INVESTMENT ADVISORY AGREEMENT
Exhibit (d)(i)
THIS
AGREEMENT is made and entered into as of this ___ day of , 2008, by and between
FLC Investment Management Company, LLC, an Illinois limited liability company (the “Adviser”), and
Federal Life Trust, a Delaware Statutory Trust (the “Trust”).
WHEREAS, the Trust is registered as an open-end, management investment company under the
Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS, the Trust consists of the Federal Life Fixed Income Portfolio and the Federal Life
Equity Portfolio (the “Portfolios”); and
WHEREAS, the Board of Trustees of the Trust has approved this Agreement, and the Adviser is
willing to furnish certain investment advisory services upon the terms and conditions herein set
forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, it is
agreed between the parties hereto as follows:
1. Appointment Of Investment Adviser. The Trust desires to employ each Portfolio’s capital
by investing and reinvesting in investments of the kind and in accordance with the limitations
specified in such Portfolio’s Prospectus and the Statement of Additional Information as from time
to time in effect (the “Prospectus”), and in the manner and to the extent as may from time to time
be approved by the Board of Trustees of the Trust. The Trust desires to employ and hereby appoints
the Adviser to act as investment adviser to the Portfolios. The Adviser accepts the appointment and
agrees to furnish the services described herein for the compensation set forth below.
2. Delivery Of Trust Documents. The Trust has furnished the Adviser with copies, properly
certified or authenticated, of the (a) Declaration of Trust, (b) Bylaws, (c) Resolutions of the
Board of Trustees of the Trust selecting the Adviser to the Portfolios and approving the form of
this Agreement; and (d) the Trust’s Form N-1A Registration Statement.
The Trust will furnish the Adviser from time to time with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing, if any.
3. Services Provided By Adviser. Subject to the supervision and direction of the Board of
Trustees of the Trust, the Adviser will, either directly or by employing subadvisers: (a) act in
strict conformity with the Trust’s Declaration of Trust, the Trust’s Bylaws, the Investment Company
Act of 1940, as amended (the “1940 Act”) and the Investment Advisers Act of 1940, as amended; (b)
manage each Portfolio’s assets and furnish a continual investment program for each Portfolio in
accordance with such Portfolio’s investment objective and policies as described in the such
Portfolio’s Prospectus; (c) make investment decisions for each Portfolio; (d) provide each
Portfolio with advice and supervision, data processing and clerical services; (e) provide the
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Trust with access to certain office facilities, which may be the Adviser’s own offices; (f)
determine what securities shall be purchased for each Portfolio; what securities shall be held or
sold by each Portfolio, and allocate assets of each Portfolios to separate sub-accounts of the
approved subadvisers, and determine what portion of each Portfolio’s assets shall be held
uninvested; (g) review investment policies with the Board of Trustees of the Trust; and (h) advise
and assist the officers of the Trust in taking such steps as are necessary or appropriate to carry
out the decisions of the Board of Trustees of the Trust and its committees with respect to the
foregoing matters and the conduct of the business of the Portfolios. In addition, the Adviser will
furnish the Trust with whatever information the Trust may reasonably request with respect to the
securities that the Portfolios may hold or contemplate purchasing. The appointment of subadvisers
shall be subject to approval by the Board of Trustees of the Trust and, to the extent required by
the 1940 Act or any other law or regulation, approval of the shareholders of the Trust.
The Adviser will keep the Trust informed of developments materially affecting any Portfolio’s
assets, and will, on its own initiative, furnish the Trust from time to time with whatever
information the Adviser believes is appropriate for this purpose.
4. Allocation Of Charges And Expenses. The Adviser will make available, without expense to
the Trust or any Portfolio, the services of such of its officers, directors and employees as may be
duly elected as officers or trustees of the Trust, subject to the individual consent of such
persons to serve and to any limitations imposed by law. The Adviser will pay all expenses incurred
in performing its investment advisory services under this Agreement, including compensation of and
office space for officers and employees of the Adviser connected with management of the Portfolios.
The Adviser will not be required to pay any investment advisory related expenses of the Portfolios
other than those specifically allocated to it in this paragraph 4. In particular, but without
limiting the generality of the foregoing, the Portfolios will be required to pay brokerage and
other expenses of executing portfolio transactions; taxes or governmental fees; interest charges
and other costs of borrowing funds; litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Portfolios’ business.
5. Compensation Of The Adviser. In consideration for the services to be performed under
this Agreement, the Adviser shall receive from the Trust an annual management fee, accrued daily at
the rate of 1/365th of the applicable advisory fee rateand payable monthly as soon as practicable
after the last day of each month in the amount of 25 basis points of each Portfolio’s daily net
assets during the month.
6. Services To Other Accounts. The Trust understands that the Adviser may act as investment
adviser to other managed accounts, and the Trust has no objection to the Adviser so acting,
provided that whenever any Portfolio and one or more other accounts advised by the Adviser are
prepared to purchase or sell the same security, available investments or opportunities for sales
will be allocated in accordance with the written policies of the Adviser and in a manner believed
by the Adviser to be equitable to each entity under the specific circumstances. The Trust
recognizes that in some cases this procedure may affect adversely the price paid or received by a
Portfolio or the size of the position purchased or sold by a Portfolio. In addition, the Trust
understands that the persons employed by the Adviser to provide service to the Portfolios in
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connection with the performance of the Adviser’s duties under this Agreement will not devote their
full time to that service. Moreover, nothing contained in this Agreement will be deemed to limit or
restrict the right of the Adviser or any “affiliated person” of the Adviser to engage in and devote
time and attention to other businesses or to render services of whatever kind or nature to other
persons or entities, including serving as investment adviser to, or employee, officer, director or
trustee of, other investment companies.
7. Brokerage And Avoidance Of Conflicts Of Interest. In connection with purchases or sales
of portfolio securities for the account of any Portfolio, neither the Adviser nor any of its
trustees, officers or employees will act as a principal or agent or receive any commission with
respect to such purchases or sales. The Adviser or its agents shall arrange for the placing of all
orders for the purchase and sale of portfolio securities for each Portfolio’s account with brokers
or dealers selected by the Adviser. In the selection of such brokers or dealers and the placing of
such orders, the Adviser will use its best efforts to seek for each Portfolio the most favorable
execution and net price available and will consider all factors the Adviser deems relevant in
making such decisions including, but not limited to, price (including any applicable brokerage
commission or dealer spread), size of order, difficulty of execution, and operational facilities of
the firm involved and the firm’s risk in positioning a block of securities.
The parties agree that it is in the interests of each Portfolio that the Adviser have access to
supplemental investment and market research and security and economic analyses provided by brokers
who may execute brokerage transactions at a higher cost to such Portfolio than may result when
brokerage is allocated to other brokers on the basis of the best price and execution. The Adviser
is authorized to place orders for the purchase and sale of securities for each Portfolio with such
brokers, subject to review by the Trust’s Board of Trustees from time to time. In selecting brokers
or dealers to execute a particular transaction and in evaluating the best price and execution
available, the Adviser may consider the brokerage and research services (as such terms are defined
in Section 28(e) of the Securities Exchange Act of 1934, as amended) provided to each Portfolio
and/or other accounts over which the Adviser exercises investment discretion.
8. Standard Of Care; Limitation Of Liability. The Adviser will exercise its best judgment
in rendering the services described herein. The Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust or any Portfolio in connection
with the matters to which this Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or from reckless
disregard by the Adviser of its obligations and duties under this Agreement, or a loss resulting
from a breach of fiduciary duty with respect to receipt of compensation for services (in which case
any award of damages shall be limited to the period and amount set forth in Section 36(b)(3) of the
1940 Act). Certain federal laws, including federal securities laws, impose liabilities under
certain circumstances on persons who act in good faith and therefore nothing contained herein shall
in any way constitute a waiver or limitation of any rights that the Trust may have under any such
federal laws.
9. Voting. The Adviser will take action and provide advice with respect to the voting of
securities held by the Portfolios in accordance with the Trust’s Proxy Voting Policies and
Procedures, as amended and revised from time to time.
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10. Duration And Termination Of This Agreement. This Agreement shall remain in force for an
initial term of two years and from year to year thereafter, but only so long as such continuance is
specifically approved at least annually by the vote of a majority of the members of the Board of
Trustees who are not interested persons of the Adviser, cast in person at a meeting called for the
purpose of voting on such approval and by a vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Trust. The requirement that continuance of this Agreement be
specifically approved at least annually shall be construed in a manner consistent with the 1940 Act
and the rules and regulations thereunder. This Agreement may, on sixty (60) days written notice, be
terminated at any time without the payment of any penalty, by the Board of Trustees of the Trust,
or by vote of a majority of the outstanding voting securities of each Portfolio, individually, or
by the Adviser. This Agreement shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Agreement, the definitions contained in Section 2(a) of the
1940 Act (particularly the definitions of “interested person”, “assignment” and “majority of the
outstanding voting securities”), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission (“SEC”) by any rule,
regulation or order.
11. Amendment Of This Agreement. A provision of this Agreement may be amended, changed,
waived, discharged or terminated only by an instrument in writing signed by the party against whom
enforcement of the amendment, change, waiver, discharge or termination is sought. An amendment to
this Agreement shall not be effective until approved by the Board of Trustees of the Trust,
including a majority of the directors who are not interested persons of the Adviser or of the
Trust. To the extent legal counsel to the Trust concludes that shareholder approval of a particular
amendment to this Agreement is required under the 1940 Act, such amendment will not be effective
until the required shareholder approval has been obtained.
12. Notice. Any notice, advice or report to be given pursuant to this Agreement shall be
delivered or mailed:
If to the Trust:
If to the Adviser:
FLC Investment Management Company, LLC
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn:
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn:
13. Governing Law. This Agreement shall be governed by, subject to and construed in
accordance with the 1940 Act and the Investment Advisers Act of 1940, and to the extent not
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inconsistent, the laws of the State of Illinois without regard to the conflicts of law provisions
thereof. All terms used herein shall have the meanings ascribed to such terms by the 1940 Act, the
rules and regulations promulgated thereunder and the written positions of the SEC and its staff.
14. Miscellaneous. Neither the holders of shares of the Portfolios nor the officers or
trustees of the Trust in their capacities as such shall be personally liable hereunder. The
captions in this Agreement are included for convenience of reference only and in no way define or
limit any of the provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
15. Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers
designated below as of the day and year first above written.
| FEDERAL LIFE TRUST | ||||||
| By: | ||||||
| Title: | ||||||
| FLC INVESTMENT MANAGEMENT COMPANY, LLC | ||||||
| By: | ||||||
| Title: | ||||||
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