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EXHIBIT d(8)
INTERIM INVESTMENT ADVISORY AGREEMENT
This AGREEMENT made as of this 29th day of August, 2001, by and between THE
VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as the
"ADVISER," and NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I, hereinafter
referred to as "NAFV I."
The ADVISER and NAFV I 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) NAFV I is an investment company organized under the
general corporation laws of Maryland, as a series type of
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 (the "1940
Act"). The 1940 Act prohibits any person from acting as an
investment adviser of a registered investment company except
pursuant to a written contract.
(c) NAFV I currently consists of twenty-one portfolios
("Funds"):
North American - AG Asset Allocation Fund
North American - AG Capital Conservation Fund
North American - AG Government Securities Fund
North American - AG Growth & Income Fund
North American - AG International Equities Fund
North American - AG International Government Bond
Fund
North American - AG Large Cap Growth Fund
North American - XX XxxXxx Index Fund
North American - AG 1 Money Market Fund
North American - AG Nasdaq-100(R) Index Fund
North American - AG Small Cap Index Fund
North American - AG Social Awareness Fund
North American - AG Stock Index Fund
North American - American Century Income & Growth
Fund
North American - American Century International
Growth Fund
North American Core Equity Fund
North American - Founders/X. Xxxx Price Small Cap
Fund
North American - Putnam Opportunities Fund
North American - X. Xxxx Price Blue Chip Growth Fund
North American - X. Xxxx Price Health Sciences Fund
North American - X. Xxxx Price Science & Technology
Fund
In accordance with NAFV I's Articles of Incorporation (the
"Articles") and Bylaws, new Funds may be added to NAFV I upon
approval of NAFV I's Board of Directors without approval of
NAFV I's shareholders. This Agreement will apply only to the
Fund(s) and any other Fund as may be added or deleted by
amendment to the attached Schedule A ("Covered Funds").
The ADVISER and NAFV I AGREE AS FOLLOWS:
1. SERVICES RENDERED AND EXPENSES PAID BY ADVISER
The ADVISER, subject to the control, direction, and supervision of NAFV
I's Board of Directors and in conformity with the 1940 Act, all
applicable laws and regulations thereunder, all other applicable
federal and state laws and regulations, including 817(b) of the
Internal Revenue Code of 1986, as amended (the "Code"),
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NAFV I's Articles, 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.
(c) furnish to the Covered Funds office space, facilities,
equipment and personnel adequate to provide the services
described above and pay the compensation to NAFV I'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 NAFV I'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
NAFV I'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 NAFV I 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 NAFV I include,
but are not limited to, (i) interest and taxes; (ii) brokerage
commissions and other expenses of purchasing and selling portfolio
investments; (iii) compensation of its 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 NAFV I 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 related to issuance of its shares against payment
therefor by, or on behalf of, the subscribers thereto; (ix) fees and
related expenses of registering and qualifying NAFV I 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 NAFV I; (xi) all other expenses incidental to holding
meetings of NAFV I'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 NAFV I's membership in trade associations
approved by the Board of Directors; and (xv) such non-recurring
expenses as may arise, including those associated with actions, suits,
or proceedings to which NAFV I is a party and the legal obligation
which NAFV I may have to indemnify its officers, Directors and
employees with respect thereto. NAFV I 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.
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2. COMPENSATION OF ADVISER
NAFV I 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
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 NAFV I.
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 NAFV I's Articles, for each business day during
a given calendar month. NAFV I 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.
During the term of this Agreement, the following conditions apply:
(a) The fee shall be held in an interest-bearing escrow
account with State Street Bank and Trust Company;
(b) If a majority of a Covered Fund's outstanding voting
securities approve a new investment advisory agreement (the
"New Agreement") with the ADVISER within 150 days after the
date hereof, the amount in the escrow account (including
interest earned thereon) with respect to such Covered Fund
shall be paid to the ADVISER; and
(c) If a majority of a Covered Fund's outstanding voting
securities do not approve a New Agreement with the ADVISER
within such 150-day period, the ADVISER shall be paid from the
escrow account, the lesser of an amount equal to
(i) any costs incurred in performing this Agreement
(plus interest earned on that amount in the escrow
account); or
(ii) the total amount in the escrow account (plus
interest earned thereon).
The Adviser's fees hereunder in respect of a Covered Fund shall be
reduced to the extent that any fees are paid by such Covered Fund
directly to its investment subadviser pursuant to an Interim Investment
Sub-Advisory Agreement of even date herewith.
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 1940 Act, any of the shareholders,
Directors, officers and employees of NAFV I 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,
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and any person controlling, controlled by or under common control with
the ADVISER, may have an interest in NAFV I.
The ADVISER shall not be liable to NAFV I, or to any shareholder in
NAFV I, 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.
The 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 the
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 the ADVISER, and no obligation will be incurred by, or on
behalf of, NAFV I with respect to them.
Notwithstanding any other provision of this Agreement, NAFV I 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-adviser and NAFV I, by the sub-adviser on notice to
the ADVISER and NAFV I, and by NAFV I'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 Covered Funds set forth
on Schedule A on the date hereof and will continue in effect as to a
Covered Fund until a New Agreement is approved by shareholders of such
Covered Fund or for 150 days, whichever is less.
This Agreement shall automatically terminate in the event of its
assignment. This Agreement may be terminated, without the payment of
any penalty, as to any Covered Fund at any time by NAFV I's Board of
Directors or by vote of a majority of that Covered Fund's outstanding
voting securities, on not more than ten calendar days' written notice
to the ADVISER, 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.
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 NAFV I by the
Securities and Exchange Commission (the "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.
6. MISCELLANEOUS PROVISIONS
For the purposes of this Agreement, the terms "affiliated person,"
"assignment," "interested person," and "majority of outstanding voting
securities" shall have their respective meanings defined in the 1940
Act and the Rules and Regulations thereunder, subject, however, to such
exemptions as may be granted to either the ADVISER or NAFV I by the
Commission, or such interpretive positions as may be taken by the
Commission or its staff, under the 1940 Act, and the term "brokerage
and research services" shall have the meaning given in the Securities
Exchange Act of 1934 and the Rules and Regulations thereunder.
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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.
NORTH AMERICAN FUNDS
VARIABLE PRODUCT SERIES I
By:
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Name:
Title:
ATTEST:
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Secretary
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By:
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Name:
Title:
ATTEST:
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Secretary
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NORTH AMERICAN FUNDS VARIABLE PRODUCT SERIES I
SCHEDULE A
to Investment Advisory Agreement
(Effective August 29, 2001)
Annual Fee computed at the following annual rate, based on average monthly net
assets value and payable monthly:
MidCap Index Fund 0.35% on the first $500 million;
0.25% on assets over $500 million
Stock Index Fund 0.35% on the first $500 million;
0.25% on assets over $500 million
Small Cap Index Fund 0.35% on the first $500 million;
0.25% on assets over $500 million
Science & Technology Fund 0.90%
Growth and Income Fund 0.75%
Core Equity Fund 0.80%
North American - Founders 1.00%
Large Cap Growth Fund
North American - American 0.77%
Century Income & Growth Fund
North American - Putnam 0.95%
Opportunities Fund
North American - Founders/ 0.90%
X. Xxxx Price Small Cap Fund
North American - American 1.00%
Century International Growth Fund
North American - AG 0.40%
Nasdaq-100 Index Fund
North American - X. Xxxx 0.80%
Price Blue Chip Growth Fund
AG Asset Allocation Fund 0.50%
Money Market Fund 0.50%
Capital Conservation Fund 0.50%
Government Securities Fund 0.50%
Social Awareness Fund 0.50%
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International Government 0.50%
Bond Fund
International Equities Fund 0.35% on the first $500 million
0.25% on assets over $500 million
North American - X. Xxxx 1.00%
Price Health Sciences Fund
