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EXHIBIT d.5(b)(11)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT made this 1st day of March, 2000, by and between THE
VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and
X. XXXX PRICE ASSOCIATES, 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 American
General Science & Technology Fund, pursuant to an Investment Advisory
Agreement dated October 7, 1998 between VALIC and American General
Series Portfolio Company 2 ("FUND"), an investment company organized
under the laws of Delaware as a business trust, as a series type of
investment company issuing separate classes (or series) of shares of
beneficial interest and is registered as a diversified, 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) The FUND currently consists of twenty-four portfolios
("Funds"): American General International Value Fund, American General
International Growth Fund, American General Large Cap Value Fund,
American General Large Cap Growth Fund, American General Mid Cap Value
Fund, American General Mid Cap Growth Fund, American General Small Cap
Value Fund, American General Small Cap Growth Fund, American General
Socially Responsible Fund, American General Science & Technology Fund,
American General Money Market Fund, American General Domestic Bond
Fund, American General Stock Index Fund, American General Mid Cap Index
Fund, American General Small Cap Index Fund, American General Balanced
Fund, American General Conservative Growth Lifestyle Fund, American
General Moderate Growth Lifestyle Fund, American General Growth
Lifestyle Fund, American General Core Bond Fund, American General
Strategic Bond Fund, American General High Yield Bond Fund, American
General Municipal Bond Fund and American General Municipal Money Market
Fund. In accordance with the FUND's Agreement and Declaration of Trust
(the "Declaration"), new Funds may be added to the FUND upon approval
of the FUND's Board of Trustees without approval of the FUND's
shareholders. This Agreement will apply only to the Fund(s) 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 Funds").
(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 Funds which VALIC determines from time to time to assign to
the SUB-ADVISER.
VALIC and the SUB-ADVISER agree as follows:
1. SERVICES RENDERED AND EXPENSES PAID BY THE SUB-ADVISERA
The SUB-ADVISER, subject to the control, direction, and supervision of
VALIC and the FUND's Board of Trustees and in material conformity with the 1940
Act, all applicable laws and regulations thereunder, all other applicable
federal and state securities and tax laws and regulations, including section
817(h) and Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"), the FUND's Declaration, Bylaws, registration statements, prospectus
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and stated investment objectives, policies and restrictions and any applicable
procedures adopted by the FUND's Board of Trustees and provided to the
SUB-ADVISER shall:
(a) manage the investment and reinvestment of the assets,
other than cash, 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 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.
The SUB-ADVISER will assist the Covered Fund and its agents in
determining whether prices obtained for valuation purposes accurately reflect
the prices on the SUB-ADVISER's portfolio records relating to the assets of the
Covered Fund for which the SUB-ADVISER has responsibility on a monthly basis
(unless otherwise agreed upon by the parties hereto) and at such other times as
VALIC shall reasonably request.
In performing the services described in paragraph (b) above, the
SUB-ADVISER shall use its best efforts to obtain for the Covered Funds the best
execution of portfolio transactions. Subject to approval by the FUND's Board of
Trustees of appropriate policies and procedures, the SUB-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 to the SUB-ADVISER. 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 in accordance with such authorization.
The SUB-ADVISER may aggregate sales and purchase orders of securities
held by the Covered Fund with similar orders being made simultaneously for other
accounts managed by the SUB-ADVISER or with accounts of the affiliates of the
SUB-ADVISER, if in the SUB-ADVISER's reasonable judgment such aggregation shall
result in an overall economic benefit to the Covered Fund considering the
advantageous selling or purchase price, brokerage commission and other expenses.
In accounting for such aggregated order price, commission and other expenses
shall be averaged on a per bond or share basis daily. VALIC acknowledges that
the determination of such economic benefit to the Covered Fund by the
SUB-ADVISER is subjective and represents the SUB-ADVISER's evaluation that the
Covered Fund is benefitted by relatively better purchase or sales prices, lower
commission expenses and beneficial timing of transactions or a combination of
these and other factors.
VALIC may direct the SUB-ADVISER to use a particular broker or dealer
for one or more trades if, in the sole opinion of VALIC, it is in the best
interest of the Covered Fund to do so. Any such direction shall be in writing
and in a form satisfactory to SUB-ADVISER.
VALIC authorizes and empowers the SUB-ADVISER to direct the Covered
Fund's Custodian to open and maintain brokerage accounts for securities and
other property, including financial and commodity futures and commodities and
options thereon (all such accounts hereinafter called "brokerage accounts") for
and in the name of the Covered Fund and to execute for the Covered Fund as its
agent and attorney-in-fact standard customer agreements with such broker or
brokers as the SUB-ADVISER shall select as provided above. With respect to
brokerage accounts for financial and commodity futures and commodities and
options thereon, the SUB-ADVISER shall select such brokers, as approved by
VALIC, prior to the establishment of such brokerage account. The SUB-ADVISER
may, using such of the securities and other property in the Covered Fund as the
SUB-ADVISER deems necessary or desirable, direct the Covered Fund's custodian to
deposit for the Covered Fund original and maintenance brokerage and margin
deposits and
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otherwise direct payments of cash, cash equivalents and securities and other
property into such brokerage accounts and to such brokers as the SUB-ADVISER
deems desirable or appropriate.
The SUB-ADVISER shall maintain records adequately demonstrating
compliance with its obligations under this Agreement and report periodically to
VALIC and the FUND's Board of Trustees regarding the performance of its services
under this Agreement. The SUB-ADVISER will make available to VALIC and the FUND
promptly upon their reasonable written request all of the Covered Funds'
investment records and ledgers to assist VALIC and the FUND 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 the FUND's Board of Trustees such periodic and special reports as VALIC
and the FUND'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 Funds are being conducted in a manner consistent with
applicable laws and regulations. The SUB-ADVISER will not disclose or use any
records or information obtained pursuant to this Agreement in any manner
whatsoever except as expressly authorized in this Agreement, and will keep
confidential any non-public information obtained directly as a result of this
service relationship, and the SUB-ADVISER shall disclose such non-public
information only if VALIC or the Board of Trustees of the FUND has authorized
such disclosure, or if such information is or hereafter otherwise is known by
the SUB-ADVISER or has been disclosed, directly or indirectly, by VALIC or the
Fund to others becomes ascertainable from public or published information or
trade sources, or if such disclosure is expressly required or requested by
applicable federal or state regulatory authorities, or to the extent such
disclosure is reasonably required by auditors or attorneys of the SUB-ADVISER in
connection with the performance of their professional services. Notwithstanding
the foregoing, the SUB-ADVISER may disclose the total return earned by the
Covered Funds and may include such total return in the calculation of composite
performance information without prior approval by VALIC or the Board of Trustees
of the FUND.
Should VALIC at any time make any definite determination as to any
investment policy and notify the SUB-ADVISER in writing 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, provided such determination will permit SUB-ADVISER to comply with
the first paragraph of this Section.
The SUB-ADVISER will not hold money or investments on behalf of the
FUND. The money and investments will be held by the Custodian of the FUND. The
SUB-ADVISER will arrange for the transmission to the Custodian for the FUND, on
a daily basis, such confirmation, trade tickets and other documents as may be
necessary to enable it to perform its administrative responsibilities with
respect to the Covered Funds. The SUB-ADVISER further shall have the authority
to instruct the Custodian of the FUND (i) to pay cash for securities and other
property delivered, or to be delivered, to the Custodian for the FUND (ii) to
deliver securities and other property against payment for the FUND, and (iii) to
transfer assets and funds to such brokerage accounts as the SUB-ADVISER may
designate, all consistent with the powers, authorities and limitations set forth
herein. The SUB-ADVISER shall not have the authority to cause the Custodian to
deliver securities and other property except as expressly provided for in this
Agreement.
The SUB-ADVISER will not perform cash management services for the
Covered Funds. The cash management function will be performed by VALIC.
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 or represent VALIC or the Fund 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
the Agreement.
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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 daily 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, provided that amendments are made
in conformity with applicable laws and regulations and the Declaration and
Bylaws of the FUND. 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 daily 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 Declaration, 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 ten (10)
business 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 the FUND.
3. SCOPE OF THE SUB-ADVISER'S ACTIVITIES
VALIC understands that the SUB-ADVISER and its affiliates now act, will
continue to act and may act in the future as investment adviser to fiduciary and
other managed accounts and as investment adviser to other investment companies,
and VALIC has no objection to the SUB-ADVISER so acting, provided that whenever
a Covered Fund and one or more other accounts or investment companies advised by
the SUB-ADVISER have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a methodology believed
to be equitable to each entity. The SUB-ADVISER similarly agrees to allocate
opportunities to sell securities. VALIC recognizes that, in some cases, this
procedure may limit the size of the position that may be acquired or sold for a
Covered Fund. In addition, VALIC understands that the persons employed by the
SUB-ADVISER to assist in the performance of the SUB-ADVISER's duties hereunder
will not devote their full time to such service and nothing contained herein
shall be deemed to limit or restrict the right of the SUB-ADVISER or any
affiliate of the SUB-ADVISER to engage in and devote time and attention to other
business or to render services of whatever kind or nature.
Except as otherwise required by the 1940 Act, any of the shareholders,
directors, 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, the FUND, or to any
shareholder in the Covered Fund, 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 in
performing its duties under this Agreement.
VALIC shall perform quarterly and annual tax compliance tests and
promptly furnish reports of such tests to the SUB-ADVISER after each quarter end
to ensure that the Covered Fund is in compliance with Subchapter M of the Code
and Section 817(h) of the Code. VALIC shall apprise the SUB-ADVISER promptly
after each quarter end of any potential non-compliance with the diversification
requirements in such Code provisions. If so advised, the SUB-ADVISER shall take
prompt action so that the Covered Fund complies with such Code diversification
provisions, as directed by VALIC.
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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 the FUND with a copy of such code of ethics together
with evidence of its adoption.
(c) The SUB-ADVISER has provided VALIC and the FUND with a copy of its
Form ADV as most recently filed with the SEC and will promptly after filing its
annual update to its Form ADV with the SEC, furnish a copy of such amendment to
VALIC.
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, 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 Covered 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
the FUND'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 the FUND's Board of
Trustees or a majority of that Covered 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 the FUND as
it relates to any Covered Fund. The Agreement may be terminated as to any
Covered Fund at any time, without the payment of any penalty, by vote of the
FUND's Board of Trustees or by vote of a majority of that Covered Fund's
outstanding voting securities on not more than 60 days' nor less than 30 days'
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 not more than 60 days' nor less than 30 days' 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 not more than 60 days' nor less than 30
days' written notice to VALIC, or upon such shorter notice as may be mutually
agreed upon by the parties.
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6. OTHER MATTERS
The SUB-ADVISER may from time to time employ or associate with itself
any person or persons believed to be particularly fit 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 the FUND with respect to them.
The SUB-ADVISER agrees that all books and records which it maintains
for the Covered Fund are the Covered Fund's property. The SUB-ADVISER also
agrees upon request of VALIC or the FUND, 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 Rule 31a-1 under the 1940 Act.
VALIC has herewith furnished the SUB-ADVISER copies of the FUND's
Prospectus, Statement of Additional Information, Declaration and Bylaws 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. Until VALIC
delivers any amendments or supplements to the SUB-ADVISER, the SUB-ADVISER shall
be fully protected in relying on the documents previously furnished to it.
The SUB-ADVISER is authorized to honor and act on any notice,
instruction or confirmation given by VALIC on behalf of the Covered Fund 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
shareholders of the Covered Fund 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 the Covered Fund as the
SUB-ADVISER at any time, or from time to time, may reasonably request in order
to discharge obligations hereunder.
VALIC agrees to indemnify the SUB-ADVISER for losses, costs, fees,
expenses and claims which arise directly or indirectly (i) as a result of a
failure by VALIC to provide the services or furnish materials required under the
terms of this Investment Sub-Advisory 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 the Covered Fund, except insofar as any such statement
or omission was specifically made in reliance on written information provided by
the SUB-ADVISER to VALIC.
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 Investment Sub-Advisory
Agreement, including a negligent failure whether unintentional or in good faith
or otherwise, to comply with the diversification requirements specified in
section 817(h), and the qualification standards of Subchapter M of the Code, as
amended, and the regulations thereunder, (other than a failure which is
subsequently timely corrected by the SUB-ADVISER in accordance with applicable
law and regulations such that no loss is incurred by VALIC or a Covered Fund) 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 the
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Covered Fund to the extent any such statement or omission was made in reliance
on information provided by the SUB-ADVISER or its affiliates.
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.
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/ XXXX X. XXXX
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Name: Xxxx X. Xxxx
Title: President and CEO
ATTEST:
/s/ XXXXXX X. XXXXXX
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X. XXXX PRICE ASSOCIATES, INC.
By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
ATTEST:
/s/ XXXXXXXX XXXXXXX
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SCHEDULE A
(Effective March 1, 2000)
Annual Fee computed at the following annual rate, based on average daily net
asset value for each month and payable monthly:
Covered Fund Fee
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American General Science & Technology Fund .60% on first $500 million
.55% over $500 million
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