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EXHIBIT d(2)
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 laws, 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
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman and President
ATTEST:
/s/ XXXXXXX XXXXX
-------------------------------
Secretary
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By: /s/ XXX X. XXXXXXX
-------------------------------------
Name: Xxx X. Xxxxxxx
Title: Sr. Vice President - Marketing
ATTEST:
/s/ XXXXXXX XXXXX
-------------------------------
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
assets value and payable monthly:
**MidCap Index Fund............... .35% on the first $500 million;
.25% on assets over $500 million
Of this fee, VALIC pays Bankers Trust a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $300 million 0.35% 0.03% 0.32%
On the next $200 million 0.35% 0.02% 0.33%
On the excesses over $500 million 0.25% 0.02% 0.23%
**Stock Index Fund................ .35% on the first $500 million;
.25% on assets over $500 million
Of this fee, VALIC pays Bankers Trust a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $500 million 0.35% 0.02% 0.33%
On the next $1.5 billion 0.25% 0.02% 0.23%
On the excess over $2 billion 0.25% 0.01% 0.24%
**Small Cap Index Fund............ .35% on the first $500 million;
.25% on assets over $500 million
Of this fee, VALIC pays Bankers Trust a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $150 million 0.35% 0.03% 0.32%
On the next $350 million 0.35% 0.02% 0.33%
On the excess over $500 million 0.25% 0.02% 0.23%
**Science & Technology Fund....... .90%
Of this fee, VALIC pays X. Xxxx Price a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $500 million 0.90% 0.60% 0.30%
On the excess over $500 million 0.90% 0.55% 0.35%
*Growth and Income Fund.......... .75% (VALIC retains all of this fee)
**Growth Fund.................... .80%
Of this fee, VALIC pays X. Xxxx Price a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $500 million 0.80% 0.50% 0.30%
On the excess over $500 million 0.80% 0.45% 0.35%
* This fee was shared with Value Line, Inc. prior to their termination as
Sub-adviser effective February 20, 1999.
**The fee paid by VALIC to Bankers Trust or X. Xxxx Price was amended effective
February 2, 1998.
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FORM OF 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
assets value and payable monthly:
**MidCap Index Fund............... .35% on the first $500 million;
.25% on assets over $500 million
Of this fee, VALIC pays Bankers Trust a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $300 million 0.35% 0.03% 0.32%
On the next $200 million 0.35% 0.02% 0.33%
On the excesses over $500 million 0.25% 0.02% 0.23%
**Stock Index Fund................ .35% on the first $500 million;
.25% on assets over $500 million
Of this fee, VALIC pays Bankers Trust a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $500 million 0.35% 0.02% 0.33%
On the next $1.5 billion 0.25% 0.02% 0.23%
On the excess over $2 billion 0.25% 0.01% 0.24%
**Small Cap Index Fund............ .35% on the first $500 million;
.25% on assets over $500 million
Of this fee, VALIC pays Bankers Trust a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $150 million 0.35% 0.03% 0.32%
On the next $350 million 0.35% 0.02% 0.33%
On the excess over $500 million 0.25% 0.02% 0.23%
**Science & Technology Fund....... .90%
Of this fee, VALIC pays X. Xxxx Price a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $500 million 0.90% 0.60% 0.30%
On the excess over $500 million 0.90% 0.55% 0.35%
*Growth and Income Fund.......... .75% (VALIC retains all of this fee)
***Growth Fund................... .80%
Of this fee, VALIC pays Wellington
Management Company a portion and
retains the remainder as follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $50 million 0.80% 0.325% 0.475%
On the next $450 million 0.80% 0.250% 0.550%
On the next $1 billion 0.80% 0.200% 0.600%
Over $1.5 billion 0.80% 0.180% 0.620%
* This fee was shared with Value Line, Inc. prior to their termination as
Sub-adviser effective February 20, 1999.
** The fee paid by VALIC to Bankers Trust or X. Xxxx Price was amended effective
February 2, 1998.
***Effective September 1, 1999, Wellington Management Company was appointed as
Sub-adviser to the Growth Fund.
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FORM OF 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
assets value and payable monthly:
****MidCap Index Fund............ .35% on the first $500 million;
.25% on assets over $500 million
(VALIC retains all of this fee)
****Stock Index Fund............. .35% on the first $500 million;
.25% on assets over $500 million
(VALIC retains all of this fee)
****Small Cap Index Fund......... .35% on the first $500 million;
.25% on assets over $500 million
(VALIC retains all of this fee)
**Science & Technology Fund...... .90%
Of this fee, VALIC pays X. Xxxx Price a
portion and retains the remainder as
follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $500 million 0.90% 0.60% 0.30%
On the excess over $500 million 0.90% 0.55% 0.35%
*Growth and Income Fund.......... .75% (VALIC retains all of this fee)
***Growth Fund................... .80%
Of this fee, VALIC pays Wellington
Management Company a portion and
retains the remainder as follows:
Sub-adviser Retained
Annual Fee Fee by VALIC
---------- --- --------
On the first $50 million 0.80% 0.325% 0.475%
On the next $450 million 0.80% 0.250% 0.550%
On the next $1 billion 0.80% 0.200% 0.600%
Over $1.5 billion 0.80% 0.180% 0.620%
* This fee was shared with Value Line, Inc. prior to their termination as
Sub-adviser effective February 20, 1999.
** The fee paid by VALIC to X. Xxxx Price was amended effective February 2,
1998.
*** Effective September 1, 1999, Wellington Management Company was appointed as
Sub-adviser to the Growth Fund.
****This fee was shared with Bankers Trust prior to their termination as
subadviser effective October 1, 1999.
