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INVESTMENT ADVISORY AGREEMENT
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INVESTMENT ADVISORY AGREEMENT made as of the twenty-third day of July,
1997, by and between GENERAL AMERICAN CAPITAL COMPANY ("Company"), a Maryland
corporation, and CONNING ASSET MANAGEMENT COMPANY ("Adviser"), a Missouri
corporation which is registered as an investment adviser under the Investment
Advisers Act of 1940, whereby the Adviser will act as investment adviser to
the Company as follows:
ARTICLE I
Advisory Services
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The Company is an open-end, diversified management investment company,
incorporated under the laws of the State of Maryland on November 15, 1985.
The Company hereby employs the Adviser to act as the investment adviser to
and manager of the Company, and, subject to the supervision of the Board of
Directors of the Company ("Board"), to manage the investment and reinvestment
of the assets of the funds currently offered for sale by the Company
("Funds") for the period and on the terms and conditions set forth in this
Agreement. The Adviser hereby accepts such employment and agrees during such
period, at its own expense, to render the services and to assume the
obligations herein set forth for the compensation provided for herein. The
Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized
herein, have no authority to act for or represent the Company in any way or
otherwise be deemed an agent of the Company. The Adviser shall, for purposes
of this Agreement, have and exercise full investment discretion and authority
to act as agent for the Company in buying, selling or otherwise disposing or
managing the Company's investments, subject to the supervision of the Board.
A. Duties of Adviser. In carrying out its obligations to manage the
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investment and reinvestment of the assets of the Company, the Adviser shall,
as appropriate and consistent with the limitations set forth in Section C
hereof:
(a) perform research and obtain and evaluate pertinent
economic, statistical, and financial data relevant to the investment
policies of each Fund of the Company as set forth in the prospectus
for the Company, as amended from time to time;
(b) consult with the Board and furnish to the Board
recommendations with respect to an overall investment strategy for
each Fund of the Company for approval, modification, or rejection by
the Board;
(c) seek out specific investment opportunities and take such
steps as are necessary to implement any overall investment strategies
approved by the Board, including making and carrying out day-to-day
decisions to acquire or dispose of permissible investments, management
of investments and any other property of the Company, and providing or
obtaining such services as may be necessary in managing, acquiring or
disposing of investments;
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(d) regularly report to the Board with respect to the
implementation of any approved overall investment strategy and any
other activities in connection with management of the assets of the
Company; and
(e) furnish to regulatory authorities having jurisdiction such
information as may be requested in order for such authorities to
ascertain that variable insurance operations are being conducted in
accordance with applicable laws and regulations.
B. Employment of Sub-Adviser(s). The Adviser shall have the
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authority to employ, at its expense, one or more sub-advisers. Where
applicable, reference herein to the Adviser shall include any sub-advisers
employed by the Adviser. Any agreement between the Adviser and any
sub-adviser shall be subject to the terms for approval, renewal, termination
and amendment as provided herein with respect to the Adviser, and such
sub-adviser shall at all times be subject to the direction of the Adviser and
the Board, and any duly constituted committee thereof, or any officer of the
Company acting pursuant to like authority.
C. Limitations on Advisory Services. The Adviser shall perform the
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services under this Agreement subject to the supervision and review of the
Board and in a manner consistent with the investment objectives, policies,
and restrictions of each Fund of the Company as stated in its Registration
Statement, as amended from time to time, filed with the Securities and
Exchange Commission, its Articles of Incorporation and By-Laws, as amended
from time to time, the provisions of the Investment Company Act of 1940, as
amended (the "Investment Company Act") and the applicable requirements of the
Internal Revenue Code of 1986, as amended.
The Company has furnished or will furnish the Adviser with copies of
the Company's Prospectus, Articles of Incorporation, and By-Laws as currently
in effect and agrees during the continuance of the Agreement to furnish the
Adviser with copies of any amendments or supplements thereto before or at the
time the amendments or supplements become effective. The Adviser will be
entitled to rely on all documents furnished by the Company.
ARTICLE II
Compensation of the Adviser
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A. Investment Advisory Fee. As compensation for its services to the
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Company, the Adviser shall receive monthly compensation based on an annual
percentage of the average daily value of the net assets of the Funds of the
Company as shown below:
S&P 500 Index Fund .25 Percent
Money Market Fund .125 Percent
Bond Index Fund .25 Percent
Asset Allocation Fund .50 Percent
Small-Cap Equity Fund .25 Percent
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Managed Equity Fund Assets
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First $10 million .40%
Next $20 million .30%
Balance over $30 million .25%
International Index Fund Assets
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First $10 million .50%
Next $10 million .40%
Balance over $30 million .30%
Mid-Cap Equity Fund Assets
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First $10 million .55%
Next $10 million .45%
Balance over $30 million .40%
B. Allocation of Expenses. The Adviser shall be responsible for
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payment of all expenses it may incur in performing the services set forth in
Article I hereunder. Except for expenses specifically assumed by the Adviser
as stated above, the Company shall be responsible for all expenses associated
with the operations of the Company.
The Board shall determine the manner in which expenses are
allocated to the Funds of the Company, and the determination of the Board
shall be final and binding.
ARTICLE III
Fund Transactions and Brokerage
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The Adviser agrees to determine the securities to be purchased or sold
by each Fund of the Company, subject to the provisions of Article I, 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
Adviser, subject to the following limitations.
The Adviser is authorized to select the brokers or dealers that will
execute the purchases and sales of portfolio securities for each Fund of the
Company and will use its best efforts to obtain the most favorable price and
efficient execution of the Company's orders, taking into account all
appropriate factors, including: price; dealer spread or commission, if any;
size and difficulty of the transaction; the nature of the market for the
security; the reliability, financial condition and general execution and
operational capabilities of the broker-dealer; and the research, statistical,
and economic data furnished by the broker-dealer to the Company.
Subject to the above requirements, nothing shall prohibit the Adviser
from selecting brokers or
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dealers with which it or the Company are affiliated and from selecting
brokers or dealers by virtue of sales of insurance policies of General
American Life Insurance Company or its affiliates by such broker-dealers or
their affiliates.
ARTICLE IV
Activities of the Adviser
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The services of the Adviser to the Company under this Agreement are not
to be deemed exclusive and the Adviser will be free to render similar
services to others so long as its services under this Agreement are not
impaired. It is understood that directors, officers, employees and
shareholders of the Company are or may become interested in the Adviser, as
directors, officers, employees or shareholders or otherwise, and that
directors, officers, employees or shareholders of the Adviser are or may
become similarly interested in the Company.
It is agreed that the Adviser may use any supplemental investment
research obtained for the benefit of the Company in providing investment
advice to its other investment advisory accounts. The Adviser or its
subsidiaries may use such information in managing their own accounts.
Conversely, such supplemental information obtained by the placement of
business for the Adviser or other entities advised by the Adviser will be
considered by and may be useful to the Adviser in carrying out its
obligations to the Company.
Securities held by a Fund may also be held by separate investment
accounts or other investment companies for which the Adviser may act as an
adviser or by the Adviser or its affiliates. Because of different investment
objectives or other factors, a particular security may be bought by the
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
Company or other entities for which the Adviser or its affiliates act as
investment adviser or for their advisory clients arise for consideration at
or about the same time, the Company agrees that the 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 Adviser during the same
period may increase the demand for securities being purchased or the supply
of securities being sold, the Company recognizes that there may be an adverse
effect on price.
It is agreed that, on occasions when the Adviser deems the purchase or
sale of a security to be in the best interests of the Company 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 the Company with those to be sold or purchased
for other accounts or companies in order to obtain favorable execution and
lower 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 Adviser in the manner it considers to be most equitable and
consistent with its fiduciary obligations to the Company and to such other
accounts or companies. The Company recognizes that in some cases this
procedure may adversely affect the size of the position obtainable for a Fund
of the Company.
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ARTICLE V
Effectiveness of the Agreement
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This Agreement shall not become effective unless and until it is
approved by the Company's Board (including a majority of directors who are
not parties to this Agreement or interested persons of any such party to this
Agreement), and by the Company's shareholders, and this Agreement shall come
into full force and effect on the date on which it is so approved, provided
that it shall not become effective as to any subsequently created Fund until
it has been approved by the Board specifically for such Fund, and that
implementation of any changes from prior Agreements may be delayed until the
start of the next month after a change is approved by the shareholders.
ARTICLE VI
Term of the Agreement
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As to each Fund of the Company, this Agreement shall continue in effect
from year to year so long as its continuance is approved annually by a
majority of the votes cast by those persons having voting rights in respect
of the Fund or by a vote by a majority of the members of the Board, but in
either event by the vote of a majority of the Board who are not "interested
persons" (as defined in the Investment Company Act) of any party to this
Agreement, cast in person at a meeting called for the purpose of voting such
approval.
As to each Fund of the Company, this Agreement:
(1) may be terminated without the payment of any penalty upon 60
days' written notice to the Adviser either by the Board or by a majority vote
of those persons having voting rights in respect of the affected Fund(s) of
the Company:
(2) shall automatically terminate if it is assigned (within the
meaning of the Investment Company Act) by the Adviser;
(3) may be terminated by the Adviser without payment of any penalty
upon 60 days' written notice to the Secretary of the Board of the Company;
and
(4) may be amended, changed, waived, discharged or terminated only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. An amendment of this
Agreement shall not be effective until approved by (a) vote of the holders of
a majority of the outstanding voting securities of the Fund or Funds
affected; and (b) a majority of those directors of the Company 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.
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ARTICLE VII
Recordkeeping
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The Adviser agrees to preserve for the period prescribed by the rules
and regulations of the Securities and Exchange Commission all records the
Adviser maintains for the Company as are required to be maintained pursuant
to said rules. The Adviser agrees that all such records shall be the
property of the Company and shall be made available, within five (5) business
days of the request, to the Company's accountants or auditors during regular
business hours at the Adviser's offices upon such prior written notice. In
the event of termination for any reason, all such records shall be returned
promptly to the Company, free from any claim or retention of rights by the
Adviser. In addition, the Adviser will provide any materials, reasonably
related to the investment advisory services provided hereunder, as may be
reasonably requested in writing by the directors or officers of the Company
or as may be required by any governmental agency having jurisdiction.
Adviser will keep any information obtained in the course of performing under
this Agreement in confidence, and will not use such information for its own
benefit nor disclose it except as authorized by Company or as required by
regulatory authorities having jurisdiction.
ARTICLE VIII
Liability of the Adviser
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In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties on the part of the Adviser (or
its 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), neither the Adviser nor any of its officers,
directors, employees or agents shall be subject to liability to the Company
or to any shareholder or to any other person with a beneficial interest in
the Company for any act or omission in the course of, or connected with,
rendering advisory services hereunder, including without limitation any error
or judgment or mistake of law or for any loss suffered by the Company or any
shareholder or other person in connection with the matters to which this
Agreement relates, except to the extent specified in Section 36(b) of the
Investment Company Act concerning loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services. The
provisions of this Article VIII shall not apply to services other than those
relating solely to the provision of investment advice rendered by the Adviser
pursuant to this Agreement.
ARTICLE IX
Governing Law
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While this Agreement is intended by the parties to be governed by
Missouri law as to matters of state law, this Investment Advisory Agreement
is also subject to the provisions of the Investment Company Act, 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 Company
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and the holders of voting shares of any class of the Company's Capital Stock,
the term "majority of the outstanding voting shares" means the lesser of (i)
67% or more of the voting shares represented at a meeting at which the
holders of more than 50% of the outstanding voting shares are represented or
(ii) more than 50% of the outstanding voting shares.
IN WITNESS WHEREOF, the parties have caused this Investment Advisory
Agreement to be signed by their respective officials duly authorized, as of
the day and year first above written.
Attest: GENERAL AMERICAN CAPITAL COMPANY
/s/ Xxxxxxx X. XxXxxxxx By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. XxXxxxxx, Secretary Xxxxxxx X. Xxxxx, President
CONNING ASSET MANAGEMENT
Attest: COMPANY
/s/ Xxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxxxx, Secretary Xxxxxxx X. Xxxxxxxxxx, Chief Executive
Officer and Chief Investment Officer
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