MORGAN KEEGAN SERIES FUND, INC.
                              50 North Front Street
                            Memphis, Tennessee 38103



March 22, 1999

Morgan Asset Management, Inc.
50 North Front Street
Memphis, Tennessee  38103

Dear Ladies and Gentlemen:

      This Agreement is made by and between Morgan Keegan Series Fund, Inc. (the
"Fund") and Morgan  Asset  Management,  Inc.  (the  "Adviser")  on behalf of the
Fund's two distinct series of common stock, Morgan Keegan Intermediate Bond Fund
("Intermediate  Portfolio")  and Morgan  Keegan High  Income Fund ("High  Income
Portfolio") (each a "Portfolio").

      The Adviser  hereby agrees to waive its fees and, if necessary,  reimburse
the Fund for its first  fiscal  year of  operations  to the  extent  its  annual
operating  expenses  (excluding  brokerage,  interest,  taxes and  extraordinary
expenses) exceed for the Intermediate Portfolio:  0.90% of net assets of Class A
shares, 1.25% of net assets of Class C shares and 0.65% of net assets of Class I
shares; and exceed for the High Income Portfolio: 1.25% of net assets of Class A
shares,  1.75% of net assets of Class C shares, and 1.00% of net assets of Class
I shares.

      The Fund agrees to furnish or otherwise make available to the Adviser such
copies of its financial  statements,  reports, and other information relating to
its  business  and affairs as the Adviser may, at any time or from time to time,
reasonably request in connection with this Agreement.

      The  Adviser  understands  that it  shall  look  only to the  assets  of a
Portfolio for  performance of this agreement as it relates to that Portfolio and
for payment of any claim it may have hereunder  relating to that Portfolio,  and
neither any other series of the Fund, nor any of the Fund's directors, officers,
employees,  agents,  or shareholders,  whether past,  present or future shall be
personally liable therefor.

      This agreement is effective as of March 22, 1999.

      Except insofar as the Investment Company Act of 1940, as amended, or other
federal  laws  and  regulations  may be  controlling,  this  agreement  shall be
governed by, and  construed  and enforced in  accordance  with,  the laws of the



State of Maryland. Any amendment to this agreement shall be in writing signed by
the parties hereto.

      If you are in  agreement  with  the  foregoing,  please  sign  the form of
acceptance on the enclosed counterpart hereof and return the same to us.

                                            Very truly yours,

                                            MORGAN KEEGAN SERIES FUND, INC.

                                            By:  /s/ Charles D. Maxwell
                                                 ----------------------
                                                 Secretary


The foregoing agreement is hereby
accepted as of  March 22, 1999

MORGAN ASSET MANAGEMENT, INC.

By:     /s/ Charles D. Maxwell
        ----------------------
Title:  Secretary