EXHIBIT d(5)(17)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT made this 7th day of November, 2005, by and between THE VARIABLE
ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and U.S.
BANCORP ASSET MANAGEMENT, INC., hereinafter referred to as the "SUB-ADVISER."
VALIC and the SUB-ADVISER recognize the following:
(a) VALIC 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, as amended ("Advisers Act").
(b) VALIC is engaged as the investment adviser of VALIC Company II ("XX
XX") pursuant to an Investment Advisory Agreement between VALIC and
XX XX, a Delaware business trust. XX XX is a series type of
investment company issuing separate classes (or series) of shares
and is registered as an open-end, management investment company
under the Investment Company Act of 1940, as amended ("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) XX XX currently consists of fifteen portfolios ("Funds"):
Aggressive Growth Lifestyle Fund
Capital Appreciation Fund
Conservative Growth Lifestyle Fund
Core Bond Fund
High Yield Bond Fund
International Small Cap Equity Fund
Large Cap Value Fund
Mid Cap Growth Fund
Mid Cap Value Fund
Moderate Growth Lifestyle Fund
Money Market II Fund
Small Cap Growth Fund
Small Cap Value Fund
Socially Responsible Fund
Strategic Bond Fund
In accordance with VC II's Agreement and Declaration of Trust (the
"Declaration"), new Funds may be added to XX XX upon approval of VC
II's Board of Trustees without the approval of Fund shareholders.
This Agreement will apply only to Funds set forth on the attached
Schedule A, and any other Funds as may be added or deleted by
amendment to the attached Schedule A ("Covered Fund").
(d) The SUB-ADVISER is engaged principally in the business of rendering
investment advisory services and is registered as an investment
adviser under the Advisers Act.
(e) VALIC desires to enter into an Investment Sub-Advisory Agreement
with the SUB-ADVISER for all or a portion of the assets of the
Covered Fund(s) which VALIC determines from time to time to assign
to the SUB-ADVISER, as described more specifically in Schedule A, as
amended from time to time.
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VALIC and the SUB-ADVISER AGREE AS FOLLOWS:
1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISER
The SUB-ADVISER, subject to the control, direction, and supervision of
VALIC and VC II's Board of Trustees and in conformity with the 1940 Act,
all applicable laws and regulations thereunder, all other applicable
federal and state laws and regulations, including section 817(h) of the
Internal Revenue Code of 1986, as amended (the "Code"), VC II's Agreement
and Declaration of Trust, registration statements, prospectus and stated
investment objectives, policies and restrictions and any applicable
procedures adopted by VC II's Board of Trustees shall:
(a) manage the investment and reinvestment of the assets of the
Covered Fund(s) 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 orders for the purchase and
sale of portfolio investments (including futures contracts and
options thereon) for each Covered Fund's account with brokers
or dealers (including futures commission merchants) selected
by the SUB-ADVISER, or arrange for any other entity to provide
a trading desk and to place orders with brokers and dealers
(including futures commission merchants) selected by the
SUB-ADVISER, subject to the SUB-ADVISER's control, direction,
and supervision, which brokers or dealers may include brokers
or dealers (including futures commission merchants) affiliated
with the SUB-ADVISER, subject to applicable law.
In performing the services described in paragraph (b) above, the
SUB-ADVISER shall use its best efforts to obtain best execution for the
Covered Fund(s). Subject to approval by VC II's Board of Trustees of
appropriate policies and procedures, the SUB-ADVISER may cause the Covered
Fund(s) 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 products or services, including statistical data, to the
SUB-ADVISER. Furthermore, on occasions when the SUB-ADVISER deems the
purchase or sale of a security to be in the best interest of one or more
of the Covered Fund(s) as well as other clients of the SUB-ADVISER, it may
allocate such transactions in the manner it considers to be the most
equitable and consistent with its fiduciary obligation to the Covered
Fund(s) and to such other clients. The SUB-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 SUB-ADVISER shall maintain records adequately demonstrating compliance
with its obligations under this Agreement and report periodically to VALIC
and VC II's Board of Trustees regarding the performance of services under
this Agreement. The SUB-ADVISER will make available to VALIC and XX XX
promptly upon their request all of the Covered Fund(s) investment records
and ledgers to assist VALIC and XX XX in compliance with respect to each
Covered Fund's securities transactions as required by the 1940 Act and the
Advisers Act, as well as other applicable laws. The SUB-ADVISER will
furnish VC II's Board of Trustees such periodic and special reports as
VALIC and VC II's Board of Trustees may reasonably request. The
SUB-ADVISER will furnish to regulatory authorities any information or
reports in connection with such services which may be requested in order
to ascertain whether the operations of the Covered Fund(s) are being
conducted in a manner consistent with applicable laws and regulations. The
SUB-ADVISER will not disclose or use any records or information belonging
to VALIC or XX XX obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized in this Agreement, and will keep
confidential any information obtained pursuant to this service
relationship, and disclose such information only if VALIC or the Board of
Trustees of XX XX has authorized such disclosure, or if such information
is or hereafter becomes ascertainable from public or published information
or trade sources, or if such disclosure is expressly required or requested
by applicable federal or state authorities.
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VALIC will not disclose or use any records or information belonging to the
SUB-ADVISER obtained pursuant to this Agreement in any manner whatsoever
except as expressly authorized in this Agreement, and will keep
confidential any information obtained pursuant to this service
relationship, and disclose such information only if the SUB-ADVISER has
authorized such disclosure, or if such information is or hereafter becomes
ascertainable from public or published information or trade sources, or if
such disclosure is expressly required or requested by applicable federal
or state authorities.
Should VALIC at any time make any definite determination as to investment
policy and notify the SUB-ADVISER of such determination, the SUB-ADVISER
shall be bound by such determination for the period, if any, specified in
such notice or until similarly notified that such determination has been
revoked.
The SUB-ADVISER will not hold money or investments on behalf of XX XX. The
money and investments will be held by the Custodian of XX XX. The
SUB-ADVISER will arrange for the transmission to the Custodian for XX XX,
on a daily basis, such confirmation, trade tickets and other documents as
may be necessary to enable the Custodian to perform its administrative
responsibilities with respect to the Covered Fund(s).
The SUB-ADVISER shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise provided or authorized,
have no authority to act for or represent VALIC or XX XX other than in
furtherance of the SUB-ADVISER's duties and responsibilities as set forth
in this Agreement.
Except as otherwise agreed, or as otherwise provided herein, the
SUB-ADVISER shall bear the expense of discharging its responsibilities
hereunder and VALIC shall pay, or arrange for others to pay, all VALIC's
expenses, except that VALIC shall in all events pay the compensation
described in Section 2 of this Agreement.
The SUB-ADVISER is hereby prohibited from consulting with any other
sub-adviser of the Covered Fund(s) (or a portion thereof) or any other
sub-adviser to a fund under common control with the Covered Fund(s) (or a
portion thereof) concerning securities transactions of the Covered Fund(s)
(or a portion thereof) in securities or other assets.
2. COMPENSATION OF THE SUB-ADVISER
VALIC shall pay to the SUB-ADVISER, as compensation for the services
rendered and expenses paid by the SUB-ADVISER, a monthly fee or fees based
on each Covered Fund's average monthly net asset value computed for each
Covered Fund as provided for herein and in the fee schedule attached
hereto as Schedule A. Schedule A may be amended from time to time, by
written agreement executed by both Parties, provided that amendments are
made in conformity with applicable laws and regulations and the Agreement
and Declaration of Trust of XX XX. Any change in Schedule A pertaining to
any new or existing 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 VC II's Agreement and Declaration of Trust, for each
business day during a given calendar month. VALIC shall pay this fee for
each calendar month as soon as practicable after the end of that month,
but in any event no later than thirty (30) days following the end of the
month.
If the SUB-ADVISER serves for less than a whole month, the foregoing
compensation shall be prorated.
The payment of advisory fees related to the services of the SUB-ADVISER
under this Agreement shall be the sole responsibility of VALIC and shall
not be the responsibility of XX XX.
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3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES
The SUB-ADVISER, and any person controlled by or under common control with
the SUB-ADVISER, shall remain free to provide similar investment advisory
services to other persons or entities or engage in any other business or
activity which does not impair the services which the SUB-ADVISER renders
to the Covered Fund(s).
Except as otherwise required by the 1940 Act, any of the shareholders,
Trustees, officers and employees of VALIC may be a shareholder, director,
officer or employee of, or be otherwise interested in, the SUB-ADVISER,
and in any person controlling, controlled by or under common control with
the SUB-ADVISER; and the SUB-ADVISER, and any person controlling,
controlled by or under common control with the SUB-ADVISER, may have an
interest in VALIC.
The SUB-ADVISER shall not be liable to VALIC, XX XX, or to any shareholder
in XX XX, and VALIC shall indemnify the SUB-ADVISER, for any act or
omission in rendering services under this Agreement, or for any losses
sustained in connection with the matters to which this agreement relates,
so long as there has been no willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties on the part of
the SUB-ADVISER.
4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC
The SUB-ADVISER represents, warrants, and agrees as follows:
(a) The SUB-ADVISER (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as
this Agreement remains in effect: (ii) is not prohibited by the 1940
Act or the Advisers Act from performing the services contemplated by
this Agreement; (iii) has met, and will continue to meet for so long
as this Agreement remains in effect, any applicable federal or state
requirements, or the applicable requirements of any regulatory or
industry self-regulatory agency, necessary to be met in order to
perform the services contemplated by this Agreement, (iv) has the
authority to enter into and perform the services contemplated by
this Agreement, and (v) will immediately notify VALIC of the
occurrence of any event that would disqualify the SUB-ADVISER from
serving as an investment adviser of an investment company pursuant
to Section 9(a) of the 1940 Act or otherwise.
(b) The SUB-ADVISER has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and if it has not
already done so, will provide VALIC and XX XX with a copy of such
code of ethics together with evidence of its adoption.
(c) The SUB-ADVISER has provided VALIC and XX XX with a copy of its Form
ADV Part II and will promptly after making any material amendment to
its Form ADV Part II, furnish a copy of such amendment to VALIC.
(d) VALIC shall forward to XX XX a copy of any amendment to the
SUB-ADVISER's Form ADV Part II that is provided to VALIC by the
SUB-ADVISER.
VALIC represents, warrants, and agrees as follows:
VALIC (i) is registered as an investment adviser under the Advisers
Act and will continue to be so registered for so long as this
Agreement remains in effect, (ii) is not prohibited by the 1940 Act
or the Advisers Act from performing the services contemplated by
this Agreement, (iii) has met, and will continue to meet for so long
as this Agreement remains in effect, any applicable federal or state
requirements, or the applicable requirements of any regulatory or
industry self-regulatory agency,
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necessary to be met in order to perform the services contemplated by
this Agreement, (iv) has the authority to enter into and perform the
services contemplated by this Agreement, and (v) will immediately
notify the SUB-ADVISER of the occurrence of any event that would
disqualify VALIC from serving as an investment adviser of an
investment company pursuant to Section 9(a) of the 1940 Act or
otherwise.
5. TERM OF AGREEMENT
This Agreement shall become effective as to the Fund(s) set forth on
Schedule A 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. Unless sooner terminated as provided herein, this Agreement
shall continue in effect for two years from its effective date.
Thereafter, this Agreement shall continue in effect, but with respect to
any Covered Fund, subject to the termination provisions and all other
terms and conditions hereof, only so long as such continuance is approved
at least annually by the vote of a majority of VC II's Trustees 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 VC II's Board of Trustees or a
majority of that Fund's outstanding voting securities.
This Agreement shall automatically terminate in the event of its
assignment as that term is defined in the 1940 Act, or in the event of the
termination of the Investment Advisory Agreement between VALIC and XX XX
as it relates to any Covered Fund(s); provided that the termination of an
Interim Investment Advisory Agreement between XX XX and VALIC, pursuant to
Rule 15a-4 under the 1940 Act upon shareholder approval of a definitive
Investment Advisory Agreement with respect to a Covered Fund, shall not
result in the termination of this Agreement as to such Covered Fund. The
Agreement may be terminated as to any Covered Fund at any time, without
the payment of any penalty, by vote of VC II's Board of Trustees or by
vote of a majority of that Covered Fund's outstanding voting securities on
at least 60 days' prior written notice to the SUB-ADVISER, or upon such
shorter notice as may be mutually agreed upon by the parties. This
Agreement may also be terminated by VALIC: (i) on at least 60 days' prior
written notice to the SUB-ADVISER, or upon such shorter notice as may be
mutually agreed upon by the parties, without the payment of any penalty;
or (ii) if the SUB-ADVISER becomes unable to discharge its duties and
obligations under this Agreement. The SUB-ADVISER may terminate this
Agreement at any time, or preclude its renewal without the payment of any
penalty, on at least 60 days' prior written notice to VALIC, or upon such
shorter notice as may be mutually agreed upon by the parties.
6. OTHER MATTERS
The SUB-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 no such person
serves or acts as an investment adviser separate from the SUB-ADVISER so
as to require a new written contract pursuant to the 1940 Act. The
compensation of any such persons will be paid by the SUB-ADVISER, and no
obligation will be incurred by, or on behalf of, VALIC or XX XX with
respect to them.
The SUB-ADVISER agrees that all books and records which it maintains for
XX XX are VC II's property. The SUB-ADVISER also agrees upon request of
VALIC or XX XX, to promptly surrender the books and records in accordance
with the 1940 Act and rules thereunder. The SUB-ADVISER further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records required to be maintained by subparagraphs (b) (5), (6), (7), (9),
(10), (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
VALIC has herewith furnished the SUB-ADVISER copies of VC II's Prospectus,
Statement of Additional Information, Agreement and Declaration of Trust as
currently in effect and agrees during the continuance of this Agreement to
furnish the SUB-ADVISER copies of any amendments or supplements thereto
before or at the time the amendments or supplements become effective.
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The SUB-ADVISER is authorized to honor and act on any notice, instruction
or confirmation given by VALIC on behalf of XX XX in writing signed or
sent by any of the persons whose names, addresses and specimen signatures
will be provided by VALIC from time to time. The SUB-ADVISER shall not be
liable for so acting in good faith upon such instructions, confirmation or
authority, notwithstanding that it shall subsequently be shown that the
same was not given or signed or sent by an authorized person.
VALIC agrees to furnish the SUB-ADVISER at its principal office prior to
use thereof, copies of all prospectuses, proxy statements, reports to
shareholders, sales literature, or other material prepared for
distribution to interest holders of XX XX or the public that refer in any
way to the SUB-ADVISER, and not to use such material if the SUB-ADVISER
reasonably objects in writing within ten (10) business days (or such other
time as may be mutually agreed) after receipt thereof. In the event of
termination of this agreement, VALIC will continue to furnish to the
SUB-ADVISER copies of any of the above-mentioned materials that refer in
any way to the SUB-ADVISER. VALIC shall furnish or otherwise make
available to the SUB-ADVISER such other information relating to the
business affairs of VALIC and XX XX as the SUB-ADVISER at any time, or
from time to time, may reasonably request in order to discharge
obligations hereunder. The provisions of this paragraph shall survive the
termination of this Agreement.
VALIC agrees to indemnify the SUB-ADVISER for losses and claims which
arise (i) as a result of a failure by VALIC to provide the services or
furnish materials required under the terms of this Agreement, or (ii) as
the result of any untrue statement of a material fact or any omission to
state a material fact required to be stated or necessary to make the
statements, in light of the circumstances under which they were made, not
misleading in any registration statements, proxy materials, reports,
advertisements, sales literature, or other materials pertaining to XX XX,
except insofar as any such statement or omission was made in reasonable
reliance on information provided to VALIC by the SUB-ADVISER to the extent
such statement or omission accurately reflects the information provided to
VALIC by the SUB-ADVISER upon which VALIC relied in making the relevant
statement or omission. The provisions of this paragraph shall survive the
termination of this Agreement.
The SUB-ADVISER agrees to indemnify VALIC for losses and claims which
arise (i) as a result of a failure by SUB-ADVISER to provide the services
or furnish the materials required under the terms of this Agreement, or
(ii) as the result of any untrue statement of a material fact or any
omission to state a material fact required to be stated or necessary to
make the statements, in light of the circumstances under which they were
made, not misleading in any registration statements, proxy materials,
reports, advertisements, sales literature, or other materials pertaining
to XX XX only to the extent any such statement or omission was made in
reasonable reliance on information provided to VALIC by the SUB-ADVISER
and only to the extent such statement or omission accurately reflects the
information provided to VALIC by the SUB-ADVISER upon which VALIC relied
in making the relevant statement or omission.
7. APPLICABILITY OF FEDERAL SECURITIES LAWS
This Agreement shall be interpreted in accordance with the laws of the
State of Texas and applicable federal securities laws and regulations,
including definitions therein and such exemptions as may be granted to
VALIC or the SUB-ADVISER 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.
8. AMENDMENT AND WAIVER
Provisions of this Agreement may be amended, 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. The Agreement may be amended by mutual written consent of the
parties, subject to the requirements of the 1940 Act and the rules and
regulations promulgated and orders granted thereunder.
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9. NOTICES
All notices hereunder shall be given in writing (and shall be deemed to
have been duly given upon receipt) by delivery in person, by facsimile, by
registered or certified mail or by overnight delivery (postage prepaid,
return receipt requested) to VALIC and to SUB-ADVISER at the address of
each set forth below:
If to VALIC:
Attn: Xxxx X. Xxxxxx, Esq.
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
If to SUB-ADVISER:
Attn: General Counsel
000 Xxxxxxxx Xxxx
XX-XX-X00X
Xxxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
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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.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
ATTEST:
/s/ Xxxx Xxxxxxx
--------------------
U.S. BANCORP ASSET MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxx X. Greenwal
Title: Senior Managing Director - Distribution
ATTEST:
/s/ Xxxxx Xxxxx
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SCHEDULE A
(Effective November 7, 2005)
SUB-ADVISER shall manage a portion of the Mid Cap Value Fund assets and shall be
compensated as follows on that portion:
Covered Fund Fee
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Mid Cap Value Fund 0.50% of the first $100 million;
0.475% of the next $150 million;
0.45% of the next $250 million;
0.425% of the next $250 million; and
0.40% on the excess over $750 million.
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