EXHIBIT 4(d)(14)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT made as of this 1st day of January, 2002, by and between THE
VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and
SunAmerica Asset Management Corp., 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, an
investment company organized under the laws of
Delaware as a business trust. XX XX is a series type
of investment company issuing separate classes (or
series) of shares of beneficial interest. XX XX 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 Growth II 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(s)").
(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.
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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 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"), VC II's Declaration, Bylaws,
registration statements, prospectuses and stated investment objectives,
policies and restrictions and any applicable procedures adopted by VC
II's Board of Trustees and provided to the SUB-ADVISER 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.
The SUB-ADVISER shall not be responsible for the administrative affairs
of the Covered Fund, including pricing the Covered Fund. The
SUB-ADVISER will provide reasonable assistance to VALIC to assist in
pricing securities where market or broker quotations are not readily
available.
In performing the services described in paragraph (b) above, the
SUB-ADVISER shall use its best efforts to obtain for the Covered
Fund(s) the best execution of portfolio transactions. If VC II's Board
of Trustees approves 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
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 benefited 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
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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 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 VC II's Board of Trustees regarding the
performance of its services under this Agreement. The SUB-ADVISER will
make available to VALIC and XX XX promptly upon their reasonable
written 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 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
XX XX 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 XX XX 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 Fund(s) and may include such
total return in the calculation of composite performance information
without prior approval by VALIC or the Board of Trustees of XX XX.
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 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 it to perform its
administrative responsibilities with respect to the Covered Fund(s).
The SUB-ADVISER further shall have the authority to instruct the
Custodian of XX XX (i) to pay cash for securities and other property
delivered, or to be delivered, to the Custodian for XX XX (ii) to
deliver securities and other property against payment for XX XX, 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 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 XX XX other
than in furtherance of the SUB-ADVISER's duties and responsibilities as
set forth in this Agreement.
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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.
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 assets 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
mutual agreement of the parties, provided that amendments are made in
conformity with applicable laws and regulations and the Declaration and
Bylaws 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 daily net assets shall be determined by taking the average
of all of the determinations of net assets, made in the manner provided
in VC II'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 XX XX.
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,
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 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
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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. VALIC
acknowledges that the SUB-ADVISER will base its compliance with such
provisions of the Code on accurate and timely portfolio information,
including tax lot allocation, from VALIC.
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 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 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 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
XX XX as it
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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 VC II'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.
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 XX XX with
respect to them.
The SUB-ADVISER agrees that, upon request of VALIC or XX XX, it will
promptly provide VALIC or XX XX with copies of all books and records
relating to the Covered Fund, in accordance with the 1940 Act and rules
thereunder.
VALIC has herewith furnished the SUB-ADVISER copies of VC II'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 to VALIC
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by the SUB-ADVISER for use in such material and which was specifically
reviewed and approved by SUB-ADVISER.
The SUB-ADVISER agrees to indemnify VALIC for losses and claims which
arise (i) as a result of the willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties by the
SUB-ADVISER; 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 to
the extent any such statement or omission was made in reliance on
information provided to VALIC by the SUB-ADVISER for use in such
material and which was specifically reviewed and approved by
SUB-ADVISER.
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.
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
Telephone: (000) 000-0000
FAX: (000) 000-0000
If to SUB-ADVISER:
SunAmerica Asset Management Corp.
Attn: Xxxxxx Xxxxx, Esq.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (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:
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Name:
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Title:
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ATTEST:
Attest:
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Name:
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Title:
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SUNAMERICA ASSET MANAGEMENT CORP.
By:
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Name:
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Title:
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ATTEST:
Attest:
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Name:
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Title:
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