Depositor's interest in the balance in
the custodial account is nonforfeitable.
ARTICLE III
1. No part of the custodial funds may be
invested in life insurance contracts, nor may the assets of the custodial
account be commingled with other property except in a common trust fund
or common investment fund (within the meaning of Section 408(a)(5)).
2. No part of the custodial funds may be
invested in collectibles (within the meaning of Section 408(m)) except as
otherwise permitted by Section 408(m)(3) which provides an exception for
certain gold and silver coins and coins issued under the laws of any state.
ARTICLE IV
1. Notwithstanding any provision of this
agreement to the contrary, the distribution of the Depositor's interest
in the custodial account shall be made in accordance with the following
requirements and shall otherwise comply with Section 408(a)(6) and Proposed
Regulations Section 1.408-8, including the incidental death benefit provisions
of Proposed Regulations Section 1.401(a)(9)-2, the provisions of which are
herein incorporated by reference.
2. Unless otherwise elected by the time
distributions are required to begin to the Depositor under Paragraph 3,
or to the surviving spouse under Paragraph 4, other than in the case of a
life annuity, life expectancies shall be recalculated annually. Such election
shall be irrevocable as to the Depositor and the surviving spouse and shall
apply to all subsequent years. The life expectancy of a nonspouse beneficiary
may not be recalculated.
3. The Depositor's entire interest in the
custodial account must be, or begin to be, distributed by the Depositor's
required beginning date, April 1 following the calendar year end in which
the Depositor reaches age 70 1/2. By that date, the Depositor may elect,
in a manner acceptable to the Custodian, to have the balance in the custodial
account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal
or substantially equal monthly, quarterly, or annual payments over the
life of the Depositor.
(c) An annuity contract that provides equal
or substantially equal monthly, quarterly, or annual payments over the
joint and last survivor lives of the Depositor and his or her
designated beneficiary.
(d) Equal or substantially equal annual
payments over a specified period that may not be longer than the
Depositor's life expectancy.
(e) Equal or substantially equal annual
payments over a specified period that may not be longer than the joint
life and last survivor expectancy of the Depositor and his or her
designated beneficiary.
4. If the Depositor dies before his or her
entire interest is distributed to him or her, the entire remaining
interest will be distributed as follows:
(a) If the Depositor dies on or after
distribution of his or her interest has begun, distribution must continue to
be made in accordance with Paragraph 3.
(b) If the Depositor dies before distribution of his or her
interest has begun, the entire remaining interest will, at the election of
the Depositor or, if the Depositor has not so elected, at the election of the
beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the
year containing the fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially
equal payments over the life or life expectancy of the designated
beneficiary or beneficiaries starting by December 31 of the year
following the year of the Depositor's death. If, however, the
beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in
which the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of
an annuity meeting the requirements of Section 408(b)(3) and its related
regulations has irrevocably commenced, distributions are treated as having
begun on the Depositor's required beginning date, even though payments may
actually have been made before that date.
(d) If the Depositor dies before his or her
entire interest has been distributed and if the beneficiary is other than the
surviving spouse, no additional cash contributions or rollover contributions
may be accepted in the account.
5. In the case of a distribution over life
expectancy in equal or substantially equal annual payments, to determine
the minimum annual payment for each year, divide the Depositor's
entire interest in the custodial account as of the close of business on
December 31 of the preceding year by the life expectancy of the Depositor
(or the joint life and last survivor expectancy of the Depositor and the
Depositor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies). In the case of distributions under Paragraph
3, determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Depositor and designed beneficiary
as of their birthdays in the year the Depositor reaches age 70 1/2. In the
case of a distribution in accordance with Paragraph 4(b)(ii), determine life
expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual
retirement accounts may use the "alternative method" described in Notice
88-38,1988-1 C.B. 524, to satisfy the minimum distribution requirements
described above. This method permits an individual to satisfy these
requirements by taking from one individual retirement account the amount
required to satisfy the requirement for another.
ARTICLE V
1. The Depositor agrees to provide the
Custodian with information necessary for the Custodian to prepare any
reports required under Section 408(i) and Regulations Section 1.408-5
and 1.408-6.
2. The Custodian agrees to submit reports
to the Internal Revenue Service and the Depositor prescribed by the Internal
Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may
be added or incorporated, the provisions of Articles I through III and this
sentence will be controlling. Any additional articles that are not consistent
with Section 408(a) and related regulations will be invalid.
ARTICLE VII
This agreement will be amended from time to
time to comply with the provisions of the Code and related regulations. Other
amendments may be made with the consent of the persons whose signatures appear
below.
ARTICLE VIII
1. Investment of Account Assets. (a) All
contributions to the custodial account shall be invested in shares of the
_______________________________ or, if available, any other series of
________________________ or other regulated investment companies for which
____________________________ serves as investment advisor or designates as
being eligible for investment ("Investment Company"). Shares of stock of
an Investment Company shall be referred to as "Investment Company Shares."
To the extent that two or more funds are available for investment,
contributions shall be invested in accordance with the Depositor's investment
election.
(b) Each contribution to the custodial
account shall identify the Depositor's account number and be accompanied by a
signed statement directing the investment of that contribution. The
Custodian may return to the Depositor, without liability for interest thereon,
any contribution which is not accompanied by adequate account identification or
an appropriate signed statement directing investment of that contribution.
(c) Contributions shall be invested in whole
and fractional Investment Company Shares at the price and in the manner such
shares are offered to the public. All distributions received on Investment
Company Shares, including both dividends and capital gains distributions, held
in the custodial account shall be reinvested in like shares. If any
distribution of Investment Company Shares may be received in additional like
shares or in cash or other property, the Custodian shall elect to receive
such distribution in additional like Investment Company Shares.
(d) All Investment Company Shares acquired
by the Custodian shall be registered in the name of the Custodian or its
nominee. The Depositor shall be the beneficial owner of all Investment
Company Shares held in the custodial account and the Custodian shall not
vote any such shares, except upon written direction of the Depositor, timely
received, in a form acceptable to the Custodian. The Custodian agrees to
forward to the Depositor each prospectus, report, notice, proxy and related
proxy soliciting materials applicable to Investment Company Shares held in
the custodial account received by the Custodian.
(e) The Depositor may, at any time, by
written notice to the Custodian, in a form acceptable to the Custodian,
redeem any number of shares held in the custodial account and reinvest the
proceeds in the shares of any other Investment Company upon the terms and
within the limitations imposed by the then current prospectus of such other
Investment Company in which the Depositor elects to invest. By giving such
instructions, the Depositor will be deemed to have acknowledged receipt
of such prospectus. Such redemptions and reinvestments shall be done at
the price and in the manner such shares are then being redeemed or offered
by the respective Investment Company.
2. Amendment and Termination. (a)
____________________________, the investment advisor for
___________________________, may amend the Custodial Account (including
retroactive amendments) by delivering to the Custodian and to the Depositor
written notice of such amendment setting forth the substance and effective
date of the amendment. The Custodian and the Depositor shall be deemed to
have consented to any such amendment not objected to in writing by the
Custodian or Depositor, as applicable, within thirty (30) days of receipt of
the notice, provided that no amendment shall cause or permit any part of the
assets of the custodial account to be diverted to purposes other than for the
exclusive benefit of the Depositor or his or her beneficiaries.
(b) The Depositor may terminate the custodial account at any time
by delivering to the Custodian a written notice of such termination.
(c) The custodial account shall automatically terminate upon
distribution to the Depositor or his or her beneficiaries of its entire
balance.
3. Taxes and Custodial Fees. Any income
taxes or other taxes levied or assessed upon or in respect of the assets or
income of the custodial account and any transfer taxes incurred shall be
paid from the custodial account. All administrative expenses incurred by the
Custodian in the performance of its duties, including fees for legal services
rendered to the Custodian in connection with the custodial account, and the
Custodian's compensation shall be paid from the custodial account, unless
otherwise paid by the Depositor or his or her beneficiaries. Sufficient
shares shall be liquidated from the custodial account to pay such fees and
expenses.
The Custodian's fees are set forth in a schedule provided to the
Depositor. Extraordinary charges resulting from unusual administrative
responsibilities not contemplated by the schedule will be subject to such
additional charges as will reasonably compensate the Custodian. Fees for
refund of excess contributions, transferring to a successor trustee or
custodian, or redemption/reinvestment of Investment Company Shares will be
deducted from the refund or redemption proceeds and the remaining balance will
be remitted to the Depositor, or reinvested or transferred in accordance with
the Depositor's instructions.
4. Reports and Notices. (a) The Custodian shall keep
adequate records of transactions it is required to perform hereunder.
After the close of each calendar year, the Custodian shall provide to the
Depositor or his or her legal representative a written report or reports
reflecting the transactions effected by it during such year and the
assets and liabilities of the Custodial Account at the close of the year.
(b) All communications or notices shall be
deemed to be given upon receipt by the Custodian at Post Office Box 701,
Milwaukee, Wisconsin 53201-0701 or the Depositor at his most recent
address shown in the Custodian's records. The Depositor agrees to advise
the Custodian promptly, in writing, of any change of address.
5. Designation of Beneficiary. The Depositor may designate a
beneficiary or beneficiaries to receive benefits from the custodial account
in the event of the Depositor's death. In the event the Depositor has not
designated a beneficiary, or if all beneficiaries shall predecease the
Depositor, the following persons shall take in the order named:
(a) The spouse of the Depositor;
(b) If the spouse shall predecease the
Depositor or if the Depositor does not have a spouse, then to the
Depositor's estate.
The Depositor may also change or revoke any
previously made designation of beneficiary. Any designation or change
or revocation of a designation shall be made by written notice in a
form acceptable to and filed with the Custodian, prior to the complete
distribution of the balance in the custodial account. The last such
designation on file at the time of the Depositor's death shall govern. If a
beneficiary dies after the Depositor, but prior to receiving his or her
entire interest in the custodial account, the remaining interest in the
custodial account shall be paid to the beneficiary's estate.
6. Multiple Individual Retirement Accounts. In the event the
Depositor maintains more than one individual retirement account (as defined
in Section 408(a)) and elects to satisfy his or her minimum distribution
requirements described in Article IV above by making a distribution for
another individual retirement account in accordance with Paragraph 6 thereof,
the Depositor shall be deemed to have elected to calculate the amount
of his or her minimum distribution under this custodial account in the same
manner as under the individual retirement account from which the distribution
is made.
7. Inalienability of Benefits. Neither the benefits provided under
this custodial account nor the assets held therein shall be subject to
alienation, assignment, garnishment, attachment, execution or levy of any kind
and any attempt to cause such benefits or assets to be so subjected shall not be
recognized except to the extent as may be required by law.
8. Rollover Contributions and Transfers.
The Custodian shall have the right to receive rollover contributions and to
receive direct transfers from other custodians or trustees. All contributions
must be made in cash or check.
9. Conflict in Provisions. To the extent
that any provisions of this Article VIII shall conflict with the provisions
of Articles IV, V and/or VII, the provisions of this Article VIII shall govern.
10. Applicable State Law. This custodial account shall be
construed, administered and enforced according to the laws of the State of
Wisconsin.
11. Resignation or Removal of Custodian.
The Custodian may resign at any time upon thirty (30) days notice in
writing to the Investment Company. Upon such resignation, the Investment
Company shall notify the Depositor, and shall appoint a successor custodian
under this Agreement. The Depositor or the Investment Company at any time
may remove the Custodian upon 30 days written notice to that effect in a form
acceptable to and filed with the Custodian. Such notice must include
designation of a successor custodian. The successor custodian shall satisfy
the requirements of section 408(h) of the Code. Upon receipt by the Custodian
of written acceptance of such appointment by the successor custodian, the
Custodian shall transfer and pay over to such successor the assets of and
records relating to the Custodial Account. The Custodian is authorized,
however, to reserve such sum of money as it may deem advisable for payment
of all its fees, compensation, costs and expenses, or for payment of any
other liability constituting a charge on or against the assets of the Custodial
Account or on or against the Custodian, and where necessary may liquidate
shares in the Custodial Account for such payments. Any balance of such
reserve remaining after the payment of all such items shall be paid over to
the successor Custodian. The Custodian shall not be liable for the acts or
omissions of any predecessor or successor custodian or trustee.
12. Limitation on Custodian Responsibility.
The Custodian will not under any circumstances be responsible for the
timing, purpose or propriety of any contribution or of any distribution
made hereunder, nor shall the Custodian incur any liability or responsibility
for any tax imposed on account of any such contribution or distribution.
Further, the Custodian shall not incur any liability or responsibility in
taking or omitting to take any action based on any notice, election, or
instruction or any written instrument believed by the Custodian to be genuine
and to have been properly executed. The Custodian shall be under no duty of
inquiry with respect to any such notice, election, instruction, or written
instrument, but in its discretion may request any tax waivers, proof of
signatures or other evidence which it reasonably deems necessary for
its protection. The Depositor and the successors of the Depositor including
any executor or administrator of the Depositor shall, to the extent permitted
by law, indemnify the Custodian and its successors and assigns against any and
all claims, actions or liabilities of the Custodian to the Depositor or the
successors or beneficiaries of the Depositor whatsoever (including without
limitation all reasonable expenses incurred in defending against or
settlement of such claims, actions or liabilities) which may arise in
connection with this Agreement or the Custodial Account, except those due to
the Custodian's own bad faith, gross negligence or willful misconduct. The
Custodial shall not be under any duty to take any action not specified in
this Agreement, unless the Depositor shall furnish it with instructions in
proper form and such instructions shall have been specifically agreed to by
the Custodian, or to defend or engage in any suit with respect hereto unless
it shall have first agreed in writing to do so and shall have been fully
indemnified to its satisfaction.
KOPP FUNDS, INC.
KOPP EMERGING GROWTH FUND
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The following Distribution and Shareholder
Servicing Plan (the "Plan") has been adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940,
as amended (the "Act"), by Kopp Funds, Inc. (the
"Corporation"), a Minnesota corporation, on behalf of
the Kopp Emerging Growth Fund (the "Fund"). The Plan
has been approved by a majority of the Corporation's
Board of Directors, including a majority of the
directors who are not interested persons of the
Corporation and who have no direct or indirect
financial interest in the operation of the Plan or in
any Rule 12b-1 related agreement (as defined below)
(the "Disinterested Directors"), cast in person at a
meeting called for the purpose of voting on such plan.
In approving the Plan, the Board of Directors
determined that adoption of the Plan would be prudent
and in the best interests of the Fund and its
shareholders. Such approval by the Board of Directors
included a determination, in the exercise of its
reasonable business judgment and in light of its
fiduciary duties, that there is a reasonable likelihood
that the Plan will benefit each Class of the Fund and
its shareholders.
The provisions of the Plan are as follows:
1. PAYMENTS BY THE CORPORATION TO PROMOTE THE SALE OF
THE FUND'S SHARES
(a) The Corporation, on behalf of the Fund,
will reimburse Centennial Lakes Capital, Inc. (the
"Distributor"), as principal distributor of the
Fund's Class A and Class I shares (each a
"Class"), for expenses incurred in connection with
(i) the promotion and distribution of each Class
(the "distribution fee") and (ii) the provision of
personal services to the shareholders of each
Class (the "shareholder servicing fee"). Neither
the distribution fee nor the shareholder servicing
fee payable to the Distributor shall exceed 0.25%
of the average daily net assets of the Fund
attributable to each Class. The Distributor may
pay all or a portion of these fees to any
registered securities dealer, financial
institution or any other person (the "Recipient")
who renders assistance in distributing or
promoting the sale of a Class, or who provides
certain shareholder services to shareholders of a
Class, pursuant to a written agreement (the "Rule
12b-1 Related Agreement"), a form of which is
attached hereto as Appendix A with respect to the
Class A shares and Appendix B with respect to the
Class I shares. To the extent such fees are not
paid to such persons, the Distributor may use the
fees for its distribution expenses incurred in
connection with the sale of a Class (not to exceed
0.25% of the average daily net assets of the Fund
attributable to each Class), or any of its
shareholder servicing expenses (not to exceed
0.25% of the average daily net assets of the Fund
attributable to each Class). Payment of these
fees to the Distributor shall be made quarterly,
within 30 days after the close of the quarter for
which the fee is payable, upon the Distributor
forwarding to the Corporation's Board of Directors
the written report required by Section 2 of this
Plan; provided that the aggregate payments by any
Class under the Plan to the Distributor and all
Recipients shall not exceed 0.50% (on an
annualized basis) of the average daily net assets
of the Fund attributable to each Class for that
quarter; and provided further that no fees shall
be paid in excess of the distribution and
shareholder servicing expenses verified in a
written report and submitted by the Distributor to
the Corporation's Board of Directors as required
under Section 2 of this Plan.
(b) From time to time, the Distributor may
engage in activities which jointly promote the
sale of one or both Classes, the costs of which
are not readily identifiable as related to any one
Class. The expenses attributable to such joint
distribution activities shall be allocated by the
Board of Directors among each Class on the basis
of its respective net assets, although the Board
of Directors may allocate expenses in any other
manner it deems fair and equitable.
(c) If the Distributor is due more monies
for its services rendered and commission fees
borne than are immediately payable because of the
expense limitation under Section 1 of this Plan,
the unpaid amount shall be carried forward from
period to period while the Plan is in effect until
such time as it is paid. The Distributor shall
not, however, be entitled to charge the Fund any
interest, carrying or finance fees in connection
with any such unpaid amounts carried forward.
(d) No Rule 12b-1 Related Agreement shall be
entered into with respect to any Class, and no
payments shall be made pursuant to any Rule 12b-1
Related Agreement, unless such Rule 12b-1 Related
Agreement is in writing and has first been
delivered to and approved by a vote of a majority
of the Corporation's Board of Directors, and of
the Disinterested Directors, cast in person at a
meeting called for the purpose of voting on such
Rule 12b-1 Related Agreement. The form of Rule
12b-1 Related Agreement relating to the Class A
shares attached hereto as Appendix A and the form
of Rule 12b-1 Related Agreement relating to the
Class I shares attached hereto as Appendix B have
been approved by the Corporation's Board of
Directors as specified above.
(e) Any Rule 12b-1 Related Agreement shall
describe the services to be performed by the
Recipient and shall specify the amount of, or the
method for determining, the compensation to the
Recipient.
(f) No Rule 12b-1 Related Agreement may be
entered into unless it provides (i) that it may be
terminated with respect to a Class of the Fund at
any time, without the payment of any penalty, by
vote of a majority of the Class, or by vote of a
majority of the Disinterested Directors, on not
more than 60 days' written notice to the other
party to the Rule 12b-1 Related Agreement, and
(ii) that it shall automatically terminate in the
event of its assignment.
(g) Any Rule 12b-1 Related Agreement shall
continue in effect for a period of more than one
year from the date of its execution only if such
continuance is specifically approved at least
annually by a vote of a majority of the Board of
Directors, and of the Disinterested Directors,
cast in person at a meeting called for the purpose
of voting on such Rule 12b-1 Related Agreement.
2. QUARTERLY REPORTS
The Distributor shall provide to the Board of
Directors, and the Directors shall review, at
least quarterly, a written report of all amounts
expended pursuant to the Plan. This report shall
include the identity of the Recipient of each
payment and the purpose for which the amounts were
expended and such other information as the Board
of Directors may reasonably request.
3. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective with respect to
each Class immediately upon approval by the vote
of a majority of the Board of Directors, and of
the Disinterested Directors, cast in person at a
meeting called for the purpose of voting on the
approval of the Plan. The Plan shall continue in
effect for a period of one year from its effective
date unless terminated pursuant to its terms.
Thereafter, the Plan shall continue with respect
to each Class from year to year, provided that
such continuance is approved at least annually by
a vote of a majority of the Board of Directors,
and of the Disinterested Directors, cast in person
at a meeting called for the purpose of voting on
such continuance. The Plan may be terminated with
respect to a Class at any time by a majority vote
of such Class, or by vote of a majority of the
Disinterested Directors.
4. SELECTION OF DISINTERESTED DIRECTORS
During the period in which the Plan is effective,
the selection and nomination of those Directors
who are Disinterested Directors of the Corporation
shall be committed to the discretion of the
Disinterested Directors.
5. AMENDMENTS
All material amendments of the Plan shall be in
writing and shall be approved by a vote of a
majority of the Board of Directors, and of the
Disinterested Directors, cast in person at a
meeting called for the purpose of voting on such
amendment. In addition, the Plan may not be
amended to increase materially the amount to be
expended by the Fund hereunder without the
approval by a majority vote of each Class affected
thereby.
Rule 12b-1 Related Agreement - Class A
Centennial Lakes Capital, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
____________, 1997
[Recipient's Name and Address]
Ladies and Gentlemen:
This letter will confirm our understanding and
agreement with respect to payments to be made to you
pursuant to a Distribution and Shareholder Servicing
Plan (the "Plan") adopted by Kopp Funds, Inc. (the
"Corporation"), on behalf of the Kopp Emerging Growth
Fund (the "Fund"), pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act").
The Plan and this related agreement (the "Rule 12b-1
Related Agreement") have been approved by a majority of
the Board of Directors of the Corporation, including a
majority of the Board of Directors who are not
"interested persons" of the Corporation, as defined in
the Act, and who have no direct or indirect financial
interest in the operation of the Plan or in this or any
other Rule 12b-1 Related Agreement (the "Disinterested
Directors"), cast in person at a meeting called for the
purpose of voting thereon. Such approval included a
determination by the Board of Directors that, in the
exercise of its reasonable business judgment and in
light of its fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund's Class
A shareholders.
1. To the extent you provide distribution and
marketing services in the promotion of the Fund's Class
A shares, including furnishing services and assistance
to your customers who invest in and own Class A shares,
including, but not limited to, answering routine
inquiries regarding the Fund and assisting in changing
account designations and addresses, we shall pay you a
fee of up to 0.50% of the average daily net assets of
the Fund attributable to the Fund's Class A shares
(computed on an annual basis) which are owned of record
by your firm as nominee for your customers or which are
owned by those customers of your firm whose records, as
maintained by the Corporation or its agent, designate
your firm as the customer's dealer or service provider
of record. We reserve the right to increase, decrease
or discontinue the fee at any time in our sole
discretion upon written notice to you.
We shall make the determination of the net asset
value, which determination shall be made in the manner
specified in the Fund's current Prospectus, and pay to
you quarterly, on the basis of such determination, the
fee specified above, to the extent permitted under the
Plan. No such quarterly fee will be paid to you with
respect to shares purchased by you and redeemed or
repurchased by the Corporation, its agent or us within
seven (7) business days after the date of our
confirmation of such purchase. In addition, no such
quarterly fee will be paid to you with respect to any
of your customers if the amount of such fee based upon
the value of such customer's Class A shares will be
less than $1.00. Payment of such quarterly fee shall
be made within 45 days after the close of each quarter
for which such fee is payable.
2. You shall furnish us with such information as
shall reasonably be requested by the Board of
Directors, on behalf of the Fund, with respect to the
fees paid to you pursuant to this Rule 12b-1 Related
Agreement.
3. We shall furnish to the Board of Directors,
for its review, on a quarterly basis, a written report
of the amounts expended under the Plan by us and the
purposes for which such expenditures were made.
4. This Rule 12b-1 Related Agreement may be
terminated by the vote of (a) a majority vote of Class
A shareholders, or (b) a majority of the Disinterested
Directors, on sixty (60) days' written notice, without
payment of any penalty. In addition, this Rule 12b-1
Related Agreement will be terminated by any act which
terminates the Distribution Agreement between the
Corporation and us and shall terminate immediately in
the event of its assignment. This Rule 12b-1 Related
Agreement may be amended by us upon written notice to
you, and you shall be deemed to have consented to such
amendment upon effecting any purchases of shares for
your own account or on behalf of any of your customer's
accounts following your receipt of such notice.
5. The provisions of the Distribution Agreement
between the Corporation and us are incorporated herein
by reference. This Rule 12b-1 Related Agreement shall
become effective on the date accepted by you and shall
continue in full force and effect so long as the
continuance of the Distribution Agreement, the Plan and
this Rule 12b-1 Related Agreement are approved at least
annually by a vote of the Board of Directors of the
Corporation and of the Disinterested Directors, cast in
person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to
the above address. Any notice to you shall be duly
given if mailed or telegraphed to you at the address
specified by you below. This Rule 12b-1 Related
Agreement shall be construed under the laws of the
State of Minnesota.
CENTENNIAL LAKES CAPITAL, INC.
By: _____________________________
Donald B. Cornelius
Accepted:
____________________________
(Dealer or Service Provider Name)
____________________________
(Street Address)
____________________________
(City) (State) (ZIP)
____________________________
(Telephone No.)
____________________________
(Facsimile No.)
By: _____________________________
(Name and Title)
Rule 12b-1 Related Agreement - Class I
Centennial Lakes Capital, Inc.
7701 France Avenue South, Suite 500
Edina, Minnesota 55435
_______________, 1997
[Recipient's Name and Address]
Ladies and Gentlemen:
This letter will confirm our understanding and
agreement with respect to payments to be made to you
pursuant to a Distribution and Shareholder Servicing
Plan (the "Plan") adopted by Kopp Funds, Inc. (the
"Corporation"), on behalf of the Kopp Emerging Growth
Fund (the "Fund"), pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act").
The Plan and this related agreement (the "Rule 12b-1
Related Agreement") have been approved by a majority of
the Board of Directors of the Corporation, including a
majority of the Board of Directors who are not
"interested persons" of the Corporation, as defined in
the Act, and who have no direct or indirect financial
interest in the operation of the Plan or in this or any
other Rule 12b-1 Related Agreement (the "Disinterested
Directors"), cast in person at a meeting called for the
purpose of voting thereon. Such approval included a
determination by the Board of Directors that, in the
exercise of its reasonable business judgment and in
light of its fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund's Class
I shareholders.
1. To the extent you provide distribution and
marketing services in the promotion of the Fund's Class
I shares, including furnishing services and assistance
to your customers who invest in and own Class I shares,
including, but not limited to, answering routine
inquiries regarding the Fund and assisting in changing
account designations and addresses, we shall pay you a
fee of up to 0.50% of the average daily net assets of
the Fund attributable to the Fund's Class I shares
(computed on an annual basis) which are owned of record
by your firm as nominee for your customers or which are
owned by those customers of your firm whose records, as
maintained by the Corporation or its agent, designate
your firm as the customer's dealer or service provider
of record. We reserve the right to increase, decrease
or discontinue the fee at any time in our sole
discretion upon written notice to you.
We shall make the determination of the net asset
value, which determination shall be made in the manner
specified in the Fund's current Prospectus, and pay to
you quarterly, on the basis of such determination, the
fee specified above, to the extent permitted under the
Plan. No such quarterly fee will be paid to you with
respect to shares purchased by you and redeemed or
repurchased by the Corporation, its agent or us within
seven (7) business days after the date of our
confirmation of such purchase. In addition, no such
quarterly fee will be paid to you with respect to any
of your customers if the amount of such fee based upon
the value of such customer's Class I shares will be
less than $1.00. Payment of such quarterly fee shall
be made within 45 days after the close of each quarter
for which such fee is payable.
2. You shall furnish us with such information as
shall reasonably be requested by the Board of
Directors, on behalf of the Fund, with respect to the
fees paid to you pursuant to this Rule 12b-1 Related
Agreement.
3. We shall furnish to the Board of Directors,
for its review, on a quarterly basis, a written report
of the amounts expended under the Plan by us and the
purposes for which such expenditures were made.
4. This Rule 12b-1 Related Agreement may be
terminated by the vote of (a) a majority vote of Class
I shareholders, or (b) a majority of the Disinterested
Directors, on sixty (60) days' written notice, without
payment of any penalty. In addition, this Rule 12b-1
Related Agreement will be terminated by any act which
terminates the Distribution Agreement between the
Corporation and us and shall terminate immediately in
the event of its assignment. This Rule 12b-1 Related
Agreement may be amended by us upon written notice to
you, and you shall be deemed to have consented to such
amendment upon effecting any purchases of shares for
your own account or on behalf of any of your customer's
accounts following your receipt of such notice.
5. The provisions of the Distribution Agreement
between the Corporation and us are incorporated herein
by reference. This Rule 12b-1 Related Agreement shall
become effective on the date accepted by you and shall
continue in full force and effect so long as the
continuance of the Distribution Agreement, the Plan and
this Rule 12b-1 Related Agreement are approved at least
annually by a vote of the Board of Directors of the
Corporation and of the Disinterested Directors, cast in
person at a meeting called for the purpose of voting
thereon. All communications to us should be sent to
the above address. Any notice to you shall be duly
given if mailed or telegraphed to you at the address
specified by you below. This Rule 12b-1 Related
Agreement shall be construed under the laws of the
State of Minnesota.
CENTENNIAL LAKES CAPITAL, INC.
By: _____________________________
Donald B. Cornelius
Accepted:
____________________________
(Dealer or Service Provider Name)
____________________________
(Street Address)
____________________________
(City) (State) (ZIP)
____________________________
(Telephone No.)
____________________________
(Facsimile No.)
By: _____________________________
(Name and Title)
KOPP FUNDS, INC.
RULE 18f-3
MULTIPLE CLASS PLAN
Kopp Funds, Inc. (the "Company"), a registered
investment company currently consisting of the Kopp
Emerging Growth Fund (the "Fund"), has elected to rely
on Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), in offering multiple
classes of shares of the Fund. The Board of Directors
of the Company has determined in accordance with Rule
18f-3(d) that the following plan (the "Plan") is in the
best interests of each class individually and the
Company as a whole:
1. Class Designation. Fund shares will be
designated either Class A or Class I.
2. Class Characteristics. Each class of shares
will represent interests in the same portfolio of
investments and will be identical in all respects to
the other class, except as set forth below:
Class A: Class A shares will be sold subject to a maximum front-
end sales charge of 3.50%, subject to certain exceptions as set forth
in the current prospectus for the Class A shares. Class A shares
will also be subject to a distribution plan adopted pursuant
to Rule 12b-1 under the 1940 Act which provides for an annual
distribution fee of up to 0.50% of the average daily net assets of the
Fund attributable to Class A shares, computed on an annual basis.
The distribution plan fees for the Class A shares will be used
to pay the Fund's distributor (i) a distribution fee of up to 0.25%
for the promotion and distribution of Class A shares and (ii) a
shareholder servicing fee of up to 0.25% for personal service provided
to Class A shareholders. A deferred sales charge of 1.00% will
be imposed on redemptions of Class A shares which were purchased
without a sales charge and redeemed within 24 months of purchase.
Class I: Class I shares will be offered for sale at net asset
value per share without the imposition of a sales charge.
However, Class I shares will be subject to a distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act which provides
for an annual distribution fee of up to 0.50% of the average daily
net assets of Class I shares, computed on an annual basis. The
distribution plan fees for the Class I shares will be used to pay
the Fund's distributor (i) a distribution fee of up to 0.25% for
the promotion and distribution of Class I shares and (ii) a
shareholder servicing fee of up to 0.25% for personal service provided
to Class I shareholders. A redemption fee of 1.00% will be
imposed on redemptions of Class I shares made within 24 months of
purchase.
3. Expense Allocations. The following expenses
will be allocated on a class-by-class basis, to the
extent practicable: (i) fees under the distribution
plan; (ii) printing and postage expenses related to
preparing and distributing materials to existing
shareholders of a particular class; (iii) Securities
and Exchange Commission and blue sky fees incurred on
behalf of the shareholders of a particular class; (iv)
the expense of administrative personnel and services
required to support the shareholders of a particular
class; (v) accounting, auditor, litigation or other
legal expenses relating solely to a particular class;
(vi) transfer agent fees identified by the transfer
agent as being attributable to a particular class; and
(vii) expenses incurred in connection with shareholder
meetings as a result of issues relating to a particular
class. Income, realized and unrealized capital gains
and losses, and expenses of the Fund not allocated to a
particular class will be allocated on the basis of the
net asset value of each class in relation to the net
asset value of the Fund. Notwithstanding the
foregoing, a service provider for the Fund may waive or
reimburse the expenses of a specific class or classes
to the extent permitted under Rule 18f-3 of the 1940
Act.
4. Exchanges and Conversions. There are no
exchange or conversion features associated with the
Class A or Class I shares.
5. General. Each class will have exclusive
voting rights with respect to any matter related solely
to that class. Each class will have separate voting
rights with respect to any matter in which the
interests of one class differ from the interests of the
other class. Each class will have in all other
respects the same rights and obligations as each other
class. On an ongoing basis, the Board of Directors
will monitor the Plan for any material conflicts
between the interests of the classes of shares. The
Board of Directors will take such action as is
reasonably necessary to eliminate any conflict that
develops. The Fund's investment adviser and
distributor will be responsible for alerting the Board
of Directors to any material conflicts that may arise.
Any material amendment to this Plan must be approved by
a majority of the Board of Directors, including a
majority of the directors who are not interested
persons of the Company, as defined in the 1940 Act.
This Plan is qualified by and subject to the then
current prospectus for the applicable class, which
contains additional information about that class.
