INVESTMENT ADVISORY AGREEMENT
AGREEMENT made the third day of August, 1987 by and between Advance
Capital I, Inc. ("Advance") and Advance Capital Management, Inc. ("ACM").
Amended July 24, 1992. Further Amended July 24, 1998, July 26, 2000 and
June 30, 2006.
WITNESSETH:
In consideration of the mutual promises and agreements contained in this
Agreement and other good and valuable consideration, the receipt of which is
acknowledged, it is agreed by and between the parties as follows:
I. In General
Advance engages ACM and ACM agrees to act as investment adviser to Advance
with respect to the investment of its assets and in general to supervise the
investments of Advance, subject at all times to the direction and control of
the Board of Directors of Advance.
II. Duties of ACM with Respect to Investment of Assets of Advance and
Accounting Services
A. ACM shall regularly provide investment advice to Advance and shall,
subject to the succeeding provisions of this section, supervise
continuously the investment and reinvestment of cash, securities or
other property comprising the assets of the investment portfolios of
Advance consisting of its Equity Growth Fund, Balanced Fund, Retirement
Income Fund, and Cornerstone Stock Fund (the "Funds"); and in
furtherance of those responsibilities, ACM shall:
1. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Funds of Advance, and whether concerning the individual companies
whose securities are included in the Funds' portfolios or the
industries in which they engage, or with respect to securities which
ACM considers desirable for inclusion in the Funds' portfolios, and
regularly report thereon to the Board of Directors of Advance;
2. furnish continuously an investment program for each of the Funds of
Advance;
3. determine what securities shall be purchased or sold by each of the
Funds of Advance;
4. take, on behalf of Advance, all actions which appear to ACM necessary
to carry into effect the investment program and supervisory functions
stated previously, including the placing of purchase and sales orders,
and make appropriate reports thereon to the Board of Directors of
Advance.
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B. Any investment program furnished by ACM under this section, or any
supervisory function taken by ACM, shall at all times conform to
and be in accordance with any requirements imposed by:
1. the provisions of the Investment Company Act of 1940 and any rules or
regulations in force thereunder;
2. any other applicable provision of law;
3. the provisions of the Articles of Incorporation of Advance as amended
from time to time;
4. the provisions of the By-laws of Advance as amended from time to time;
5. the terms of the registration statements of Advance, as amended from
time to time, under the Securities Act of 1933 and the Investment
Company Act of 1940.
C. Any investment program furnished by ACM under this section or any
supervisory functions taken hereunder by ACM, shall at all times be
subject to any directions of the Board of Directors of Advance, its
Executive Committee or any committee or officer of Advance acting
pursuant to authority given by the Board of Directors.
D. The foregoing notwithstanding, with the approval of the shareholders
and the directors of Advance given in the manner prescribed by
Sections (15(a) and 15(c), respectively, of the Investment Company Act
of 1940 for the approval of investment advisory contracts and their
terms, ACM may appoint another entity, including an affiliated company
of ACM, to act as sub advisor to furnish to Advance on behalf of ACM
the services specified in paragraph (A) of the Section II and Section
IV of this Agreement. Such services shall be subject to the
requirements of paragraphs (B) and (C) of this Section II and Sections
IV and VI and would be provided under the terms of a Sub advisory
Agreement between ACM and the sub advisor.
III. Allocation of Expenses
The expenses of Advance and the expenses of ACM in performing its
functions under this Agreement shall be divided into two classes, to wit:
(i) those expenses which will be paid in full by ACM, as set forth in
subparagraph "A" hereof, and (ii) those expenses which will be paid in
full by Advance, as set forth in subparagraph "B" hereof.
A. With respect to the duties of ACM under Section II above, it shall
pay in full for (a) the salaries and employment benefits of all
employees of ACM who are engaged in providing these services,
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(b) adequate office space and suitable office equipment for such
employees, (c) all telephone and postage costs relating to such
functions and (d) the fees and expenses of any sub advisor appointed
pursuant to the provisions of paragraph (D) of Section II of this
Agreement. In addition, if requested by Advance, ACM shall pay the
fees and expenses of all directors of Advance who are employees of
ACM or an affiliated corporation and the salaries and employment
benefits of all officers or employees of Advance who are affiliated
persons of ACM.
B. Advance shall pay in full for all of its expenses which are not listed
above (other than those assumed by ACM or its affiliates in their
capacity as Administrator for Advance) including (a) the costs of
printing prospectuses and reports to shareholders of Advance; (b) the
costs of printing all proxy statements and all other costs and
expenses of meetings of shareholders of Advance except preparation
of proxy statements and mailing costs; (c) interest, taxes, brokerage
commissions and premiums on fidelity insurance; (d) audit fees and
expenses of independent accountants and legal fees and expenses of
attorneys, but not of attorneys who are employees of ACM; (e) fees and
expenses of its directors, but not of directors who are employees of
ACM; (f) custodian fees and expenses; (g) transfer agency fees and
expenses; (h) fees payable by Advance under the Securities Act of 1933,
the Investment Company Act of 1940, and the securities or "Blue Sky"
laws of any jurisdiction; (i) fees and assessments of the Investment
Company Institute or any successor organization; (j) such nonrecurring
or extraordinary expenses as may arise, including litigation affecting
Advance and any indemnification by Advance of its officers, directors,
employees and agents with respect thereto; (k) the costs and expenses
provided for in any Administration Agreement, including amendments
thereto, contemplated by subsection C of this section III; and (l) the
costs and expenses provided for in any distribution plan adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940. In
the event that any of the foregoing shall, in the first instance, be
paid by ACM, Advance shall pay the same to ACM on presentation of a
statement with respect thereto.
C. ACM or an affiliate of ACM may also act as administrator of Advance if
at the time in question there is a separate agreement ("Administration
Agreement") covering such functions between Advance and ACM or such
affiliate. The corporation, whether ACM or its affiliate, which is the
party to the Administration Agreement with Advance is referred to as
the "Administrator". Each Administration Agreement shall provide in
substance that it shall not go into effect, or may be amended, or a new
agreement covering the same topics between Advance and the
Administrator may be entered into only if the terms of such
Administration Agreement, such amendment or such new agreement have
been approved by the Board of Directors of Advance, including the vote
of a majority of the directors who are not "interested persons" as
defined in the Investment Company Act of 1940, of either party to the
Administration Agreement, such amendment or such new agreement
(considering ACM to be such a party even if at the time in question,
the Administrator is an affiliate of ACM), cast in person at a meeting
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called for the purpose of voting on such approval. Such a vote is
referred to as a "disinterested director" vote. Each Administration
Agreement shall also provide in substance for its continuance, unless
terminated, for a specified period which shall not exceed two years
from the date of its execution and from year to year thereafter only
if such continuance is specifically approved at least annually by a
disinterested director vote and that any disinterested director vote
shall include a determination that (i) the Administration Agreement,
amendment, new agreement or continuance in question is in the best
interests of Advance and its shareholders; (ii) the services to be
performed under the Administration Agreement as amended, new agreement
or agreement to be continued are services required for the operation of
Advance; (iii) the Administrator can provide services the nature and
quality of which are at least equal to those provided by others
offering the same or similar services; and (iv) the fees for such
services are fair and reasonable in the light of the usual and
customary charges made by others for services of the same nature and
quality. Any Administration Agreement may also provide in substance
that any disinterested director vote may be conditioned on the
favorable vote of the holders of a majority (as defined in or under
the Investment Company Act of 1940) of the outstanding shares of each
class of Advance. Each Administration Agreement shall also provide
in substance that it may be terminated by the Administrator at any
time without penalty upon giving Advance 120 days' written notice
(such notice may be waived by Advance) and may be terminated by Advance
at any time without penalty upon giving the Administrator sixty (60)
days' written notice (which notice may be waived by the Administrator),
provided that such termination of Advance shall be directed or approved
by the vote of a majority of the Board of Directors (as defined in or
under the Investment Company Act of 1940) of the outstanding shares of
each class of Advance.
IV. Brokerage
ACM shall place purchase and sale orders with brokers and/or dealers who
in the judgment of ACM are able to execute the orders as expeditiously as
possible and at the best obtainable price. Generally, in order not to risk a
possible adverse change in price, ACM will make inquiry of brokers and/or
dealers who on the basis of interest shown and past experience ACM believes
can execute the order as expeditiously as possible and at the best obtainable
price.
ACM is authorized to allocate brokerage and principal business to members
of securities exchanges, brokers and dealers ("brokers") who provide brokerage
and research services (as such services are defined in Section 28(e) of the
Securities and Exchange Act of 1934) for Advance and/or other accounts for
which ACM exercises investment discretion (as that term is defined in Section
3(a)(35) of the aforesaid Act) and to cause Advance to pay a commission for
effecting a securities transaction in excess of the amount another broker would
have charged for effecting that transaction if ACM determines in good faith
that such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker, viewed in terms of
either that particular transaction or ACM's overall responsibilities with
respect to the accounts as to which it exercises investment discretion. ACM
shall use its judgment in determining that the amount of commissions paid is
reasonable in relation to the value of brokerage and research services received
and need not place or attempt to place a specific dollar value on research
services received or on the portion of the commission rate reflecting such
services. In demonstrating that such determinations were in good faith, ACM
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shall be prepared to show that the commissions allocated or paid for research
services were for purposes contemplated by this Agreement, that the commissions
paid were within a reasonable range and that commissions paid were not
allocated or paid for products or services which were readily and customarily
available and offered to the public on a commercial basis. ACM is also
authorized to consider sales of shares as a factor in the selection of brokers
to execute brokerage and principal portfolio transactions, subject to the
requirements of best execution, (i.e., that such brokers are able to execute
the order quickly and at the best obtainable price).
V. Compensation of ACM
As compensation in full for services rendered and for the facilities and
personnel furnished under sections I, II and IV of this Agreement, Advance
will pay to ACM for each day the fees specified in Exhibit A hereto.
The amounts payable to ACM shall be determined as of the close of business
each day; shall, except as set forth below, be based upon the value of net
assets computed in accordance with the Articles of Incorporation of
Advance; shall be paid in arrears whenever requested by ACM; and provided,
however, that each of the Funds of Advance will pay a portion of the total
fee payable by Advance in an amount equal to the proportion that such
Funds' average daily net assets bears to the average daily net assets of
Advance. In computing the value of the net assets of Advance, there shall
be excluded the amount owed to Advance in respect to shares which have
been sold but not yet paid to ACM or any of its affiliates.
Notwithstanding the foregoing, if the laws, regulations or policies of any
state in which shares of Advance are qualified for sale limit the operating
and management expenses of Advance, ACM will refund to the appropriate Fund
the amount by which such expenses exceed the lowest of such state limitations.
VI. Undertakings of ACM; Liability
ACM shall give to Advance the benefit of its best judgment, efforts and
facilities in rendering services under this Agreement, but shall be free
to render services to others similar to that rendered under this Agreement
or of a different nature except as such services may conflict with the
services to be rendered or the duties to be assumed under this Agreement.
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ACM shall at all times be guided by and be subject to Advance's investment
policies, the provisions of its Articles of Incorporation and By-laws as each
shall from time to time be amended, and to the decision and determination of
Advance's Board of Directors.
This Agreement shall be performed in accordance with the requirements of
the Investment Company Act of 1940, the Investment Advisers Act of 1940, the
Securities Act of 1933 and the Securities Exchange Act of 1934, to the extent
that the subject matter of this Agreement is within the purview of such Acts.
Insofar as applicable to ACM as an investment adviser and affiliated person of
Advance, ACM shall comply with the provisions of the Investment Company Act of
1940, the Investment Advisers Act of 1940 and the respective Rules and
Regulations of the Securities and Exchange Commission.
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of ACM, it
shall not be subject to liability to Advance or to any stockholder of Advance
for any act or omission in the course of or connected with rendering services
thereunder or for any losses that may be sustained in the purchase, holding or
sale of any security.
VII. Duration of this Agreement
This Agreement shall become effective at the start of business on the date
hereof and shall continue in effect, unless terminated as hereinafter provided,
for a period of one year and from year to year thereafter only if such
continuance is specifically approved at least annually by the Board of
Directors, including the vote of a majority of the directors who are not
parties to this Agreement or "interested persons" (as defined in the Investment
Company Act of 1940) of any such party, cast in person at a meeting called for
the purpose of voting on such approval, or by the vote of the holders of a
majority (as so defined) of the outstanding voting securities of each class of
Advance and by the vote of a majority of the directors who are not parties to
this Agreement or "interested persons" (as so defined) of any such party, cast
in person at a meeting called for the purpose of voting on such approval.
As additional investment portfolios ("New Fund") other than the existing
Funds are established by Advance, this Agreement shall become effective with
respect to each such New Fund upon the initial public offering of such New
Fund, provided that this Agreement has been approved previously for
continuation, together with any related agreements, by vote of the Board of
Directors of Advance including the majority of directors who are not parties
to this Agreement or "interested persons" (as defined in the Investment
Company Act of 1940) of any such party, cast in person at a meeting held
before the initial public offering of such New Fund and called for the purpose
of voting as such approval.
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VIII. Termination
This Agreement may be terminated by ACM at any time without penalty upon
giving Advance sixty (60) days' written notice (which notice may be waived by
Advance) and may be terminated by Advance at any time without penalty upon
giving ACM sixty (60) days' written notice (which notice may be waived by ACM),
provided that such termination by Advance shall be directed or approved by the
vote of a majority of the Board of Directors of Advance in office at the time
or by the vote of a majority (as defined in the Investment Company Act of 1940)
of the outstanding voting securities of Advance. This Agreement shall
automatically terminate in the event of its assignment, the term "assignment"
for this purpose having the meaning defined in Section 2 (a)(4) of the
Investment Company Act of 1940.
ACM hereby acknowledges that all records pertaining to Advance's
investment are the property of Advance, and in the event that this Agreement
is terminated and a transfer of investment advisory services to someone other
than ACM or an affiliated company should ever occur, ACM will promptly, and at
its own cost, take all steps necessary to segregate such records and deliver
them to Advance.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers, as of the day and
year first above written.
ADVANCE CAPITAL I, INC.
By /S/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx, President
ATTEST: /S/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx, Vice President
ADVANCE CAPITAL MANAGEMENT, INC.
By: /S/ Xxxxxxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxxxxxx X. Xxxxxx, President
ATTEST: /S/ Xxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxx X. Xxxxxxxxxx, Vice President
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Exhibit A
COMPENSATION OF ADVANCE CAPITAL MANAGEMENT, INC.
AS INVESTMENT ADVISER TO ADVANCE CAPITAL I, INC.
For services provided and expenses assumed pursuant to the Investment Advisory
Agreement, Advance Capital Management, Inc. ("ACM") shall be paid an advisory
fee, computed daily and paid monthly, at the annual rate, as displayed in the
table below, of the average daily net assets of each Fund as those terms are
defined in the Investment Advisory Agreement and subject to the limitations
therein. From time to time, as it may deem appropriate in its sole discretion,
ACM may waive a portion or all of such fee.
ANNUAL
FUND NAME RATE NOTES
------------------------ ----------- ---------
Equity Growth Fund
- First $200 million .7% 4
- Above $200 million .55% 4
Balanced Fund
- First $200 million .7% 4
- Above $200 million .55% 4
Retirement Income Fund
- First $200 million .5% 2, 4, 5
- Above $200 million .4% 4
Cornerstone Stock Fund .4% 3
1 - Annual rate lowered on April 28, 1989 from .7% to .4%
2 - Initial annual rate approved at July 24, 1992 Board of Directors
Meeting.
3 - Cornerstone Stock Fund fees approved at July 24, 1998 Board of Directors
Meeting.
4 - Revision to include step at $200 million approved at July 28, 2000 Board
of Directors Meeting.
5 - Combination of the Bond and Retirement Income Funds in April, 2004.
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Resolution Passed by the Board of Directors
of
Advance Capital I, Inc.
July 24, 1998
WHEREAS, Advance Capital Management, Inc. has acted as the investment advisor
to the Company since its inception, and has made material contributions to
the growth of the four portfolios represented by Classes A, B, C, and E of the
Company's stock, and
WHEREAS, The Board of Directors approved, on December 6, 1991, the Investment
Advisory Agreement between the Company and Advance Capital Management, Inc.
with respect to the investment management of the Equity Growth Fund, Bond Fund,
Balanced Fund, and Retirement Income Fund, and
WHEREAS, the Investment Advisory Agreement provides for additional investment
portfolios to be established by the Company and for the Investment Advisory
Agreement to be extended to cover any new portfolios following the approval
of the Board of Directors of the Company, and
WHEREAS, the Board of Directors has authorized the addition of one new
portfolio,as represented by Class F, of the common stock of the Company, and
WHEREAS, the Directors, including those Directors who are not parties to said
Agreement and who are not interested persons as that term is defined in the
Investment Company Act of 1940, have reviewed the Agreement, and
WHEREAS, it is the desire of the Board of Directors to extend said agreement
to include the management of the portfolio represented by Classes F of the
Company's common stock,
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby ratify
and affirm the Investment Advisory Agreement between the Company and Advance
Capital Management, Inc. in all respects as it pertains to the existing four
portfolios and to the additional portfolio represented by Class F of the
Company's common stock; and further
RESOLVED, that the advisory fee paid to Advance Capital Management, Inc.
pursuant to the Investment Advisory Agreement shall be computed daily and paid
monthly at the annual rate of 0.40% of the average daily net assets of the
portfolio represented by Class F of the Company's common stock (the
Cornerstone Stock Fund) as those terms are defined in the Investment Advisory
Agreement and subject to the limitations therein, and further
RESOLVED, that from time to time, as it may deem appropriate in its sole
discretion, Advance Capital Management, Inc. may waive a portion or all of
such fee.
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