AMENDED AND RESTATED
INVESTMENT ADVISORY AND
MANAGEMENT SERVICES AGREEMENT
This Agreement made this 11th day of November, 1987, as amended
December 1, 1996 and as further amended and restated the 25th day of June and
3rd day of July, 2003, by and between EQUITRUST SERIES FUND, INC., a Maryland
corporation (the "Fund"), and EQUITRUST INVESTMENT MANAGEMENT SERVICES, INC., a
Delaware corporation ("EquiTrust");
WHEREAS, the original Agreement between the Fund and EquiTrust made
November 11, 1987 was approved by the vote of at least a majority (as defined in
the Investment Company Act of 1940 ("ICA")) of the outstanding shares of each
portfolio of the Fund and was later amended on December 1, 1996;
WHEREAS, the Fund and EquiTrust wish to amend and restate the original
Agreement as amended (i) to reflect the current names of the Fund, the
portfolios of the Fund and EquiTrust, and (ii) to make other minor
modifications; and it is amended and restated hereby:
WITNESSETH:
In consideration of the mutual covenants herein contained, it is agreed
as follows:
1. ADVISORY SERVICES. EquiTrust shall furnish investment research and
advice to the Fund and shall manage the investment and reinvestment of the
assets of the portfolios currently offered (with the exception of the Blue Chip
Portfolio, which is covered by a separate agreement between the Fund and
EquiTrust) and to be offered by the Fund (individually, a "Portfolio" and
collectively, the "Portfolios") and its business affairs and matters incidental
thereto, all subject to the supervision of the Board of Directors of the Fund
(the "Board"), and the provisions of the Articles of Incorporation and By-Laws
of the Fund and any resolutions, rules or regulations adopted by the Board.
EquiTrust shall for all purposes herein provided be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized herein,
have no authority to act for or represent the Fund in any way or otherwise be
deemed an agent for the Fund. The Fund shall also be free to retain, at its own
expense, other persons to provide it with any services whatsoever including, but
not limited to, statistical, factual or technical information or advice. The
services of EquiTrust herein provided are not to be deemed exclusive and
EquiTrust shall be free to render similar services or other services to others
so long as its services hereunder shall not be impaired thereby.
2. LIMITATIONS ON ADVISORY SERVICES. EquiTrust shall perform the services
under this Agreement subject to the supervision and review of the Board of
Directors and in a manner consistent with the objectives, policies and
restrictions of each Portfolio of the Fund as stated in its Registration
Statement, as amended from time to time, the provisions of the ICA and the
applicable requirements of the Internal Revenue Code of 1986.
3. DUTIES OF ADVISER. In carrying out its obligations to manage the
investment and reinvestment of the assets of the Fund, EquiTrust shall, as
appropriate and consistent with the limitations set forth in Paragraph 2 hereof:
(a) perform research and obtain and evaluate pertinent economic,
statistical and financial data relevant to the investment policies of each
Portfolio of the Fund as set forth in the prospectus for the Fund, as amended
from time to time;
(b) make and carry out day-to-day decisions to acquire or dispose of
permissible investments, manage the investments and any other property of the
Fund, and provide or obtain such services as may be necessary in managing,
acquiring or disposing of investments; and
(c) determine the composition of the assets of each of the Portfolios,
including the purchase, retention or sale of the securities and cash contained
in those Portfolios.
4. REPORT TO BOARD. EquiTrust, either through persons employed by it or at
its expense, shall furnish to the Board at least once every quarter a schedule
of investments and other assets held in the Portfolios and a statement of all
purchases and sales for the Portfolios, except short-term money market
instruments, made during the period since the last report.
5. RECORDS. EquiTrust agrees to preserve for the period prescribed by the
rules and regulations of the Securities and Exchange Commission all records
EquiTrust maintains for the Fund as are required to be maintained pursuant to
said rules. EquiTrust agrees that all such records shall be the property of the
Fund and shall be made available, within five (5) business days of the request,
to the Fund's accountants or auditors during regular business hours at
EquiTrust's offices upon prior written notice. In the event of termination of
this Agreement for any reason, all such records shall be returned promptly to
the Fund, free from any claim or retention of rights by EquiTrust. In addition,
EquiTrust will provide any materials, reasonably related to the investment
advisory services provided hereunder, as may be reasonably requested in writing
by the Board or officers of the Fund or as may be required by any governmental
agency having jurisdiction.
6. EXPENSES. EquiTrust shall at its expense furnish the Fund with office
space (in the offices of EquiTrust, or-other such place or places as may be
agreed upon by the parties) and such office facilities, simple business
equipment, advisory, research and statistical facilities and clerical services
and personnel as may be necessary to administer the investment business of the
Fund. EquiTrust shall arrange, if desired by the Fund, for officers or employees
of EquiTrust to serve without salary from the Fund as Directors, officers or
agents of the Fund if duly elected or appointed to such positions by the
shareholders of the Fund or by the Board thereof and subject to their individual
consent and to any limitations imposed by law. EquiTrust will not be required to
pay any other expenses of the Fund other than those expressly enumerated herein;
and in particular, but without limiting the generality of the foregoing,
EquiTrust will not be required to pay any of the following Fund expenses: (1)
expenses for services rendered by a custodian including those for the
safekeeping of the Fund's securities or other property and for keeping its books
of account, (2) charges and expenses of independent auditors, legal counsel, any
transfer or dividend disbursing agent or any registrar of the Fund, (3) costs of
acquiring and disposing of portfolio securities, (4) interest, if any, on
obligations incurred by the Fund, (5) the cost of calculating the net asset
value of each Portfolio of the Fund as provided in the Articles of Incorporation
and By-Laws of the Fund and corporate reports, (6) membership dues in the
Investment Company Institute or any similar organization, (7) the cost of
reports, notices to
shareholders and other shareholder communications and other like miscellaneous
expenses, (8) expenses of any registration and qualification of shares of the
Fund for sale under federal securities laws and the securities laws of any state
or other jurisdiction, (9) telephone and personnel costs incurred by EquiTrust
and allocable to the above, (10) taxes and fees payable to federal, state or
other governmental agencies or otherwise, and (11) expenses of underwriting and
selling shares of stock issued by the Fund. The Board shall determine how
expenses are to be allocated among the existing Portfolios, and the
determination of the Board shall be final and binding. The Fund shall not pay or
incur any obligation for any management or administrative expenses for which the
Fund intends to seek reimbursement from EquiTrust as herein provided without
first obtaining the written approval of EquiTrust.
7. COMPENSATION. For the services to be rendered and the charges and
expenses assumed and to be paid by EquiTrust as provided herein, the Fund shall
pay EquiTrust compensation based on an annual percentage of the average daily
net assets of each Portfolio as follows:
AVERAGE DAILY NET ASSETS
FIRST SECOND OVER
$200 $200 $400
PORTFOLIO MILLION MILLION MILLION
--------- ------- ------- -------
Managed 0.60% 0.55% 0.50%
Strategic Yield 0.55% 0.50% 0.45%
Value Growth 0.50% 0.45% 0.40%
High Grade Bond 0.40% 0.35% 0.30%
Money Market 0.25% 0.25% 0.25%
Compensation under this Agreement shall be calculated and accrued for each
business day by applying the appropriate annual rates to the net assets of the
Portfolio in accordance with the formula set forth above as of the close of the
last business day preceding the day for which the fee is being calculated, and
dividing the sum so computed by the number of business days in the fiscal year.
The fees thus accrued shall be payable monthly, provided that such compensation
shall be paid proportionately for any other period ending with the termination
of this Agreement.
8. LIMITATION OF EXPENSES. In the event that expenses of any Portfolio
chargeable to its income account (including amounts payable hereunder but
exclusive of brokerage fees, distribution services fee, interest, taxes and
extraordinary expenses for any fiscal year ending on a date at which this
Agreement is in effect) shall exceed 1.50% of the average daily net assets of
the Portfolio for said fiscal year, calculated on the basis of the average of
all of the daily valuations of the net assets of the Portfolio in effect as of
the close of each business day during said fiscal year, EquiTrust shall pay to
the Portfolio the amount by which such expenses exceed the applicable
limitation, within three days after the determination of the amount thereof. In
no event shall EquiTrust be required to reimburse the Portfolio in an amount
exceeding its compensation for such period from such Portfolio under this
Agreement.
9. FUND TRANSACTIONS AND BROKERAGE. EquiTrust agrees to determine the
securities to be purchased or sold by each Portfolio of the Fund, subject to the
provisions of Paragraphs 2 and
3 above, and to place orders pursuant to its determinations either directly with
the issuer, with any broker-dealer or underwriter that specializes in the
securities for which the order is made, or with any other broker or dealer
selected by EquiTrust, subject to the following limitations.
EquiTrust is authorized to select the brokers or dealers that will execute
the purchases and sales of portfolio securities for each Portfolio of the Fund
and will use its best efforts to obtain the most favorable price and efficient
execution of the Fund's orders, taking into account all appropriate factors,
including: price; dealer spread or commission, if any; size and difficulty of
the transaction; the nature of the market for the security; the reliability,
financial condition and general execution and operational capabilities of the
broker-dealer; and the research, statistical, and economic data or facilities
furnished by the broker-dealer to the Fund.
If, in the judgment of EquiTrust, the Fund or any Portfolio thereof would
be benefited by supplemental investment research, EquiTrust is authorized to pay
reasonable fees for such information. The expenses of EquiTrust may not
necessarily be reduced as a result of receipt of such supplemental information.
EquiTrust or any of its affiliates may also use any investment research obtained
for the benefit of the Fund or any Portfolio thereof in providing investment
advice to its other investment advisory accounts.
10. AVOIDANCE OF INCONSISTENT POSITION. In connection with purchases or
sales of portfolio securities for the account of the Fund or any Portfolio
thereof, neither EquiTrust nor any officer, director or shareholder of EquiTrust
shall act as principal or receive any commission other than its compensation
provided for in this Agreement. Such limitation, however, shall not prohibit the
payment of the usual and customary brokerage commissions to any of such parties
in the proper case. It is understood and agreed that EquiTrust, by virtue of a
separate agreement or agreements with the Fund, may also act as underwriter,
distributor, transfer agent and/or shareholder service agent for the Fund,
and/or perform accounting services for the Fund, and may be compensated
therefor.
The same securities held by the Fund may also be held by separate
investment accounts or other investment companies for which EquiTrust may act as
an adviser or by EquiTrust or its affiliates. Because of different investment
objectives or other factors, a particular security may be bought by EquiTrust or
its affiliates or for one or more clients when one or more clients are selling
the same security. If purchases or sales of securities for the Fund or other
entities for which EquiTrust or its affiliates act as investment adviser or for
their advisory clients arise for consideration at or about the same time, the
Fund agrees that EquiTrust may make transactions in such securities, in such
manner as is deemed equitable to all. To the extent that transactions on behalf
of more than one client of EquiTrust during the same period may increase demand
for securities being purchased or the supply of securities being sold, the Fund
recognizes that there may be an adverse effect on price.
It is agreed that, on occasions when EquiTrust deems the purchase or
sale of a security to be in the best interests of the Fund as well as other
accounts or companies, it may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be sold
or purchased for the Fund with those to be sold or purchased for other accounts
or companies in order to obtain favorable execution and lower brokerage
commissions. In that event, allocation of the securities purchased or sold, as
well as the expenses incurred in
the transaction, will be made by EquiTrust in the manner it considers to be
most equitable and consistent with its fiduciary obligations to the Fund and to
such other accounts or companies. The Fund recognizes that in some cases this
procedure may adversely affect the size of the position obtainable for a
Portfolio of the Fund.
11. LIMITATION OF LIABILITY OF ADVISER. EquiTrust shall not be liable for
any error of judgment or mistake of law, or for any loss suffered by the Fund in
connection with the matters to which this Agreement relates, except loss to the
Fund resulting from willful misfeasance, bad faith or gross negligence on the
part of EquiTrust in the performance of its obligations and duties or by reasons
of its reckless disregard of its obligations and duties under this Agreement,
except to the extent otherwise provided by law. It is understood that the
officers, Directors, agents and shareholders of the Fund are or may become
interested in EquiTrust as officers, directors, agents, shareholders or
otherwise, and that the officers, directors, shareholders and agents of
EquiTrust may become similarly interested in the Fund; and that the existence of
any such dual interest shall not affect the validity of this Agreement or any
transaction hereunder except as provided in the Articles of Incorporation or
By-Laws of the Fund or Articles of Incorporation of EquiTrust, or by the
specific provisions of applicable law. Any person, even though also employed by
EquiTrust, who may be or become an employee of and paid by the Fund shall be
deemed, when acting within the scope of his employment by the Fund, to be acting
in such employment solely for the Fund and not as an employee or agent of
EquiTrust.
12. EFFECTIVE DATE AND TERM. This Agreement shall not become effective
unless and until it is approved by the Fund's Board, including a majority of
Directors who are not parties to this Agreement or "interested persons" (as
defined in the ICA) of any such party to this Agreement, as to the Value Growth
Portfolio, a vote of a "majority of the outstanding voting securities" (as
defined in the ICA) of such Portfolio. This Agreement shall come into full force
and effect on December 1, 1987, provided that it shall not become effective as
to any subsequently created Portfolio until it has been approved by the Board of
Directors specifically for such Portfolio.
As to each Portfolio of the Fund, the Agreement shall continue in effect
until November 30, 1988, and shall thereafter continue in effect from year to
year so long as its continuance is approved at least annually in the manner
required by the ICA and the rules and regulations thereunder; provided however
that if the continuation of this Agreement is not approved for a Portfolio,
EquiTrust may continue to serve in such capacity for such Portfolio in the
manner and to the extent permitted by the ICA and the rules and regulations
thereunder. In connection with such approvals, the Board shall request, and
EquiTrust shall furnish, such information as may be necessary to evaluate this
Agreement.
As to each Portfolio of the Fund, this Agreement:
A. may be terminated without the payment of any penalty upon 60
days' written notice to EquiTrust either by the Board or by a
majority vote of those persons having voting rights in respect of
the affected Portfolio(s) of the Fund;
B. shall automatically terminate if it is assigned (within the
meaning of the ICA) by EquiTrust;
C. may be terminated by EquiTrust without payment of any penalty
upon 60 days' written notice to the Secretary of the Board; and
D. may be amended, changed, waived, discharged or terminated only by
an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought. Any amendment of this Agreement shall be subject to the
ICA.
13. NOTICES. Any notices under this Agreement shall be in writing addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience or reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously 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 Fund and EquiTrust have caused this Agreement to be
executed in their names and on their behalf and under their corporate seals by
and through their duly authorized officers all on the day and year first above
written.
ATTEST: EQUITRUST SERIES FUND, INC.
/s/ XXXXXX XXXXXX /s/ XXXXXX X. XXXXXX
---------------------------- ----------------------------
By: Its Secretary By: Its Vice President
ATTEST: EQUITRUST INVESTMENT MANAGEMENT SERVICES, INC.
/s/ XXXXXX XXXXXX /s/ XXXXXX X. XXXXXX
---------------------------- ----------------------------
By: Its Secretary By: Its President
