INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
THIS AGREEMENT, made this 2nd day of April 1998, by and between Fortis
Series Fund, Inc., a Minnesota corporation (the "Fund") and Fortis Advisers,
Inc., a Minnesota corporation ("Advisers").
1. INVESTMENT ADVISORY AND MANAGEMENT SERVICES. The Fund hereby
engages Advisers, and Advisers hereby agrees to act, as investment adviser for,
and to manage the affairs, business and the investment of the assets of the
Small Cap Value Series, the Mid Cap Stock Series, and the Large Cap Growth
Series of the Fund. Each such Series is herein individually referred to as a
"Series," and the Series are herein collectively referred to as the "Series."
The investment of the assets of the Series shall at all times be
subject to the applicable provisions of the Articles of Incorporation and Bylaws
of the Fund and the current Registration Statement (including the Prospectus and
Statement of Additional Information) of the Series and shall conform to the
policies and restrictions of the Series as set forth in such Registration
Statement and any additional limitations as may be adopted from time to time by
the Board of Directors of the Fund and communicated to Advisers. Within the
framework of the investment policies, restrictions, and limitations of the
Series, Advisers shall have the sole and exclusive responsibility for the
management of the Series and the making and execution of all investment
decisions for the Series, provided:
Advisers may, at is option and expense, with respect to each of the Series,
appoint a sub-adviser which shall assume such responsibilities and
obligations of Advisers pursuant to this Investment Advisory and Management
Agreement as shall be delegated to the sub-adviser; provided, however, that
any discretionary investment decisions made by a sub-adviser on behalf of
any of the Series shall be subject to approval or ratification by Advisers,
and, not withstanding any
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delegation of responsibilities and obligations to the sub-adviser, Advisers
shall retain the right, in its discretion, to make investment decisions for
the Series. Any appointment of a sub-adviser and assumption of
responsibilities and obligations of Advisers by such sub-adviser shall be
subject to approval by the Board of Directors of the Fund and, to the
extent (if any) required by law, by the shareholders of the Series. Any
appointment of a sub-adviser for the Series pursuant hereto shall in no way
limit or diminish Advisers' obligations and responsibilities under this
Investment Advisory and Management Agreement, and Advisers shall be
responsible for monitoring compliance by the sub-adviser(s) with the
investment policies, restrictions, and limitations of the Series, and will
also be responsible for ensuring that the Series are managed in a way so
that: (1) they meet the requirements of Subchapter M of the Internal
Revenue Code to be taxed as a regulated investment company; and (2) they
comply with the provisions of Section 817(h) of the Internal Revenue Code,
and the regulations promulgated thereunder.
Advisers 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 by each Series to the
investment policies, restrictions and limitations of such Series.
Advisers shall, at its own expense, furnish the Fund suitable office
space, and all necessary office facilities, equipment and personnel for
servicing the investments of the Fund. Advisers shall arrange, if required by
the Fund, for officers, employees or other affiliates of Advisers 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.
Advisers shall create and maintain all reports, books and records
relating to its activities and obligations under this Agreement in such a manner
as will meet the obligations of the Fund under the Investment Company Act of
1940, applicable federal and state tax and insurance laws and regulations and
any other
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law or regulation which may be or become applicable to the Fund. All such
reports, books and records shall be the property of the Fund. Furthermore, such
reports, books and records shall at all reasonable times be available for
copying and otherwise open to inspection and audit by the Securities and
Exchange Commission, banking and insurance regulators and other authorities and
regulators having authority over the Fund, and by officers and employees of, and
auditors employed by, the Fund. Advisers hereby further agrees that, upon the
termination of this Agreement, all reports, books and records pertaining to
Adviser's activities under this Agreement shall be promptly segregated and
returned to the Fund free from any claim or retention of rights by Advisers.
2. COMPENSATION FOR SERVICES. In payment for all services,
facilities, equipment and personnel, and for other costs of Advisers hereunder,
the fund shall pay to advisers a monthly fee for each Series, which fee shall be
paid to Advisers not later than the fifth business day of the month following
the month in which such services are rendered. Each such monthly fee shall be
at the rate or rates set forth below and shall be based on the average of the
net asset values of all of the issued and outstanding shares of the respective
Series as determined as of the close of each business day of the month pursuant
to the Article of Incorporation, Bylaws and currently effective Prospectus and
Statement of Additional Information of the Series. The following table sets
forth the fees on a monthly and annual basis:
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Equivalent
Monthly Annual Average Asset
Rate Rate Values of the Series
------------ ---------- ----------------------------------
Small Cap Value Series 1/12 of .90% .90% On the first $50,000,000
1/12 of .85% .85% On average assets over $50,000,000
Mid Cap Stock Series 1/12 of .90% .90% On the first $100,000,000
1/12 of .85% .85% On the next $150,000,000
1/12 of .80% .80% On average assets over $250,000,000
Large Cap Growth Series 1/12 of .90% .90% On the first $100,000,000
1/12 of .85% .85% On the next $100,000,000
1/12 of .80% .80% On average assets over $200,000,000
The fees shall be prorated for any fraction of a month at the
commencement or termination of this Agreement.
3. ALLOCATION OF EXPENSES.
(a) In addition to the fees described in Section 2 hereof, the Fund
shall pay all its expenses which are not assumed by Advisers, Fortis investors,
Inc. ("Investors") or any other person. These Fund expenses include, by way of
example, but not by way of limitation, the fees and expenses of directors and
officers of the Fund who are not "affiliated persons" of Advisers, interest
expenses, taxes, brokerage fees and commissions, fees and expenses of
registering and qualifying the Fund and its shares for distribution under
federal and state securities laws, expenses of preparing Prospectuses and of
printing and distributing Prospectuses and Statements of Additional Information
annually to existing shareholders and existing insurance contract owners,
custodian charges, auditing and legal expenses, insurance expenses, association
membership dues, and the expense of reports to shareholders, shareholders'
meetings, and proxy solicitations. Advisers shall bear the costs of acting as
the Fund's transfer agent, registrar, and dividend disbursing agent.
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(b) Advisers (or Investors or Fortis Benefits Insurance Company or
First Fortis Life Insurance Company) shall bear all promotional expenses in
connection with the distribution of the Fund's shares, including paying for
prospectuses and shareholder reports for new shareholders and new insurance
contract owners, and the costs of sales literature.
4. LIMIT ON EXPENSES. Out of its advisory fee, but not in excess
thereof, Advisers shall reimburse the Fund for each Series' expenses from the
date of the initial public offering until the date a Series' aggregate net
assets first reach $10,000,000, to the extent that the aggregate expenses of the
Series (including the investment advisory and management fees for such Series
under paragraph 2 of this Agreement, but excluding interest, taxes, brokerage
fees and commissions) exceed an amount equal, on an annual basis, to the
following percentage of the average daily net assets of the Series:
Small Cap Value Series 1.25%
Mid Cap Stock Series 1.25%
Large Cap Growth Series 1.25%
5. FREEDOM TO DEAL WITH THIRD PARTIES. Advisers 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.
6. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT. This
Agreement shall be effective as to each Series on May 1, 1998. Wherever
referred to in this Agreement, the vote or approval of the holders of a majority
of the outstanding voting securities of a Series or of the Fund shall mean
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the vote of 65% 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 less.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect only so long as such continuance is specifically approved at
least annually (a) by the Board of Directors of the Fund, or, with respect to
particular Series, by the vote of the holders of a majority of the outstanding
voting securities of such Series, and (b) by a majority of the directors who are
not interested persons of Advisers or of the Fund cast in person at a meeting
called for the purpose of voting on such approval; provided that, if a majority
of the outstanding voting securities of any of the Series approves this
Agreement, this Agreement shall continue in effect with respect to such
approving Series whether or not the shareholders of any other Series of the Fund
approve this Agreement.
This Agreement may be terminated at any time without the payment of
any penalty by the vote of the Board of Directors of the fund, or by Advisers,
upon sixty (60) days' written notice to the other party. This Agreement may be
terminated with respect to a particular Series at any time without the payment
of any penalty by the vote of the holders of a majority of the outstanding
voting securities of such Series, upon sixty (60) days' written notice to
Advisers. Any termination may be made effective with respect to both the
investment advisory and management services provided for in this Agreement or
with respect to either of such kinds of services. This Agreement shall
automatically terminate in the event of its assignment.
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7. AMENDMENTS TO AGREEMENT. No material amendment to this Agreement
shall be effective until approved by vote of the holders of majority of the
outstanding voting securities of the Series which have approved and are subject
to this Agreement. In addition, if a majority of the outstanding voting
securities of any Series of the Fund votes to amend this Agreement, such
amendment shall be effective with respect to such Series whether or not the
shareholders of any other Series vote to adopt such amendment.
8. 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 Advisers have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
FORTIS SERIES FUND, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
President
FORTIS ADVISERS, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
Chief Executive Officer
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