Exhibit (e)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT made this 4th day of June, 1999, by and between THE VARIABLE
ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and BANKERS
TRUST COMPANY, 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 Small Cap Value Fund pursuant to an Investment Advisory
Agreement dated August 26, 1998 between VALIC and American General
Series Portfolio Company 3 ("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 eighteen 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
Money Market Fund, American General Domestic Bond 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, and American General
High Yield Bond 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 in the business of
rendering investment advisory services and is a "bank" as defined
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-ADVISER
The SUB-ADVISER, subject to the control, direction, and supervision
of VALIC and the FUND'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"), the FUND's Declaration, Bylaws,
registration statements, prospectus and stated investment objectives, policies
and restrictions and any applicable procedures adopted by the FUND's Board of
Trustees shall:
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(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.
In performing the services described in paragraph (b) above, the
SUB-ADVISER shall use its best efforts to obtain for the Covered Funds the most
favorable overall price and execution. 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, including statistical data, 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
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 the FUND's Board of Trustees regarding the performance of services
under this Agreement. The SUB-ADVISER will make available to VALIC and the FUND
promptly upon their 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
information obtained pursuant to this service relationship, and disclose such
information only if VALIC or the Board of Trustees of the FUND 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 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.
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 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 information with respect to transactions as may be
necessary to enable it to perform its administrative responsibilities with
respect to the Covered Funds.
The SUB-ADVISER will not perform cash management services for the
Covered Funds. The cash management function will be performed by VALIC.
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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 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 this 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 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, 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 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 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 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 the FUND.
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 engage in any other business or activity
which does not impair the services which the SUB-ADVISER renders to the Covered
Funds.
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 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.
4. REPRESENTATIONS OF THE SUB-ADVISER AND VALIC
The SUB-ADVISER represents, warrants, and agrees as follows:
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(a) The SUB-ADVISER (i) is a ?bank? as defined 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.
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 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 through July 30, 2000. 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 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 at least 60 days' prior written notice to the
SUB-ADVISER. This Agreement may also be terminated by VALIC: (i) on at least 60
days' prior written notice to the SUB-ADVISER, 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.
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 the FUND with respect to them.
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The SUB-ADVISER agrees that all books and records which it maintains
for the FUND are the 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.
The SUB-ADVISER is authorized to honor and act on any notice,
instruction or confirmation given by VALIC on behalf of the 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
interest holders of the 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 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 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 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 FUND,
except insofar as any such statement or omission was made in reliance on
information provided by the SUB-ADVISER or its affiliates.
The SUB-ADVISER agrees to indemnify VALIC for losses and claims
which arise (i) as a result of a failure by the 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 FUND to
the extent any such statement or omission was made in reliance on information
provided by the SUB-ADVISER or its affiliates.
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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
-------------------------------
Name: Xxxx X. Xxxx
Title: President and CEO
ATTEST:
/s/ XXXXXX X. XXXXXX
-------------------------
Xxxxxx x. Xxxxxx
BANKERS TRUST COMPANY
By: /s/ XXXXX XXXXXXX
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: Xxxxx Xxxxxxx
ATTEST:
/s/ XXXXXX X. XXXX
-------------------------
Xxxxxx X. Xxxx
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SCHEDULE A
(Effective June 4, 1999)
Annual Fee computed at the following annual rate, based on average daily net
asset value for each month and payable monthly:
Covered Fund Fee
------------ ---
American General Small Cap 0.03%
Value Fund
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SCHEDULE B
(Effective June 4, 1999)
Pursuant to Section 6, the following person has been given signature authority
to sign on behalf of VALIC:
Xxxx X. Xxxx
--------------------------
President and CEO /s/ XXXX X. XXXX
-------------------------- ------------------------------
The person holding the office indicated above, whose signature appears above,
is authorized to sign pursuant to Section 6.
Accepted:
VALIC BANKERS TRUST COMPANY
By: /s/ XXXX X. XXXX By: /s/ XXXXX XXXXXXX
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