DISTRIBUTION AGREEMENT (Revised)
THIS AGREEMENT is made as of this ______ day of________, 1999, by and
between JohnsonFamily Funds, Inc., a Maryland corporation (the "Corporation"),
and Sunstone Distribution Services, LLC, a Wisconsin limited liability company
(the "Distributor").
WHEREAS, the Corporation is an open-end investment company registered
under the Investment Company Act of 1940, as amended (the "Act") and is
authorized to issue shares of common stock (the "Shares") in separate classes
with each such class representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Corporation and Distributor desire to enter into an
agreement pursuant to which Distributor shall be the distributor of the Shares
of the Corporation representing the investment portfolios listed on Schedule A
hereto and any additional investment portfolios the Corporation and Distributor
may agree upon and include on Schedule A as such Schedule may be amended from
time to time (such investment portfolios and any additional investment
portfolios are individually referred to as a "Fund" and collectively the
"Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. Appointment of the Distributor.
The Corporation hereby appoints the Distributor as agent for the
distribution of the Shares, on the terms and for the period set forth in this
Agreement. Distributor hereby accepts such appointment as agent for the
distribution of the Shares on the terms and for the period set forth in this
Agreement.
2. Services and Duties of the Distributor.
2.1 Distributor will act as agent for the distribution of Shares in
accordance with the instructions of the Corporation's Board of Directors and the
registration statement and prospectuses then in effect with respect to the Funds
under the Securities Act of 1933, as amended (the "1933 Act").
2.2 Distributor may finance appropriate activities which it deems
reasonable which are primarily intended to result in the sale of Shares,
including, but not limited to, advertising, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature. All other expenses in connection with the organization and
operation of the Corporation and the Funds shall be the responsibility of the
Corporation. Distributor may enter into servicing and/or selling agreements with
qualified broker/dealers and other persons with respect to the offering of
Shares to the public, and if it so chooses Distributor will act only on its own
behalf as principal. The Distributor shall not be obligated to sell any certain
number of Shares of any Fund.
2.3 All Shares of the Funds offered for sale by Distributor shall be
offered for sale to the public at a price per unit (the "offering price") equal
to their net asset value (determined in the manner set forth in the Funds' then
current prospectus).
2.4 Distributor shall act as distributor of the Shares in compliance
in all material respects with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted
pursuant to the 1940 Act, by the Securities and Exchange Commission (the
"Commission") and the NASD. Distributor shall provide to the Corporation's Board
of Directors, at least quarterly, a report of its expenses incurred pursuant to
this Agreement.
3. Duties and Representations of the Corporation.
3.1 The Corporation represents that it is registered as an open-end
management investment company under the 1940 Act and that it has and will
continue to act in conformity with its Articles of Incorporation, By-Laws, its
registration statement as may be amended from time to time and resolutions and
other instructions of its Board of Directors and has and will continue to comply
with all applicable laws, rules and regulations including without limitation the
1933 Act, the 1934 Act, the 1940 Act, the laws of the states in which shares of
the Funds are offered and sold, and the rules and regulations thereunder.
3.2 The Corporation shall take or cause to be taken all necessary
action to register and maintain the registration of the Shares under the 1933
Act for sale as herein contemplated and shall pay all costs and expenses in
connection with the registration of Shares under the 1933 Act, and be
responsible for all expenses in connection with the organization and operation
of the Corporation and the Funds including maintaining facilities for the issue
and transfer of Shares and for supplying information, prices and other data to
be furnished by the Corporation hereunder.
3.3 The Corporation shall execute any and all documents and furnish
any and all information and otherwise take all actions which may be reasonably
necessary in the discretion of the Corporation's officers in connection with the
qualification of the Shares for sale in such states as Distributor and the
Corporation may approve, shall maintain the registration of a sufficient number
or amount of shares thereunder, and shall pay all expenses which may be incurred
in connection with such qualification.
3.4 The Corporation shall, at its expense, keep the Distributor fully
informed with regard to its affairs. In addition, the Corporation shall furnish
Distributor from time to time such information with respect to the Corporation
and the Shares as Distributor may reasonably request, and the
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Corporation warrants that the statements contained in any such information shall
be true and correct. The Corporation represents that it will not use or
authorize the use of any advertising or sales material unless and until such
materials have been approved and authorized for use by the Distributor.
3.5 The Corporation represents to Distributor that all registration
statements and prospectuses of the Corporation filed or to be filed with the
Commission under the 1933 Act with respect to the Shares have been and will be
prepared in conformity with the requirements of the 1933 Act, the 1940 Act, and
the rules and regulations of the Commission thereunder. As used in this
Agreement the terms "registration statement" and "prospectus" shall mean any
registration statement and prospectus (together with the related statement of
additional information) at any time now or hereafter filed with the Commission
with respect to any of the Shares and any amendments and supplements thereto
which at any time shall have been or will be filed with said Commission. The
Corporation represents and warrants to Distributor that any registration
statement and prospectus, when such registration statement becomes effective,
will contain all statements required to be stated therein in conformity with the
1933 Act, the 1940 Act and the rules and regulations of the Commission; that all
information contained in the registration statement and prospectus will be true
and correct in all material respects when such registration statement becomes
effective; and that neither the registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The
Corporation agrees to file timely from time to time such amendments,
supplements, reports and other documents as may be necessary or required in
order to comply with the 1933 Act and the 1940 Act and in order that there may
be no untrue statement of a material fact in a registration statement or
prospectus, or necessary or required in order that there may be no omission to
state a material fact in the registration statement or prospectus which omission
would make the statements therein misleading.
3.6 The Corporation shall not file any amendment to the registration
statement or supplement to any prospectus without giving Distributor reasonable
notice thereof in advance and if the Distributor declines to assent to such
amendment (after a reasonable time), the Corporation may terminate this
Agreement forthwith by written notice to the Distributor without payment of any
penalty. If the Corporation shall not propose an amendment or amendments and/or
supplement or supplements promptly after receipt by the Corporation of a written
request from Distributor to do so, Distributor may, at its option, immediately
terminate this Agreement. In addition, if, at any time during the term of this
Agreement, the Distributor requests the Corporation to make any change in its
governing instruments or in its methods of doing business which are necessary in
order to comply with any requirement of applicable law or regulation, and the
Corporation fails to make any such change as requested, the Distributor may
terminate this Agreement forthwith by written notice to the Corporation without
payment of any penalty. Nothing contained in this Agreement shall in any way
limit the Corporation's right to file at any time any amendments to any
registration statement and/or supplements to any prospectus, of whatever
character, as the Corporation may deem advisable, such right being in all
respects absolute and unconditional.
3.7 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by circumstances of any kind, the
Corporation's officers may decline to accept any orders for, or make any sales
of, any Shares until such time as they deem it advisable to accept such
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orders and to make such sales and the Corporation shall advise Distributor
promptly of such determination.
3.8 The Corporation agrees to advise the Distributor promptly in
writing:
(i) of any correspondence or other communication by the Commission or
its staff relating to a Fund, including requests by the Commission for
amendments to the registration statement or prospectuses, and any correspondence
or other communication by the Corporation or its representatives or agents to
the Commission or its staff relating to a Fund;
(ii) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or prospectuses then
in effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectuses or which
requires the making of a change in such registration statement or prospectuses
in order to make the statements therein not misleading; and (iv) of all actions
taken by the Commission with respect to any amendments to any registration
statement or prospectus which may from time to time be filed with the
Commission.
4. Compensation.
4.1 For the services provided pursuant to this Agreement, and subject
to the limitations contained in Section 4.3 below, the Funds will pay to the
Distributor a fee (the "Distribution Fee"), payable monthly in arrears, at the
annual rate of .05% per annum of each Fund's average daily net assets.
4.2 In addition to the compensation payable pursuant to Section 4.1,
and subject to the limitations contained in Section 4.3 below, the Funds will
reimburse the Distributor or pay directly, at the Distributor's discretion, (i)
the Distributor's reasonable out-of-pocket expenses incurred in connection with
activities primarily intended to result in the sale of Shares including, without
limitation, typesetting, printing and distribution of prospectuses and
shareholder reports, production, printing and distribution of sales materials
and forms, placement of media advertising, engagement of designers, free xxxxx
writers and public relation firms, long distance telephone lines, services and
charges, postage, overnight delivery charges, storage of inventory, regulatory
filing fees and travel, lodging and meals, and (ii) to the extent approved by
the Corporation trailing commissions paid by Distributor to dealers or other
persons entering into a selling agreement with Distributor or the Corporation.
4.3 Subject to and calculated in accordance with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., if during any
annual period the total of (i) the Distribution Fee and out-of-pocket
reimbursements under Sections 4.1 and 4.2 to the Distributor, and (ii) amounts
paid by a Fund which payment was primarily intended to result in the sale of
Shares pursuant to the Fund's
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Rule 12b-1 Plan and which was approved by the Distributor, exceeds 0.25% of a
Fund's average daily net assets, the Distributor will rebate that portion of its
Distribution Fee and expenses necessary to result in the total of (i) and (ii)
above not exceeding 0.25% of the Fund's average daily net assets. The payment of
the Distribution Fee and reimbursement of expenditures is authorized pursuant to
the Corporation's Distribution Plan under Rule 12b-1 under the 1940 Act and is
contingent upon the continued effectiveness of the Corporation's Distribution
Plan.
5. Indemnification.
5.1(a) The Corporation authorizes Distributor to use any prospectus,
in the form furnished to Distributor from time to time, in connection with the
sale of Shares. The Corporation shall indemnify, defend and hold the
Distributor, and each of its present or former directors, officers, employees,
representatives and any person who controls or previously controlled the
Distributor within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all losses, claims, demands, liabilities, damages and
expenses (including the costs of investigating or defending any alleged losses,
claims, demands, liabilities, damages or expenses and any counsel fees incurred
in connection therewith) which Distributor, each of its present and former
directors, officers, employees or representatives or any such controlling
person, may incur under the 1933 Act, the 1934 Act, any other statute (including
Blue Sky laws) or any rule or regulation thereunder, or under common law or
otherwise, arising out of or based upon any untrue statement, or alleged untrue
statement, of a material fact contained in the registration statement or any
prospectus, as from time to time amended or supplemented, or an annual or
interim report to shareholders, or arising out of or based upon any omission, or
alleged omission, to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that the Corporation's obligation to indemnify Distributor and any of the
foregoing indemnitees shall not be deemed to cover any losses, claims, demands,
liabilities, damages or expenses arising out of any untrue statement or alleged
untrue statement or omission or alleged omission made in the registration
statement, prospectus, or annual or interim report in reliance upon and in
conformity with information relating to the Distributor and furnished to the
Corporation or its counsel by Distributor for the purpose of, and used in, the
preparation thereof; and provided further that the Corporation's agreement to
indemnify Distributor and any of the foregoing indemnitees shall not be deemed
to cover any liability to the Corporation or its shareholders to which
Distributor would otherwise be subject by reason of its willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this Agreement. The
Corporation's agreement to indemnify the Distributor, and any of the foregoing
indemnitees, as the case may be, with respect to any action, is expressly
conditioned upon the Corporation being notified of such action brought against
Distributor, or any of the foregoing indemnitees, within a reasonable time after
the summons or other first legal process giving information of the nature of the
claim shall have been served upon the Distributor, or such person, such
notification to be given by letter or by telegram addressed to the Corporation's
President, but the failure so to notify the Corporation of any such action shall
not relieve the Corporation from any liability which the Corporation may have to
the person against whom such action is brought by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than on
account of the Corporation's indemnity agreement contained in this Section 5.1.
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5.1(b) The Corporation shall be entitled to participate at its own
expense in the defense or, if it so elects, to assume the defense of any suit
brought to enforce any such loss, claim, demand, liability, damage or expense,
but if the Corporation elects to assume the defense, such defense shall be
conducted by counsel chosen by the Corporation and approved by the Distributor,
which approval shall not be unreasonably withheld. In the event the Corporation
elects to assume the defense of any such suit and retain such counsel, the
indemnified defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by them. If the Corporation does not
elect to assume the defense of any such suit, or in case the Distributor does
not, in the exercise of reasonable judgment, approve of counsel chosen by the
Corporation, the Corporation will reimburse the indemnified person or persons
named as defendant or defendants in such suit, for the fees and expenses of any
counsel retained by Distributor and them. The Corporation's indemnification
agreement contained in this Section 5.1 and the Corporation's representations
and warranties in this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Distributor,
and each of its present or former directors, officers, employees,
representatives or any controlling person, and shall survive the delivery of any
Shares and the termination of this Agreement. This agreement of indemnity will
inure exclusively to the Distributor's benefit, to the benefit of each of its
present or former directors, officers, employees or representatives or to the
benefit of any controlling persons and their successors. The Corporation agrees
promptly to notify Distributor of the commencement of any litigation or
proceedings against the Corporation or any of its officers or directors in
connection with the issue and sale of any of the Shares.
5.2(a) Distributor shall indemnify, defend and hold the Corporation,
and each of its present or former Directors, officers, employees,
representatives, and any person who controls or previously controlled the
Corporation within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all losses, claims, demands, liabilities, damages and
expenses (including the costs of investigating or defending any alleged losses,
claims, demands, liabilities, damages or expenses, and any counsel fees incurred
in connection therewith) which the Corporation, and each of its present or
former Directors, officers, employees, representatives, or any such controlling
person, may incur under the 1933 Act, the 1934 Act, any other statute (including
Blue Sky laws) or any rule or regulation thereunder, or under common law or
otherwise, arising out of or based upon any untrue, or alleged untrue, statement
of a material fact contained in the Corporation's registration statement or any
prospectus, as from time to time amended or supplemented, or annual or interim
report to shareholders or the omission, or alleged omission, to state therein a
material fact required to be stated therein or necessary to make the statement
not misleading, but only if such statement or omission was made in reliance
upon, and in conformity with, information relating to the Distributor and
furnished to the Corporation or its counsel by the Distributor for the purpose
of, and used in, the preparation thereof. Distributor's agreement to indemnify
the Corporation and any of the foregoing indemnitees shall not be deemed to
cover any liability to Distributor to which the Corporation would otherwise be
subject by reason of its willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of its reckless disregard of its
obligations and duties, under this Agreement. The Distributor's Agreement to
indemnify the Corporation, and any of the foregoing indemnitees, is expressly
conditioned upon the Distributor's being notified of any action brought against
the Corporation, and any of the foregoing indemnitees, such notification to be
given by letter or telegram addressed to Distributor's President, within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Corporation or
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such person, but the failure so to notify Distributor of any such action shall
not relieve Distributor from any liability which Distributor may have to the
person against whom such action is brought by reason of any such untrue, or
alleged untrue, statement or omission, otherwise than on account of
Distributor's indemnity agreement contained in this Section 5.2(a).
5.2(b) The Distributor shall be entitled to participate at its own
expense in the defense or, if it so elects, to assume the defense of any suit
brought to enforce any such loss, claim, demand, liability, damage or expense,
but if the Distributor elects to assume the defense, such defense shall be
conducted by counsel chosen by the Distributor and approved by the Corporation,
which approval shall not be unreasonably withheld. In the event the Distributor
elects to assume the defense of any such suit and retain such counsel, the
indemnified defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by them. If the Distributor does not
elect to assume the defense of any such suit, or in case the Corporation does
not, in the exercise of reasonable judgment, approve of counsel chosen by the
Distributor, the Distributor will reimburse the indemnified person or persons
named as defendant or defendants in such suit, for the fees and expenses of any
counsel retained by the Corporation and them. The Distributor's indemnification
agreement contained in this Section 5.2 and the Distributor's representations
and warranties in this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Corporation,
and each of its present or former directors, officers, employees,
representatives or any controlling person, and shall survive the delivery of any
Shares and the termination of this Agreement. This agreement of indemnity will
inure exclusively to the Corporation's benefit, to the benefit of each of its
present or former directors, officers, employees or representatives or to the
benefit of any controlling persons and their successors. The Distributor agrees
promptly to notify the Corporation of the commencement of any litigation or
proceedings against the Distributor or any of its officers or directors in
connection with the issue and sale of any of the Shares.
6. Offering of Shares.
No Shares shall be offered by either the Distributor or the
Corporation under any of the provisions of this Agreement and no orders for the
purchase or sale of such Shares hereunder shall be accepted by the Corporation
if and so long as the effectiveness of the registration statement then in effect
or any necessary amendments thereto shall be suspended under any of the
provisions of the 1933 Act, or if and so long as the current prospectus as
required by Section 10 of the 1933 Act, as amended, is not on file with the
Commission; provided, however, that nothing contained in this paragraph 6 shall
in any way restrict or have an application to or bearing upon the Corporation's
obligation to repurchase Shares from any shareholder in accordance with the
provisions of the prospectus or Articles of Incorporation.
7. Term.
7.1 This Agreement shall become effective with respect to each Fund
listed on Schedule A hereof as of the date hereof and, with respect to each Fund
not in existence on that date, on the date an amendment to Schedule A to this
Agreement relating to that Fund is executed. Unless sooner
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terminated as provided herein, this Agreement shall continue in effect with
respect to each Fund until________, 2000. Thereafter, if not terminated, this
Agreement shall continue automatically in effect as to each Fund for successive
annual periods, provided such continuance is specifically approved at least
annually by (i) the Corporation's Board of Directors or (ii) the vote of a
majority (as defined in the 0000 Xxx) of the outstanding voting securities of a
Fund, and provided that in either event the continuance is also approved by the
Distributor and by a majority of the Corporation's Board of Directors who are
not "interested persons" (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of voting
on such approval.
7.2 This Agreement may be terminated without penalty with respect to a
particular Fund (1) through a failure to renew this Agreement at the end of a
term, (2) upon mutual consent of the parties, or (3) on no less than sixty (60)
days' written notice, by the Corporation's Board of Directors, by vote of a
majority (as defined with respect to voting securities in the 1940 Act) of the
outstanding voting securities of a Fund, or by the Distributor (which notice may
be waived by the party entitled to such notice). In addition, this Agreement may
be terminated at any time, without penalty, with respect to a particular Fund by
vote of a majority of the members of the Board of Directors who are not
interested persons of the Corporation (as defined in the 0000 Xxx) and have no
direct or indirect financial interest in the operation of the Corporation's
Service and Distribution Plan or in this Agreement. 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 the Distributor and the
Corporation. This Agreement will also terminate automatically in the event of
its assignment (as defined in the 1940 Act).
8. Miscellaneous.
8.1 The services of the Distributor rendered to the Funds are not
deemed to be exclusive. The Distributor may render such services and any other
services to others, including other investment companies. The Corporation
recognizes that from time to time directors, officers, and employees of the
Distributor may serve as directors, Directors, officers and employees of other
entities (including other investment companies), that such other entities may
include the name of the Distributor as part of their name and that the
Distributor or its affiliates may enter into distribution, administration, fund
accounting, transfer agent or other agreements with such other entities.
8.2 Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Corporation all records
relative to the Funds and prior, present or potential shareholders of the
Corporation (and clients of said shareholders), and not to use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Corporation, which approval may not be withheld where the Distributor may be
exposed to civil or criminal proceedings for failure to comply, when requested
to divulge such information by duly constituted authorities, when subject to
governmental or regulatory audit or investigation, or when so requested by the
Corporation. Records and information which have become known to the public
through no wrongful act of the Distributor or any of its employees, agents or
representatives shall not be subject to this paragraph.
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8.3 This Agreement shall be governed by Wisconsin law. To the extent
that the applicable laws of the State of Wisconsin, or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act, the latter
shall control, and nothing herein shall be construed in a manner inconsistent
with the 1940 Act or any rule or order of the Commission thereunder. Any
provision of this Agreement which may be determined by competent authority to be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.4 Any notice required or to be permitted to be given by either party
to the other shall be in writing and shall be deemed to have been given when
sent by registered or certified mail, postage prepaid, return receipt requested,
as follows: Notice to the Distributor shall be sent to Sunstone Distribution
Services, LLC, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX, 00000,
Attention: Xxxxxx X. Xxxxxxx, and notice to the Corporation shall be sent to
JohnsonFamily Funds, 0000 Xxxxx Xxxx Xxxxxx, Xxxxxx, Xxxxxxxxx 00000, Attention:
Xxxx X. Xxxxx.
8.5 This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original agreement but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by a duly authorized officer as of the day and year first above
written.
JOHNSONFAMILY FUNDS, INC.
(the "Corporation")
By: ____________________________________
President
SUNSTONE DISTRIBUTION SERVICES, LLC
(the "Distributor")
By: ____________________________________
Xxxxxx X. Xxxxxxx
President
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Schedule A
to the
Distribution Agreement
by and between
JohnsonFamily Funds, Inc.
and
Sunstone Distribution Services, LLC
Name of Funds
JohnsonFamily Large Cap Equity Fund
JohnsonFamily Small Cap Equity Fund
JohnsonFamily International Equity Fund
JohnsonFamily Intermediate Fixed Income Fund
