EXHIBIT d(11)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT, effective this 1st day of January, 2002, by and between THE
VARIABLE ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and
AIG GLOBAL INVESTMENT 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 I ("VC I"), an investment company organized
under the laws of Maryland as a corporation. VC I is
a series type of investment company issuing separate
classes (or series) of shares of beneficial interest
and is registered as an open-end, management
investment company under the Investment Company Act
of 1940, as amended ("1940 Act"). The 1940 Act
prohibits any person from acting as an investment
adviser of a registered investment company except
pursuant to a written contract.
(c) VC I currently consists of fifteen portfolios
("Funds"):
Asset Allocation Fund
Blue Chip Growth Fund
Capital Conservation Fund
Core Equity Fund
Government Securities Fund
Growth & Income Fund
Health Sciences Fund
Income & Growth Fund
International Equities Fund
International Government Bond Fund
International Growth Fund
Large Cap Growth Fund
Mid Cap Index Fund
Money Market 1 Fund
Nasdaq-100(R) Index Fund
Opportunities Fund
Science & Technology Fund
Small Cap Fund
Small Cap Index Fund
Social Awareness Fund
Stock Index Fund
Value Fund
In accordance with the VC I Articles of Incorporation
(the "Articles"), new Funds may be added to VC I upon
approval of the Board of Directors without the
approval of 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 Fund(s)").
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(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.
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 VC I Board of Directors 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 VC I Articles, Bylaws,
registration statements, prospectus and stated investment objectives,
policies and restrictions and any applicable procedures adopted by the
VC I Board of Directors and provided to the SUB-ADVISER shall:
(a) manage the investment and reinvestment of each
Covered Fund. The Subadviser will determine in its
discretion, and subject to the oversight and review
of VALIC, the securities to be purchased or sold.
(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
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. Subject to
approval by the VC I Board of Directors of appropriate policies and
procedures, the SUB-ADVISER may cause the Covered Fund(s) to pay to a
broker a commission, for effecting a portfolio transaction, in excess
of the commission another broker would have charged for effecting the
same transaction, if the first broker provided brokerage and/or
research 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. If applicable, in accordance with
Section 11(a) of the 1934 Act and Rule 11a2-2(T) thereunder, and
subject to any other applicable laws and regulations, including Section
17(e) of the 1940 Act and Rule 17e-1 thereunder, the SUB-ADVISER may
engage its affiliates or any other subadviser to the Fund and its
respective affiliates, VALIC and its affiliates, as broker-dealers or
futures commission merchants to effect Fund transactions in securities
and other investments for a Covered Fund.
The SUB-ADVISER shall maintain records adequately demonstrating
compliance with its obligations under this Agreement and report
periodically to VALIC and the VC I Board of Directors regarding the
performance of its services under this Agreement. The SUB-ADVISER will
make available to VALIC and VC I promptly upon their reasonable written
request all of the Covered Fund(s)' investment records and ledgers to
assist VALIC and VC I 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
Board of Directors such periodic and special reports as VALIC and the
VC I Board of Directors 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
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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 Directors 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 VC I 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 or as may otherwise be
contemplated by this Agreement. 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 VC I
Board of Directors.
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
Fund(s). 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 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 may aggregate sales and purchase orders of securities
held by the 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 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 Fund by the SUB-ADVISER
is subjective and represents the SUB-ADVISER's evaluation that the 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.
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 VC I 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. VALIC and the
SUB-ADVISER acknowledge that the Fund will be ultimately responsible
for all brokerage commissions, taxes, custodian fees and any other
transaction-related fees, but that, for the purposes of this Agreement,
as between VALIC and the SUB-ADVISER, VALIC will be responsible for
such expenses, and VALIC authorizes the SUB-ADVISER to incur and pay
such expenses for the Fund, as deemed appropriate by the SUB-ADVISER.
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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 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 VC I Articles and Bylaws. 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 VC I Articles, 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, VC I, 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 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 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 VCII 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 with a copy of
such code of ethics together with evidence of its adoption.
(c) The SUB-ADVISER has provided VALIC with a copy of its Form ADV
as most recently filed with the SEC and will promptly after
filing any amendment 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 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 VC I
Directors 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 VC I
Board of Directors 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
VC I 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 VC I's Board of Directors or by vote of a majority of that
Covered Fund's outstanding voting securities on 30-60 days' prior
written notice to the SUB-ADVISER. This
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Agreement may also be terminated by VALIC: (i) on 30-60 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 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 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. The SUB-ADVISER agrees that all books and
records which it maintains for the Fund are the Fund's property and
will be surrendered promptly to the Fund or VALIC on request. The
SUB-ADVISER agrees that all accounts, books and other records
maintained and preserved by it as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special
and other examinations by the Securities and Exchange Commission, the
Fund's auditors, the Fund or any representative of the Fund, VALIC, or
any government agency or other instrumentality having regulatory
authority over the Fund.
VALIC has herewith furnished the SUB-ADVISER copies of the Fund's
Prospectus, Statement of Additional Information, Articles 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 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. Subject to provisions of
this paragraph, SUB-ADVISER grants VALIC and the Fund a non-exclusive
right to use the "AIG Global Investment Corp." name in connection with
the SUB-ADVISER's management of the Fund (i) for so long as this
Agreement, any other investment management agreement between VALIC and
SUB-ADVISER with respect to VC I, or to any extension, renewal or
amendment thereof, remain in effect, and (ii) for subsequent periods as
long as required by law, rule or regulation or to the extent necessary
to refer to or illustrate the historical performance of the Fund.
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
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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 specifically made in reliance on written information
provided by the SUB-ADVISER to VALIC, where the untrue statement was
not reasonably knowable to be untrue by VALIC at the time made.
The SUB-ADVISER agrees to indemnify VALIC only for losses and claims
which arise directly from willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on
the part of the 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 New York,
or any of the provisions herein, conflict with applicable provisions of
the federal securities laws, the latter shall control. If any suit is
instituted by any of the parties to enforce any of the terms or
conditions of this Agreement, each of the parties hereby submits to the
exclusive jurisdiction of and venue in the federal courts of the United
States of America, County of New York, State of New York, to the extent
permitted by federal law, and otherwise, each of the parties hereby
submits to the exclusive jurisdiction of and venue in the state courts
of the State of New York located in the city and county of New York.
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
Tel: (000) 000-0000
Fax: (000) 000-0000
If to SUB-ADVISER:
ADDRESS FOR NOTICE: WITH A COPY TO:
AIG GLOBAL INVESTMENT CORP. AIG GLOBAL INVESTMENT CORP.
Compliance Department Office of the General Counsel
000 Xxxxx Xxxxxx 00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 Xxx Xxxx, Xxx Xxxx 00000
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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:
--------------------------------
Name:
Title:
ATTEST:
AIG GLOBAL INVESTMENT CORP.
By:
--------------------------------
Name:
Title:
ATTEST:
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