EXHIBIT (8)(k)
INVESTMENT SERVICES AGREEMENT
-----------------------------
THIS INVESTMENT SERVICES AGREEMENT ("Agreement"), dated and effective
as of November 28, 1995 between ANNUITY INVESTORS LIFE INSURANCE COMPANY, an
Ohio corporation ("Company"), and AMERICAN ANNUITY GROUP, INC., a Delaware
corporation ("American").
WHEREAS, Company seeks to obtain information and advice with respect to
the investment of its assets; and
WHEREAS, American, utilizing its own employees along with services
provided by its affiliate, American Money Management ("AMM"), is willing and
able to supply such investment services pursuant to the terms and conditions set
forth below;
NOW, THEREFORE, for the consideration herein stated, the parties agree
as follows:
1. INVESTMENT SERVICES.
--------------------
1 American shall furnish investment services to Company, which services
shall include the following:
.1 to counsel and advise Company in connection with the formulation
of investment programs and strategies designed to accomplish Company's
investment objectives; and
.2 to manage the investment of Company's portfolios of Invested
Assets (as later defined) in accordance with investment policies, objectives,
directions and guidelines established by Company, as set forth in Section below,
and, in connection therewith, to have full discretion and authority, without
prior consultation or prior approval, to buy, sell and otherwise trade in
stocks, bonds and other securities or assets and take such other actions which
American shall deem requisite, appropriate or advisable.
2 Custody and control of the securities and all other assets comprising
Company's investment portfolio shall at all times be subject to the direction
and control of Company, acting through its Board of Directors or an appropriate
committee thereof. All purchases and sales of securities shall be in the name of
Company, and all certificates or other instruments representing its investments
shall be held by Company or in accounts at depository institutions designated by
Company or in book form where appropriate. Such securities will be held in
accounts segregated from those of American or its affiliates.
3 American agrees that the investment services it furnishes will be in
accordance with the general, investment policies, objectives and guidelines
(collectively, "Guidelines") submitted by American to Company and approved by
the Board of Directors of Company or an appropriate committee of the Board of
Directors of Company.
4 The Company shall at all times keep American fully informed as to the
funds available, or to become available, for investment, and generally as to its
financial condition. The Company shall furnish American with copies of financial
statements and with other information with regard to its affairs, as American
may from time to time request.
5 Notwithstanding Section 1.1 above, American shall not (i) invest any
of the Invested Assets in securities of American or any of its affiliates or any
entity controlled by any of them, (ii) cause Company to purchase any securities
from, or sell any securities to, American or any of its affiliates or any entity
controlled by any of them or (iii) invest any of such Invested Assets in any
investment opportunity which was previously made available to and declined by
American, in each case without first obtaining the approval of the Board of
Directors of the Company or a appropriate Committee thereof.
6 For purposes of this Agreement, "Invested Assets" shall mean bonds,
stocks (common and preferred), short term investments and similar invested
assets carried on the Company's statutory convention statements on Schedules BA,
DA and D as admitted assets as permitted by applicable law.
2. PURCHASE AND SALE OF SECURITIES.
--------------------------------
American shall place all orders for the purchase and sale of portfolio
securities for Company accounts with brokers or dealers selected by American and
shall seek to execute portfolio transactions on terms which are advantageous to
Company in selecting brokers or dealers to execute transactions. American shall
not be obligated to solicit competitive bids or seek the lowest available
commission cost.
3. OTHER SERVICES; REPORTS AND RECORDS.
------------------------------------
1 American shall maintain adequate records relating to the furnishing
of investment services under this Agreement, including those with respect to the
acquisition and disposition of securities, and shall provide Company with all
reports and documentation necessary for proper accounting and regulatory
reporting. American shall provide to Company such oral or written reports as to
its services provided under this Agreement as Company shall reasonably require.
2 All records maintained pursuant to this Agreement shall be deemed the
property of Company and shall be subject to examination by Company and by
persons authorized by it, or by governmental authorities, at all times upon
reasonable notice. Except as expressly authorized in this Agreement or directed
- 2 -
by Company in writing, American shall keep confidential such records and other
information obtained by reason of this Agreement. Upon termination of this
Agreement, American shall promptly return all such records to Company.
4. INVESTMENT FEES; EXPENSES.
--------------------------
1 In full compensation and consideration for the performance of its
obligations hereunder, Company shall pay to American an annual fee equal to .15%
of the statutory carrying value of Invested Assets. The fee paid by the Company
shall not in any case exceed the actual cost of the services provided by
American. In addition, American shall be entitled to reimbursement for the
reasonable fees and expenses of its outside legal counsel for necessary legal
services rendered to American in connection with the performance of its
obligations hereunder. All such fees and expenses shall be paid by Company.
Payments due hereunder shall be computed by American and paid by Company on a
quarterly basis measured as of the end of the preceding calendar quarter based
on the statutory carrying value of Invested Assets at such date. The quarterly
portion of the fee shall be billed within 30 days after the end of each calendar
quarter or portion thereof in which services are rendered under this Agreement
and paid within 10 days after receipt of the ▇▇▇▇.
2 American shall furnish at its own expense necessary executive and
other personnel for providing investment services to Company hereunder,
including personnel to perform clerical, bookkeeping, accounting and other
office functions. Company shall be responsible for the expenses of (a) brokerage
commissions, issue and transfer taxes and other costs in connection with
securities transactions to which Company is a party, including any portion of
such commissions attributable to research and brokerage services, (b) taxes
payable by Company to federal, state and other governmental agencies, and (c)
custodial fees and expenses.
5. NON-EXCLUSIVITY OF SERVICES.
----------------------------
The services of American to be provided hereunder are not to be deemed
exclusive and American shall be free to provide similar services for its own
account and the accounts of other affiliates, provided that such services do not
materially interfere with services to be rendered hereunder.
6. SUBCONTRACTING.
---------------
Company acknowledges that American intends to subcontract with American
Money Management Corporation to provide a portion of the services to be rendered
hereunder. The arrangement with American Money Management Corporation to provide
those services shall not relieve American of any liability or responsibility
hereunder and any cost or expense of obtaining such services shall be the sole
responsibility of American.
- 3 -
7. LIABILITY; INDEMNIFICATION.
---------------------------
1 Neither American nor any of its directors, officers or employees or
other persons affiliated with American shall have any liability hereunder for
any act, omission, misstatement or error in judgment in the course of, or in
connection with, providing investment advisory services under this Agreement, or
for any losses that may be sustained from such investment advisory services.
Company shall indemnify and hold harmless American and its directors, officers,
employees and other affiliated persons from and against any and all liability,
claims and damages arising from or in connection with providing services
hereunder; provided, however, that the foregoing shall not relieve American from
liability for negligence, gross negligence or willful misfeasance in providing
services under this Agreement.
2 As to all other services provided by American hereunder, neither
American nor any of its directors, officers or employees or other persons
affiliated with American shall have any liability hereunder for any act,
omission, misstatement or error in judgment in the course of, or in connection
with, providing such other services, or for any losses that may be sustained
from such other services, and Company shall indemnify and hold harmless American
and its directors, officers, employees and other affiliated persons from and
against any and all liability, claims and damages arising from or in connection
with providing such other services hereunder; provided, however, that the
foregoing shall not relieve American from liability for negligence, gross
negligence or willful misfeasance in providing such other services.
8. TERMINATION; RENEGOTIATION.
---------------------------
1 This Agreement shall remain in effect until terminated by any party
thereto at any time upon ninety (90) days written notice to the other party's
normal business address. Upon termination of this Agreement, Company shall pay
pro rata any investment fees due for any portion of a calendar quarter within
ten (10) days following the date of termination.
2 This Agreement shall be subject to renegotiations upon the request of
either party at the end of each three (3) year period during which this
Agreement continues in effect. The party requesting renegotiation shall provide
written notice thereof to the other party's normal business address during the
thirty (30) day period preceding the end of any three (3) year period. If such
renegotiations result in an Agreement which is unsatisfactory to Company, it
shall be entitled to terminate this Agreement in accordance with the terms
hereof.
- 4 -
9. NOTICES.
--------
Notices or other writings given or sent under or pursuant to this
Agreement shall be in writing and be deemed to have been given or sent if
delivered to the party at its address listed below in person or by telex or
telecopy or within two (2) days of mailing if mailed postage prepaid to such
address. The addresses of the parties are:
Annuity Investors Life Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
with a copy to:
American Annuity Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Each party may change its address by giving notice as herein required.
10. SOLE INSTRUMENT.
----------------
This instrument constitutes the sole and only agreement of the parties
hereto relating to the subject matter hereof and correctly sets forth the
rights, duties, and obligations of each party to the other as of its date.
11. WAIVER OR MODIFICATION.
-----------------------
No waiver or modification of this Agreement shall be effective unless
reduced to a written document signed by the party to be charged.
12. GOVERNING LAW.
--------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio.
13. ASSIGNMENT.
-----------
No party to this Agreement shall have the right to sell, transfer,
delegate, or assign this Agreement or any of its rights or duties hereunder to
any person, firm or corporation at any time during the term hereof, and any
proposed assignee shall acquire no rights nor be able to assume any obligations
unless the written consent of the other party to this Agreement is given before
- 5 -
such assignment or delegation takes place. However, subject to this paragraph,
this Agreement binds and inures to the benefit of the parties, their successors
and assigns.
14. COMPLIANCE WITH APPLICABLE LAW. This Agreement shall be performed in
accordance with the requirements of the Securities Act of 1933, Securities
Exchange Act of 1934, Investment Company Act of 1940, Investment Advisors Act of
1940 and the applicable rules and regulations of the Securities and Exchange
Commission promulgated thereunder, to the extent that any of the foregoing are
applicable to the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
November 28, 1995, effective for all purposes as of such date for services
rendered subsequent to November 28, 1995.
ANNUITY INVESTORS LIFE INSURANCE
COMPANY
BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Senior Vice President
AMERICAN ANNUITY GROUP, INC.
BY: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Senior Vice President
- 6 -
