EXHIBIT d (4)(15)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT made this 20th day of October, 2004, by and between THE VARIABLE
ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and A I M
CAPITAL MANAGEMENT, INC., 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 II
("XX XX"), an investment company organized under the laws of
Delaware as a business trust. XX XX 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) XX XX currently consists of fifteen portfolios ("Funds"):
Aggressive Growth Lifestyle Fund
Capital Appreciation Fund
Conservative Growth Lifestyle Fund
Core Bond Fund
High Yield Bond Fund
International Small Cap Equity Fund
Large Cap Value Fund
Mid Cap Growth Fund
Mid Cap Value Fund
Moderate Growth Lifestyle Fund
Money Market II Fund
Small Cap Growth Fund
Small Cap Value Fund
Socially Responsible Fund
Strategic Bond Fund
In accordance with the XX XX Agreement and Declaration of
Trust (the "Declaration"), new Funds may be added to XX XX
upon approval of the Board of Trustees without the approval of
shareholders. This Agreement will apply only to the Covered
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)").
(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.
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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 XX XX Board of Trustees 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 XX XX
Declaration, Bylaws, registration statements, prospectus and stated
investment objectives, policies and restrictions and any applicable
procedures adopted by the XX XX Board of Trustees and provided to
the SUB-ADVISER in writing, 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.
The SUB-ADVISER will assist the Covered Fund(s) and its agents in
determining whether prices obtained for valuation purposes
accurately reflect the prices on the SUB-ADVISER's portfolio records
relating to the assets of the Covered Fund(s) for which the
SUB-ADVISER has responsibility on a monthly basis (unless otherwise
agreed upon by the parties hereto) and at such other times as VALIC
shall reasonably request; provided, however, that the parties
acknowledge that the SUB-ADVISER is not the fund accounting agent
for the Covered Fund(s) and is not responsible for pricing
determinations or calculations and any information provided pursuant
to this position by SUB-ADVISER will be provided for information
purposes only.
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 XX XX Board of Trustees 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.
VALIC may direct the SUB-ADVISER to use a particular broker or
dealer for one or more trades if, in the sole opinion of VALIC, it
is in the best interest of the Covered Fund to do so. Any such
direction shall be in writing and in a form satisfactory to
SUB-ADVISER.
VALIC authorizes and empowers the SUB-ADVISER to direct the Covered
Fund's Custodian to open and maintain brokerage accounts for
securities and other property, including financial and commodity
futures and commodities and options thereon (all such accounts
hereinafter called "brokerage accounts") for and in the name of the
Covered Fund(s) and to execute for the Covered Fund(s) as its agent
and attorney-in-fact standard customer agreements with such broker
or brokers as the SUB-ADVISER shall select as provided above. With
respect to brokerage accounts for financial and commodity futures
and commodities and options thereon, the
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SUB-ADVISER shall select such brokers, as approved by VALIC,
prior to the establishment of such brokerage account. The
SUB-ADVISER may, using such of the securities and other property in
the Covered Fund as the SUB-ADVISER deems necessary or desirable,
direct the Covered Fund's Custodian to deposit for the Covered Fund
original and maintenance brokerage and margin deposits and otherwise
direct payments of cash, cash equivalents and securities and other
property into such brokerage accounts and to such brokers as the
SUB-ADVISER deems desirable or appropriate.
The SUB-ADVISER shall maintain records adequately demonstrating
compliance with its obligations under this Agreement and report
periodically to VALIC and the XX XX Board of Trustees regarding the
performance of its services under this Agreement. The SUB-ADVISER
will make available to VALIC and XX XX promptly upon their
reasonable written request all of the Covered Fund(s)' investment
records and ledgers to assist VALIC and XX XX 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 Trustees such
periodic and special reports as VALIC and the XX XX 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 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 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
Trustees 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 XX XX 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. 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 XX XX Board of Trustees.
The SUB-ADVISER will not hold money or investments on behalf of XX
XX. The money and investments will be held by the Custodian of the
XX XX. The SUB-ADVISER will arrange for the transmission to the
Custodian for XX XX, 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 XX XX (i) to pay cash for securities and
other property delivered to the Custodian for XX XX, (ii) to deliver
securities and other property against payment for XX XX, 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 Covered Fund(s) 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 Covered Fund(s) 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 Covered Fund(s) by the SUB-ADVISER is
subjective and represents the SUB-ADVISER's evaluation that the
Covered Fund(s) 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.
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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 or represent VALIC or XX XX
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 SUB-ADVISER acknowledge that XX XX will be ultimately
responsible for all brokerage commissions, taxes, custodian fees and
other transaction-related fees incurred on behalf of the Covered
Fund(s).
The SUB-ADVISER is hereby prohibited from consulting with any other
sub-adviser of the Covered Fund(s) (or a portion thereof) or any
other sub-adviser to a fund under common control with the Covered
Fund(s) (or a portion thereof) concerning securities transactions of
the Covered Fund(s) (or a portion thereof) in securities or other
assets.
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 daily 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 XX XX Declaration 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 daily 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 XX XX 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 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 XX XX.
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.
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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, XX XX, or to any
shareholder in the Covered 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 Covered Fund(s) 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 the Covered Fund complies with such Code
diversification provisions, as directed by VALIC.
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
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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 Covered 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 XX XX 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 XX XX 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 XX XX as it relates to any Covered Fund(s). The Agreement
may be terminated as to any Covered Fund at any time, without the
payment of any penalty, by vote of VC II's Board of Trustees or by
vote of a majority of that Covered Fund's outstanding voting
securities on not more than 60 days' nor less than 30 days' 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 not more than 60 days' nor less than 30
days' 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 not more than 60
days' nor less than 30 days' 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 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 Covered Fund(s) with respect to them.
The SUB-ADVISER agrees that all books and records which it maintains
for the Covered Fund(s) are the Covered Fund's property. The
SUB-ADVISER also agrees upon request of VALIC or VC I, 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 VC II'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. 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 Covered
Fund(s) 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
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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 Covered Fund(s)
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 Covered Fund(s) 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, 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 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 Covered
Fund(s), except insofar as any such statement or omission was
specifically made in reliance on written information provided by the
SUB-ADVISER to VALIC.
The SUB-ADVISER agrees to indemnify VALIC for losses and claims
which arise (i) as a result of the willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties by
the SUB-ADVISER; 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 Covered
Fund(s), but only to the extent that such statement or omission was
specifically made in reliance on written information provided by the
SUB-ADVISER to VALIC.
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.
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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:
AIM Legal Department
A I M Capital Management, Inc.
00 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
ATTN: Xxx Xxxxxxxx, Associate General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
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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:
A I M CAPITAL MANAGEMENT, INC.
By:________________________________
Name:______________________________
Title:_____________________________
ATTEST:
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SCHEDULE A
(Effective October 20, 2004)
Annual Fee computed at the following annual rate, based on average daily net
asset value for each month and payable monthly:
Covered Fund Fee
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Mid Cap Growth Fund 0.55% on the first $50 million
0.50% on the next $50 million
0.45% on the next $150 million
0.40% on the next $250 million
0.35% over $500 million
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