INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made this 20th day of August 2003, by and between Advantus
Cornerstone Fund, Inc., a Minnesota corporation (the "Fund") and Xxxxxxx &
Xxxx Xxx Investment Company, a Delaware corporation ("Management").
WITNESSETH:
1. INVESTMENT ADVISORY AND MANAGEMENT SERVICES.
The Fund hereby engages Management, and Management hereby agrees to act,
as investment advisor for, and to manage the affairs, business, and the
investment of the assets of the Fund.
The investment of the assets of the Fund shall at all times be subject
to the applicable provisions of the Articles of Incorporation, the Bylaws,
the Registration Statement, the current Prospectus and the Statement of
Additional Information, if any, of the Fund and shall conform to the
investment objective and policies of the Fund as set forth in such documents
and as interpreted from time to time by the Board of Directors of the Fund.
Within the framework of the objective and investment policies and
restrictions of the Fund, Management shall have the sole and exclusive
responsibility for the management of the Fund's portfolio and the making and
execution of all investment decisions for the Fund. Management shall report
to the Board of Directors regularly at such times and in such detail as the
Board may from time to time determine to be appropriate, in order to permit
the Board to determine the adherence of Management to the investment policies
of the Fund.
Management shall, at its own expense, furnish the Fund office space and
all necessary office facilities, equipment, and personnel for servicing the
investments of the Fund. Management shall arrange for officers or employees
of Management to serve without compensation from the Fund as directors,
officers, or employees of the Fund if duly elected to such positions by the
shareholders or directors of the Fund.
Management hereby acknowledges that all records necessary in the
operation of the Fund, including records pertaining to its shareholders and
investments, are the property of the Fund, and in the event that a transfer
of management or investment advisory services to someone other than
Management should ever occur, Management will promptly, and at its own cost,
take all steps necessary to segregate such records and deliver them to the
Fund.
In providing the services and assuming the obligations set forth herein,
Management may at its expense employ one or more Sub-Advisors, or may enter
into such service agreements as Management deems appropriate in connection
with the performance of its duties and obligations hereunder. Reference
herein to the duties and responsibilities of Management shall include any
Sub-Advisor employed by Management to the extent Management shall delegate
such duties and responsibilities to the Sub-Advisor. Any agreement between
Management and any Sub-Advisor shall be subject to the approval of the Fund,
its Board of Directors, and Shareholders as required by the Investment
Company Act of 1940 (the "Investment Company Act"), as amended, and such
Sub-Advisor shall at all times be subject to the direction of the Board of
Directors of the Fund and any duly constituted committee thereof or any
officer of the Fund acting pursuant to like authority.
2. COMPENSATION FOR SERVICES.
In payment for the investment advisory and other services to be rendered
by Management hereunder, the Fund shall pay to Management a monthly fee,
which fee shall be paid to Management not later than the fifth business day
following the end of each calendar month in which said services were
rendered. Said monthly fee shall be based on the average of the net asset
values of all of the issued and outstanding shares of the Fund as determined
as of the close of each business day of the month pursuant to the Articles of
Incorporation, Bylaws and currently effective Prospectus and Statement of
Additional Information, if any, of the Fund. The amount of such fee as
applied to the average daily value of the net assets of the Fund on an annual
rate, shall be as described in the schedule below:
ADVISORY FEE AS PERCENTAGE
ASSETS OF AVERAGE NET ASSETS
------ --------------------------
On the first $500 million in assets .70%
On the next $500 million in assets .65%
On the next $1 billion in assets .60%
On all assets in excess of $2 billion .55%
The fee shall be pro rated for any fraction of a month at the commencement or
termination of this Agreement.
3. ALLOCATION OF EXPENSES.
(a) In addition to the fee described in Section 2 hereof, the Fund shall pay
all its costs and expenses which are not assumed by Management. The Fund
expenses include, by way of example, but not by way of limitation, all
expenses incurred in the operation of the Fund and any public offering of its
shares, including, among others, interest, taxes, brokerage fees and
commissions, fees of the directors who are not employees of Management or any
of its affiliates, expenses of directors' and shareholders' meetings,
including the cost of printing and mailing proxies, expenses of insurance
premiums for fidelity and other coverage, expenses of redemption of shares,
expenses of issue and sale of shares (to the extent not borne by the
principal underwriter of the Fund's shares under its agreement with the
Fund), expenses of printing and mailing stock certificates representing
shares of the Fund, association membership dues, charges of custodians,
expenses for services of a transfer agent, dividend disbursing (including
reinvestment) agent and redemption agent, and bookkeeping, auditing, and
legal expenses. The Fund will also pay the fees and bear the expense of
registering and maintaining the registration of the Fund and its shares with
the Securities and Exchange Commission and registering or qualifying its
shares under state or other securities laws and the expense of preparing and
mailing Prospectuses and reports to shareholders.
(b) The principal underwriter of the Fund's shares shall bear all
advertising and promotional expenses in connection with the distribution of
the Fund's shares, including paying for Prospectuses and Statements of
Additional Information (if any) for new shareholders, shareholder reports for
new shareholders, and the costs of sales literature.
4. FREEDOM TO DEAL WITH THIRD PARTIES.
Management shall be free to render services to others similar to those
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 hereunder.
2
5. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT.
This Agreement shall become effective on the date of its execution first
written above.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect for a period of more than two years from the date of its
execution only so long as such continuance is specifically approved at least
annually by the Board of Directors of the Fund, or by the vote of a majority
of the outstanding voting securities of the Fund, provided that in either
event such continuance shall also be approved by the vote of a majority of
the directors who are not interested persons of Management or the Fund, cast
in person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Directors of the Fund or by the vote of a majority of the
outstanding voting securities of the Fund, or by Management, upon 60 days'
written notice to the other party. This Agreement will automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in the Investment Company Act).
Wherever referred to in this Agreement, the vote or approval of the
holders of a majority of the outstanding voting securities of the Fund shall
mean the vote of 67% or more of such securities if the holders of more than
50% of such securities are present in person or by proxy or the vote of more
than 50% of such securities, whichever is the lesser.
6. AMENDMENTS TO AGREEMENT.
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of a majority of the outstanding voting
securities of the Fund and by the vote of a majority of the directors of the
Fund who are not interested persons of any party to this Agreement cast in
person at a meeting called for the purpose of voting on such approval.
Notwithstanding the foregoing, this Agreement may be amended without
Shareholder approval to the extent such is permitted under then-current
regulatory interpretations of the Investment Company Act.
7. NOTICES.
Any notice under this Agreement shall be in writing, addressed,
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate in writing for receipt of such notice.
IN WITNESS WHEREOF, The Fund and Management have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
Advantus Cornerstone Fund, Inc.
By
--------------------------------
Xxxxxx X. Xxxxxxx
Its President
Xxxxxxx & Xxxx Xxx Investment Company
3
By
--------------------------------
Its
-----------------------
4
