Exhibit 99.(d)(xxxiv)
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of December 31, 2005, by and
between AIG SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and KINETICS ASSET MANAGEMENT INC. a New York Corporation (the
"Subadviser").
WITNESSETH:
WHEREAS, the Adviser and SunAmerica Focused Series, Inc., a Maryland
corporation (the "Corporation"), have entered into an Investment Advisory and
Management Agreement dated as of January 1, 1999, (the "Advisory Agreement")
pursuant to which the Adviser has agreed to provide investment management,
advisory and administrative services to the Corporation; and
WHEREAS, the Corporation is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company
and may issue shares of common stock, par value $.0001 per share, in separately
designated series representing separate funds with their own investment
objectives, policies and purposes; and
WHEREAS, the Subadviser is engaged in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Adviser desires to retain the Subadviser to furnish
investment advisory services to the investment series of the Corporation listed
on Schedule A attached hereto (the "Portfolio"), and the Subadviser is willing
to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as
follows:
1. DUTIES OF THE SUBADVISER. (a) The Adviser hereby engages the
services of the Subadviser in furtherance of its Investment Advisory and
Management Agreement with the Corporation. Pursuant to this Subadvisory
Agreement and subject to the oversight and review of the Adviser, the Subadviser
will manage the investment and reinvestment of a portion of the assets of each
Portfolio listed on Schedule A attached hereto. The Subadviser will determine in
its sole discretion, and subject to the oversight and review of the Adviser, the
securities to be purchased or sold, will provide the Adviser with records
concerning its activities which the Subadviser is required to maintain, and will
render regular reports to the Adviser and to officers and Directors of the
Corporation concerning its discharge of the foregoing responsibilities. The
Subadviser shall discharge the foregoing responsibilities subject to the control
of the officers and the Directors of the Corporation and in compliance with such
policies as the Directors of the Corporation may from time to time establish and
communicate to Subadviser, and in compliance with (a) the objectives, policies,
and limitations for the Portfolio set forth in the Corporation's current
prospectus and statement of additional information as provided to Subadviser,
and (b) applicable laws and regulations.
The Subadviser shall have no power, authority, responsibility,
or obligation hereunder to take any action with regard to any claim or potential
claim in any bankruptcy
proceedings, class action securities litigation, or other litigation or
proceeding affecting securities held at any time in the Portfolio, including,
without limitation, to file proofs of claim or other documents related to such
proceedings (the "Litigation"), or to investigate, initiate, supervise, or
monitor the Litigation involving Portfolio assets, and the Adviser acknowledges
and agrees that no such power, authority, responsibility or obligation is
delegated hereunder. Nevertheless, the Subadviser agrees that it shall provide
the Adviser with any and all documentation or information relating to the
Litigation as may reasonably be requested by the Adviser that is in the
possession of the Subadviser.
The Subadviser represents and warrants to the Adviser that it
will manage the portion of the assets of each Portfolio set forth in Schedule A
in compliance with all applicable federal and state laws governing its
operations and investments. Without limiting the foregoing and subject to
Section 11(c) hereof, the Subadviser represents and warrants (1) that the
Subadviser's management of the portion of the assets of a Portfolio will be
designed to achieve qualification by each Portfolio to be treated as a
"regulated investment company" under subchapter M, chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code"), and (2) compliance with (a) the
provisions of the Act and rules adopted thereunder that relate to the investment
of Portfolio assets, including depositing those assets in custody with
institutions designated by the Corporation to the extent the Subadviser has the
authority over such assets; and (b) federal and state securities and commodities
laws applicable to Subadviser's portfolio management responsibilities; provided
that for purposes of Section 17(a), (d) and (e) of the Act, the Subadviser shall
effect compliance only in relation to its own affiliates and to affiliated
persons identified to it by the Adviser. The Subadviser further represents and
warrants that to the extent any statements or omissions made in any Registration
Statement for shares of the Corporation, or any amendment or supplement thereto,
are made in reliance upon and in conformity with information furnished by the
Subadviser expressly for use therein, such Registration Statement and any
amendments or supplements thereto will, when they become effective, conform in
all material respects to the requirements of the Securities Act of 1933 and the
rules and regulations of the Commission thereunder (the "1933 Act") and the Act
and will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. The Adviser agrees to notify the Subadviser
in advance of any such statements it intends to use in the Registration
Statement and any amendments or supplements thereto, and will only include such
statements of the Subadviser upon the consent of the Subadviser.
The Subadviser accepts such employment and agrees, at its own
expense, to render the services set forth herein and to provide the office
space, furnishings, equipment and personnel required by it to perform such
services on the terms and for the compensation provided in this Agreement.
(b) The Subadviser agrees: (i) to maintain a level of errors
and omissions or professional liability insurance coverage that, at all times
during the course of this Agreement, is appropriate given the nature of its
business, and (ii) from time to time and upon reasonable request, to supply
evidence of such coverage to the Adviser.
2. PORTFOLIO TRANSACTIONS. (a) The Subadviser is responsible for
decisions, and is hereby authorized, to buy or sell securities and other
investments for each Portfolio, broker-dealers and futures commission merchants'
selection, and negotiation of brokerage commission and futures commission
merchants' rates. As a general matter, in executing Portfolio transactions, the
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Subadviser may employ or deal with such broker-dealers or futures commission
merchants as may, in the Subadviser's best judgement, provide prompt and
reliable execution of the transactions at favorable prices and reasonable
commission rates, including an affiliated broker-dealer. In selecting such
broker-dealers or futures commission merchants, the Subadviser shall consider
all relevant factors including price (including the applicable brokerage
commission, dealer spread or futures commission merchant rate), the size of the
order, the nature of the market for the security or other investment, the timing
of the transaction, the reputation, experience and financial stability of the
broker-dealer or futures commission merchant involved, the quality of the
service, the difficulty of execution, the execution capabilities and operational
facilities of the firm involved, and, in the case of securities, the firm's risk
in positioning a block of securities. Subject to such policies as the Directors
may determine and consistent with Section 28(e) of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), the Subadviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of the Subadviser's having caused a Portfolio to pay
a member of an exchange, broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
if the Subadviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member of an exchange, broker or dealer viewed in terms of
either that particular transaction or the Subadviser's overall responsibilities
with respect to such Portfolio and to other clients as to which the Subadviser
exercises investment discretion. 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 Act and Rule 17e-1 thereunder, the
Subadviser may engage its affiliates, the Adviser and its affiliates or any
other subadviser to the Corporation and its respective affiliates, as
broker-dealers or futures commission merchants to effect Portfolio transactions
in securities and other investments for a Portfolio. The Subadviser will
promptly communicate to the Adviser and to the officers and the Directors of the
Corporation such information relating to Portfolio transactions as they may
reasonably request, including but not limited to, reports prepared by
independent third parties relating to the execution costs of such transactions.
To the extent consistent with applicable law, the Subadviser may aggregate
purchase or sell orders for the Portfolio with contemporaneous purchase or sell
orders of other clients of the Subadviser or its affiliated persons. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Subadviser in the
manner the Subadviser determines to be equitable and consistent with its and its
affiliates' fiduciary obligations to the Portfolio and to such other clients.
The Adviser hereby acknowledges that such aggregation of orders may not result
in more favorable pricing or lower brokerage commissions in all instances.
(b) Notwithstanding Section 2(a) above, for such purposes as
obtaining investment research products and services, covering fees and expenses,
the Adviser may request the Subadviser to effect a specific percentage of the
transactions in securities and other investments it effects on behalf of the
Portfolio with certain broker-dealers and futures commission merchants, however,
the Subadviser shall not be required in any instance to effect transactions
through broker-dealers requested by the Adviser. In designating the use of a
particular broker-dealer or futures commission merchant, the Adviser and
Subadviser acknowledge and agree that all brokerage transactions are subject to
best execution. As such, Subadviser will use its best efforts to direct non-risk
commission transactions to a particular broker-dealer or futures commission
merchant designated by the Adviser provided that the Subadviser obtains best
execution. Adviser acknowledges that Subadviser may be unable to fulfill the
Adviser's request for direction for a number of reasons, including, but not
limited to: 1) such direction may result in
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the Subadviser paying a higher commission, depending upon the Subadviser's
arrangements with the particular broker-dealer or futures commission merchant,
etc; 2) if the Subadviser directs payments of an excessive amount of
commissions, the executions may not be accomplished as rapidly; 3) the
Subadviser may forfeit the possible advantage derived from the aggregation of
multiple orders as a single "bunched" transaction where Subadviser would, in
some instances, be in a better position to negotiate commissions; and 4)
Subadviser does not make commitments to allocate fixed or definite amounts of
commissions to brokers.
3. COMPENSATION OF THE SUBADVISER. The Subadviser shall not be entitled
to receive any payment from the Corporation and shall look solely and
exclusively to the Adviser for payment of all fees for the services rendered,
facilities furnished and expenses paid by it hereunder. As full compensation for
the Subadviser under this Agreement, the Adviser agrees to pay to the Subadviser
a fee at the annual rates set forth in Schedule A hereto with respect to the
portion of the assets managed by the Subadviser for each Portfolio listed
thereon. Such fee shall be accrued daily and paid monthly as soon as practicable
after the end of each month, but not later than thirty (30) days after the end
of a particular month (i.e., the applicable annual fee rate divided by 365
applied to each prior days' net assets in order to calculate the daily accrual).
If the Subadviser shall provide its services under this Agreement for less than
the whole of any month, the foregoing compensation shall be prorated.
4. OTHER SERVICES. At the request of the Corporation or the Adviser,
the Subadviser in its discretion may make available to the Corporation office
facilities, equipment, personnel and other services. Such office facilities,
equipment, personnel and services shall be provided for or rendered by the
Subadviser and billed to the Corporation or the Adviser at the Subadviser's
cost.
5. REPORTS. The Corporation, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs and that of the Corporation as each may reasonably request.
6. STATUS OF THE SUBADVISER. The services of the Subadviser to the
Adviser and the Corporation are not to be deemed exclusive, and the Subadviser
shall be free to render similar services to others and to use the same or other
information and investment strategy utilized in the performance of services to
the Corporation for such other accounts. Nothing herein shall prevent the
Subadviser, its principles and affiliates from trading in financial instruments
or other investments for their own accounts or for other accounts the Subadviser
or its affiliates manages. The Subadviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Corporation in any way or otherwise be
deemed an agent of the Corporation.
7. ADVERTISING. Subadviser shall not provide or in any way distribute
any sales or advertising materials, whether or not related to the Corporation,
to any employee or representative of AIG SunAmerica Capital Services, Inc.
("SACS") or its affiliates, including wholesaling personnel, unless such
material has been received and approved, in writing, by the Adviser.
Notwithstanding the foregoing, Subadviser may include the Adviser's and
Corporation's names in its "client list" used in promotional materials with
prior consent of the Adviser and/or Corporation. The Subadviser shall have no
liability for any advertising materials prepared exclusively by the Adviser
and/or Corporation, without reliance on any statement or omission to make any
statement by the Subadviser.
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8. PROXY VOTING. Each Portfolio has appointed Investor Responsibility
Research Center as the proxy-voting agent and will vote all such proxies in
accordance with the proxy voting policies and procedures adopted by the Board of
Directors. With respect to certain vote items, a Portfolio may request guidance
or a recommendation from the adviser, administrator or subadviser of the
Portfolio. The Subadviser shall not have responsibilities in connection with
proxy voting for a Portfolio unless it is affirmatively requested to make a
proxy voting recommendation, in which case the Subadviser's sole responsibility
shall be to make such a recommendation.
9. CERTAIN RECORDS. The Subadviser hereby undertakes and agrees to
maintain, in the form and for the period required by Rule 31a-2 under the Act,
all records relating to its investments of the Portfolio, and the Subadviser's
duties and obligations under Section 1 hereof, that are required to be
maintained by the Corporation pursuant to the requirements of Rule 31a-1 of that
Act;. Copies of any records required to be maintained and preserved pursuant to
the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Act which are
prepared or maintained by the Subadviser on behalf of the Corporation will be
provided promptly to the Corporation or the Adviser on request.
The Subadviser 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 Corporation's
auditors, the Corporation or any representative of the Corporation, the Adviser,
or any governmental agency or other instrumentality having regulatory authority
over the Corporation.
10. REFERENCE TO THE SUBADVISER. Neither the Corporation nor the
Adviser or any affiliate or agent thereof shall make reference to or use the
name or logo of the Subadviser or any of its affiliates in any advertising or
promotional materials without the prior approval of the Subadviser, which
approval shall not be unreasonably withheld.
11. LIABILITY OF THE SUBADVISER. (a) In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties ("disabling conduct") hereunder on the part of the Subadviser (and its
officers, directors, agents, employees, controlling persons, shareholders and
any other person or entity affiliated with the Subadviser), the Subadviser shall
not be subject to liability to the Adviser, its officers, directors, agents,
employees, controlling persons or shareholders or to the Corporation or to any
shareholder of the Corporation for any act or omission in the course of, or
connected with, rendering services hereunder, including without limitation, any
error of judgment or mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct, the Adviser shall indemnify the
Subadviser (and its officers, directors, partners, agents, employees,
controlling persons, shareholders and any other person or entity affiliated with
the Subadviser) (collectively, the "Indemnified Parties") from any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses) arising from the Subadviser's providing services under this
Agreement or the sale of securities of the Corporation.
(b) The Subadviser agrees to indemnify and hold harmless the
Adviser and its affiliates and each of its directors and officers and each
person, if any, who controls the Adviser
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within the meaning of Section 15 of the 1933 Act against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses), to which the Adviser or its affiliates or such directors, officers or
controlling person may become subject under the 1933 Act, under other statutes,
at common law or otherwise, which are caused by Subadviser's disabling conduct;
provided, however, that in no case is the Subadviser's indemnity in favor of any
person deemed to protect such other persons against any liability to which such
person would otherwise be subject by reasons of willful misfeasance, bad faith,
or gross negligence in the performance of his, her or its duties or by reason of
his, her or its reckless disregard of obligation and duties under this
Agreement.
(c) The Subadviser shall not be liable to the Adviser its
officers, directors, agents, employees, controlling persons or shareholders or
to the Corporation or its shareholders for (i) any acts of the Adviser or any
other subadviser to the Portfolio with respect to the portion of the assets of a
Portfolio not managed by Subadviser and (ii) acts of the Subadviser which result
from or are based upon acts of the Adviser, including, but not limited to, a
failure of the Adviser to provide accurate and current information with respect
to any records maintained by Adviser or any other subadviser to a Portfolio,
which records are not also maintained by the Subadviser or, to the extent such
records relate to the portion of the assets managed by the Subadviser, otherwise
available to the Subadviser upon reasonable request. The Adviser and Subadviser
each agree that the Subadviser shall manage the portion of the assets of a
Portfolio allocated to it as if it was a separate operating portfolio and shall
comply with subsections (a) and (b) of Section 1of this Subadvisory Agreement
(including, but not limited to, the investment objectives, policies and
restrictions applicable to a Portfolio and qualifications of a Portfolio as a
regulated investment company under the Code) only with respect to the portion of
assets of a Portfolio allocated to Subadviser. The Adviser shall indemnify the
Indemnified Parties from any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses) arising from the
conduct of the Adviser, the Corporation and any other subadviser with respect to
the portion of a Portfolio's assets not allocated to the Subadviser and with
respect to any other portfolio of the Corporation.
12. CONFIDENTIALITY. The Subadviser 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 or as reasonably
required to execute transactions on behalf of the Portfolios, and will keep
confidential any non-public information obtained directly as a result of this
service relationship, and the Subadviser shall disclose such non-public
information only if the Adviser or the Board of Directors has authorized such
disclosure by prior written consent, or if such information is or hereafter
otherwise is known by the Subadviser or has been disclosed, directly or
indirectly, by the Adviser or the Corporation 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 duly authorized subpoena, or to the extent such disclosure is
reasonably required by auditors or attorneys of the Subadviser in connection
with the performance of their professional services or as may otherwise be
contemplated by this Agreement. Notwithstanding the foregoing, the Subadviser
may disclose the total return earned by the Portfolios and may include such
total return in the calculation of composite performance information.
The Adviser and the Corporation acknowledge that, pursuant to Rule
38a-1 under the Act, that the Corporation has adopted policies and procedures
reasonably designed to protect the confidentiality of the Corporation's
portfolio holdings information, and that these procedures
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provide for the oversight of compliance by the Adviser. The Adviser and
Corporation further acknowledge and agree that the trading instructions,
methods, and systems of the Subadviser are the property of the Subadviser and
agree that they will keep confidential and will not disseminate such
instructions, methods or systems, or any documents, statements, agreements or
workpapers provided to the Adviser or the Corporation hereunder, except to the
extent such information is expressly required or requested by applicable federal
or state regulatory authorities or a duly authorized subpoena.
13. PERMISSIBLE INTERESTS. Directors and agents of the Corporation are
or may be interested in the Subadviser (or any successor thereof) as directors,
partners, officers, or shareholders, or otherwise; directors, partners,
officers, agents, and shareholders of the Subadviser are or may be interested in
the Corporation as Directors, or otherwise; and the Subadviser (or any
successor) is or may be interested in the Corporation in some manner.
14. TERM OF THE AGREEMENT. This Agreement shall continue in full force
and effect with respect to each Portfolio until two years from the date hereof,
and from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Directors of
the Corporation who are not parties to this Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by the Directors of the Corporation or by vote of a
majority of the outstanding voting securities of the Portfolio voting separately
from any other series of the Corporation.
With respect to each Portfolio, this Agreement may be
terminated at any time, without payment of a penalty by the Portfolio or the
Corporation, by vote of a majority of the Directors, or by vote of a majority of
the outstanding voting securities (as defined in the Act) of the Portfolio,
voting separately from any other series of the Corporation, or by the Adviser,
on not less than 30 nor more than 60 days' written notice to the Subadviser.
With respect to each Portfolio, this Agreement may be terminated by the
Subadviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser and the Corporation. The termination of this Agreement
with respect to any Portfolio or the addition of any Portfolio to Schedule A
hereto (in the manner required by the Act) shall not affect the continued
effectiveness of this Agreement with respect to each other Portfolio subject
hereto. This Agreement shall automatically terminate in the event of its
assignment (as defined by the Act).
This Agreement will also terminate in the event that the
Advisory Agreement by and between the Corporation and the Adviser is terminated.
15. SEVERABILITY. This Agreement constitutes the entire Agreement
between the parties hereto. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
16. AMENDMENTS. This Agreement may be amended by mutual consent in
writing, but the consent of the Corporation must be obtained in conformity with
the requirements of the Act.
17. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of the Act. To
the extent the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Act, the
latter shall control.
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18. SEPARATE SERIES. Pursuant to the provisions of the Articles of
Incorporation and the General Laws of the State of Maryland, each Portfolio is a
separate series of the Corporation, and all debts, liabilities, obligations and
expenses of a particular Portfolio shall be enforceable only against the assets
of that Portfolio and not against the assets of any other Portfolio or of the
Corporation as a whole.
19. NOTICES. All notices shall be in writing and deemed properly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed as follows:
Subadviser: Kinetics Asset Management, Inc.
00 Xxx Xxxxxxxx
Xxxxxx Xxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
Adviser: AIG SunAmerica Asset Management Corp.
Harborside Financial Center
0000 Xxxxx 0
Xxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Attention: Legal Department
IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.
AIG SUNAMERICA ASSET MANAGEMENT CORP.
By:
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
KINETICS ASSET MANAGEMENT, INC.
By:
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Chief Financial Officer
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