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EXHIBIT d(4)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT made this June 4, 1999 by and between THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY, hereinafter referred to as "VALIC", and BANKERS TRUST
COMPANY, hereinafter referred to as "SUB-ADVISER".
VALIC and 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.
(b) VALIC is engaged as the investment adviser of the Stock
Index Portfolio, the Small Cap Index Portfolio and the MidCap Index
Portfolio pursuant to an Investment Advisory Agreement (Form II) dated
May 1, 1992 between VALIC and American General Series Portfolio Company
("FUND"), an investment company organized under the general corporation
laws of Maryland as a series type of investment company issuing
separate classes (or series) of stock and is registered as a
diversified, open-end, management investment company under the
Investment Company Act of 1940. That 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 thirteen Portfolios
("Funds"): MidCap Index Portfolio, Asset Allocation Portfolio, Money
Market Portfolio, Capital Conservation Portfolio, Government Securities
Portfolio, Stock Index Portfolio, International Equities Portfolio,
Social Awareness Portfolio, International Government Bond Portfolio,
Small Cap Index Portfolio, Growth Portfolio, Science & Technology
Portfolio and Growth & Income Portfolio. In accordance with the FUND's
Articles of Incorporation and Bylaws, new Funds may be added to the
FUND upon approval of the FUND's Board of Directors without approval of
the FUND's shareholders. This Agreement will apply only to the Stock
Index Portfolio, the Small Cap Index Portfolio and the MidCap Index
Portfolio, and any other Funds as may be added or deleted by amendment
to the attached Schedule A ("Covered Funds").
(d) SUB-ADVISER is a bank engaged in the business of rendering
investment advisory services and is not an "investment adviser"
pursuant to Section 202(a)(11) of the Investment Advisers Act of 1940.
(e) VALIC desires to enter into an Investment Sub-Advisory
Agreement with respect to the Covered Funds with SUB-ADVISER.
VALIC and SUB-ADVISER AGREE AS FOLLOWS:
1. SERVICES RENDERED AND EXPENSES PAID BY SUB-ADVISER
SUB-ADVISER, subject to the control, direction, and supervision of
VALIC and the FUND's Board of Directors and in conformity with the Investment
Company Act of 1940, 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 FUND's Articles of
Incorporation, Bylaws' registration statements, prospectus and stated investment
objectives, policies and restrictions and any applicable procedures adopted by
the FUND's Board of Directors shall:
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(a) manage the investment and reinvestment of the assets 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) to the extent determined by VALIC, maintain a trading desk
and place orders for the purchase and sale of portfolio investments for
each Covered Fund's account with brokers or dealers selected by
SUB-ADVISER, or arrange for any other entity to provide a trading desk
and to place orders with brokers and dealers selected by SUB-ADVISER,
subject to SUB-ADVISER's control, direction, and supervision, which
brokers or dealers may include brokers or dealers affiliated with
SUB-ADVISER, subject to applicable law.
In performing the services described in paragraph (b) above,
SUB-ADVISER shall use its best efforts to obtain for the Covered Funds the most
favorable overall price and execution. SUB-ADVISER shall also use its best
efforts to obtain for the Covered Funds any tender and exchange offer
solicitation fees, other fees, and similar payments available in connection with
the portfolio transactions of the Covered Funds. Subject to prior authorization
by the FUND's Board of Directors of appropriate policies and procedures,
SUB-ADVISER may cause the Covered Funds to pay 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
SUB-ADVISER. 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.
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 Directors regarding the performance of services under this
Agreement. SUB-ADVISER will make available to VALIC and the FUND promptly upon
their request all its 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 Investment Company Act of 1940 and the Investment Advisers
Act of 1940, as well as other applicable laws. SUB-ADVISER will furnish the
FUND's Board of Directors such periodic and special reports as VALIC and the
FUND's Board of Directors may reasonably request. 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. 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 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 regulatory
authorities.
Should VALIC at any time make any definite determination as to
investment policy and notify SUB-ADVISER of such determination, 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.
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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. 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 Funds.
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 SUB-ADVISER's duties and responsibilities as set forth in this Agreement.
Except as otherwise agreed, or as otherwise provided herein,
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 other
than those which Section 2 of this Agreement expressly states are payable to
SUB-ADVISER.
2 COMPENSATION OF SUB-ADVISER
The payment of advisory fees related to the services of SUB-ADVISER
under this Agreement shall be the sole concern of VALIC and SUB-ADVISER and
shall not be the responsibility of the FUND.
VALIC shall pay to SUB-ADVISER, as compensation for the services
rendered and expenses paid by 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 Articles 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 Articles of Incorporation, 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.
SUB-ADVISER shall promptly reduce its monthly fee by the amount of any
commissions, tender and exchange offer solicitation fees, other fees, or similar
payments received by SUB-ADVISER or any affiliated person of SUB-ADVISER, in
connection with any Covered Fund's portfolio transactions, less the amount of
any direct expenses incurred by SUB-ADVISER, or any affiliated person of
SUB-ADVISER, in obtaining such commissions, fees, or payments. Such
"commissions" or "other fees," shall exclude those charged by brokers or dealers
affiliated with SUB-ADVISER as referred to in paragraph l.(b) above. Such
"tender and exchange offer solicitation fees" shall exclude those received by
SUB-ADVISER acting in the capacity of manager for any such offer.
If SUB-ADVISER serves for less than a whole month, the foregoing compensation
shall be prorated.
3. SCOPE OF SUB-ADV1SER'S ACTIVITIES
SUB-ADVISER, and any person controlled by or under common control with
SUB-ADVISER shall remain free to provide similar investment advisory services to
other persons or engage in any other
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business or activity which does not impair the services which SUB-ADVISER
renders to the Covered Funds.
Except as otherwise required by the Investment Company Act of 1940, any
of the shareholders, directors, officers and employees of VALIC may be a
shareholder, director, officer or employee of, or be otherwise interested in,
SUB-ADVISER, and in any person controlling, controlled by or under common
control with SUB-ADVISER; and SUB-ADVISER, and any person controlling,
controlled by or under common control with SUB-ADVISER, may have an interest in
VALIC.
SUB-ADVISER shall not be liable to VALIC, the FUND, or to any
shareholder in the FUND, for any act or omission in rendering services under
this Agreement, or for any losses sustained in the purchase, holding, or sale of
any portfolio security, so long as there has been no willful misfeasance, bad
faith, negligence, or reckless disregard of obligations or duties on the part of
SUB-ADVISER.
4. DURATION OF AGREEMENT
This Agreement shall become effective as to the Stock Index Portfolio,
the MidCap Index Portfolio and the Small Cap Index Portfolio on the date hereof
and as to any other Funds on the date of the Amendment to Schedule A adding such
Fund in accordance with this Agreement. It shall continue in force thereafter,
but with respect to any Covered Fund, only so long as such continuance is
approved at least annually by the vote of a majority of the FUND'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 the FUND'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 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, on not more than
60 days' nor less than 30 days' written notice, or upon such shorter notice as
may be mutually agreed upon by VALIC on notice to SUB-ADVISER and the FUND, by
the FUND's Board of Directors or by vote of a majority of that Covered Fund's
outstanding voting securities on notice to SUB-ADVISER and VALIC, or by
SUB-ADVISER on notice to VALIC and the FUND. Such termination shall be without
the payment of any penalty.
5. OTHER MAKERS
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 SUB-ADVISER so as to require a new
written contract pursuant to the Investment Company Act of 1940. The
compensation of any such persons will be paid by SUB-ADVISER, and no obligation
will be incurred by, or on behalf of, VALIC or the FUND with respect to them.
SUB-ADVISER agrees that all books and records which it maintains for
the FUND are the FUND's property. SUB-ADVISER also agrees upon request of VALIC
for the FUND, to promptly surrender the books and records in accordance with the
Investment Company Act of 1940 and rules thereunder. SUB-ADVISER further agrees
to preserve for the periods prescribed by Rule 31a-2 under the Investment
Company Act of 1940 the records required to be maintained by Rule 31a-1 under
the Investment Company Act of 1940.
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VALIC has herewith furnished SUB-ADVISER copies of the FUND's
Prospectus, Statement of Additional Information, Articles of Incorporation and
Bylaws as currently in effect and agrees during the continuance of this
Agreement to furnish SUB-ADVISER copies of any amendments or supplements thereto
before or at the time the amendments or supplements become effective.
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. 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 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 SUB-ADVISER,
and not to use such material if SUB-ADVISER reasonably objects in writing within
five (5) 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 SUB-ADVISER copies of any of the above-mentioned
materials that refer in any way to SUB-ADVISER. VALIC shall furnish or otherwise
make available to SUB-ADVISER such other information relating to the business
affairs of VALIC and the FUND as SUB-ADVISER at any time, or from time to time,
may reasonably request in order to discharge obligations hereunder.
6. 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
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.
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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: /s/ XXXX X. XXXX
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Name: Xxxx X. Xxxx
Title: President and CEO
ATTEST:
/s/ XXXXXX X. XXXXXX
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BANKERS TRUST COMPANY
By: /s/ XXXXX XXXXXXX
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Name: Xxxxx Xxxxxxx
Title: Managing Director
ATTEST:
/s/ XXXXXX X. XXXX
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SCHEDULE A
(Effective June 4, 1999)
(Bankers Trust Company)
Annual Fee computed at the following annual rate, based on average monthly net
asset value and payable monthly:
MidCap Index Fund........................... .03% on the first $300 million;
.02% on assets over $300 million
No minimum annual fee
Stock Index Fund............................ .02% on the first $2 billion;
.01% on assets over $2 billion
No minimum annual fee
Small Cap Index Fund........................ .03% of the first $150 million
.02% on the excess over $150 million
$50,000 minimum annual fee
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