INVESTMENT ADVISORY AGREEMENT
AGREEMENT ("Agreement"), made this 1st day of April, 2003, 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 currently registered 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 "Fund"), the
JohnsonFamily Small Cap Value Fund (the "Small Cap Value Fund"), the
JohnsonFamily Large Cap Value Fund (the "Large Cap Value Fund") and the
JohnsonFamily International Value Fund (the "International Value Fund");
WHEREAS, the Adviser, which is an investment adviser registered under the
Investment Advisers Act of 1940, provides investment advisory services to the
Fund, the Small Cap Value Fund, the Large Cap Value Fund and the International
Value Fund pursuant to separate investment advisory agreements; and
WHEREAS, the Company and the Adviser desire to enter into a new investment
advisory agreement with respect to the Fund only.
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 Fund and to administer its
business and administrative operations, subject to the direction of the Board of
Directors of the Company (the "Board of Directors") and the officers of the
Company, 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 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 Fund in any way or otherwise be deemed an agent of the Company or the 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, as amended, restated or
supplemented, or any applicable statute or
regulation, or to relieve or deprive the Board of Directors of its
responsibility for and control of the affairs of the Fund.
3. Obligations of and Services to be Provided by the Adviser. The Adviser
undertakes to provide the services hereinafter set forth and to assume the
following obligations:
A. Management and Administrative Services.
(1) The Adviser shall furnish to the Company adequate office space,
which may be space within the offices of the Adviser or in such other place
as may be agreed upon from time to time, and all office furnishings,
facilities and equipment as may be reasonably required for performing
services relating to advisory, research, asset allocation, portfolio
manager selection and evaluation activities and otherwise managing and
administering the business and operations of the Fund.
(2) The Adviser shall employ or provide and compensate the executive,
administrative, secretarial and clerical personnel necessary to supervise
the provision of the services set forth in sub-paragraph 3(A)(1) and shall
bear the expense of providing such services, except as provided in Section
4 of this Agreement. The Adviser shall also compensate all officers and
employees of the Company who are officers or employees of the Adviser or
its affiliated companies.
B. Investment Management Services.
(1) The Adviser shall, subject to and in accordance with the
investment objective and policies of the Fund and any directions which the
Board of Directors may issue to the Adviser, have overall responsibility
for the general management and investment of the assets and securities
portfolios of the Fund.
(2) The Adviser may delegate its investment responsibilities under
sub-paragraph 3(B)(1) with respect to the Fund or segments thereof to one
or more persons or companies ("Portfolio Manager[s]") pursuant to an
agreement between the Adviser, the Company and each such Portfolio Manager
("Sub-Advisory Agreement"). Each Sub-Advisory Agreement may provide that
the Portfolio Manager, subject to the control and supervision of the Board
of Directors and the Adviser, shall have full investment discretion for the
Fund and shall make all determinations with respect to the investment of
the Fund's assets assigned to the Portfolio Manager and the purchase and
sale of portfolio securities with those assets, and such steps as may be
necessary to implement its decision. Any delegation of duties pursuant to
this paragraph shall comply with all applicable provisions of Section 15 of
the Act, except to the extent permitted by any exemptive order of the
Securities and Exchange Commission or similar relief.
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Adviser shall not be responsible or liable for the investment merits of any
decision by a Portfolio Manager to purchase, hold or sell a security for
the Fund's portfolio.
(3) The Adviser shall develop overall investment programs and
strategies for the Fund, or segments thereof, shall revise such programs as
necessary, and shall monitor and report periodically to the Board of
Directors concerning the implementation of the programs.
(4) The Adviser shall research and evaluate Portfolio Managers and
shall advise the Board of Directors of the Company of the Portfolio
Managers which the Adviser believes are best-suited to invest the assets of
the Fund; shall monitor and evaluate the investment performance of each
Portfolio Manager; shall determine the portion of the Fund's assets to be
managed by each Portfolio Manager; shall recommend changes or additions of
Portfolio Managers when appropriate; and shall coordinate the investment
activities of the Portfolio Managers.
(5) The Adviser shall be solely responsible for paying the fees of
each Portfolio Manager.
(6) The Adviser shall render to the Board of Directors such periodic
reports concerning the business and investments of the Fund as the Board of
Directors shall reasonably request.
C. Provision of Information Necessary for Preparation of Securities
Registration Statements, Amendments and Other Materials.
The Adviser will make available and provide financial, accounting and
statistical information required by the Fund for the preparation of registration
statements, reports and other documents required by federal and state securities
laws, and with such information as the Fund may reasonably request for use in
the preparation of such documents or of other materials necessary or helpful for
the underwriting and distribution of the Fund's shares.
D. Provision of Personnel.
The Adviser shall make available its officers and employees to the Board of
Directors and officers of the Company for consultation and discussions regarding
the administration and management of the Company and its investment activities.
4. Expenses. The Adviser shall not be required to pay any expenses of the
Fund except as provided herein; provided, however, that if the aggregate annual
operating expenses, including the Adviser's fee but excluding all federal, state
and local taxes, interest, brokerage commissions and other costs incurred in
connection with the purchase or sale of portfolio
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securities and extraordinary items, shall in any year exceed 1.5% of the average
net assets of the Fund for such year, as determined by valuations made as of the
close of each business day of the year, then the Adviser's fee shall be reduced
as hereinafter provided. The expenses of the Fund's operations borne by the Fund
include by way of illustration and not limitation, directors fees paid to those
directors who are not officers of the Company, the costs of preparing and
printing 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, the printing and
distribution cost of prospectuses mailed to existing shareholders, the cost of
stock 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 Fund's assets, expenses of calculating the net asset value
and repurchasing and redeeming shares, printing and mailing expenses, 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 Fund on a monthly basis.
If the accrued amount of the expenses of the Fund exceeds the expense limitation
established herein, the Company shall create an account receivable from the
Adviser in 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.
5. Compensation of the Adviser. For the services to be rendered by the
Adviser hereunder, the Company, through and on behalf of the Fund, shall pay to
the Adviser an advisory fee, paid monthly, based on the average net assets of
the 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 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.
6. Ownership of Shares of the Fund. The Adviser shall not take an ownership
position in the Fund, and shall not permit any of its shareholders, officers,
directors or employees to take a long or short position in the shares of the
Fund, except for the purchase of shares of the Fund for investment purposes at
the same price as that available to the public at the time of purchase.
7. Exclusivity. The services of the Adviser to the 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
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permitting the 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 Fund and the Company will
not use such name if the Adviser ceases to be an investment adviser for the
Fund. During the period that this Agreement is in effect, and except as herein
provided, the Adviser shall be the Fund's sole investment adviser.
8. 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 Fund or to
any shareholder of the 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.
9. Brokerage Commissions. The Adviser, subject to the control and direction
of the Board of Directors, and any Portfolio Managers, subject to the control
and direction of the Board of Directors and the Adviser, shall have authority
and discretion to select brokers and dealers to execute portfolio transactions
for the Fund and for the selection of the markets on or in which the
transactions will be executed. The Adviser or the Portfolio Managers may cause
the 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 or the Portfolio Managers 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
or the Portfolio Manager 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 shall provide such reports as the
Board of Directors may reasonably request with respect to each Fund's total
brokerage and the manner in which that brokerage was allocated.
10. Code of Ethics. The Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the Act and has provided the
Company with a copy of the code of ethics and evidence of its adoption. Upon the
written request of the Company, the Adviser shall permit the Company to examine
the reports required to be made by the Adviser pursuant to Rule 17j-1(c)(1).
11. 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 Board of Directors 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 Fund, as defined in the Act.
12. Termination. This Agreement may be terminated at any time, without the
payment of any penalty, by the Board of Directors or by a vote of the majority
of the outstanding voting securities of the Fund, as defined in the Act, upon
giving sixty (60) days' written notice to
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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
Board of Directors or by the vote of the majority of the outstanding voting
securities of the Company, as defined in the Act, and (ii) the Board of
Directors 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.
(the "Adviser")
By:_________________________________
Xxxxxxx Xxxxxxx, President
JOHNSONFAMILY FUNDS, INC.
(the "Company")
By:_________________________________
Xxxxxxx Xxxxxxx, President
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