MAXIM SERIES FUND, INC.
8515 EAST ORCHARD ROAD
ENGLEWOOD, COLORADO 80111
December 24, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Maxim Series Fund, Inc. (the "Fund")
File No. 811-3364
Preliminary Proxy Statement
Ladies and Gentlemen:
Please find enclosed via EDGAR transmission pursuant to Rule 14a-6 under the
Securities Exchange Act of 1934, a copy of the preliminary proxy statement, form
of proxy and notice of meeting in connection with the a Special Meeting of
Shareholders to be held on February 13, 1998. The purpose of this meeting is to
approve a new sub-advisory agreement with Founders Asset Management due to the
proposed acquisition of Founders by Mellon Bank, N.A.
It is proposed that definitive copies of the proxy materials will be mailed on
or about January 12, 1998.
Any questions with respect to this filing should be directed to the undersigned
at (303) 689-3819 or Mr. Tom Mira at (202) 965-8158.
Sincerely,
/s/ Beverly A. Byrne
Beverly A. Byrne
Secretary
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MAXIM SERIES FUND, INC.
(Name of Registrant as specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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January 12, 1998
Dear Participants and Contract Owners:
Enclosed you will find proxy solicitation materials for Maxim Series
Fund, Inc. (the "Fund"), which relate only to the Fund's Blue Chip Portfolio. As
you know, your variable contract, issued by Great-West Life & Annuity Insurance
Company ("GWL&A"), is funded by purchases of shares of the Fund. You have the
right under the contract to direct GWL&A as to the voting of a proportionate
number of Fund shares consistent with the value of your variable contract.
Founders Asset Management ("Founders"), the sub-adviser for the Blue Chip
Portfolio, is being acquired by Mellon Bank, N.A. ("Mellon"). Mellon is part of
a multibank holding company that provides a comprehensive range of financial
products and services in domestic and selected international markets. The
acquisition will be structured as a merger of Founders into a newly created
subsidiary of Mellon which will be called Founders Asset Management LLC ("New
Founders"). Following the merger, the business, operations and personnel of New
Founders will be substantially identical to the current business, operations and
personnel of Founders. It is important to note that:
The investment objective and portfolio manager of the Blue Chip Portfolio
will not change as a result of the merger. _ The advisory fees and expenses of
the Blue Chip Portfolio will not change as a result of the merger.
Enclosed is a Proxy Statement for a special meeting of the shareholders
of the Blue Chip Portfolio that will be held on February 13, 1998. As explained
more fully in the Proxy Statement, at the time the merger takes effect, the
present sub-advisory contract with Founders will terminate automatically, as a
matter of law. Although shareholders are not being asked to approve the merger,
they must vote on a new Sub-Advisory Agreement for the Portfolio. We encourage
you to read the full text of the Proxy Statement, and to help you more fully
understand its contents, we have prepared a few brief Questions and Answers
("Q&A") regarding the proposal.
Your vote is important, no matter how many shares you own. The matter
we are submitting for your consideration is significant to the Portfolio.
Therefore, please take the time to read the Proxy Statement, cast your vote on
the enclosed proxy card(s), and return the card(s) in the enclosed
pre-addressed, postage-paid envelope.
We thank you for your prompt response to the Proxy Statement.
Sincerely,
Beverly A. Byrne
Secretary
Maxim Series Fund, Inc.
<PAGE>
Q. WHAT IS THIS TRANSACTION ALL ABOUT?
A. Mellon Bank, N.A. is acquiring Founders Asset Management, Inc., the
sub-adviser to the Blue Chip Portfolio. The same professionals will continue to
provide the Blue Chip Portfolio with investment management and shareholder
services, simply as employees of a new subsidiary of Mellon.
Q. WHY AM I BEING ASKED TO VOTE ON THESE PROPOSALS?
A. The federal law that governs mutual funds generally requires
shareholders to approve a new investment Sub-Advisory Agreement whenever there
is a change in control of the investment adviser or a sub-adviser to a
Portfolio. The merger will result in a change in control of the sub-adviser to
the Blue Chip Portfolio. As a result, you are being asked to approve a new
Sub-Advisory Agreement for the Portfolio.
Q. HOW WILL THIS AFFECT ME?
A. Portfolio management will not change as a result of the merger. The primary
difference is that the ownership of Founders will change from a privately-held
corporation to a subsidiary of Mellon. This transaction will not result in
changes to the Portfolio's advisory services.
Q. WILL THE INVESTMENT ADVISORY FEES BE THE SAME?
A. Yes, the fees charged to the Portfolio will not change as a result of the
merger.
Q. HOW DO THE FUND DIRECTORS SUGGEST THAT I VOTE?
A. After careful consideration, the Directors recommend that you vote "FOR" the
proposal on the enclosed proxy card.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. If you have any questions regarding the Proxy Statement or its contents,
please call (303) 689-3000 extension 3817 between 9:00 a.m. and 4:00 p.m.,
Mountain time, Monday through Friday.
<PAGE>
MAXIM SERIES FUND, INC.
8515 East Orchard Road
Englewood, Colorado 80111
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 13, 1998
Notice is hereby given that a special meeting of shareholders (the
"Meeting") of the Maxim Blue Chip Portfolio (the "Portfolio"), will be held at
8515 East Orchard Road, Englewood, Colorado 80111, on Friday, February 13, 1998
at 10:00 a.m., Mountain time, for the following purposes:
1. To approve a new Sub-Advisory Agreement between Maxim Series Fund, Inc.
(the "Fund"), GW Capital Management, LLC ("GW Capital") and Founders Asset
Management LLC ("New Founders"), such agreement to take effect only if the
proposed merger of Founders into New Founders is completed (the "Merger");
and
2. To transact such other business as may properly come before the Meeting or
any adjournment(s) thereof.
The proposal is not expected to result in any change in the way the
Portfolio is managed or the advisory fees paid by the Portfolio.
The Board of Directors of the Fund has fixed the close of business on
December 31, 1997 as the record date for the determination of shareholders
entitled to notice of and to vote at the Meeting or any adjournment(s) thereof.
You are cordially invited to attend the Meeting. Even if you plan to
attend the Meeting, all shareholders are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the enclosed envelope that
requires no postage if mailed in the United States. The enclosed proxy is being
solicited on behalf of the Board of Directors of the Fund.
IMPORTANT
Please mark, sign, date and return the enclosed proxy in the envelope
as soon as possible in order to ensure a full representation at the Meeting.
The Meeting will have to be adjourned without conducting any business
if less than a majority of the eligible shares is represented, and the Fund will
have to continue to solicit votes until a quorum is obtained.
<PAGE>
Your vote, then, is critical in allowing the Fund to hold the Meeting
as scheduled. By marking, signing, and promptly returning the enclosed proxy,
you may eliminate the need for additional solicitation. We appreciate your
cooperation.
By Order of the Board of Directors
Beverly A. Byrne
Secretary
Maxim Series Fund, Inc.
Englewood, Colorado
Dated: January 12, 1998
<PAGE>
MAXIM SERIES FUND, INC.
8515 East Orchard Road
Englewood, Colorado 80111
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 13, 1998
INTRODUCTION
The enclosed proxy is being solicited by the Board of Directors (the
"Board" or the "Directors") of Maxim Series Fund, Inc. (the "Fund") on behalf of
the Maxim Blue Chip Portfolio (the "Portfolio") for use in connection with the
special meeting of shareholders of the Fund (the "Meeting") to be held at 10:00
a.m., Mountain time, on Friday, February 13, 1998, at 8515 East Orchard Road,
Englewood, Colorado 80111, and any adjournment(s) thereof for the purposes set
forth in the foregoing notice. The Fund's Annual Report, including financial
statements of the Fund for the fiscal year ended December 31, 1996, and the
Fund's Semiannual Report, including financial statements of the Fund for the
six-month period ended June 30, 1997, are available without charge upon request
to ). The approximate mailing date of proxies and this Proxy Statement is
January 12, 1998.
The purpose of the Meeting is to allow you to consider a new
Sub-Advisory Agreement for the Portfolio. As explained in more detail below, the
current Sub-Advisory Agreement for the Portfolio (the "Current Sub-Advisory
Agreement") will terminate automatically, by operation of law, upon the
consummation of the proposed merger (the "Merger") of Founders Asset Management,
Inc. ("Founders") into a newly-created subsidiary of Mellon Bank, N.A.
("Mellon"). That subsidiary will be called Founders Asset Management LLC ("New
Founders"). You are not being asked to approve the Merger; however, you are
being asked to approve a proposed new Sub-Advisory Agreement (the "Proposed
Sub-Advisory Agreement") that would take effect at the time of the Merger. The
transactions contemplated by the Merger and the terms of the Proposed
Sub-Advisory Agreement are discussed under Proposal 1, below.
The Proposed Sub-Advisory Agreement is substantially identical in form
and terms to the Current Sub-Advisory Agreement, except as follows:
The investment adviser is New Founders rather than Founders. The execution,
effectiveness and termination dates are different.
You should consider the following factors in determining whether to
approve the Proposed Sub-Advisory Agreement:
The Proposed Sub-Advisory Agreement has been approved by the Directors of
the Fund, including all of the Independent Directors (as defined below).
There will be no change in the investment objectives or policies of the
Portfolio.
There will be no increase in the advisory fees for the Portfolio as a
result of the approval and implementation of the Proposed Sub-Advisory
Agreement.
No changes are contemplated in the personnel who are responsible for
managing the investments of the Portfolio.
Shares held by shareholders present in person or represented by proxy
at the Meeting will be counted both for the purpose of determining the presence
of a quorum and for calculating the votes cast on the issues before the Meeting.
The presence in person or by proxy of the holders of record of a majority of the
shares of the Portfolio entitled to vote shall constitute a quorum at the
Meeting. For the purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions will be treated as shares that
are present but which have not been voted. For this reason, abstentions will
have the effect of a vote "against" the Proposal for the purposes of obtaining
the requisite approval.
Shareholders of record at the close of business on December 31, 1997
(the "Record Date"), are entitled to vote at the Meeting, including any
adjournment(s) thereof, and are entitled to one vote for each share, and
corresponding fractional votes for fractional shares, on each matter to be acted
upon at the Meeting. The shares of the Portfolio are sold to the FutureFunds
Series Account ("FutureFunds I") and the FutureFunds Series Account II
("FutureFunds II") of Great-West Life & Annuity Insurance Company ("GWL&A") to
fund benefits under variable annuity contracts issued by GWL&A. Shares of the
Portfolio are also sold to TNE Series (k) Account ("Series (k) Account") of The
New England Mutual Insurance Company ("The New England") to fund benefits under
certain variable annuity contracts issued by The New England. FutureFunds I is a
registered investment company under the Investment Company Act of 1940 (the
"Act"). Owners of contracts issued by GWL&A through FutureFunds I who have
allocated contract value to the Portfolio as of the Record Date will be entitled
to provide voting instructions with respect to their proportionate interest
(including fractional interests) therein. FutureFunds II and Series (k) Account
are not registered under the Act. Shares held by FutureFunds II and Series (k)
Account will be voted by GWL&A and The New England, respectively, in the same
proportion as the votes cast by contract owners of FutureFunds I. On the Record
Date, the number of outstanding shares of the Portfolio's common stock, $.01 par
value per share, was . As of the Record Date, FutureFunds I held ___% of the
Portfolio's outstanding shares, FutureFunds II held ___% of the Portfolio's
outstanding shares, and Series (k) Account held __% of the Portfolio's
outstanding shares.
Executing the enclosed proxy card will not affect a shareholder's right
to attend the Meeting and vote in person, and a shareholder giving a proxy has
the power to revoke it (by written notice to the Fund at 8515 East Orchard Road,
Englewood, Colorado 80111, execution of a subsequent proxy card, or oral
revocation at the Meeting) at any time before it is exercised.
The investment adviser to the Fund is GW Capital Management, LLC, ("GW
Capital") 8515 E. Orchard Road, Englewood, Colorado 80111. GW Capital is a
wholly-owned subsidiary of Great-West Life & Annuity Insurance Company, a
Canadian stock life insurance company. Great-West is a 99.4%-owned subsidiary of
Great-West Lifeco Inc., which in turn is an 86.4%-owned subsidiary of Power
Financial Corporation of Canada. Power Corporation of Canada, a holding and
management company, has voting control of Power Financial Corporation of Canada.
Mr. Paul Desmarais, his associates, and a group of private holding companies
which he controls, have voting control of Power Corporation of Canada. The
investment sub-adviser to the Portfolio is Founders Asset Management, LLC
("Founders"), 2930 East Third Avenue, Denver, Colorado 80206. Mr. Bjorn K.
Borgen owns 100% of Founders' voting stock and is Founders' Chairman, Chief
Executive Officer and Chief Investment Officer.
In accordance with its view of present applicable law, shares
attributable to the Portfolio held in FutureFunds I will be voted based on
instructions received from the owners of Contracts issued by GWL&A through
FutureFunds I having on the Record Date a voting interest in the corresponding
Investment Division of FutureFunds I. The number of votes which a Contractowner
has the right to cast will be determined by applying his/her percentage interest
in the Investment Division to the total number of votes attributable to the
Investment Division. In determining the number of votes, fractional shares will
be recognized. Portfolio shares as to which no timely instructions are received
will be voted by GWL&A in proportion to the voting instructions which are
received. In connection with the solicitation of such instructions from such
Contractowners, it is understood and expected that GWL&A will furnish a copy of
this Proxy Statement to Contractowners.
All costs of printing and mailing proxy materials and the costs and
expenses of holding the Meeting and soliciting proxies, including related legal
and accounting expenses, will be borne by Founders, Mellon, or GWL&A, and not by
the Portfolio or its shareholders.
Without notice other than announcement at the Meeting, the presiding
officer may seek one or more adjournments of the Meeting to solicit additional
shareholders, if necessary, to obtain a quorum for the Meeting, or to obtain the
required shareholder vote to approve Proposal 1. An adjournment would require
the affirmative vote of the holders of a majority of the shares present at the
Meeting (or an adjournment thereof) in person or by proxy and entitled to vote.
If adjournment is proposed in order to obtain the required shareholder vote, the
persons named as proxies will vote in favor of adjournment those shares which
they are entitled to vote in favor of the Proposal and will vote against
adjournment those shares which they are required to vote against the Proposal.
In addition to the solicitation of proxies by mail, proxies may be solicited by
officers and employees of the Fund or GWL&A or their agents or affiliates
personally or telephone.
Management of the Fund knows of no other business, other than that set
forth in Proposal 1, which will be presented for consideration at the Meeting.
If any other matter is properly presented, it is the intention of the persons
named in the enclosed proxy to vote in accordance with their best judgment.
PROPOSAL 1: Approval of the Proposed Sub-Advisory Agreement
between the Fund, GW Capital and New Founders
Background
The Merger. Under an Agreement and Plan of Reorganization (the "Merger
Agreement"), dated December __, 1997, by and among Mellon, Founders Asset
Management LLC ("New Founders"), Founders, and Bjorn K. Borgen, Founders has
agreed to merge (the "Merger") into New Founders, a newly-created subsidiary of
Mellon. The shareholders of Founders will receive a total of $270 million in
consideration for their Founders shares. Following the Merger, the separate
existence of Founders will cease, and New Founders will assume all of the
assets, liabilities, business and operations of Founders. New Founders will be
headquartered at Founders' current offices at 2930 East Third Avenue, Denver,
Colorado 80206.
Mellon. Mellon is a subsidiary of Mellon Bank Corporation ("MBC"), a
publicly owned multibank holding company incorporated under Pennsylvania law in
1971 and registered under the Federal Bank Holding Company Act of 1956, as
amended. Mellon and MBC are located at One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258. MBC provides a comprehensive range of financial products and
services in domestic and selected international markets. MBC's banking
subsidiaries are located in Pennsylvania, Massachusetts, Delaware, Maryland, and
New Jersey, while other subsidiaries are located in key business centers
throughout the United States and abroad. MBC currently ranks among the nation's
largest bank holding companies based on market capitalization.
MBC's principal wholly-owned subsidiaries are Mellon, The Boston Fund,
Inc., Mellon Bank (DE) National Association, Mellon Bank (MD) National
Association, and a number of companies known as Mellon Financial Services
Corporation. MBC also owns a federal savings bank headquartered in Pennsylvania.
The Dreyfus Corporation ("Dreyfus"), one of the nation's largest mutual fund
companies, is a wholly-owned subsidiary of Mellon. MBC's banking subsidiaries
engage in retail financial services, commercial banking, trust and investment
management services, residential real estate loan financing, mortgage servicing,
equipment leasing, mutual fund activities and various securities-related
activities. Through its subsidiaries, MBC managed more than $299 billion in
assets as of September 30, 1997, including approximately $102 billion in
proprietary mutual fund assets. As of September 30, 1997, various subsidiaries
of MBC provided non-investment services, such as custodial or administration
services, for approximately $1.488 trillion in assets, including $60 billion in
mutual fund assets.
Based on Securities and Exchange Commission ("SEC") filings, MBC has
informed the Fund that it is not aware of any persons who, as of September 30,
1997, either individually or as a group, beneficially owned more than 10% of the
outstanding shares of MBC's voting securities.
New Founders. New Founders was organized as a Delaware limited
liability company on November 26, 1997. The management board of New Founders
currently consists of: Christopher M. Condron, Chairman, who is also Vice
Chairman of MBC and President, Chief Executive Officer and Chief Operating
Officer of Dreyfus, 200 Park Avenue, New York, New York 10166; Jonathan F.
Zeschin, currently President and Chief Operating Officer of Founders, 2930 East
Third Avenue, Denver, Colorado 80206; Gregory P. Contillo, currently Senior Vice
President - Institutional Marketing of Founders; Stephen E. Canter, Vice
Chairman and Chief Investment Officer of Dreyfus; and Lawrence S. Kash, Vice
Chairman - Distribution of Dreyfus. Mr. Zeschin also is the Chief Executive
Officer of New Founders, and Mr. Contillo also is the Senior Vice President -
Institutional Marketing of New Founders. Two additional members will be added to
the management board of New Founders, one qualified person from each of New
Founders and another Mellon affiliate.
Reason for Shareholder Vote. As discussed in greater detail below under
"Current and Proposed Sub-Advisory Agreements," Founders serves as the
sub-adviser to the Portfolio pursuant to the Current Sub-Advisory Agreement. As
required by the Investment Company Act of 1940, as amended (the "Act"), the
Current Sub-Advisory Agreement provides for its automatic termination upon its
"assignment." The Merger, when consummated, would give rise to an "assignment"
of the Current Sub-Advisory Agreement within the meaning of the Act. As a
result, the shareholders of the Portfolio are being asked to approve a new
investment Sub-Advisory Agreement among the Fund, GW Capital and New Founders
(the "Proposed Sub-Advisory Agreement").
The closing of the Merger and, thus, the termination of the Current
Sub-Advisory Agreement, currently is scheduled to occur in the first quarter of
1998. The precise date on which the assignment of the Current Sub-Advisory
Agreement will occur, if at all, cannot now be determined. The Merger Agreement
may be terminated upon certain events, and may be terminated by either party if
the transactions thereunder have not been consummated on or before June 30,
1998.
In order to provide for the continuation of investment management
services to the Portfolio following the Merger, the Fund's Board of Directors is
proposing that the shareholders of the Portfolio approve the Proposed
Sub-Advisory Agreement, which would become effective upon consummation of the
Merger. A description of the Proposed Sub-Advisory Agreement and the services to
be provided by New Founders are set forth below under "Current and Proposed
Sub-Advisory Agreements." A copy of the Proposed Sub-Advisory Agreement is
attached to this Proxy Statement as Exhibit A. The Proposed Sub-Advisory
Agreement is substantially identical to the Current Sub-Advisory Agreement,
except as discussed below. The fees charged for investment advisory services
will remain the same.
As described in greater detail under "Evaluation of the Board of
Directors" below, in connection with approval of the Proposed Sub-Advisory
Agreement, the Fund's Board of Directors considered that the Merger is not
expected to result in any change in (a) the Portfolio's investment objective or
policies, (b) the investment management or operation of the Portfolio, or (c)
the investment personnel managing the Portfolio. The business, assets, personnel
and operations of Founders will be transferred to New Founders. Founders has
advised the Board that, in its judgment, this transfer should not have any
material adverse effect on the Portfolio's ongoing operations or on the extent
or quality of services provided to the Portfolio, or increase the cost to the
Portfolio of such services.
At a meeting held on December 4, 1997, the Fund's Board of Directors,
including all of the Directors who are not "interested persons," as defined in
the Act, of any party to the Proposed Sub-Advisory Agreement (the "Independent
Directors"), approved the Proposed Sub-Advisory Agreement and voted to recommend
that the shareholders of the Portfolio also approve the agreement.
Founders
Founders, located at 2930 East Third Avenue, Denver, Colorado 80206, was
organized in 1938 and was reincorporated in Delaware in 1970. Founders serves as
sub-adviser for the Portfolio. In addition, Founders serves as investment
adviser or sub-adviser to various other mutual funds and private accounts.
Founders' Chairman, Chief Executive Officer, Chief Investment Officer and sole
director is Bjorn K. Borgen. Mr. Borgen's address is 2930 East Third Avenue,
Denver, Colorado 80206. Since Mr. Borgen owns 100% of Founders' voting stock, he
has an interest in the transactions between the Fund and Founders.
The staff of the Securities and Exchange Commission has been conducting
an investigation concerning possible violations of the federal securities laws
in connection with brokerage transactions Founders effected for certain of its
private account clients during the period 1992 through mid-1995. The Commission
has not yet made any determination as to whether any violations have occurred
and, if so, whether any action is appropriate. Founders currently is engaged in
discussions with the staff concerning the staff's possible recommendations to
the Commission.
Current and Proposed Sub-Advisory Agreements
The Current Sub-Advisory Agreement. Founders serves as sub-adviser to
the Portfolio pursuant to a Sub-Advisory Agreement dated May, 19, 1997 (the
"Current Sub-Advisory Agreement") among Founders, GW Capital and the Fund.
Under the Current Sub-Advisory Agreement, Founders is required to
furnish the day-to-day investment management services as well as certain related
administrative services to the Portfolio, subject to the overall supervision of
the Board of Directors of the Fund and GW Capital. In addition, Founders is
required to provide office space and facilities and pay the salaries, fees and
expenses of all officers and other employees connected with its sub-advisory
services to the Portfolio. As compensation for Founders' services, Founders
receives monthly compensation from GW Capital at the annual rate of .425% on the
first $250 million under management, 35% on the next $250 million, .325% on the
next $250 million and .30% on all amounts over $750 million. All fees and
expenses are accrued daily and deducted before declaration of dividends to
shareholders. During the period July 1, 1997 (the Portfolio's commencement date)
to November 30, 1997, the gross sub-advisory fee paid by GW Capital to Founders
was . Exhibit B sets forth the approximate net assets, as of September 30, 1997,
and the investment advisory fees payable to Founders by the various other mutual
funds for which it acts as investment adviser or sub-adviser.
The Current Sub-Advisory Agreement may be terminated without penalty at
any time by the Board of Directors of the Fund or by vote of a majority of the
outstanding securities of the Portfolio on 60 days' written notice to Founders,
or by Founders on 60 days' written notice to the Fund. As discussed above, the
Current Sub-Advisory Agreement will terminate automatically if it is assigned,
as that term is defined in the Act. Finally, the Current Sub-Advisory Agreement
provides that Founders shall not be subject to any liability in connection with
matters to which the agreement relates in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of duty.
The Proposed Sub-Advisory Agreement. The Proposed Sub-Advisory Agreement is
substantially identical to the Current Sub-Advisory Agreement, except as
follows:
The investment adviser is New Founders rather than Founders.
The execution, effectiveness and termination dates are different.
The following summary of the Proposed Sub-Advisory Agreement is qualified in its
entirety by reference to the form of such agreement attached to this Proxy
Statement as Exhibit A.
Under the Proposed Sub-Advisory Agreement, upon consummation of the
Merger, New Founders will continue to be required to furnish the day-to-day
investment management services as well as related administrative services to the
Portfolio, subject to the overall supervision of the Board of Directors of the
Fund and GW Capital. In addition, New Founders will be required to provide
office space and facilities (including computer equipment and programs), and pay
the salaries, fees and expenses of all officers and other employees connected
with the sub-advisory services to the Portfolio.
As compensation for New Founders' services, GW Capital has agreed to
pay New Founders monthly compensation in accordance with annual rates which are
identical to the rates applicable under the Current Sub-Advisory Agreement. All
fees and expenses will be accrued daily and deducted before declaration of
dividends to shareholders.
The Proposed Sub-Advisory Agreement will have an initial term expiring
one year from its execution, and will continue from year to year thereafter
provided that such continuance is approved either by the vote of a majority of
the entire Board of Directors of the Fund or by the vote of a majority of the
outstanding voting securities of the Portfolio, and in either case, by the vote
of a majority of the Independent Directors, cast in person at a meeting called
for the purpose of voting on such approval.
The Proposed Sub-Advisory Agreement may be terminated without penalty
at any time by the Board of Directors of the Fund or by vote of a majority of
the outstanding securities of the Portfolio on 60 days' written notice to New
Founders, or by New Founders on 60 days' written notice to the Fund. The
Proposed Sub-Advisory Agreement will terminate automatically if it is assigned,
as that term is defined in the Act. Finally, the Proposed Sub-Advisory Agreement
provides that New Founders shall not be subject to any liability in connection
with matters to which the agreement relates in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
Evaluation of the Board of Directors
At a meeting of the Board held on December 4, 1997, at which all of the
Independent Directors were in attendance, the Directors evaluated the Proposed
Sub-Advisory Agreement. Prior to and during the meeting, the Independent
Directors requested and received extensive information and documents that they
deemed necessary to enable them to determine whether the Proposed Sub-Advisory
Agreement is in the best interests of the Portfolio and its shareholders. At the
meeting, the Independent Directors reviewed materials furnished by Fund
management, and met with representatives of Founders. The Board considered the
nature, quality and extent of services provided by Founders, and the nature,
quality and extent of services expected to be provided by New Founders, to the
Portfolio. As discussed in more detail below, the Directors noted that senior
members of the management team of Founders will continue to be responsible for
managing the day-to-day affairs of the Portfolio, including investment
management, as employees of New Founders. In evaluating the effects of the
Merger, the Independent Directors viewed as significant the fact that, after the
Merger, New Founders is expected to provide to the Portfolio and its
shareholders sub-advisory services of the same nature, quality and extent as
before the Merger.
In addition, the Board discussed and reviewed the terms and provisions
of the Proposed Sub-Advisory Agreement. The Board specifically noted that the
terms of the Proposed Sub-Advisory Agreement are the same, in all material
respects, as the terms of the Current Sub-Advisory Agreements except for the
fact that the investment adviser is New Founders rather than Founders, and its
execution, effectiveness and termination dates are different. The Board further
noted that the fees and other expenses payable by the Portfolio under the
Proposed Sub-Advisory Agreement are identical to the fees and expenses presently
in effect under the Current Sub-Advisory Agreement.
The Board also took note of the substantial resources of Mellon and its
affiliated companies, including its reputation, experience, personnel, and
financial condition. The Board considered the statements made by representatives
of Founders that the sub-advisory services provided to the Portfolio would not
be adversely affected by the Merger and could be enhanced by the resources of
Mellon, although there was no assurance of the Portfolio obtaining any
particular additional benefits.
In connection with approval of the Proposed Sub-Advisory Agreement, the
Fund's Board of Directors considered that the terms of the Merger do not require
any change in the Portfolio's investment objective or policies, the investment
management or operation of the Portfolio, or the portfolio manager of the
Portfolio. Founders has informed the Fund's Board of Directors that the Merger
is not expected to result in any such change, although no assurance can be given
that such a change will not occur. Founders also has advised that, at present,
it does not plan nor propose to make any material changes in the business or
composition of senior management or personnel of Founders, or in the manner in
which Founders renders investment advisory services to the Portfolio, other than
transferring such business, personnel and services to New Founders. Bjorn K.
Borgen, who is currently Founders' Chairman, Chief Executive Officer, Chief
Investment Officer and sole director, has agreed to serve as a consultant to
Dreyfus pursuant to a three year agreement following the Merger. If, after the
Merger, changes in New Founders are proposed that might materially affect its
services to the Portfolio, the Fund's Board of Directors will consider the
effect of those changes and take such action as it deems advisable under the
circumstances.
Founders has advised the Fund's Board of Directors that, in its
judgment, the resulting changes in operations should not have any material
adverse effect on the Portfolio's ongoing operations or on the extent or quality
of services provided to the Portfolio, or increase the cost to the Portfolio or
shareholders of such services.
Mellon has informed Founders that it will comply with Section 15(f) of
the Act. Section 15(f) provides a non-exclusive safe harbor for an investment
adviser or any of its affiliated persons to receive any amount or benefit in
connection with a change in control of the investment adviser as long as two
conditions are met. First, for a period of three years after the transaction, at
least 75% of the board members of the investment company must not be interested
persons of the new or old investment adviser.
Second, an "unfair burden" must not be imposed on the investment
company as a result of such transaction or any express or implied terms,
conditions or understandings applicable thereto. The term "unfair burden" is
defined in Section 15(f) to include any arrangement during the two-year period
after the transaction whereby the new or old investment adviser, or any
interested person of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than bona fide compensation as principal underwriter for such investment
company). Founders, after due inquiry, is not aware of any express or implied
term, condition, arrangement or understanding which would impose an "unfair
burden" on the Portfolio as a result of the Merger. In addition, both Founders
and Mr. Borgen have represented that neither Founders nor New Founders will take
any action that would have the effect of imposing an "unfair burden" on the
Portfolio for a period of three years after the Merger.
The Board also considered several additional representations made by
Founders including, among others, the following: (a) there is no present
intention to relocate New Founders from the greater Denver, Colorado area; (b)
there is no present intention to take any action in connection with the
operation of New Founders that would result in the diminishment of the type,
quantity or quality of services currently provided by Founders to the Portfolio
or to its shareholders or that would result in a material adverse effect to the
Portfolio or its shareholders; and (c) Brian Kelly, Portfolio manager for the
Portfolio has entered into an employment agreement with New Founders, which will
become effective upon completion of the Merger.
The Board also considered the benefits derived by Founders, and those
expected to be derived by New Founders, as a result of their relationships with
the Portfolio. These benefits include the ability to execute transactions with
brokerage firms that provide research services and products that assist the
adviser in the investment decision-making process, subject to the policy of
seeking best execution of orders at the most favorable prices. Such services and
products permit the sub-adviser to supplement its own research and analysis
activities, and provide it with information from individuals and research staffs
of many securities firms. Research services and products may be useful to the
sub-adviser in providing investment advice to the Portfolio. Thus, there may be
no correlation between the amount of brokerage commissions generated by the
Portfolio and the indirect benefits received by the Portfolio.
Based upon the Directors' review and the evaluations of the materials
they received, and in consideration of all factors deemed relevant to them, the
Directors determined that the Proposed Sub-Advisory Agreement is fair,
reasonable and in the best interests of the Portfolio and its shareholders.
Accordingly, the Board, including all of the Independent Directors, approved the
Proposed Sub-Advisory Agreement and voted to recommend that the Portfolio's
shareholders vote to approve the agreement.
If the shareholders of the Portfolio approve the Proposed Sub-Advisory
Agreement, it will be executed and become effective upon the closing of the
Merger. If the conditions to the Merger are not met or waived, or if the Merger
Agreement is terminated, the Merger will not be consummated and the Current
Sub-Advisory Agreement will remain in effect.
Vote Required
As provided under the Act, approval of the Proposed Sub-Advisory
Agreement will require the affirmative vote of a majority of the outstanding
shares of the Portfolio voting separately as a class. Such a majority is defined
in the Act as the lesser of: (a) 67% or more of the shares present at the
Meeting, if the holders of more than 50% of the outstanding shares of the
Portfolio are present or represented by proxy, or (b) more than 50% of the total
outstanding shares of the Portfolio.
THE DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, RECOMMEND
THAT THE PORTFOLIO'S SHAREHOLDERS VOTE TO APPROVE THE PROPOSED SUB-ADVISORY
AGREEMENT BETWEEN THE FUND, GW CAPITAL AND NEW FOUNDERS.
OTHER BUSINESS
The management of the Fund has no business to bring before the Meeting
other than the matters described above. Should any other business be presented
at the Meeting, it is the intention of the persons named in the proxy to vote on
such matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS
The Fund does not hold annual meetings of shareholders. Shareholders
wishing to submit proposals for inclusion in a proxy statement and form of proxy
for a subsequent shareholders' meeting should send their written proposals to
the Secretary of the Fund, 8515 East Orchard Road, Englewood, Colorado 80111.
The Fund has not received any shareholder proposals to be presented at this
Meeting.
By Order of the Board of Directors
Beverly A. Byrne
Secretary
Maxim Series Fund, Inc.
January 12, 1998
<PAGE>
EXHIBIT A
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (herein "the Agreement" or "this Agreement")
made this day of , 1998 by and between G W Capital Management, LLC, a Colorado
corporation registered as an investment adviser under the Investment Advisers
Act of 1940 ("the Adviser"), Founders Asset Management, LLC, a Delaware limited
liability company registered as an investment adviser under the Investment
Advisers Act of 1940 ("the Sub-adviser"), and Maxim Series Fund, Inc., a
Maryland corporation ("the Fund"), this Agreement embodying the arrangement
whereby the Sub-adviser will act as an investment adviser to the Maxim Blue Chip
Portfolio of the Fund (the "Portfolio"), in conjunction with the Adviser, as
follows:
ARTICLE I
Preamble
The Fund entered into an Investment Advisory Agreement with the
Adviser, a copy of which is attached hereto as Appendix A. This advisory
agreement and all amendments thereto are hereinafter referred to as "the GW
Agreement". In the GW Agreement, the Adviser agreed to act as adviser to and
manager of the Fund. In that capacity it agreed to manage the investment and
reinvestment of the assets of any portfolio of the Fund in existence or created
in the future and to administer the Fund's affairs. The Adviser wishes to obtain
assistance with respect to its aforesaid advisory and management role with
respect to the Portfolio only to the extent described herein, and the Fund by
this Agreement agrees to such arrangement.
ARTICLE II
Duties of the Sub-adviser
The Adviser hereby employs the Sub-adviser to act with the Adviser as
investment advisers to and managers of the Portfolio, and, subject to the review
of the Board of Directors of the Fund ("the Board"), to manage the investment
and reinvestment of the assets of the Portfolio and to administer its affairs,
for the period and on the terms and conditions set forth in this Agreement. The
Sub-adviser hereby accepts such employment and agrees during such period to
render the services and to assume the obligations herein set forth for the
compensation provided for herein. The Sub-adviser shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized by this Agreement or otherwise, have no authority to act
for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
A. Investment Sub-Advisory Services. In carrying out its obligations to assist
in managing the investment and reinvestment of the assets of the Portfolio, the
Sub-adviser shall, when appropriate and consistent with the limitations set
forth in Section B hereof:
(a) perform research and obtain and evaluate pertinent economic,
statistical, and financial data relevant to the investment policies of
the Portfolio;
(b) consult with the Adviser and with the Board and furnish to
the Adviser and the Board recommendations with respect to an overall
investment plan for the Portfolio for approval, modification, or
rejection by the Board;
(c) seek out specific investment opportunities for the
Portfolio, consistent with an overall investment plan approved by the
Adviser and the Board;
(d) take such steps as are necessary to implement any overall
investment plan approved by the Board for the Portfolio, including
making and carrying out decisions to acquire or dispose of permissible
investments as set forth in the Fund's Registration Statement,
management of investments and any other property of the Portfolio, and
providing or obtaining such services as may be necessary in managing,
acquiring or disposing of investments, consulting as appropriate with
the Adviser;
(e) regularly report to the Adviser and the Board with respect
to the implementation of any approved overall investment plan and any
other activities in connection with management of the assets of the
Portfolio;
(f)communicate as appropriate to the Adviser the purchases and
sales within the Portfolio;
(g) arrange with the applicable broker or dealer at the time
of the purchase or sale of investments or other assets of the Portfolio
for the appropriate delivery of the investment or other asset;
(h) report monthly in writing to the Adviser and report at
least annually in person to the Board with respect to the
implementation of the approved investment plan and any other activities
in connection with management of the assets of the Portfolio;
(i) maintain all records, memoranda, instructions or
authorizations relating to the acquisition or disposition of
investments or other assets of the Portfolio required to be main-
tained by Sub-adviser;
(j) arrange with the Investment Operations Department of the
Adviser an administrative process which permits the Adviser to
appropriately reflect in its daily determination of unit values, the
expenses that will be borne directly by the Portfolio and which are
incurred as a result of providing investment management services to the
Portfolio;
(k) vote all shares held by the Portfolio.
In connection with the rendering of the services required to be
provided by the Sub-adviser under this Agreement, the Sub-adviser may, to the
extent it deems appropriate and subject to compliance with the requirements of
applicable laws and regulations, and upon receipt of written approval of the
Fund, make use of its affiliated companies, if any, and their employees;
provided that the Sub-adviser shall supervise and remain fully responsible for
all such services in accordance with and to the extent provided by this
Agreement.
It is understood that any information or recommendation supplied by the
Sub-adviser in connection with the performance of its obligations hereunder is
to be regarded as confidential and for use only by the Adviser in connection
with the Portfolio.
The Adviser will continue to provide all of the services described in
the GW Agreement other than the services described above which have been
delegated to the Sub-adviser in this Agreement.
If, in the judgment of the Sub-adviser, the Portfolio would be
benefitted by supplemental investment research from other persons or entities,
outside the context of brokerage transactions referred to in Article IV hereof,
the Sub-adviser is authorized to obtain, and pay at its own expense, for such
information.
B. Limitations on Advisory Services. The Sub-adviser shall perform the
services under this Agreement subject to the review of the Adviser and the Board
and in a manner consistent with the investment objectives, policies, and
restrictions of the Fund as stated in its Registration Statement, as amended
from time to time, filed with the Securities and Exchange Commission, its
Articles of Incorporation and Bylaws, as amended from time to time, and the
provisions of the Investment Company Act of 1940, as amended.
The Fund has furnished or will furnish the Sub-adviser with copies of
the Fund's Registration Statement, Prospectus, Articles of Incorporation, and
Bylaws as currently in effect and agrees during the continuance of this
Agreement to furnish the Sub-adviser with copies of any amendments or
supplements thereto before or at the time the amendments or supplements become
effective. The Sub-adviser will be entitled to rely on all documents furnished
by the Fund.
ARTICLE III
Compensation of the Sub-adviser
A. Investment Advisory Fee. The Adviser, and not the Fund, will pay on the last
day of each month as monthly compensation to the Sub-adviser for the services
rendered by the Sub-adviser with respect to the Portfolio, as described in
Article II of this Agreement, based on an annual percentage of the assets of the
Portfolio (the "NAV Fee") as set forth below:
Annual Fee Assets .
425% first $250 million .350%
next $250 million .325%
next $250 million
.300% over $750 million
Payment to the Sub-adviser will be made monthly by the Adviser based on the
average daily net assets of the Portfolio during each month, calculated as set
forth in the then current Registration Statement of the Fund. If this Agreement
is terminated, the payment shall be prorated to the effective date of
termination.
B. Allocation of Expenses. The Sub-adviser shall be responsible for all
expenses incurred in performing the services set forth in Article II hereof.
These expenses include only the costs incurred in providing sub-advisory
services pursuant to this Agreement (such as compensating and furnishing office
space for officers and employees of the Sub-adviser connected with investment
and economic research, trading, and investment management of the Portfolio).
As described in the GW Agreement, the Fund and/or the Adviser pays all
other expenses incurred in the operation of the Portfolio and all of its general
administrative expenses.
ARTICLE IV
Portfolio Transactions and Brokerage
The Sub-adviser agrees to determine the securities to be purchased or
sold by the Portfolio, subject to the provisions of Article II regarding
coordination with and supervision by the Adviser and the Fund's Board of
Directors, 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 the Sub-adviser, subject to the following limitations.
The Sub-adviser is authorized to select the brokers or dealers that
will execute the purchases and sales of portfolio securities for the Portfolio
and will use its best efforts to obtain the most favorable net results and
execution of the Portfolio' orders, taking into account all appropriate factors,
including price, dealer spread or commission, if any, size of the transaction,
and difficulty of the transaction.
The Sub-adviser is specifically authorized to allocate brokerage and
principal business to firms that provide such services or facilities and to
cause the Fund to pay a member of a securities exchange or any other securities
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Sub-adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services (as such services
are defined in Section 28(e) of the Securities Exchange Act of 1934) provided by
such member, broker or dealer, viewed in terms of either that particular
transaction or the Sub-adviser's over-all responsibilities with respect to the
accounts as to which it exercises investment discretion (as that term is defined
in Section 3(a)(35) of the Securities Exchange Act of 1934). The Sub-adviser
shall regularly report to the Adviser and the Board with respect to the
brokerage commissions incurred by the Portfolio for the purchases and sales of
its portfolio securities. The Adviser and the Board will review the amount of
such brokerage commissions and consult with the Sub-adviser in that regard.
Subject to the above requirements and compliance with the provisions of
the Investment Company Act of 1940, the Securities and Exchange Act of 1934,
other applicable provisions of law, and the terms of any exemption(s) therefrom,
nothing shall prohibit the Sub-adviser from selecting brokers or dealers with
which it or the Fund are affiliated.
ARTICLE V
Activities of the Sub-adviser
The services of the Sub-adviser to the Fund under this Agreement are
not to be deemed exclusive and the Sub-adviser will be free to render similar
services to others so long as the Sub-adviser fulfills its rights and
obligations under this Agreement. It is understood that directors, officers,
employees and shareholders of the Fund are or may become interested in the
Sub-adviser, as directors, officers, employees or shareholders or otherwise, and
that directors, officers, employees or shareholders of the Sub-adviser are or
may become similarly interested in the Fund, and that the Sub-adviser is or may
become interested in the Fund as shareholder or otherwise.
It is agreed that the Sub-adviser may use any supplemental investment
research obtained for the benefit of the Portfolio in providing investment
advice to its other investment advisory accounts. The Sub-adviser or its
affiliates may use such information in managing their own accounts. Conversely,
such supplemental information obtained by the Sub-adviser for the benefit of the
Sub-adviser or other entities advised by the Sub-adviser may be considered by
and may be useful to the Sub-adviser in carrying out its obligations to the
Fund.
Securities held by the Portfolio may also be held by separate accounts
or other mutual funds for which the Sub-adviser or its affiliates act as an
adviser or sub-adviser, or by the Sub-adviser or its affiliates. Because of
different investment objectives or other factors, a particular security may be
bought by the Sub-adviser 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 Portfolio or other entities for which the Sub-adviser or its
affiliates act as investment adviser or sub-adviser or for their advisory
clients arise for consideration at or about the same time, the Fund agrees that
the Sub-adviser may make transactions in such securities, insofar as feasible,
for the respective entities and clients in a manner deemed equitable to all. To
the extent that transactions on behalf of more than one client of the
Sub-adviser during the same period may increase the 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 the Sub-adviser deems the purchase
or sale of a security to be in the best interests of the Portfolio as well as
other accounts or companies, it may, to the extent permitted by applicable laws
and regulations, but will not be obligated to, aggregate the securities to be so
sold or purchased for other accounts or companies in order to obtain favorable
execution and low 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 the Sub-adviser in the manner it considers to be
most equitable and consistent with its fiduciary obligations to the Portfolio
and to such other accounts or companies.
ARTICLE VI
Effectiveness of the Agreement
The Agreement shall not become effective (and the Sub-adviser shall not
serve or act as investment adviser) unless and until it is approved by the Board
of Directors of the Fund including a majority of directors who are not parties
to this Agreement or interested persons of any such party to this Agreement; and
this Agreement shall come into full force and effect on the date on which all of
these conditions are met.
ARTICLE VII
Term of the Agreement; Amendment
The Agreement shall remain in effect until two years from the date
first above-written and shall continue so long as such continuance is annually
approved thereafter (a) by the vote of a majority of the Board of Directors of
the Fund, or by vote of a majority of the outstanding shares of the Portfolio,
and (b) by the vote of a majority of the members of the Board, who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval. In
connection with such approvals, the Board shall request and evaluate, and the
Sub-adviser shall furnish, such information as may be reasonably necessary to
evaluate the terms of this Agreement. This Agreement:
(a) shall not be terminated by the Sub-adviser without sixty days
prior written notice;
(b) shall be subject to termination, without the payment of any
penalty, by the Board or by vote of a majority of the out-
standing voting securities of the Portfolio, on sixty days
written notice to the Sub-adviser;
(c) may be amended only by a written instrument signed by the
Fund, the Adviser and the Sub-adviser; provided that no
material amendment of this Agreement shall be effective
without specific approval of such amendment by (i) the Board,
including a majority of those directors who are not parties to
this Agreement or interested persons of such a party, cast in
person at a meeting called for the purpose of voting on such
approval, and (ii) a majority of the outstanding shares of the
Portfolio; and
(d) shall automatically terminate upon assignment by either party.
ARTICLE VIII
Recordkeeping
The Sub-adviser agrees that all accounts and records which it maintains
for the Portfolio shall be the property of the Fund and that it will surrender
promptly to the designated officers of the Fund any or all such accounts and
records upon request. The Sub-adviser further agrees to preserve for the period
prescribed by the rules and regulations of the Securities and Exchange
Commission all such records as are required to be maintained pursuant to said
rules. The Sub-adviser also agrees that it will maintain all records and
accounts regarding the investment activities of the Fund in a confidential
manner. All such accounts or records shall be made available, within five (5)
business days of the request, to the Fund's accountants or auditors during
regular business hours at the Sub-adviser's offices upon reasonable prior
written notice; provided, however, that the Sub-adviser shall be permitted to
keep such records or copies thereof for such periods of time as are necessary to
comply with the rules and regulations of the Securities and Exchange Commission
or other applicable provisions of state or federal law. In addition, the
Sub-adviser will provide any materials, reasonably related to the investment
sub-advisory services provided hereunder, as may be reasonably requested in
writing by the directors or officers of the Fund or as may be required by any
governmental agency or self-regulatory organization having jurisdiction.
ARTICLE IX
Liability of the Sub-adviser
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties on the part of the Sub-adviser or
its officers, directors, employees, controlling persons, shareholders, and any
other person or entity affiliated with the Sub-adviser, neither the Sub-adviser
nor any of its officers, directors, employees, controlling persons, shareholders
or any other person or entity affiliated with the Sub-adviser shall be subject
to liability to the Fund or to any shareholder or the Adviser for any act or
omission in the course of, or connected with, rendering services pursuant to
this Agreement, including without limitation any error of judgment or mistake of
law or for any loss suffered by the Fund or any shareholder in connection with
the matters to which this Agreement relates. The federal securities laws impose
liabilities under certain circumstances on persons who act in good faith and,
therefore, nothing herein shall in any way constitute a waiver or limitation of
any rights which the Fund or any shareholder of the Fund may have under any
federal securities laws. The Sub-adviser shall not be liable for the acts and
omissions of any independent contractor used by it nor for those of any bank,
trust company, broker or other person with whom or into whose hands any monies,
shares of the Fund, or securities and investments may be deposited or come,
pursuant to the provisions of this Agreement.
ARTICLE X
Indemnification
Subject to Article IX, the Sub-adviser agrees and undertakes to hold
the Adviser harmless and to indemnify and protect the Adviser from and against
any and all lawsuits or other claims brought against the Adviser as a result of
the activities of the Sub-adviser under this Agreement, including the activities
of the Sub-adviser's officers and directors, agents, employees, controlling
persons, shareholders, and any other person or entity affiliated with the
Sub-adviser or retained by it to perform or assist in the performance of its
obligations under this Agreement; provided, however, that in no event is
Sub-adviser's indemnity in favor of Adviser deemed to protect Adviser against
any liability to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations or duties under
this Agreement or the GW Agreement.
The Adviser agrees and undertakes to hold the Sub-adviser harmless and
to indemnify and protect the Sub-adviser from and against any and all lawsuits
or other claims brought against the Sub-adviser as a result of the activities of
the Adviser under this Agreement and the GW Agreement, including the activities
of the Adviser's officers, directors, agents, employees, controlling persons,
shareholders, and any other person or entity affiliated with the Adviser or
retained by it to perform or assist in the performance of its obligations under
this Agreement or the GW Agreement; provided, however, that in no event is
Adviser's indemnity in favor of Sub-adviser deemed to protect Sub-adviser
against any liability to which the Sub-adviser would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations or
duties under this Agreement.
ARTICLE XI
Agreements, Representations and Indemnification
Related to Disclosure Documents
A. The Sub-adviser will cooperate with the Fund and the Adviser in
connection with the registration or qualification of units of the Portfolio for
offer and sale under the securities or Blue Sky laws of such jurisdictions as
the Fund may request and will cooperate with the preparation of the Disclosure
Documents (as defined in Article XI.C. below). The Fund and the Adviser will
provide the Sub-adviser with copies of all Disclosure Documents prior to
distribution to investors or submission to governmental bodies or
self-regulatory organizations and will incorporate its reasonable comments
relating to the description of, or services to be provided by, the Sub-adviser
or its affiliates, or relating to the description of the investment objectives
and policies of the Portfolio.
B. The Fund and the Adviser, jointly and severally, represent and
warrant to the Sub-adviser that the Disclosure Documents will fully comply with
the provisions of the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the Investment Company Act of 1940, as
amended, and other applicable laws, and the Disclosure Documents at all such
times will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except that this representation and warranty does not
apply to statements or omissions in the Disclosure Documents made in reliance
upon information furnished to the Fund or the Adviser in writing by the
Sub-adviser which the Fund had informed the Sub-adviser was to be used, or which
the Sub-adviser had acknowledged was to be used, in the particular Disclosure
Document. The Fund and the Adviser will notify the Sub-adviser promptly of the
happening of any event which in the judgment of the Fund or the Adviser makes
any statement made in the Disclosure Documents untrue in any material respect or
requires the making of any changes in the Disclosure Documents in order to make
the statements therein, in the light of circumstances under which they were
made, not misleading in any material respect, except that the Fund and the
Adviser need not make such notification with respect to information in the
Disclosure Documents based upon information furnished in writing to the Fund or
the Adviser by the Sub-adviser which the Fund had informed the Sub-adviser was
to be used, or which the Sub-adviser had acknowledged was to be used, in the
particular Disclosure Document.
The Sub-adviser represents and warrants to the Fund and the Adviser
that the information furnished in writing by it which the Fund has informed it
is to be used, or which the Sub-adviser has acknowledged is to be used, in a
particular Disclosure Document, will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading as required by the
provisions of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, the Investment Company Act of 1940, as amended, and
other applicable laws. The Sub-adviser will notify the Fund and the Adviser
promptly of the happening of any event which in the judgment of the Sub-adviser
makes any statement made in the Disclosure Documents untrue in any material
respect or requires the making of any changes in the Disclosure Documents in
order to make the statements therein, in the light of circumstances under which
they were made, not misleading in any material respect, except that the
Sub-adviser need only make such notification with respect to information in the
Disclosure Documents based upon information furnished in writing to the Fund or
the Adviser by the Sub-adviser which the Fund had informed the Sub-adviser was
to be used, or which the Sub-adviser had acknowledged was to be used, in the
particular Disclosure Statement.
C. Notwithstanding Article X to the contrary, the Fund and the Adviser,
jointly and severally, agree to hold harmless the Sub-adviser, its directors and
officers (each such person a "Sub-adviser Indemnified Party"), and each person,
if any, who controls the Sub-adviser within the meaning of either Section 15 of
the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange
Act of 1934, as amended, from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Fund's Registration Statement or Prospectus, or
any amendment or supplement thereto, or in any preliminary prospectus, any other
communication with investors or any other submissions to governmental bodies or
self-regulatory agencies filed or distributed on or subsequent to the date first
above-written (such documents being herein referred to as "Disclosure
Documents") or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any such untrue
statement or omission or allegation thereof based upon information furnished in
writing to the Fund or the Adviser by the Sub-adviser which the Fund had
informed the Sub-adviser was to be used, or which the Sub-adviser had
acknowledged was to be used, in the particular Disclosure Document.
If any action or proceeding (including any governmental investigation)
shall be brought or asserted against the Sub-adviser Indemnified Party in
respect of which indemnity may be sought from the Fund and the Adviser, the
Sub-adviser Indemnified Party shall promptly notify the Fund and the Adviser in
writing, and the Fund and the Adviser shall assume the defense thereof,
including the employment of counsel satisfactory to the Sub-adviser and the
payment of all expenses. The Sub-adviser Indemnified Party shall have the right
to employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be the expense of the
Sub-adviser Indemnified Party unless (a) the Fund or the Adviser has agreed to
pay such fees and expenses or (b) the Fund or the Adviser shall have failed to
assume the defense of such action or proceeding and to employ counsel
satisfactory to the Sub-adviser in any such action or proceeding or (c) the
named parties to any such action or proceeding (including any impleaded parties)
include both the Sub-adviser Indemnified Party and the Fund or the Sub-adviser
Indemnified Party shall have been advised by counsel that there may be one or
more legal defenses available to any of them which are different from or
additional to those available to the Fund or the Adviser (in which case, if the
Sub-adviser Indemnified Party notifies the Fund and the Adviser in writing that
it elects to employ separate counsel at the expense of the Fund and the Adviser,
the Fund and the Adviser shall not have the right to assume the defense of such
action or proceeding on behalf of the Sub-adviser Indemnified Party), it being
understood, however, that the Fund and the Adviser shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for the
Sub-adviser Indemnified Party, which firm shall be designated in writing by the
Sub-adviser. Neither the Fund nor the Adviser shall be liable for any settlement
of any such action or proceeding effected without their written consent, but if
settled with their written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the Fund and the Adviser agree to
indemnify and hold harmless the Sub-adviser Indemnified Party from and against
any loss or liability by reason of such settlement or judgment. It is understood
that neither the Fund nor the Adviser may settle on behalf of the Sub-adviser
without the consent of the Sub-adviser.
Notwithstanding Article X to the contrary, the Sub-adviser agrees to
indemnify and hold harmless the Fund and the Adviser, their directors and
officers, and each person, if any, who controls the Fund or the Adviser within
the meaning of either Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934, as amended, to the same
extent as the foregoing indemnity from the Fund and the Adviser to the
Sub-adviser, but only with respect to information furnished in writing by it
which the Fund had informed the Sub-adviser was to be used, or which the
Sub-adviser had acknowledged was to be used, in the particular Disclosure
Document. In case any action or proceeding shall be brought against the Fund or
the Adviser, their directors or officers, or any such controlling persons, in
respect of which indemnity may be sought against the Sub-adviser, the
Sub-adviser shall have the rights and duties given to the Fund and the Adviser,
and the Fund or the Adviser, their directors or officers, or such controlling
persons shall have the rights and duties given to the Sub-adviser, by the
preceding paragraph.
D. The agreements, representations and indemnification contained in
this Article XI shall remain operative and in full force and effect regardless
of (a) any investigation made by or on behalf of the Sub-adviser Indemnified
Party or by or on behalf of the Fund or the Adviser, its directors and officers,
or any person controlling the Fund or the Adviser or (b) any termination of this
Agreement.
ARTICLE XII
Governing Law
This Agreement shall be construed in accordance with the laws of the
State of Colorado and the applicable provisions of the Investment Company Act of
1940, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder, including such exemptions therefrom as the Securities and
Exchange Commission may grant. Words and phrases used herein shall be
interpreted in accordance with that Act and those rules and regulations. As used
with respect to the Portfolio, the term "majority of the outstanding shares"
means the lesser of (i) 67% of the shares represented at a meeting at which more
than 50% of the outstanding shares are represented or (ii) more than 50% of the
outstanding shares. To the extent that the applicable laws of the State of
Colorado conflict with applicable provisions of the Investment Company Act of
1940, as amended, or the rules and regulations thereunder, such Act, rules and
regulations shall control.
ARTICLE XIII
Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
ARTICLE XIV
Counterparts
This Agreement may be executed in any number of counterparts, and by
separate parties hereto in separate counterparts, each of which when so executed
and delivered shall be deemed an original, but all such counterparts together
shall constitute but one and the same instrument.
ARTICLE XV
Sales Literature
The Adviser will not use the Sub-adviser's name in Fund sales
literature without prior review and approval by the Sub-adviser, which will not
be unreasonably withheld or delayed.
ARTICLE XVI
Notices
Any notice under this Agreement shall be in writing and shall be deemed
given (a) upon person delivery, (b) on the first business day after receipted
delivery to a courier service that guarantees next business day delivery, under
circumstances in which such guaranty is applicable or (c) on the earlier of
delivery or three business days after mailing by United States certified mail,
postage and fees prepaid, to the appropriate party at the address set forth
below, or to such other address as the party so notifies the others in writing.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officials duly authorized, as of the day and year first
above written.
Witness: G W CAPITAL MANAGEMENT, LLC
By:
Name: Name:
Title:
Address: 8515 East Orchard Road
Englewood, CO 80111
Attn: General Counsel
Witness: FOUNDERS ASSET MANAGEMENT LLC
By:
Name:
Name:
Title:
Address: 2930 East Third Avenue
Denver, CO 80206
Attn: General Counsel
Witness: MAXIM SERIES FUND, INC.
By:
Name: Name:
Title:
Address: 8515 East Orchard Road
Englewood, CO 80111
Attn: Secretary
<PAGE>
EXHIBIT B
MUTUAL FUNDS ADVISED OR SUB-ADVISED BY FOUNDERS
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
Type Investment Adviser Sub-Adviser Advisory Fee Rate (based Sub-Advisory Fee (based Net Assets as of
of Objective on average net assets) on average net assets)1 September 30, 1997
Fund
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Growth Funds
- ----------------------------------------------------------------------------------------------------------------------------------
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
Founders Long-term Founders None 1.00% to $30 million None $1,755,409,701.27
Growth growth of 0.75% next $270 million
Fund capital 0.70% next $200 million
0.65% thereafter
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
New Long-term New England Founders 1.05% 0.55% to $50 million $277,537,100.62
England growth of Funds 0.50% next $200 million
Funds capital Management, L.P. 0.475% thereafter
Trust I-
New England
Star Advisers
Fund2
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
Manufact- Long-term Manufacturers Founders 0.85% 0.45% to $50 million $147,706,073.38
ers Invest- growth of Securities 0.45% next $150 million
ment Trust- capital Services, LLC 0.35% next $300 million
Growth Trust 0.30% thereafter
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
North Long-term CypressTree Founders 0.90% to $50 million 0.50% to $50 million $25,744,105.01
American growth of Asset 0.85% next $150 million 0.45% next $150 million
Funds - capital Management 0.825% next $300 million 0.425% next $300 million
Growth Corporation, 0.80% thereafter 0.40% thereafter
Equity Fund Inc.
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Growth and Income Funds
- ----------------------------------------------------------------------------------------------------------------------------------
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
Founders Long-term Founders None 0.65% to $250 million None $566,935,024.80
Blue growth of 0.60% next $250 million
Chip capital and 0.55% next $250 million
Fund income 0.50% thereafter
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
Maxim Long-term G W Capital Founders 1.00% 0.425% to $250 million $91,467,499.05
Series growth of Management, LLC 0.350% next $250 million
Fund, capital and 0.325% next $250 million
Inc. income 0.300% thereafter
- -
Maxim
Blue Chip
Portfolio
- ------ --------------- ----------------- ------------ --------------------------- --------------------------- -------------------
</TABLE>
-----------------------
1 With respect to all funds for which Transfers acts as sub-adviser,
the sub-advisory fee is by the fund's investment adviser out of its
fee, not by the fund directly.
2 This fund has four sub-advisers, each managing a different segment
of the fund's portfolio. Founders receives a sub-advisory fee only
with respect to the segment of the fund it manages. The net
asset amount shown for this fund reflects only Founders' segment.
<PAGE>
[FORM OF PROXY CARD]
MAXIM SERIES FUND, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
FEBRUARY 13, 1998
The undersigned hereby appoints Beverly A. Byrne, David G. McLeod and Jeffrey A.
Engelsman, and each of them, proxy for the undersigned, with the power of
substitution, to vote with the same force and effect as the undersigned at the
Special Meeting of Shareholders of Maxim Series Fund, Inc. (the "Fund") to be
held at 8515 East Orchard Road, Englewood, Colorado 80111, on Friday, February
13, 1998 at 10:00 a.m. (Mountain time) and at any adjournment thereof, upon the
matters set forth below, all in accordance with and as more fully described in
the Notice of Special Meeting and Proxy Statement, dated January 12, 1998,
receipt of which is hereby acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS, WHICH RECOMMENDS A VOTE "FOR"
EACH PROPOSAL.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSAL 1.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE. THANK YOU.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Proposal 1
1. Proposal to approve the Sub-Advisory Agreement between
the Fund, GW Capital Management, LLC and Founders Investments LLC
For Against Abstain
[ ] [ ] [ ]
- ----------------------- ----------------------- ----------
Signature Signature (Joint Owners) Date
Please sign exactly as your name appears hereon. If shares are held in the name
of joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc. should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
