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 Intermediate Fixed Income 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 Intermediate
Fixed Income 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 Intermediate Fixed Income 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 Intermediate Fixed Income 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 Intermediate Fixed Income Fund in
any way or otherwise be deemed an agent of the Company or the Intermediate
Fixed Income 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 Intermediate Fixed Income Fund.
3. Expenses. The Adviser, at its own expense and without
reimbursement from the Company or the Intermediate Fixed Income Fund,
shall furnish office space, and all necessary office facilities, equipment
and executive personnel for managing the investments of the Intermediate
Fixed Income Fund. The Intermediate Fixed Income Fund shall bear all
expenses initially incurred by it, provided that the total expenses borne
by the Intermediate Fixed Income 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 1.5% of the average net assets of the
Intermediate Fixed Income Fund for such year, as determined by valuations
made as of the close of each business day. The expenses of the
Intermediate Fixed Income Fund's operations borne by the Intermediate
Fixed Income 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
Intermediate Fixed Income 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 Intermediate
Fixed Income Fund on a monthly basis. If the accrued amount of the
expenses of the Intermediate Fixed Income 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
Intermediate Fixed Income Fund shall pay to the Adviser an advisory fee,
paid monthly, based on the average net assets of the Intermediate Fixed
Income 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 0.45% (0.45%
per annum) of such average net assets of the Intermediate Fixed Income
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 Intermediate Fixed Income Fund.
Except in connection with the initial capitalization of the Intermediate
Fixed Income 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 Intermediate Fixed Income Fund, except
for the purchase of shares of the Intermediate Fixed Income 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
Intermediate Fixed Income 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 Intermediate Fixed Income 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 Intermediate Fixed Income Fund
and the Company will not use such name if the Adviser ceases to be the
Intermediate Fixed Income Fund's sole investment adviser. During the
period that this Agreement is in effect, the Adviser shall be the
Intermediate Fixed Income 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 Intermediate Fixed Income Fund or to any shareholder of
the Intermediate Fixed Income 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 Intermediate Fixed Income Fund and for the selection
of the markets on or in which the transactions will be executed. The
Adviser may cause the Intermediate Fixed Income 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 Intermediate
Fixed Income 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 Intermediate Fixed
Income 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
Intermediate Fixed Income 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 Intermediate Fixed
Income 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:
