INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
THIS AGREEMENT, made this 1st day of December 1997, by and between
Fortis Income Portfolios, Inc., a Minnesota corporation (the "Company") and
Fortis Advisers, Inc., a Minnesota ("Advisers").
RECITALS
A. WHEREAS, the Board of Directors of the Company has amended the
Company's Articles of Incorporation to create a new series of $.01 par value
common stock desinated as Series B Common Shares known as "Fortis Strategic
Income Fund (the "Portfolio"); and
B. WHEREAS, the Board of Directors of the Company desires to enter
into this Agreement pursuant to which Advisers will act as investment adviser
for, and manage the affairs, business and the investment assets of the
Portfolio.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants herein made, the Company and Advisers agree as follows:
1. INVESTMENT ADVISORY AND MANAGEMENT SERVICES
The Company 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 Portfolio.
The investment of the assets of the Portfolio shall at all times be
subject to the applicable provisions of the Articles of Incorporation, Bylaws,
Registration Statement and current Prospectus of the Portfolio and shall conform
to the policies and purposes of the Portfolio as set forth in the Registration
Statement and Prospectus and as interpreted from time to time by the Board of
Directors of the Company. Within the framework of the investment policies of
the Portfolio, Advisers shall have the sole and exclusive responsibility for the
management of the Portfolio and the making and execution of all investment
decisions for the Portfolio. 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 of Advisers to the investment policies of the Portfolio.
Advisers shall, at its own expense, furnish the Portfolio suitable
office space, and all necessary office facilities, equipment and personnel for
servicing the investments of the Portfolio. Advisers shall arrange, if
requested by the Company, for officers, employees or other affiliates of
Advisers to serve without compensation from the Portfolio as directors,
officers, or employees of the Fund if duly elected to such positions by the
shareholders or directors of the Company.
-1-
Advisers hereby acknowledges that all records necessary in the
operation of the Portfolio, including records pertaining to shareholders and
investments, are the property of the Portfolio, and in the event that a transfer
of management or investment advisory services to someone other than Advisers
should ever occur, Advisers will promptly, and at its own cost, take all steps
necessary to segregate such records and deliver them to the Portfolio.
2. COMPENSATION FOR SERVICES.
In payment for all services, facilities, equipment and personnel, and
for other costs of Advisers hereunder, the Portfolio shall pay to Advisers a
monthly fee, 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. Such monthly bee 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 Portfolio as determined as of the close of each
business day of the month pursuant to the Articles of Incorporation, Bylaws and
currently effective Prospectus of the Portfolio. The following table sets forth
the fee on a monthly and annual basis:
Monthly Equivalent Average Asset
Rate Annual Rate Values of the Portfolio
------- ----------- -----------------------
1/15 of 1% 8/10 of 1% On the first $50,000,000
7/120 of 1% 7/10 of 1% For assets over $50,000,000
The fee shall be prorated for any fraction of a month at the
commencement or termination of this Agreement.
3. ALLOCATION OF EXPENSES
In addition to the fee described in Section 2 hereof, the Portfolio
shall pay all its expenses which are not assumed by Advisers and/or Fortis
Investors, Inc. ("Investors"). These expenses include, by way of example, but
not by way of limitation, the fees and expenses of directors and officers of the
Company who are not "affiliated persons" of Advisers, interest expenses, taxes,
brokerage fees and commissions, fees and expenses of registering and qualifying
the Portfolio and its shares for distribution under federal and state securities
laws, expenses of preparing prospectuses and of printing and distributing
prospectuses annually to existing shareholders, custodian charges, auditing and
legal expenses, insurance expenses, association membership dues, and the
expenses of reports to shareholders, shareholders' meetings and proxy
solicitations. Advisers shall bear the costs of acting as the Portfolio's
transfer agent, registrar and dividend disbursing agent.
Advisers or Investors shall bear all promotional expenses in
connection with the distribution of the Portfolio's shares, including paying for
prospectuses and shareholder reports for new shareholders and the costs of sales
literature.
-2-
4. 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.
5. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT.
. The effective date of this Agreement shall be December 1, 1997.
Wherever referred to in this Agreement, the vote or approval of the holders of a
majority of the outstanding voting securities of the Portfolio 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.
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect only so long as such continuance is specifically approved at
least annually by the Board of Directors of the Company, including the specific
approval of a majority of the directors who are not interested persons of
Advisers or of the Company cast in person at a meeting called for the purpose of
voting on such approval, or by the vote of the holders of a majority of the
outstanding voting securities of the Portfolio.
This Agreement may be terminated at any time without the payment of
any penalty by the vote of the Board of Directors of the Company or by the vote
of the holders of a majority of the outstanding voting securities of the
Portfolio, or by Advisers, upon sixty (60) days written notice to the other
party. Any such 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.
6. AMENDMENTS TO AGREEMENT.
No material amendment to this Agreement shall be effective until
approved by a vote of the holders of a majority of the outstanding voting
securities of the Portfolio.
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.
-3-
IN WITNESS WHEREOF, the Company and Advisers have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
FORTIS INCOME PORTFOLIOS, INC.
By /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Its President
-----------------------------------
FORTIS ADVISERS, INC.
By /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Its President
-----------------------------------
-4-
