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EXHIBIT d(7)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT made this 29th day of August, 2001, by and between THE VARIABLE
ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and
WELLINGTON MANAGEMENT COMPANY, LLP, 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 North
American Funds Variable Product Series I ("NAF
Variable") pursuant to an Investment Advisory
Agreement between VALIC and NAF Variable, a Maryland
corporation. NAF Variable is a series type of
investment company issuing separate classes (or
series) of shares 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) The FUND currently consists of twenty-one portfolios
("Funds"):
North American - AG Asset Allocation Fund
North American - AG Capital Conservation Fund
North American - AG Government Securities Fund
North American - AG Growth & Income Fund
North American - AG International Equities Fund
North American - AG International Government Bond
Fund
North American - AG Large Cap Growth Fund
North American - XX XxxXxx Index Fund
North American - AG 1 Money Market Fund
North American - AG Nasdaq-100(R) Index Fund
North American - AG Small Cap Index Fund
North American - AG Social Awareness Fund
North American - AG Stock Index Fund
North American - American Century Income & Growth
Fund
North American - American Century International
Growth Fund
North American Core Equity Fund
North American - Founders/X. Xxxx Price Small Cap
Fund
North American - Putnam Opportunities Fund
North American - X. Xxxx Price Blue Chip Growth Fund
North American - X. Xxxx Price Health Sciences Fund
North American - X. Xxxx Price Science & Technology
Fund
In accordance with NAF Variable's Articles of
Incorporation (the "Articles"), new Funds may be
added to NAF Variable upon approval of NAF Variable's
Board of Directors 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").
(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.
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(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 NAF Variable's Board of Directors 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"),
NAF Variable's Articles, Bylaws, registration statements, prospectus
and stated investment objectives, policies and restrictions and any
applicable procedures adopted by NAF Variable's Board of Directors
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.
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 most favorable overall price and execution. Subject to
approval by NAF Variable's 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, including statistical data, to the SUB-ADVISER.
Furthermore, on occasions when the SUB-ADVISER deems the purchase or
sale of a security to be in the best interest of one or more of the
Covered Fund(s) as well as other clients of the SUB-ADVISER, it may
allocate such transactions in the manner it considers to be the most
equitable and consistent with its fiduciary obligation to the Covered
Fund(s) and to such other clients. 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 NAF Variable's Board of Directors regarding
the performance of services under this Agreement. The SUB-ADVISER will
make available to VALIC and NAF Variable promptly upon their request
all of the Covered Fund(s) investment records and ledgers to assist
VALIC and NAF Variable 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 NAF Variable's Board of Directors such periodic and special
reports as VALIC and NAF Variable's 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
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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 Directors of
NAF Variable 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.
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 NAF
Variable. The money and investments will be held by the Custodian of
NAF Variable. The SUB-ADVISER will arrange for the transmission to the
Custodian for NAF Variable, on a daily basis, such confirmation, trade
tickets and other documents as may be necessary to enable the Custodian
to perform its administrative responsibilities with respect to the
Covered Fund(s).
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 NAF
Variable 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, by written agreement executed by both Parties, provided that
amendments are made in conformity with applicable laws and regulations
and the Articles and Bylaws of NAF Variable. 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 NAF Variable's 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 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 NAF Variable.
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 Fund(s).
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-
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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, NAF Variable, or to any
shareholder in NAF Variable, 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:
(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 NAF
Variable with a copy of such code of ethics together with
evidence of its adoption.
(c) The SUB-ADVISER has provided VALIC and NAF Variable 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
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continuance is approved at least annually by the vote of a majority of
NAF Variable's 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 NAF Variable's 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
NAF Variable as it relates to any Covered Fund(s); provided that the
termination of an Interim Investment Advisory Agreement between NAF
Variable and VALIC, pursuant to Rule 15a-4 under the 1940 Act upon
shareholder approval of a definitive Investment Advisory Agreement with
respect to a Covered Fund, shall not result in the termination of this
Agreement as to such Covered Fund. The Agreement may be terminated as
to any Covered Fund at any time, without the payment of any penalty, by
vote of NAF Variable's Board of Directors 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, or upon such shorter notice as
may be mutually agreed upon by the parties. This Agreement may also be
terminated by VALIC: (i) on at least 60 days' prior 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 at least 60 days' prior 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 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 NAF Variable with respect to them.
The SUB-ADVISER agrees that all books and records which it maintains
for NAF Variable are NAF Variable's property. The SUB-ADVISER also
agrees upon request of VALIC or NAF Variable, 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 subparagraphs (b)(5), (6), (7), (9), (10), (11) and paragraph (f)
of Rule 31a-1 under the 1940 Act.
VALIC has herewith furnished the SUB-ADVISER copies of NAF Variable'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.
The SUB-ADVISER is authorized to honor and act on any notice,
instruction or confirmation given by VALIC on behalf of NAF Variable 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 NAF Variable 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
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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 NAF Variable as the SUB-ADVISER at
any time, or from time to time, may reasonably request in order to
discharge obligations hereunder. The provisions of this paragraph shall
survive the termination of this Agreement.
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 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 NAF Variable, except insofar as any such
statement or omission was made in reliance on information provided by
the SUB-ADVISER or its affiliates. The provisions of this paragraph
shall survive the termination of this Agreement.
The SUB-ADVISER agrees to indemnify VALIC for losses and claims which
arise (i) as a result of a failure by SUB-ADVISER to provide the
services or furnish the materials required under the terms of this
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 NAF Variable to the extent any such statement
or omission was made in reliance on information provided by the
SUB-ADVISER or its affiliates.
7. APPLICABILITY OF FEDERAL SECURITIES LAWS
This Agreement shall be interpreted in accordance with the laws of the
State of Texas and applicable federal securities laws and regulations,
including definitions therein and such exemptions as may be granted to
VALIC or the SUB-ADVISER by the Securities and Exchange Commission or
such interpretive positions as may be taken by the Commission or its
staff. To the extent that the applicable law of the State of Texas, or
any of the provisions herein, conflict with applicable provisions of
the federal securities laws, the latter shall control.
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
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If to SUB-ADVISER:
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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:
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WELLINGTON MANAGEMENT COMPANY, LLP
By:
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Name:
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Title:
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ATTEST:
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