Sub-Advisory Agreement THE AAL VARIABLE PRODUCT SERIES FUND, INC. SUB-ADVISORY AGREEMENT FOR THE HIGH YIELD BOND PORTFOLIO WITH PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
Sub-Advisory
Agreement
THE AAL VARIABLE PRODUCT SERIES FUND, INC.
SUB-ADVISORY AGREEMENT FOR THE
HIGH YIELD BOND PORTFOLIO
WITH
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
AGREEMENT made this 12th day of June 2000, by and among THE AAL VARIABLE PRODUCT SERIES FUND, INC. (the “Fund”), a Maryland Corporation, AAL CAPITAL MANAGEMENT CORPORATION (the “Adviser”), a Delaware corporation and PACIFIC INVESTMENT MANAGEMENT COMPANY LLC (the “Sub-Adviser”), a Delaware limited liability company.
WITNESSETH:
In consideration of the
mutual promises and agreements herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, it is hereby agreed
by and among the parties hereto as follows:
1. In General.
The Sub-Adviser agrees, as
more fully set forth herein, to act as Sub-Adviser to the Fund with respect to
the investment and reinvestment of the assets of the Fund’s series of
shares described as The AAL Variable Product High Yield Bond Portfolio. It is
understood that the Fund has designated, and there presently exist, several
other series of the Fund’s shares, and that the Fund may create one or more
additional series from time to time in the future. This Agreement may be amended
by the mutual written agreement of the parties to include any such additional
series under the terms of this Agreement.
2. Duties and Obligations of the Sub-Adviser with Respect to Investment of Assets of the High Yield Bond Fund.
(a) Subject to the
succeeding provisions of this section and subject to the oversight and review of
the Adviser and the direction and control of the Board of Trustees
(“Trustees”) of the Fund, the Sub-Adviser, as agent and
attorney-in-fact with respect to the Fund, is authorized, in its discretion and
with prior consultation with the Fund, on behalf of each series covered from
time to time by this Agreement, to:
(i) Buy, sell,
exchange, convert, lend and otherwise trade in any stocks, bonds, currencies,
and any other securities or assets;
(ii) Place orders and
negotiate the commissions (if any) for the execution of transactions in
securities or other assets with or through such brokers, dealers, underwriters
or issuers as the Sub-Adviser may select; including brokers and dealers that may
be affiliates of the Sub-Adviser;
(iii) Enter into and execute agreements on behalf of the Fund, relating to the
acquisition or disposition of investment assets and the execution of portfolio
transactions. Nothing contained herein, however, shall be deemed to authorize
the Sub-Adviser to take or receive physical possession of any cash or securities
held for the Fund, it being intended that sole responsibility for safekeeping
thereof and the consummation of all such purchases, sales, deliveries, and
investments made pursuant to the Sub- Adviser’s direction shall rest upon
the Fund’s Custodian; and
(iv) Provide the Adviser and the Trustees with such reports as may reasonably be
requested in connection with the discharge of the foregoing responsibilities and
the discharge of the Adviser’s responsibilities under the Investment
Advisory Agreement with the Fund and those of AAL Capital Management Corporation
under the Distribution Agreement with the Fund.
Written procedures with respect to (i), (ii) and (iii) above may be set forth as agreed to among the Fund, the
Adviser and Sub-Adviser.
(b) Any investment purchases or sales made by the Sub-Adviser under this section shall at all times
conform to, and be in accordance with, any requirements imposed by: (1) the
provisions of the Investment Company Act of 1940 (the “Act”) and of
any rules or regulations in force thereunder; (2) any other applicable
provisions of law; (3) any policies and determinations of the Board of Trustees
of the Fund; and (4) the fundamental policies of the Fund, as reflected in
its Registration Statement under the Act, or as amended by the shareholders of
the Fund; provided that copies of the items referred to in clauses (3) and (4)
shall have been furnished to the Sub-Adviser.
(c) The Sub-Adviser shall give the Fund the benefit of its best judgment and effort in rendering services hereunder. In the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of its obligations and duties (“disabling conduct”) hereunder on the part of the Sub-Adviser (and its officers, directors, agents, employees, controlling persons, shareholders and any other person or entity affiliated with the Sub-Adviser) the Sub-Adviser shall not be subject to liability to the Fund or to any shareholder of the Fund for any act or omission in the course of, or connected with rendering services hereunder, including without limitation, any error of judgment or mistake of law or for any loss suffered by any of them in connection with the matters to which this Agreement relates, except to the extent specified in Section 36 (b) of the Act concerning loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services. Except for such disabling conduct, the Fund shall indemnify the Sub-Adviser (and its officers, directors, agents, employees, controlling persons, shareholders and any other person or entity affiliated with the Sub-Adviser) against any liability arising from the Sub-Adviser’s gross negligent conduct under this Agreement to the extent permitted by the Articles of Incorporation and applicable law.
(d) Nothing in this Agreement shall prevent the Sub-Adviser or any “affiliated person” (as defined in the Act) of the Sub-Adviser from acting as investment adviser or manager for any other person, firm or corporation and shall not in any way limit or restrict the Sub-Adviser or any such affiliated person from buying, selling or trading any securities for its or their own accounts or for the accounts of others for whom it or they may be acting, provided, however, that the Sub-Adviser expressly represents that it will undertake no activities which, in its judgment, will adversely affect the performance of its obligations to the Fund under this Agreement. It is agreed that the Sub-Adviser shall have no responsibility or liability for the accuracy or completeness of the Fund’s Registration Statement under the Act and the Securities Act of 1933 except for information supplied by the Sub-Adviser for inclusion therein. The Sub-Adviser shall be deemed to be an independent contractor and, unless otherwise expressly provided or authorized, have no authority to act or represent the Fund in any way or otherwise be deemed an agent of the Fund.
(e) In connection with its duties to arrange for the purchase and sale of the securities and other assets of each series covered from time to time by this Agreement, the Sub-Adviser shall follow the principles set forth in any investment advisory agreement in effect from time to time between the Fund and the Adviser, provided that a copy of any such agreement shall have been provided to the Sub-Adviser. The Sub-Adviser will promptly communicate to the Adviser and to the officers and the Trustees of the Fund such information relating to portfolio transactions as they may reasonably request.
(f) The Sub-Adviser may place orders both as to sales and purchases of assets directly through any broker or dealer it chooses. Brokers or dealers may be selected who provide brokerage and/or research services to the Fund and/or other accounts over which the Sub-Adviser or its affiliates exercise investment discretion. Brokers or dealers who execute portfolio transactions on behalf of the Fund may receive commissions which are in excess of the amount of commissions which other brokers or dealers would have charged for effecting such transactions. In order to cause the Fund to pay such higher commissions, the Sub-Adviser must determine in good faith that such commissions are reasonable in relation to the value of the brokerage and/or research services provided by such executing brokers or dealers viewed in terms of a particular transaction or the Sub-Adviser’s overall responsibilities to the Fund or its other discretionary client accounts. The Sub-Adviser shall not be liable for any act or omission of any securities brokerage firm or firms designated by the Adviser or chosen with reasonable care.
(g) On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of the Fund as well as other clients, the Sub-Adviser, to the extent permitted by applicable laws and regulations, may aggregate the securities to be sold or purchased in order to obtain the best execution and lower brokerage commissions, if any. In such event, allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner it considers to be most equitable and consistent with its fiduciary obligations to the Fund and to such clients.
The Sub-Adviser may
purchase or sell for the Fund, pursuant to the Fund’s Rule I0f-3
Procedures, any security (including securities of the same class as those
underwritten or other securities of the same or related issuer) for which any
affiliate of the Sub-Adviser acts as (1) an underwriter (either as lead
underwriter or syndicate member), both during the pendency of any underwriting
or selling syndicate and thereafter, or (2) a market maker, provided that such
security is purchased from a non-affiliated party.
3. Allocation of Expenses.
During the term of this Agreement, the Sub-Adviser will pay all expenses incurred by it in connection
with its activities under this Agreement other than the cost of securities,
commodities, and other investments (including brokerage commissions and other
transaction charges, if any) purchased for the Fund. The Sub-Adviser agrees that
it will furnish the Fund, at the Sub-Adviser’s expense, with all office
space, facilities, equipment, and clerical personnel necessary for carrying out
its duties under this Agreement.
4. Certain Records.
Any records required to be
maintained and preserved pursuant to the provisions of Rule 31a-1 and Rule
31a-2 under the Act that are prepared or maintained by the Sub-Adviser on behalf
of the Fund are the property of the Fund and will be surrendered promptly to the
Fund or Adviser on request.
5. Reference to the Sub-Adviser.
Neither the Fund, the
Adviser or any affiliate or agent thereof shall make reference to or use the
name of the Sub-Adviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Sub-Adviser, which
approval shall not be unreasonably withheld.
6. Compensation of the Sub-Adviser.
The Adviser agrees to pay
the Sub-Adviser and the Sub-Adviser agrees to accept as full compensation for
all services rendered by the Sub-Adviser as such, a management fee, payable
quarterly in arrears and computed on the average daily net asset value of The
AAL Variable Product High Yield Bond Portfolio at rates shown on Exhibit
A attached hereto.
7. Duration and Termination.
(a) This Agreement shall go
into effect for The AAL Variable Product High Yield Bond Portfolio on July 1,
2000, or as soon thereafter as it is approved by shareholders of that Fund, and
shall, unless terminated as hereinafter provided, continue in effect thereafter
from year to year, but only so long as such continuance is specifically approved
at least annually by a majority of the Fund’s Board of Trustees, or by the
vote of the holders of a “majority” (as defined in the Act) of the
outstanding voting securities of the Fund, with respect to the High Yield Bond
Fund, and, in either case, a majority of the Trustees who are not parties to
this Agreement or “interested persons” (as defined in the Act) of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
(b) This Agreement may be
terminated by the Sub-Adviser at any time without penalty upon giving the Fund
and the Adviser sixty (60) days’ written notice (which notice may be waived
by the Fund and Adviser) and may be terminated by the Fund or the Adviser at any
time without penalty upon giving the Sub-Adviser sixty (60) days’ written
notice (which notice may be waived by the Sub-Adviser), provided that such
termination by the Fund shall be directed or approved by the vote of a majority
of all of the Trustees in office at the time or by the vote of the holders of a
majority (as defined in the Act) of the voting securities of the Fund, with
respect to The AAL Variable Product High Yield Bond Portfolio, or with respect
to any other series of the Fund covered by this Agreement, by the vote of a
majority of the outstanding shares of such series. This Agreement shall
automatically terminate in the event of its “assignment” (as defined
in the Act). This Agreement will also terminate in the event that the Investment
Advisory Agreement is terminated. Furthermore, the Fund and the Adviser
understand and agree that Pacific Investment Management Company LLC was
indirectly acquired by Allianz AG on May 5, 2000.
8. Agreement Binding Only On Fund Property.
The Sub-Adviser understands
that the obligations of this Agreement are not binding upon any shareholder of
any series of the Fund personally, but bind only the property of the Fund
allocated to the particular series; the Sub-Adviser represents that it has
notice of the provisions of the Fund’s Articles of Incorporation
disclaiming shareholder liability for acts or obligations of the Fund.
9. Action By An Individual Series.
The provisions of this
Agreement and any amendments hereto with respect to The AAL Variable Product
High Yield Bond Portfolio or any other series of the Fund covered hereby may be
approved by the shareholders of such series and become effective with respect to
the assets of such series without the necessity of approval thereof by
shareholders of any other series. The Adviser represents that the holders of a
majority (as defined in the “Act”) of The AAL Variable Product High
Yield Bond Portfolio will vote on approval of the entry into this Agreement on
behalf of said series.
10. Notices.
The Sub-Adviser agrees to promptly notify the Adviser of the occurrence of any of the following events:
(a) Any change in any of the Sub-Adviser's portfolio managers;
(b) The Sub-Adviser fails to be registered as an investment adviser under the Advisers Act or under the laws of
any jurisdiction in which the Sub-Adviser is required to be registered as an investment adviser in order to perform its obligations
under this Agreement;
(c) The Sub-Adviser is the subject of any action, suit, proceeding, inquiry or investigation at law or in
equity, before any court, public board or body, involving the affairs of the Fund or another series of the Fund covered by this
Agreement, or
(d) Any change in ownership or control, or partnership structure of the Sub-Adviser.
11. Manner of Notice.
Any notice given hereunder
shall be in writing and may be served by being sent by telex, facsimile or other
electronic transmission, or sent by registered mail or by courier to the address
set forth below for the party for which it is intended. A notice served by mail
shall be deemed served seven days after mailing and in the case of telex,
facsimile or other electronic transmission, twelve hours after confirmed receipt
thereof. Addresses for notice may be changed by written notice to the other
party.
The Adviser: Xxxxxx X. Same, President
AAL Capital Management Corporation
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Fax: (000)000-0000
The Fund: Xxxxxx X. Same, President
The AAL Variable Product Series Fund, Inc.
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
The Sub-Adviser: Xxxxx Xxxxxx
Pacific Investment Management Company
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
cc: Chief Administrative Officer
No provisions of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by all of the parties.
The Adviser and the Fund acknowledges receipt of the Sub-Adviser's Part II, Form ADV at least 48 hours in advance of signing
this Agreement.
The captions in this
Agreement are included for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect their construction or
effect. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby.
The Adviser represents to the Sub-Adviser that the Adviser has all necessary power and authority to execute, deliver and perform this Agreement and all transactions contemplated hereby, and such execution, delivery and performance will not violate and applicable law, rule, regulation, governing document, contract or other material agreement binding upon the Adviser
The Sub-Adviser is
expressly authorized to rely upon any and all instructions, approvals and
notices given on behalf of the Fund whose names, titles and specimen signatures
appear in Exhibit B attached hereto. The Adviser may amend such Exhibit B from
time to time by written notice to the Sub-adviser. The Sub-Adviser shall
continue to rely upon these instructions until notified by the Adviser to the
contrary.
This Agreement shall be governed by the laws of the State of Wisconsin.
This Agreement shall be
executed in two counterparts, each of which shall be considered to be an
original.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument to be executed by their duly authorized officers and their seals to be hereunto affixed, all as of the day and year first above written.
THE AAL VARIABLE PRODUCT SERIES FUND, INC.
/s/ Xxxxxx X. Same
------------------
Xxxxxx X. Same, President
AAL CAPITAL MANAGEMENT CORPORATION
/s/ Xxxxxx X. Same
------------------
Xxxxxx X. Same, President
PACIFIC INVESTMENT MANAGEMENT COMPANY
/s/ Xxxxxxx X. Benz, II
-----------------------
Xxxxxxx X. Benz, II
Managing Director
EXHIBIT A TO THE AAL VARIABLE PRODUCT SERIES FUND, INC. SUB-ADVISORY AGREEMENT (Dated June 12, 2000)
1. The AAL Variable Product High Yield Bond Portfolio
The management fee for The AAL Variable Product High Yield Bond Portfolio, payable to the Sub-Adviser by the Adviser,
calculated in accordance with paragraph 6 of The AAL Variable Product Series Fund, Inc. Sub-Advisory Agreement, shall be at the
annual rate of: 25 basis points.
EXHIBIT B TO THE AAL VARIABLE PRODUCT SERIES FUND, INC. SUB-ADVISORY AGREEMENT (Dated June 12, 2000)
The Adviser authorizes the following person to convey instructions, approvals and notices to the Sub-Adviser on behalf of
the Adviser:
Xxxxxx X. Same, President /s/ Xxxxxx X. Same Xxxxx X. Xxxxx, Xx. Vice President /s/ Xxxxx X. Xxxxx Xxxxxxxx X. Xxxxxxx, AAL Fixed Income /s/ Xxxxxxxx X. Xxxxxxx Xxxxxxxxx X. Xxxxxxx, Secretary /s/ Xxxxxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxxx, Treasurer /s/ Xxxxxxx X. Xxxxxxxxx
