INVESTMENT ADVISORY AGREEMENT
Agreement made this ____ day of March, 1998 between
JohnsonFamily Funds, Inc., a Maryland corporation (the "Company"), and
Xxxxxxx Asset Management, Inc., a Wisconsin corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Company is in the process of registering with the
Securities and Exchange Commission under the Investment Company Act of
1940 (the "Act") as an open-end management investment company consisting
as of the date hereof of four series, the JohnsonFamily Intermediate Fixed
Income Fund (the "Intermediate Fixed Income Fund"), the JohnsonFamily
Small Cap Equity Fund (the "Small Cap Equity Fund"), the JohnsonFamily
Large Cap Equity Fund (the "Large Cap Equity Fund") and the JohnsonFamily
International Equity Fund (the "International Equity Fund"); and
WHEREAS, the Company desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940,
as the investment adviser for the Small Cap Equity Fund.
NOW, THEREFORE, the Company and the Adviser do mutually promise
and agree as follows:
1. Employment. The Company hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Small Cap
Equity Fund for the period and on the terms set forth in this Agreement.
The Adviser hereby accepts such employment for the compensation herein
provided and agrees during such period to render the services and to
assume the obligations herein set forth.
2. Authority of the Adviser. The Adviser shall supervise and
manage the investment portfolio of the Small Cap Equity Fund and, subject
to such policies as the directors of the Company may determine, direct the
purchase and sale of investment securities in the day-to-day management of
the Small Cap Equity Fund. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Company or the Small Cap Equity Fund in any way or otherwise
be deemed an agent of the Company or the Small Cap Equity Fund. However,
one or more shareholders, officers, directors or employees of the Adviser
may serve as directors and/or officers of the Company, but without
compensation or reimbursement of expenses for such services from the
Company. Nothing herein contained shall be deemed to require the Company
to take any action contrary to its Articles of Incorporation or By-Laws or
any applicable statute or regulation, or to relieve or deprive the
directors of the Company of their responsibility for, and control of, the
affairs of the Small Cap Equity Fund.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company or the Small Cap Equity Fund, shall furnish
office space, and all necessary office facilities, equipment and executive
personnel for managing the investments of the Small Cap Equity Fund. The
Small Cap Equity Fund shall bear all expenses initially incurred by it,
provided that the total expenses borne by the Small Cap Equity Fund,
including the Adviser's fee but excluding all federal, state and local
taxes, interest, reimbursement payments to securities lenders for dividend
and interest payments on securities sold short, brokerage commissions and
extraordinary items, shall not in any year exceed 2.5% of the average net
assets of the Small Cap Equity Fund for such year, as determined by
valuations made as of the close of each business day. The expenses of the
Small Cap Equity Fund's operations borne by the Small Cap Equity Fund
include by way of illustration and not limitation, director's fees paid to
those directors who are not officers of the Company, the costs of
preparing and printing its registration statements required under the
Securities Act of 1933 and the Act (and amendments thereto), the expense
of registering its shares with the Securities and Exchange Commission and
in the various states, payments made pursuant to the Service and
Distribution Plan, the printing and distribution cost of prospectuses
mailed to existing shareholders, the cost of share certificates (if any),
director and officer liability insurance, reports to shareholders, reports
to government authorities and proxy statements, interest charges,
reimbursement payments to securities lenders for dividend and interest
payments on securities sold short, taxes, legal expenses, salaries of
administrative and clerical personnel, association membership dues,
auditing and accounting services, insurance premiums, brokerage and other
expenses connected with the execution of portfolio securities
transactions, fees and expenses of the custodian of the Small Cap Equity
Fund's assets, expenses of calculating the net asset value and
repurchasing and redeeming shares, charges and expenses of dividend
disbursing agents, registrars and stock transfer agents and the cost of
keeping all necessary shareholder records and accounts.
The Company shall monitor the expense ratio of the Small Cap
Equity Fund on a monthly basis. If the accrued amount of the expenses of
the Small Cap Equity Fund exceeds the expense limitation established
herein, the Company shall create an account receivable from the Adviser
for the amount of such excess. In such a situation the monthly payment of
the Adviser's fee will be reduced by the amount of such excess, subject to
adjustment month by month during the balance of the Company's fiscal year
if accrued expenses thereafter fall below the expense limitation.
4. Compensation of the Adviser. For the services and
facilities to be rendered and the charges and expenses to be assumed by
the Adviser hereunder, the Company, through and on behalf of the Small Cap
Equity Fund shall pay to the Adviser an advisory fee, paid monthly, based
on the average net assets of the Small Cap Equity Fund, as determined by
valuations made as of the close of each business day of the month. The
advisory fee shall be 1/12 of 0.75% (0.75% per annum) of such average net
assets of the Small Cap Equity Fund. For any month in which this
Agreement is not in effect for the entire month, such fee shall be reduced
proportionately on the basis of the number of calendar days during which
it is in effect and the fee computed upon the average net assets of the
business days during which it is so in effect.
5. Ownership of Shares of the Small Cap Equity Fund. Except
in connection with the initial capitalization of the Small Cap Equity
Fund, the Adviser shall not take, and shall not permit any of its
shareholders, officers, directors or employees to take, a long or short
position in the shares of the Small Cap Equity Fund, except for the
purchase of shares of the Small Cap Equity Fund for investment purposes at
the same price as that available to the public at the time of purchase.
6. Exclusivity. The services of the Adviser to the Small Cap
Equity Fund hereunder are not to be deemed exclusive and the Adviser shall
be free to furnish similar services to others as long as the services
hereunder are not impaired thereby. Although the Adviser has permitted
and is permitting the Small Cap Equity Fund and the Company to use the
name "JohnsonFamily," it is understood and agreed that the Adviser
reserves the right to use and has permitted and may permit other persons,
firms or corporations, including investment companies, to use such name,
and that the Small Cap Equity Fund and the Company will not use such name
if the Adviser ceases to be the Small Cap Equity Fund's sole investment
adviser. During the period that this Agreement is in effect, the Adviser
shall be the Small Cap Equity Fund's sole investment adviser.
7. Liability. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of the Adviser, the Adviser shall not be subject to
liability to the Small Cap Equity Fund or to any shareholder of the Small
Cap Equity Fund for any act or omission in the course of, or connected
with, rendering services hereunder, or for any losses that may be
sustained in the purchase, holding or sale of any security.
8. Brokerage Commissions. The Adviser shall have authority
and discretion to select brokers and dealers to exercise portfolio
transactions for the Small Cap Equity Fund and for the selection of the
markets on or in which the transactions will be executed. The Adviser may
cause the Small Cap Equity Fund to pay a broker-dealer which provides
brokerage and research services, as such services are defined in Section
28(e) of the Securities Exchange Act of 1934 (the "Exchange Act"), to the
Adviser a commission for effecting a securities transaction in excess of
the amount another broker-dealer would have charged for effecting such
transaction, if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of brokerage and
research services provided by the executing broker-dealer viewed in terms
of either that particular transaction or his overall responsibilities with
respect to the accounts as to which he exercises investment discretion (as
defined in Section 3(a)(35) of the Exchange Act). The Adviser will
provide such reports as the Company's Board of Directors may reasonably
request with respect to the Small Cap Equity Fund's total brokerage and
the manner in which that brokerage was allocated.
9. Amendments. This Agreement may be amended by the mutual
consent of the parties; provided, however, that in no event may it be
amended without the approval of the directors of the Company in the manner
required by the Act, and, if required by the Act, by the vote of the
majority of the outstanding voting securities of the Small Cap Equity
Fund, as defined in the Act.
10. Termination. This Agreement may be terminated at any time,
without the payment of any penalty, by the directors of the Company or by
a vote of the majority of the outstanding voting securities of the Small
Cap Equity Fund, as defined in the Act, upon giving sixty (60) days'
written notice to the Adviser. This Agreement may be terminated by the
Adviser at any time upon the giving of sixty (60) days' written notice to
the Company. This Agreement shall terminate automatically in the event of
its assignment (as defined in Section 2(a)(4) of the Act). Subject to
prior termination as hereinbefore provided, this Agreement shall continue
in effect for two (2) years from the date hereof and indefinitely
thereafter, but only so long as the continuance after such two (2) year
period is specifically approved annually by (i) the directors of the
Company or by the vote of the majority of the outstanding voting
securities of the Small Cap Equity Fund, as defined in the Act, and (ii)
the directors of the Company in the manner required by the Act, provided
that any such approval may be made effective not more than sixty (60) days
thereafter.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day first above written.
XXXXXXX ASSET MANAGEMENT, INC. JOHNSONFAMILY FUNDS, INC.
(the "Adviser") (the "Company")
By: By:
