1
EXHIBIT 5.(D)(1)
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT made this 24th day of February, 1994, by and between THE VARIABLE
ANNUITY LIFE INSURANCE COMPANY, hereinafter referred to as "VALIC," and ▇. ▇▇▇▇
PRICE ASSOCIATES, INC., 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 Science &
Technology and Growth Portfolio(s) 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, Timed Opportunity 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, and Science & Technology Portfolio, Growth & Income Portfolio
and Growth 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 portfolio(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 Funds").
(d) 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:
(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.
1
2
(b) 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 approval by the FUND's Board of
Directors of appropriate policies and procedures, SUB-ADVISER may cause the
Covered Funds 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 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.
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.
2
3
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, but in any event no later than
thirty (30) days following the end of the 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 1.(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-ADVISER'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 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, and VALIC shall indemnity SUB-ADVISER, 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.
3
4
4. DURATION OF AGREEMENT
This Agreement shall become effective as to the portfolios set forth on
Schedule A on the date hereof and as to any other Funds on the date of the
Amendment to Schedule A adding such Fund(s) 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 MATTERS
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 3la-1 under
the Investment Company Act of 1940.
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 ten
(10) business days (or such other time as may be mutually agreed) after receipt
thereof. In the event of termination of this agreement,
4
5
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.
VALIC agrees to indemnify 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 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 made in reliance on information provided by the
SUB-ADVISER Or its affiliates.
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 Investment Sub-Advisory Agreement,
including a negligent failure whether unintentional or in good faith or
otherwise, to comply with the diversification requirements specified in section
817(h), and the qualification standards of Subchapter M of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder, (other than a failure
which is subsequently timely corrected by SUB-ADVISER in accordance with
applicable law and regulations such that no loss is incurred by VALIC or a
Covered Fund) 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 to
the extent any such statement or omission was made in reliance on information
provided by the SUB-ADVISER or its affiliates.
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.
5
6
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/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
ATTEST:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Secretary
▇. ▇▇▇▇ PRICE ASSOCIATES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
ATTEST:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇
-----------------------------------
Assistant Secretary
6
7
SCHEDULE A
(Effective May 1, 1994)
Annual Fee computed at the following annual rate, based on average monthly net
asset value and payable monthly:
Growth Portfolio . . . . . . . . . .
Science & Technology Portfolio . . .
7
