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EXHIBIT 5.(B)
INVESTMENT ADVISORY AGREEMENT
(Form II)
This AGREEMENT made this 1st day of May, 1992, by and between THE VARIABLE
ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as the "ADVISER," and
AMERICAN GENERAL SERIES PORTFOLIO COMPANY, hereinafter referred to as the
"FUND."
The ADVISER and the FUND recognize the following:
(a) The ADVISER is a life insurance company organized under Chapter 3
of the Texas Insurance Code and an investment adviser registered under the
Investment Advisers Act of 1940.
(b) The FUND is an investment company organized under the general
corporation laws of Maryland as a series type investment company issuing
separate classes (or series) of stock and is registered as an open-end,
management investment company under the Investment Company Act of 1940.
That Act prohibits any person from acting as an investment adviser of a
registered investment company except pursuant to a written contract.
(c) The FUND currently consists of ten portfolios ("Funds"): MidCap
Index Portfolio, Timed Opportunity Portfolio, Money Market Portfolio,
Capital Conservation Portfolio, Government Securities Portfolio, Stock
Index Portfolio, International Equities Portfolio, Social Awareness
Portfolio, International Government Bond Portfolio and Small Cap Index
Portfolio. In accordance with the FUND's Articles of Incorporation and
Bylaws, new Funds may be added to the FUND upon approval of the FUND's
Board of Directors without approval of the FUND's shareholders. This
Agreement will apply only to the Stock Index Portfolio and the MidCap
Index Portfolio and any other Fund as may be added or deleted by amendment
to the Attached Schedule A ("Covered Funds").
(d) The FUND currently sells its shares to separate accounts
established by the ADVISER and its affiliates to fund certain variable
annuity contracts and to employee thrift plans maintained by the ADVISER
and/or its affiliates.
The ADVISER and the FUND AGREE AS FOLLOWS:
1. SERVICES RENDERED AND EXPENSES PAID BY ADVISER
The ADVISER, subject to the control, direction, and supervision of the
FUND's Board of Directors and in conformity with applicable laws, the FUND's
Articles of Incorporation, Bylaws, registration statements, prospectus and
stated investment objectives, policies and restrictions shall:
(a) manage the investment and reinvestment of the assets of the
Covered Funds including, for example, the evaluation of pertinent economic,
statistical, financial, and other data, the determination of the industries
and companies to be represented in each Covered Fund's portfolio, and the
formulation and implementation of investment programs.
(b) maintain a trading desk and place all orders for the purchase and
sale of portfolio investments for each Covered Fund's account with brokers
or dealers selected by the ADVISER, or arrange for any other entity to
provide a trading desk and to place orders with brokers and dealers
selected by the ADVISER, subject to the ADVISER's control, direction,
and supervision.
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(c) conduct and manage the day to day operations of each Covered Fund
including, for example, the preparation of registration statements,
prospectuses, reports, proxy solicitation materials and amendments thereto,
and the furnishing of legal services (except those services provided by
outside counsel to the FUND selected by the Board of Directors).
(d) furnish to the Covered Funds office space, facilities, equipment
and personnel adequate to provide the services described above and pay the
compensation to the FUND's directors and officers who are interested
persons of the ADVISER.
In performing the services described in paragraph (b) above, the ADVISER
shall use its best efforts to obtain for the Covered Funds the most favorable
overall price and execution. The ADVISER shall also use its best efforts to
obtain for the Covered Funds any tender and exchange offer solicitation fees,
other fees, and similar payments available in connection with the portfolio
transactions of the Covered Funds. Subject to prior authorization by the FUND's
Board of Directors of appropriate policies and procedures, the ADVISER may cause
the Covered Funds to pay to a broker a commission, for effecting a portfolio
transaction, in excess of the commission another broker would have charged for
effecting the same transaction, if the first broker provided brokerage and\or
research services, including statistical data, to the ADVISER. The ADVISER shall
not be deemed to have acted unlawfully, or to have breached any duty created by
this Agreement, or otherwise, solely by reason of acting according to such
authorization.
The ADVISER shall maintain records adequately demonstrating compliance with
its obligations under this Agreement and report periodically to the FUND's Board
of Directors regarding the performance of services under this Agreement.
Except as otherwise agreed, or as otherwise provided herein, the ADVISER
shall bear the expense of discharging its responsibilities hereunder and the
FUND shall pay, or arrange for others to pay, all its expenses other than those
which part 2 of this Agreement expressly states are payable to the ADVISER.
Expenses payable by the FUND include, but are not limited to, (i) interest and
taxes; (ii) broker's commissions and other expenses of purchasing and selling
portfolio investments; (iii) compensation of directors and officers other than
those persons who are interested persons of the ADVISER; (iv) fees of outside
counsel to and of independent auditors of the FUND selected by the Board of
Directors; (v) fees for accounting services; (vi) custodial, registration, and
transfer agency fees; (vii) expenses related to the repurchase or redemption of
its shares including expenses related to a program of periodic repurchases or
redemptions; (viii) expenses of issuing its shares against payment therefor by,
or on behalf of, the subscribers thereto; (ix) fees and related expenses of
registering and qualifying the FUND and its shares for distribution under state
and federal securities laws; (x) expenses of printing and mailing to existing
shareholders of registration statements, prospectuses, reports, notices and
proxy solicitation materials of the FUND; (xi) all other expenses incidental to
holding meetings of the FUND's shareholders including proxy solicitations
therefor; (xii) expenses for servicing shareholder accounts; (xiii) insurance
premiums for fidelity coverage and errors and omissions insurance; (xiv) dues
for the FUND's membership in trade associations approved by the Board of
Directors; (xv) such non-recurring expenses as may arise, including those
associated with actions, suits, or proceedings to which the FUND is a party and
the legal obligation which the FUND may have to indemnify its officers,
directors and employees with respect thereto. The FUND shall allocate the
foregoing expenses among the Covered Funds and, to the extent that any of the
foregoing expenses are allocated between the Covered Funds and any other Funds
or entities, such allocations shall be made pursuant to methods approved by the
Board of Directors.
2. COMPENSATION OF ADVISER
The FUND shall pay to the ADVISER, as compensation for the services
rendered, facilities furnished and expenses paid by the ADVISER, a monthly fee
based on each Covered Fund's average monthly net asset
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value computed for each Covered Fund as provided for in the fee schedule
attached hereto as Schedule A. Schedule A may be amended from time to time,
provided that amendments are made in conformity with applicable laws and
regulations and the Articles and Bylaws of the FUND. Any change in Schedule A
pertaining to any existing or new Fund shall not be deemed to affect the
interest of any other Fund and shall not require the approval of shareholders of
any other Fund.
The average monthly net asset value shall be determined by taking the mean
average of all of the determinations of net asset value, made in the manner
provided in the FUND's Articles of Incorporation, for each business day during a
given calendar month. The FUND shall pay this fee for each calendar month as
soon as practicable after the end of that month.
"The ADVISER shall promptly reduce its monthly fee by the amount of any
commissions, tender and exchange offer solicitation fees, other fees, or similar
payments received by the ADVISER, or any affiliated person of the ADVISER, in
connection with any Covered Fund's portfolio transactions, less the amount of
any direct expenses incurred by the ADVISER, or any affiliated person of the
ADVISER, in obtaining such commissions, fees, or payments.
If the ADVISER serves for less than a whole month, the foregoing
compensation shall be prorated.
3. SCOPE OF ADVISER'S DUTIES
The ADVISER, and any person controlling, controlled by or under common
control with the ADVISER, shall remain free to provide similar investment
advisory services to other persons or engage in any other business or activity
which does not impair the services which the ADVISER renders to the Covered
Funds.
Except as otherwise required by the Investment Company Act of 1940, any of
the shareholders, directors, officers and employees of the FUND may be a
shareholder, director, officer or employee of, or be otherwise interested in,
the ADVISER, and in any person controlling, controlled by or under common
control with the ADVISER; and the ADVISER, and any person controlling,
controlled by or under common control with the ADVISER, may have an interest in
the FUND.
The ADVISER shall not be liable to the FUND, or to any shareholder in the
FUND, for any act or omission in rendering services under this Agreement, or for
any losses sustained in the purchase, holding, or sale of any portfolio
security, so long as there has been no willful misfeasance, bad faith,
negligence, or reckless disregard of obligations or duties on the part of the
ADVISER.
ADVISER may from time to time employ or associate with itself any person or
persons believed to be particularly fitted to assist in its performance of
services under this Agreement, provided that any such person who serves or acts
as an investment adviser separate from ADVISER will do so pursuant to a
sub-advisory agreement as provided in the following paragraph. The compensation
of any such persons will be paid by ADVISER, and no obligation will be incurred
by, or on behalf of, the FUND with respect to them.
Notwithstanding any other provision of this Agreement, the FUND hereby
authorizes the ADVISER to employ an investment sub-adviser for any one or more
of the Covered Funds for the purpose of providing investment management services
with respect to such Covered Funds, provided that (a) the compensation to be
paid to such investment sub-adviser shall be the sole responsibility of the
ADVISER, (b) the duties and responsibilities of the investment sub-adviser shall
be as set forth in a sub-advisory agreement including the ADVISER and the
investment sub-adviser as parties, (c) such sub-advisory agreement shall be
adopted and approved in conformity with applicable laws and regulations, and (d)
such sub-advisory agreement may be terminated at any time, on not more than 60
days' written notice, by the ADVISER on notice to the sub-
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adviser and the FUND, by the sub-adviser on notice to the ADVISER and the FUND,
and by the FUND's Board of Directors or by a majority vote of the Covered Fund's
outstanding voting securities on notice to the sub-adviser and the ADVISER.
4. DURATION OF AGREEMENT
This Agreement shall become effective as to the Stock Index Portfolio and
MidCap Index Portfolio on the date hereof and as to any other Fund on the date
of the Amendment to Schedule A adding such Fund in accordance with this
Agreement. It shall continue in force thereafter, but with respect to any
Covered Fund, only so long as such continuance is approved at least annually by
the vote of a majority of the FUND's directors who are not parties to this
Agreement or interested persons of any such parties, cast in person at a meeting
called for the purpose of voting on such approval and by a vote of a majority
of the FUND's Board of Directors or a majority of that Fund's outstanding voting
securities.
This Agreement shall automatically terminate in the event of its
assignment. The Agreement may be terminated as to any Covered Fund at any time
by the FUND's Board of Directors, by vote of a majority of that Fund's
outstanding voting securities, or by the ADVISER, on not more than 60 days' nor
less than 30 days' written notice, or upon such shorter notice as may be
mutually agreed upon. Such termination shall be without the payment of any
penalty.
5. APPLICABILITY OF FEDERAL SECURITIES LAWS
This Agreement shall be interpreted in accordance with applicable federal
securities laws and regulations, including definitions therein and such
exemptions as may be granted to the ADVISER or the FUND by the Securities and
Exchange Commission or such interpretive positions as may be taken by the
Commission or its staff. To the extent that the applicable law of the State of
Texas, or any of the provisions herein, conflict with applicable provisions of
the federal securities law, the latter shall control.
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The parties hereto have each caused this Agreement to be signed in duplicate on
its behalf by its duly authorized officer on the above date.
AMERICAN GENERAL SERIES PORTFOLIO
COMPANY
By: /s/ XXXXXXX X. XXXXXX
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman and President
ATTEST:
/s/ XXXXXXX XXXXX
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Secretary
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By: /s/ XXX X. XXXXXXX
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Name: Xxx X. Xxxxxxx
Title: Vice President - Marketing
ATTEST:
/s/ XXXXXXX XXXXX
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Secretary
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SCHEDULE A
to Investment Advisory Agreement (Form II)
(Effective May 2,1994)
Annual Fee computed at the following annual rate, based on average monthly net
asset value and payable monthly:
* MidCap Index Fund.................
* Stock Index Fund..................
* Small Cap Index Fund..............
* Science & Technology Fund.........
Growth and Income Fund............
* Growth Fund.......................
* The fee paid by VALIC to Bankers Trust or X. Xxxx Price was amended
effective February 2, 1998.
