SUB-ADVISORY AGREEMENT
BETWEEN
AEGON/TRANSAMERICA FUND ADVISERS, INC.
AND
X. XXXX PRICE ASSOCIATES, INC.
SUB-ADVISORY AGREEMENT, made as of June 15, 2004, between
AEGON/Transamerica Fund Advisers, Inc. ("Investment Adviser"), a corporation
organized and existing under the laws of the State of Florida and X. Xxxx Price
Associates, Inc. ("Sub-Adviser"), a corporation organized and existing under the
laws of the State of Maryland.
WHEREAS, the Investment Adviser acts as an investment adviser to
Transamerica IDEX Mutual Funds ("Transamerica IDEX"), a Massachusetts business
trust which is engaged in business as an open-end management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
pursuant to an investment advisory agreement dated June 15, 2004 (the "Advisory
Agreement");
WHEREAS, Transamerica IDEX is authorized to issue shares of TA IDEX
X. Xxxx Price Equity Income (the "Fund"), a separate series of Transamerica
IDEX;
WHEREAS, the Sub-Adviser is engaged principally in the business of
rendering investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended ("Advisers Act");
and
WHEREAS, the Investment Adviser desires to retain the Sub-Adviser as
sub-adviser to furnish certain investment advisory services to the Investment
Adviser with respect to the Fund and the Sub-Adviser is willing to furnish such
services.
NOW, THEREFORE, in consideration of the premises and mutual promises
herein set forth, the parties hereto agree as follows:
1. APPOINTMENT.
Investment Adviser hereby appoints the Sub-Adviser as its investment
sub-adviser with respect to the Fund for the period and on the terms set forth
in this Agreement. The Sub-Adviser accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
2. DUTIES OF THE SUB-ADVISER.
A. Investment Sub-Advisory Services. Subject to the
supervision of the Transamerica IDEX Board of Trustees ("Board") and the
Investment Adviser, the Sub-Adviser shall act as the investment sub-adviser and
shall supervise and direct the investments of the Fund in accordance with the
Fund's investment objective, policies, and restrictions as provided in the
Transamerica IDEX Prospectus and Statement of Additional Information, as
currently in effect and as amended or supplemented from time to time
(hereinafter referred to as the "Prospectus"), and such other limitations as
directed by the appropriate officers of the Investment Adviser or Transamerica
IDEX by notice in writing to the Sub-Adviser. The Sub-Adviser shall obtain and
evaluate such information relating to the economy, industries, businesses,
securities markets, and securities as it may deem necessary or useful in the
discharge of its obligations hereunder and shall formulate and implement a
continuing program for the management of the assets and resources of the Fund in
a manner consistent with the Fund's investment objective, policies, and
restrictions. In furtherance of this duty, the Sub-Adviser, on behalf of the
Fund, is authorized, in its discretion and without prior consultation with the
Fund or the Investment Adviser, to:
(1) buy, sell, exchange, convert, lend, and otherwise trade in
any stocks, bonds and other securities or assets;
(2) place orders and negotiate the commissions (if any) for
the execution of transactions in securities or other assets
with or through such brokers, dealers, underwriters or issuers
as the Sub-Adviser may select; and
(3) undertake to do anything incidental to the foregoing to
facilitate the performance of the Sub-Adviser's obligations
hereunder, including voting or exercising any consent rights
with respect to such securities or investments, provided the
custodian for the Fund has furnished such proxy materials and
other items in a timely fashion to Sub-Advisor to enable it to
vote or exercise any consent rights.
1
B. Additional Duties of Sub-Adviser. In addition to the
above, Sub-Adviser shall:
(1) furnish continuous investment information, advice and
recommendations to Transamerica IDEX as to the acquisition,
holding or disposition of any or all of the securities or
other assets which the Fund may own or contemplate acquiring
from time to time;
(2) cause its officers to attend meetings of Transamerica IDEX
and furnish oral or written reports, as Transamerica IDEX may
reasonably require, in order to keep Transamerica IDEX and its
officers and Board fully informed as to the condition of the
investment securities of the Fund, the investment
recommendations of the Sub-Adviser, and the investment
considerations which have given rise to those recommendations;
and
(3) furnish such statistical and analytical information and
reports as may reasonably be required by Transamerica IDEX
from time to time.
The Sub-Adviser shall not consult with any other sub-adviser to the
Fund or a sub-adviser to a series that is under common control with the
Fund concerning transactions in securities and other assets of the Fund,
except as permitted by the policies and procedures of the Fund.
C. Further Duties of Sub-Adviser. In all matters
relating to the performance of this Agreement, the Sub-Adviser shall act in
conformity with the Transamerica IDEX Restatement of Declaration of Trust and
By-Laws, as each may be amended or supplemented, and currently effective
Registration Statement (as defined below) and with the written instructions and
directions of the Board and the Investment Adviser, and shall comply with the
requirements of the 1940 Act, the Advisers Act, the rules thereunder, and all
other applicable federal and state laws and regulations.
3. COMPENSATION.
For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, the Sub-Adviser shall receive monthly an
investment management fee as specified in Schedule A of this Agreement. If this
Agreement becomes effective or terminates before the end of any month, the
investment management fee for the period from the effective date to the end of
such month or from the beginning of such month to the date of termination, as
the case may be, shall be pro-rated according to the pro-ration which such
period bears to the full month in which such effectiveness or termination
occurs. The Investment Adviser will provide a worksheet with the monthly payment
showing the calculation of the Sub-Adviser's investment management fee.
In the event the Fund is subject to an expense limitation, and such
limitation requires the deferral of any advisory fees due the Investment
Adviser, then the sub-advisory fee due Sub-Adviser under this Section shall also
be deferred in the same proportion that the fee otherwise due Sub-Adviser bears
to the advisory fee otherwise due Investment Adviser. With respect to the
Sub-Adviser's obligation to reimburse the Fund for the Sub-Adviser's pro rata
share of the expenses in excess of the Fund's expense limitation, the total
amount to be reimbursed or waived by the Sub-Adviser shall not be greater than
the amount of sub-advisory fees the Sub-Adviser would have received under the
fee schedule. Furthermore, to the extent the Investment Adviser recaptures or is
reimbursed any portion of its advisory fee in future periods, then the
Investment Adviser shall pay Sub-Adviser a portion of such recaptured or
reimbursed fee in the proportion that the sub-advisory fee otherwise due
Sub-Adviser bears to the management fee otherwise due the Investment Adviser. If
at the end of five (5) years from the date of the Fund's inception, the
Sub-Adviser has not recaptured or been reimbursed in full for the deferred
sub-advisory fee otherwise owed to it under this Section, the Investment Adviser
shall pay Sub-Adviser all such fees notwithstanding the Investment Adviser's
agreement with respect to the deferral of its investment management fees. The
obligation of the Investment Adviser to pay any such deferred fee to Sub-Adviser
shall survive termination of this Agreement and all deferred fees shall be paid
promptly to Sub-Adviser in such case. Upon the expiration of five years from the
date of this Agreement, the Investment Adviser shall pay to the Sub-Adviser all
deferred fees.
4. DUTIES OF THE INVESTMENT ADVISER.
A. The Investment Adviser shall continue to have
responsibility for all services to be provided to the Fund pursuant to the
Advisory Agreement and shall oversee and review the Sub-Adviser's performance of
its duties under this Agreement. Notwithstanding the Advisory Agreement, the
Sub-Adviser has the authority to buy, sell, exchange, convert, lend, and
otherwise trade in
2
any stocks, bonds and other securities or assets on behalf of the Fund.
B. The Investment Adviser has furnished the Sub-Adviser
with copies of each of the following documents and will furnish to the
Sub-Adviser at its principal office all future amendments and supplements to
such documents, if any, as soon as practicable after such documents become
available:
(1) The Transamerica IDEX Restatement of Declaration of
Trust, as filed with the State of Massachusetts, as in
effect on the date hereof and as amended from time to
time ("Trust");
(2) The By-Laws of Transamerica IDEX as in effect on the
date hereof and as amended from time to time
("By-Laws");
(3) Certified resolutions of the Board of Transamerica
IDEX authorizing the appointment of the Investment
Adviser and the Sub-Adviser and approving the form of
the Advisory Agreement and this Agreement;
(4) The Transamerica IDEX Registration Statement under
the 1940 Act and the Securities Act of 1933, as amended,
on Form N-1A, as filed with the Securities and Exchange
Commission ("SEC") relating to the Fund and its shares
and all amendments thereto ("Registration Statement");
(5) The Transamerica IDEX Prospectus (as defined above);
(6) A certified copy of any publicly available financial
statement or report prepared for Transamerica IDEX by
certified or independent public accountants, and copies
of any financial statements or reports made by the Fund
to its shareholders or to any governmental body or
securities exchange.
The Investment Adviser shall furnish the Sub-Adviser with any
further documents, materials or information that the Sub-Adviser may reasonably
request to enable it to perform its duties pursuant to this Agreement.
C. During the term of this Agreement, the Investment
Adviser shall furnish to the Sub-Adviser at its principal office all
prospectuses, proxy statements, reports to shareholders, sales literature, or
other material prepared for distribution to shareholders of the Fund or the
public, which refer to the Fund, the Sub-Adviser or investment companies or
other advisory accounts advised or sponsored by the Sub-Adviser or investment
companies or other advisory accounts advised or sponsored by the Sub-Adviser in
any way, prior to the use thereof, and the Investment Adviser shall not use any
such materials if the Sub-Adviser reasonably objects in writing fifteen business
days (or such other time as may be mutually agreed) after receipt thereof.
5. BROKERAGE.
A. The Sub-Adviser agrees that, in placing orders with
broker-dealers for the purchase or sale of portfolio securities, it shall
attempt to obtain quality execution at favorable security prices (best price and
execution); provided that, on behalf of the Fund, the Sub-Adviser may, in its
discretion, agree to pay a broker-dealer that furnishes brokerage or research
services as such services are defined under Section 28(e) of the Securities
Exchange Act of 1934, as amended ("1934 Act"), a higher commission than that
which might have been charged by another broker-dealer for effecting the same
transactions, if the Sub-Adviser determines in good faith that such commission
is reasonable in relation to the brokerage and research services provided by the
broker-dealer, viewed in terms of either that particular transaction or the
overall responsibilities of the Sub-Adviser with respect to the accounts as to
which it exercises investment discretion (as such term is defined under Section
3(a)(35) of the 1934 Act). In no instance will portfolio securities be purchased
from or sold to the Sub-Adviser, or any affiliated person thereof, except in
accordance with the federal securities laws and the rule and regulations
thereunder.
B. On occasions when the Sub-Adviser deems the purchase
or sale of a security to be in the best interest of the Fund, as well as
other clients of the Sub-Adviser, the Sub-Adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be purchased or sold to attempt to obtain a more
favorable price or lower brokerage commissions and efficient execution. 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 Sub-Adviser in the
manner the Sub-Adviser considers to be the most equitable and consistent with
its fiduciary obligations to the Fund and to its other clients.
3
C. In addition to the foregoing, the Sub-Adviser agrees
that orders with broker-dealers for the purchase or sale of portfolio
securities by the Fund shall be placed in accordance with the standards set
forth in the Advisory Agreement.
6. OWNERSHIP OF RECORDS.
The Sub-Adviser shall maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of
Transamerica IDEX. In compliance with the requirements of Rule 31a-3 under the
1940 Act, the Sub-Adviser hereby agrees: (i) that all records that it maintains
for the Fund are the property of Transamerica IDEX, (ii) to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act any records that it
maintains for the Fund and that are required to be maintained by Rule 31a-1
under the 1940 Act and (iii) agrees to surrender promptly to Transamerica IDEX
any records that it maintains for the Fund upon request by Transamerica IDEX;
provided, however, the Sub-Adviser may retain copies of such records.
7. REPORTS.
The Sub-Adviser shall furnish to the Board or the Investment
Adviser, or both, as appropriate, such information, reports, evaluations,
analyses and opinions as the Sub-Adviser and the Board or the Investment
Adviser, as appropriate, may mutually agree upon from time to time.
8. SERVICES TO OTHER CLIENTS.
Nothing contained in this Agreement shall limit or restrict (i) the
freedom of the Sub-Adviser, or any affiliated person thereof, to render
investment management and corporate administrative services to other investment
companies, to act as investment manager or investment counselor to other
persons, firms, or corporations, or to engage in any other business activities,
or (ii) the right of any director, officer, or employee of the Sub-Adviser, who
may also be a director, officer, or employee of Transamerica IDEX, to engage in
any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar nature
or a dissimilar nature.
9. SUB-ADVISER'S USE OF THE SERVICES OF OTHERS.
The Sub-Adviser may (at its cost except as contemplated by Section 5
of this Agreement) employ, retain, or otherwise avail itself of the services or
facilities of other persons or organizations for the purpose of obtaining such
statistical and other factual information, such advice regarding economic
factors and trends, such advice as to occasional transactions in specific
securities, or such other information, advice, or assistance as the Sub-Adviser
may deem necessary, appropriate, or convenient for the discharge of its
obligations hereunder or otherwise helpful to the Sub-Adviser, as appropriate,
or in the discharge of Sub-Adviser's overall responsibilities with respect to
the other accounts that it serves as investment manager or counselor, provided
that the Sub-Adviser shall at all times retain responsibility for making
investment recommendations with respect to the Fund.
10. LIMITATION OF LIABILITY OF THE SUB-ADVISER.
Neither the Sub-Adviser nor any of its officers, directors, or
employees, nor any person performing executive, administrative, trading, or
other functions for Transamerica IDEX or the Fund (at the direction or request
of the Sub-Adviser) or the Sub-Adviser in connection with the Sub-Adviser's
discharge of its obligations undertaken or reasonably assumed with respect to
this Agreement, shall be liable for any error of fact or mistake of law
contained in any report or date provided by the Sub-Adviser, except for any
error, mistake or loss resulting from willful misfeasance, bad faith, or gross
negligence in the performance of its or his duties on behalf of Transamerica
IDEX or the Fund or from reckless disregard by the Sub-Adviser or any such
person of the duties of the Sub-Adviser pursuant to this Agreement.
11. REPRESENTATIONS OF SUB-ADVISER.
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
4
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
Investment Adviser 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 the Investment Adviser and Transamerica
IDEX with a copy of such code of ethics, together with evidence of its adoption.
C. The Sub-Adviser has provided the Investment Adviser
and Transamerica IDEX with a copy of its Form ADV as most recently filed
with the SEC and will, within a reasonable time after filing any amendment to
its Form ADV with the SEC, furnish a copy of such amendment to the Investment
Adviser in connection with its annual contract renewal.
12. TERM OF AGREEMENT.
This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those members of the Board who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting of the Board called for the purpose of voting on such
approval, and (ii) by vote of a majority of the Fund's outstanding voting
securities. 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 from year to year, with respect to the Fund,
subject to the termination provisions and all other terms and conditions hereof,
so long as such continuation shall be specifically approved at least annually
(a) by either the Board, or by vote of a majority of the outstanding voting
securities of the Fund; and (b) in either event, by the vote, cast in person at
a meeting of the Board called for the purpose of voting on such approval, of a
majority of the members of the Board who are not parties to this Agreement or
interested persons of any such party. The Sub-Adviser shall furnish to
Transamerica IDEX, promptly upon its request such information as may reasonably
be necessary to evaluate the terms of this Agreement or any extension, renewal,
or amendment hereof.
13. NOTICES.
Any notice shall be sufficiently given when sent by certified U.S.
mail, national expenses deliver service, or facsimile to the parties at the
address below:
If to Transamerica IDEX:
Transamerica IDEX Mutual Funds
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Investment Adviser:
AEGON/Transamerica Fund Advisers, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Sub-Adviser:
5
X. Xxxx Price Associates, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Chief Legal Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
14. TERMINATION OF AGREEMENT.
Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by vote of the Board or by a vote
of a majority of the outstanding voting securities of the Fund, or per the terms
of the exemptive order - Release No. 23379 - under Section 6(c) of the Act from
Section 15(a) and Rule 18f-2 under the Act, on at least 60 days' prior written
notice to the Sub-Adviser. This Agreement may also be terminated by the
Investment Adviser: (i) on at least 60 days' prior written notice to the
Sub-Adviser, without the payment of any penalty; or (ii) if the Sub-Adviser
becomes unable to discharge its duties and obligations under this Agreement. The
Sub-Adviser may terminate this Agreement at any time, or preclude its renewal
without the payment of any penalty, on at least 60 days' prior notice to the
Investment Adviser. This Agreement shall terminate automatically in the event of
its assignment or upon termination of the Advisory Agreement.
15. AMENDMENT OF AGREEMENT.
No provision of this Agreement may be changed, waived, discharged,
or terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge, or termination is
sought, and no amendment of this Agreement shall be effective until approved by
vote of a majority of the Fund's outstanding voting securities, unless otherwise
permitted in accordance with the 1940 Act.
16. MISCELLANEOUS.
A. Governing Law. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachusetts without
giving effect to the conflicts of laws principles thereof, and the 1940 Act. To
the extent that the applicable laws of the Commonwealth of Massachusetts
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
B. Captions. The captions contained in this Agreement
are included for convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their construction or effect.
C. Entire Agreement. This Agreement represents the
entire agreement and understanding of the parties hereto and shall supersede
any prior agreements between the parties relating to the subject matter hereof,
and all such prior agreements shall be deemed terminated upon the effectiveness
of this Agreement.
D. Interpretation. Nothing herein contained shall be
deemed to require Transamerica IDEX to take any action contrary to its Trust
or By-Laws, or any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the Board of its
responsibility for and control of the conduct of the affairs of Transamerica
IDEX.
E. Definitions. Any question of interpretation of any
term or provision of this Agreement having a counterpart in or
otherwise derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision of the 1940 Act and to interpretations
thereof, if any, by the United States courts or, in the absence of any
controlling decision of any such court, by rules, regulations, or orders of the
SEC validly issued pursuant to the 1940 Act. As used in this Agreement, the
terms "majority of the outstanding voting securities," "affiliated person,"
"interested person," "assignment," "broker," "investment adviser," "net assets,"
"sale," "sell," and "security" shall have the same meaning as such terms have in
the 1940 Act, subject to such exemption as may be granted by the SEC by any
rule, regulation, or order. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Agreement is made less
restrictive by a rule, regulation, or order of the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation, or order, unless the Investment Adviser and the
Sub-Adviser agree to the contrary.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their duly authorized signatories as of the date and year
first above written.
6
SUB-ADVISORY AGREEMENT
SCHEDULE A
FUND SUB-ADVISER COMPENSATION
---------------------------------------------------------------------------------------------------
0.40% of the Fund's average daily net assets up to
TA IDEX X. XXXX PRICE EQUITY INCOME $500 million; 0.35% of the Fund's average daily net
assets over $500 million
