INVESTMENT ADVISORY AGREEMENT
Agreement made this 1st day of February, 2003 between FMI Common Stock
Fund, Inc., a Wisconsin corporation (the "Fund"), and Fiduciary Management,
Inc., a Wisconsin corporation (the "Adviser").
W I T N E S S E T H:
WHEREAS, the Fund is registered with the Securities and Exchange Commission
under the Investment Company Act of 1940 (the "Act") as an open-end management
investment company; and
WHEREAS, the Fund desires to retain the Adviser, which is an investment
adviser registered under the Investment Advisers Act of 1940, as the investment
adviser for the Fund.
NOW, THEREFORE, the Fund and the Adviser do mutually promise and agree as
follows:
1. Employment. The Fund hereby employs the Adviser to manage the investment
and reinvestment of the assets of the 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 Fund, and, subject to such policies as the directors
of the Fund may determine, direct the purchase and sale of investment securities
in the day-to-day management of the 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 Fund in any way or otherwise be deemed an
agent of the Fund. However, one or more shareholders, officers, directors or
employees of the Adviser may serve as directors and/or officers of the Fund, but
without compensation or reimbursement of expenses for such services from the
Fund. Nothing herein contained shall be deemed to require the Fund 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 Fund of
their responsibility for, and control of, the affairs of the Fund.
3. Expenses. The Adviser, at its own expense and without reimbursement from
the Fund, shall furnish office space, and all necessary office facilities,
equipment and executive personnel for managing the investments of the Fund. The
Fund shall bear all expenses initially incurred by it, provided that the total
expenses borne by the Fund, including the Adviser's fee but excluding all
federal, state and local taxes, interest, brokerage commissions and
extraordinary items, shall not in any year exceed 1.3% of the average net assets
of the Fund for such year, as determined by valuations made as of the close of
each business day. The expenses of the Fund's operations borne by the Fund
include by way of illustration and not limitation, director's fees paid to those
directors who are not officers of the Fund, 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, 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, taxes, legal expenses, salaries of
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administrative and clerical personnel, association membership dues, auditing and
accounting services, insurance premiums, brokerage and other expenses associated
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, charges and expenses of dividend
disbursing agents, registrars and stock transfer agents and the cost of keeping
all necessary shareholder records and accounts.
The Fund 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 Fund 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 Fund'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 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 monthly advisory fee shall be 1/12 of
1.00% (1.00% per annum) of such average net assets. 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 Fund. Except in connection with the initial
capitalization of the 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
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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.
6. 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 permitting the Fund to use the names "FMI" and
"Fiduciary" it is understood and agreed that the Adviser reserves the right to
use and to permit other persons, firms or corporations, including investment
companies, to use such names, and that the Fund will not use such names if the
Adviser ceases to be the Fund's sole investment adviser. During the period that
this Agreement is in effect, the Adviser shall be the 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 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.
8. Brokerage Commissions. The Adviser, subject to the control and direction
of the directors of the Fund, shall have the 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 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 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
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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).
9. 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
Fund with a copy of the code of ethics and evidence of its adoption. Upon the
written request of the Fund, the Adviser shall permit the Fund to examine any
reports required to be made by the Adviser pursuant to Rule 17j-1(d) under the
Act.
10. 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 Fund 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.
11. Termination. This Agreement may be terminated at any time, without the
payment of any penalty, by the directors of the Fund 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 the Adviser. This Agreement
may be terminated by the Adviser at any time upon the giving of sixty (60) days'
written notice to the Fund. 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 Fund
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or by the vote of the majority of the outstanding voting securities of the Fund,
as defined in the Act, and (ii) the directors of the Fund in the manner required
by the Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day first above written.
FIDUCIARY MANAGEMENT, INC. FMI COMMON STOCK FUND, INC.
(the "Adviser") (the "Fund")
By: By:
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President President
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