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EXHIBIT (e).1
UNDERWRITING AND DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this 14th day of November 1994, by and between
Fortis Advantage Portfolios, Inc. (formerly AMEV Advantage Portfolios, Inc.), a
Minnesota corporation (the "Fund") for and on behalf of each class of shares
(each such class is referred to hereinafter as a "Class") of each of the Fund's
Portfolios and Fortis Investors, Inc. (formerly AMEV Investors, Inc.), a
Minnesota corporation ("Investors")
WITNESSETH:
1. UNDERWRITING SERVICES.
The Fund on behalf of each Class hereby engages Investors, and
Investors hereby agrees to act, as principal underwriter for each Class in
connection with the sale and distribution of the shares of each Class of the
Fund's Portfolios to the public, either through dealers or otherwise. Investors
agrees to offer such shares for sale at all times when such shares are available
for sale and may lawfully be offered for sale and sold.
As used herein, "Portfolios" is defined as Capital Appreciation
Portfolio, High Yield Portfolio, Asset Allocation Portfolio, Government Total
Return Portfolio and any other Portfolios which may hereafter be created by the
Board of Directors of the Fund. In addition, as used herein, "Classes" of the
Fund's Portfolios is defined as Class A, Class B, Class C and Class H shares of
each Portfolio and any other classes which may hereinafter be created by the
Fund's Board of Directors.
2. SALE OF FUND SHARES.
The shares of each Class are to be sold only on the following terms:
(a) All subscriptions, offers or sales shall be subject to acceptance
or rejection by the Fund. Any offer or sale shall be conclusively presumed to
have been accepted by the Fund if the Fund shall fail to notify Investors of the
rejection of such offer or sale prior to the computation of the net asset value
of the applicable Class's shares next following receipt by the Fund of notice of
such offer or sale.
(b) No share of a Class shall be sold by Investors (i) for any amount
less than the net asset value of such share, computed as provided in the Bylaws
of the Fund, or (ii) for any consideration other than cash, or, pursuant to any
exchange privilege provided for by such Class's currently effective Prospectus
or Statement of Additional Information, shares of the corresponding Class of
shares of any other investment company for which Investors acts as an
underwriter. In addition, except as provided below or in the Class's currently
effective Prospectus or Statement of Additional Information, all shares of the
Fund's Portfolios sold by Investors shall be sold at the applicable public
offering price, as hereinafter defined, provided that, in the case of sales of
such shares to or through bona fide dealers in securities, Investors may allow,
or sell at, a discount from said public offering price to such dealers, which
discount shall be no greater than the "sales load" hereinafter referred to.
(c) The public offering price of the shares of the Fund's Portfolios
shall be the current net asset value thereof (computed as provided in the Bylaws
of the Fund) plus the applicable "sales load" or loading charge, if any, which
shall be such percentage of the public offering price, computed to the nearest
cent, as may be agreed upon by the Fund and Investors and specifically
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approved by the Board of Directors of the Fund, provided that no schedule of
sales loads shall be effective until set forth in a prospectus of the Fund
meeting the requirements of the Securities Act of 1933. Said sales loads may be
graduated on a scale based on the dollar amount of shares sold.
(d) In connection with certain sales of shares, a contingent deferred
sales charge will be imposed in the event of a redemption transaction occurring
within a certain period of time following such a purchase, as described in each
Class's currently effective Prospectus and Statement of Additional Information.
(e) The front-end sales charge, if any, for any Class may, at the
discretion of the Fund and Investors, be increased, reduced or eliminated as
permitted by the Investment Company Act of 1940, and the rules and regulations
thereunder, as they may be amended from time to time, or as set forth elsewhere
in this Agreement, provided that, if necessary, such increase, reduction or
elimination shall be set forth in the Prospectus for such Class, and provided
that the Fund shall in no event receive for any shares sold an amount less than
the net asset value thereof. In addition, any contingent deferred sales charge
for any Class may, at the discretion of the Fund and Investors, be increased,
reduced or eliminated in accordance with the terms of an exemptive order
received from, or any applicable rule or rules promulgated by, the Securities
and Exchange Commission by the Fund, provided such increase, reduction or
elimination shall be set forth in the Prospectus for such Class.
(f) Investors may decline to offer for sale or sell shares of the Fund
in an amount the cumulative public offering price of which is less than $500.00
or such smaller amount as it may from time to time fix.
3. INVESTMENT OF DIVIDEND AND DISTRIBUTIONS.
The Fund may extend to its shareholders the right to purchase shares
issued by each Class of the Fund at the net asset value thereof with the
proceeds of any dividend or capital gain distribution paid or payable by the
Fund (or any other fund for which Investors serves as underwriter) to its
shareholders.
4. REGISTRATION OF SHARES.
The Fund agrees to make prompt and reasonable efforts to effect and keep in
effect, at its own expense, the registration or qualification of each Class's
shares for sale in such jurisdictions as the Fund may designate.
5. INFORMATION TO BE FURNISHED INVESTORS.
The Fund agrees that it will furnish Investors with such information
with respect to the affairs and accounts of the Fund (and each Class and
Portfolio thereof) as Investors may from time to time reasonably require, and
further agrees that Investors, at all reasonable times, shall be permitted to
inspect the books and records of the Fund.
6. ALLOCATION OF EXPENSES.
During the period of this contract, the Fund shall pay or cause to be
paid all expenses, costs and fees incurred by the Fund which are not assumed by
Investors or Fortis Advisers, Inc. ("Advisers"). Investors agrees to provide,
and shall pay costs which it incurs in connection with providing personal,
continuing services to shareholders (such costs are referred to as "Shareholder
Servicing Costs"). Shareholder Servicing Costs include all expenses of Investors
incurred in connection with providing administrative or accounting services to
shareholders of each Class, including, but not limited to, an allocation of
Investor's overhead and payments made to persons,
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including employees of Investors, who respond to inquiries of shareholders
regarding their ownership of Class shares, or who provide other administrative
or accounting services not otherwise required to be provided by the applicable
Funds' investment adviser or transfer agent. Notwithstanding the foregoing, if
the National Association of Securities Dealers, Inc. ("NASD") adopts a
definition of "service fee" for purposes of Section 26(d) of the NASD Rules of
Fair Practice that differs from a definition of Shareholder Servicing Costs in
this paragraph, or if the NASD adopts a related definition intended to define
the same concept, the definition of Shareholder Servicing Costs in this
paragraph shall be automatically amended, without further action of the parties,
to conform to such NASD definition. Investors shall also pay all costs of
distributing the shares of each Class ("Distribution Expenses"). Distribution
expenses include, but are not limited to, initial and ongoing sales compensation
(in addition to sales loads) paid to registered representatives of Investors and
to other broker-dealers and participating financial institutions; expenses
incurred in the printing of prospectuses, statements of additional information
and reports used for sales purposes; expenses of preparation and distribution of
sales literature; expenses of advertising of any type; an allocation of
Investors' overhead; payments to and expenses of persons who provide support
services in connection with the distribution of Fund shares; and other
distribution-related expenses. Advisers, rather than Investors, may bear the
expenses referred to in this paragraph, but Investors shall be primarily liable
for such expenses until paid.
7. COMPENSATION TO INVESTORS.
As compensation for all of its services provided and its costs assumed
under this contract, Investors shall receive the following forms of and amounts
of compensation:
(a) Investors shall be entitled to receive and retain the front-end
sales charge (if any) imposed in connection with sales of each Class, as set
forth in the applicable Class's current Prospectus. Up to the entire amount of
the front-end sales charge (if any) with respect to each applicable Class may be
reallowed by Investors to broker-dealers and participating financial
institutions in connection with their sale of Fund shares. The amount of the
front-end sales charge (if any) may be retained or deducted by Investors from
any sums received by it in payment for shares so sold. If such amount is not
deducted by Investors from such payments, such amount shall be paid to Investors
by the Fund not later than five business days after the close of any month
during which any such sales were made by Investors and payment therefor received
by the Fund.
(b) Investors shall be entitled to receive any contingent deferred
sales charge imposed in connection with any redemption of applicable Class
shares, as set forth in each applicable Class's current Prospectus.
(c) Investors shall be entitled to receive the following l2b-1 fees,
payable under the Plan of Distribution adopted by each Class in accordance with
Rule 12b-1 under the Investment Company Act of 1940 (the "Plan"):
(i) CLASS A SHARES: Class A shares of each of the Portfolios
are obligated to pay Investors, the principal underwriter of the Fund's
shares, a total fee in connection with distribution-related services
provided with respect to Class A and in connection with the servicing
of shareholder accounts of said Class A. This fee shall be calculated
and payable monthly as follows:
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Monthly Fee as a
percentage of average
daily net assets
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Capital Appreciation Portfolio 1/12 x .45%
High Yield Portfolio 1/12 x .35%
Asset Allocation Portfolio 1/12 x .45%
Government Total Return Portfolio 1/12 x .35%
All or a portion of such total fee may be payable as a
Distribution Fee, and all or any portion of such total fee may be
payable as a Shareholder Servicing Fee, as determined from time to time
by the Fund's Board of Directors. Until further action by the Board of
Directors, all of such fee shall be designated and payable as a
Distribution Fee.
(ii) CLASS B, CLASS C AND CLASS H SHARES: Class B, Class C and
Class H shares of the Portfolios are each obligated to pay Investors a
total fee in connection with the distribution-related services and
servicing of shareholder accounts provided for their respective Class.
The total fee paid by each Class shall be calculated and payable
monthly, at an annual rate of 1.00% of the value of the respective
Class's average daily net assets. All or any portion of such total fee
may be payable as a Distribution Fee, and all or any portion of such
total fee may be payable as a Shareholder Servicing Fee, as determined
from time to time by the Fund's Board of Directors. Until further
action by the Board, 75% of such fee (.75 of 1.00%) shall be designated
and payable as a Distribution Fee and 25% of such fee (.25 of 1.00%)
shall be designated and payable as a Shareholder Servicing Fee.
(iii) FUTURE PORTFOLIOS AND/OR CLASSES: The 12b-1 fees for
Class A, Class B, Class C or Class H shares of any future Portfolios
shall be as determined by the Board of Directors of the Fund upon the
creation of any such Portfolios, but in no event shall such fees exceed
any then existing limitations imposed under any applicable rule or
rules promulgated by the Securities and Exchange Commission and/or the
National Association of Securities Dealers, Inc. Upon the creation of
any new classes of shares for any or all of the Portfolios, the
respective levels of sales charges and 12b-1 fees shall be determined
by the Board of Directors of the Fund, subject to any necessary
shareholder approval and only in accordance with any applicable rule or
rules promulgated by the Securities and Exchange Commission and/or the
National Association of Securities Dealers, Inc. All or any portion of
the l2b-1 fees referred to in this paragraph may be payable as a
Distribution Fee, and all or any portion of such l2b-1 fees may be
payable as a Shareholder Servicing Fee, as determined from time to time
by the Fund's Board of Directors.
(iv) OTHER INFORMATION: Average daily net assets shall be
computed in accordance with the Prospectus of each applicable Class.
Amounts payable to Investors under the Plan may exceed or be less than
Investor's actual distribution expenses and shareholder servicing
costs. In the event such distribution expenses and/or shareholder
servicing expenses exceed amounts payable to Investors under the Plan,
Investors shall not be entitled to reimbursement from the Fund.
(d) In each year during which this contract remains in effect,
Investors will prepare and furnish to the Board of Directors of the Fund, and
the Board will review, on a quarterly basis written reports complying with the
requirements of Rule l2b-1 under the Investment Company
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Act of 1940 (the " 1940 Act") that set forth the amounts expended under this
contract and the Plan and the purposes for which those expenditures were made.
8. LIMITATION OF INVESTORS' AUTHORITY.
Investors shall be deemed to be an independent contractor and, except
as specifically provided or authorized herein, shall have no authority to act
for or represent the Fund. In connection with its role as underwriter of Fund
shares, Investors shall at all times be deemed an agent of the Fund and shall
sell Fund shares to purchasers thereof as agent and not as principal.
9. SUBSCRIPTION FOR SHARES; REFUND FOR CANCELED ORDERS.
Investors shall effect the subscription of Fund shares as agent for the
Fund. In the event that an order for the purchase of shares of the Fund is
placed with Investors by a customer or dealer and subsequently canceled,
Investors, on behalf of such customer or dealer, shall forthwith cancel the
subscription for such shares entered on the books of the Fund, and, if Investors
has paid the Fund for such shares, shall be entitled to receive from the Fund in
refund of such payment the lesser of:
(a) the consideration received by the Fund for said shares; or (b) the net asset
value of such shares at the time of cancellation by Investors.
10. INDEMNIFICATION OF THE FUND.
Investors agrees to indemnify the Fund against any and all litigation
and other legal proceedings of any kind or nature and against any liability,
judgment, cost or penalty imposed as a result of such litigation or proceedings
in any way arising out of or in connection with the sale or distribution of the
shares of the Fund by Investors. In the event of the threat or institution of
any such litigation or legal proceedings against the Fund, Investors shall
defend such action on behalf of the Fund at its own expense, and shall pay any
such liability, judgment, cost or penalty resulting therefrom, whether imposed
by legal authority or agreed upon by way of compromise and settlement; provided,
however, Investors shall not be required to pay or reimburse the Fund for any
liability, judgment, cost or penalty incurred as a result of information
supplied by, or as the result of the omission to supply information by, the Fund
to Investors, or to Investors by a director, officer, or employee of the Fund
who is not an interested person of Investors, unless the information so supplied
or omitted was available to Investors or the Fund's investment adviser without
recourse to the Fund or any such interested person of the Fund.
11. FREEDOM TO DEAL WITH THIRD PARTIES.
Investors shall be free to render to others services of a nature either
similar to or different from those rendered under this contract, except such as
may impair its performance of the services and duties to be rendered by it
hereunder.
12. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT.
(a) This Agreement shall be effective as to the Capital Appreciation
Portfolio, High Yield Portfolio, Asset Allocation Portfolio and Government Total
Return Portfolio and each Class thereof on November 14, 1994. 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 a particular Class by
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the vote of the holders of a majority of the outstanding voting securities of
such Class, and (b) by a majority of the directors who are not interested
persons of Investors 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 Classes approves this Agreement,
this Agreement shall continue in effect with respect to such approving Class
whether or not the shareholders of a any other Class of the Fund approve this
Agreement.
(b) 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 Investors,
upon sixty (60) days' written notice to the other party. This Agreement may be
terminated with respect to a particular Class 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 Class, upon sixty (60) days' written notice to Investors.
(c) This Agreement shall automatically terminate in the event of its
"assignment" (as defined by the provisions of the 1940 Act).
(d) Wherever referred to in this Agreement, the vote or approval of the
holders of a majority of the outstanding voting securities of a Class or 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 less.
13. AMENDMENTS TO AGREEMENT.
No material amendment to this Agreement shall be effective until
approved by a vote of the Board of Directors of the Fund, including a majority
of the Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in this Agreement, cast in person at a
meeting called for the purpose of voting on such amendment. Additionally, no
amendment to this Agreement that materially increases the distribution fee
and/or shareholder servicing fee payable by any Class hereunder shall be
effective until any necessary amendment to the applicable Rule 12b-1 Plan has
been approved by a vote of the holders of a majority of the outstanding voting
securities of the applicable Class and approved by the Fund's Board of Directors
as required under Rule 12b-1 under the Investment Company Act of 1940.
14. 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 Investors have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
FORTIS ADVANTAGE PORTFOLIOS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Its President
FORTIS INVESTORS, INC.
By: /s/ Xxxx X. Xxxxxxxx
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Its President
