SUBADVISORY AGREEMENT
Exhibit 2(g)(2)
This SUBADVISORY AGREEMENT (the “Agreement”) is dated as of December 22, 2005 by and among
SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC., a Maryland corporation (the “Fund” or the
“Corporation”), AIG SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the “Adviser”), and
XXXXXXX XXXXX INVESTMENT MANAGERS, L.P. doing business as MERCURY ADVISORS (“MERCURY”), a Delaware
Limited Partnership (the “Subadviser”).
WITNESSETH:
WHEREAS, the Adviser and the Corporation, have entered into an Investment Advisory and
Management Agreement dated as of December 22, 2005 (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 a closed-end management investment company and may issue shares of common stock,
par value $.001 per share; 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
(the “Advisers Act”); and
WHEREAS, the Adviser desires to retain the Subadviser to furnish investment advisory services
to the investment series of the Corporation as provided below, 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 Advisory Agreement with the Corporation. Pursuant to this
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 the Fund (the “Managed Assets”). The
Subadviser will (i) determine in its discretion, and subject to the oversight and review of the
Adviser, the securities to be purchased or sold in its portion of the assets of the Fund, (ii)
provide the Adviser with copies of records concerning the Subadviser’s activities which the Adviser
or the Corporation is required by applicable law to maintain, and (iii) render regular reports to
the Adviser and to officers and Directors of the Corporation as they may reasonably request
concerning its discharge of the foregoing responsibilities. The Subadviser shall discharge the
foregoing responsibilities subject to oversight by the officers and the Directors of the
Corporation and in compliance with such reasonable policies as the Directors of the Corporation may
from time to time establish and communicate in writing to Subadviser, and in compliance with (a)
the objectives, policies, and limitations for the Fund set forth in the Corporation’s current
prospectus
and statement of additional information as provided to Subadviser, and (b) applicable laws and
regulations.
(b) The Subadviser represents and warrants to the Adviser that it will manage the Managed
Assets 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 as to the Managed Assets, subject to the understanding that the Subadviser
has only limited control over certain regulatory and compliance matters relevant to the Fund, that
the Subadviser’s management of the Managed Assets will be designed to achieve (1) qualification by
the Fund 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 Fund assets, including
maintaining those assets in custody with institutions designated by the Corporation; and (b)
federal and state securities and commodities laws applicable to Subadviser’s portfolio management
responsibilities; provided that for purposes of Sections 10(f), 12(d), and 17(a), (d) and (e) of
the Act, the Subadviser shall seek to maintain compliance only in relation to its own affiliates
and to affiliated persons identified to it by the Adviser
(c)The Subadviser further represent and warrants to the Adviser that (i) it has obtained all
applicable licenses, permits, registrations and approvals that may be required in order to serve in
its designated capacities with respect to the Fund, and shall continue to keep current such
licenses, permits, registrations and approvals for so long as this Agreement is in effect; (ii) it
will immediately notify the Adviser of the occurrence of any event that would disqualify it from
serving in its designated capacities with respect to the Fund; (iii) this Agreement has been duly
and validly authorized, executed and delivered on behalf of the Subadviser and is a valid and
binding agreement of the Subdviser enforceable in accordance with its terms.
(d) The Subadviser further represents and warrants that (1) to the extent that any statements
or omissions made in any Registration Statement for shares of the Corporation, or in any amendment
or supplement thereto, are made in reliance upon and in conformity with information furnished by
the Subadviser expressly for use therein, such statements or omissions in the Registration
Statement and in any amendments or supplements thereto will, when the Registration Statement or
amendments 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 such statements or omissions 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; and (2) to the extent that any statements or omissions made in contracts,
sales material or other documents are made in reliance upon and in conformity with information
furnished by the Subadviser expressly for use therein, such statements or omissions in the
contracts, sales material and other documents 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.
(e) 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, excluding determination of net asset value per share, portfolio accounting and
shareholder accounting services. The Subadviser shall not be responsible for other expenses of the
Fund, including, without limitation, fees of the Fund’s independent public accountants, transfer
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agent, custodian and other service providers who are not employees of the Subadviser;
brokerage commissions and other transaction-related expenses; tax reporting; taxes levied against
the Fund or any of its property; and interest expenses of the Fund. The Subadviser does not
warrant that the investment performance of the portion of the Fund’s assets managed by the
Subadviser will match the performance of any index or other benchmark, such as any other account
managed by the Subadviser.
(f) 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 the Fund, to select
broker-dealers and futures commission merchants to execute such purchases or sales, and to
negotiate brokerage commissions and futures commission merchants’ rates. As a general matter, in
executing portfolio transactions, the Subadviser may employ or deal with such broker-dealers or
futures commission merchants in such a manner and on such terms as may, in the Subadviser’s best
judgment, provide prompt and reliable execution of the transactions at favorable prices and
reasonable commission rates. In selecting such broker-dealers or futures commission merchants, the
Subadviser shall consider factors relevant to execution quality such as 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 trades
involving blocks of securities, the firm’s risk in positioning a block of securities. Subject to
such policies as the Directors may determine that are 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 the Fund 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 the Fund 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 the Fund. The Subadviser will promptly communicate to the
Adviser and (through the Adviser) 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, any reports prepared by independent third parties relating to the execution costs of
such transactions if such reports exist. To the extent consistent with applicable law, the
Subadviser may aggregate purchase or sell orders for the Fund with contemporaneous purchase or sell
orders for other clients of the Subadviser or its affiliated persons. In such event, allocation of
the securities so purchased or sold,
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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 Fund and to such other clients. The Adviser and the Corporation hereby
acknowledge 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 Fund with certain broker-dealers and futures commission merchants that the Adviser or the
Corporation may designate. In designating the use of a particular broker-dealers and futures
commission merchants. 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 xxxx
commission transaction 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 : 1) such direction may result in 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 sinlge “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.
(c) The Subadviser is prohibited from consulting with another subadviser who is providing
investment advice to the Fund concerning transactions for the Fund in securities or other assets.
The Subadviser will provide investment advice solely with respect to the Managed Assets.
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. The
Subadvisder’s fee shall be paid by the Adviser without regard to any reduction in the fees paid by
the Corporation to the Adviser under its Advisory Agreement as a result of any statutory or
regulatory limitation on investment company expenses or voluntary fee reduction assumed by the
Adviser. As full compensation to the Subadviser for the services rendered under this Agreement,
the Adviser agrees to pay to the Subadviser a fee at the annual rate set forth in Schedule A hereto
with respect to the portion of the assets managed by the Subadviser for the Fund listed thereon.
Such fee shall be calculated by the Fund’s custodian and accrued daily, and paid monthly as soon as
practicable after the end of each month (i.e., the applicable annual fee rate divided by 365
applied to each prior day’s 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. Reserved.
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5. Reports. Adviser agrees to provide promptly to the Subadviser on an on-going basis
copies of all amendments and supplements to the current Prospectus and the Statement of Additional
Information (“SAI”) of the Fund (collectively, “Fund Documents”), and copies of any amendments
thereto. Until the Adviser delivers to the Subadviser any supplements or amendments to the Fund
Documents, the Subadviser shall be entitled to rely on the most recent version of such documents
previously furnished to the Subadviser. In addition, Adviser shall furnish the Subadviser with a
certified copy of any financial statement or report prepared for the Corporation with respect to
the Fund by certified or independent auditors, and with copies of any financial statements or
reports made by the Corporation to shareholders or to any state or federal regulatory agency.
Adviser shall also inform the Subadviser, and the Subadviser shall inform the Adviser of the same,
of the results of any audits or examinations by regulatory authorities pertaining to the other
party’s responsibilities for the Fund. The Corporation and the Adviser agree to furnish to the
Subadviser, if applicable, current Fund prospectuses, statements of additional information, proxy
statements, reports to shareholders, press releases providing significant information about the
Subadviser, and such other information with regard to their affairs as the Subadviser may
reasonably request. Subadviser agrees to furnish to the Corporation or the Adviser, if
applicable, proxy statements that it receives in connection with securities of the Fund which
Subadviser is responsible for managing as well as such other information about Subadviser and its
performance of its duties under this Agreement as the Corporation or Adviser 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. The Subadviser shall be deemed to be an independent contractor and shall,
except as authorized by this Agreement or as 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.
Each of Adviser and the Subadviser will provide the other party with a list, to the best of
Adviser’s or Subadviser’s respective knowledge, of each affiliated person (and any affiliated
person of such an affiliated person) of Adviser or the Subadviser, as the case may be, and each of
Adviser and the Subadviser agrees promptly to update such list whenever Adviser or the Subadviser
becomes aware of any changes that should be added to or deleted from the list of affiliated
persons.
7. Advertising. Subadviser shall not publicly distribute any sales or advertising
materials related to the Corporation unless such material has been received and approved 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.
8. Proxy Voting. The Fund 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 of the Corporation. With respect to certain vote
items, the Fund may request guidance or a recommendation from the Adviser, administrator or
Subadviser of the Fund. The Subadviser shall not have responsibilities in connection with proxy
voting for the Fund, except that the Subadviser may be affirmatively requested in writing to make a
proxy voting recommendation that the Fund or Adviser may choose to follow.
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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 the
investments held by the portion of the Fund that is managed by Subadviser and that are required to
be maintained by a subadviser to the Corporation pursuant to the requirements of Rule 31a-1 under
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 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. The parties agree that the names
“Xxxxxxx Xxxxx” and “Mercury” are the names of the Subadviser’s affiliates within Xxxxxxx Xxxxx &
Co. Inc., and any derivative or logo or trademark or service xxxx or trade name (including, but not
limited to, depictions of bulls) are the valuable property of the Subadviser and its affiliates,
and may not be used by the Adviser without the Subadviser’s prior written approval, 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 otherwise provided in the Act. 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.
(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 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
6
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 Fund with respect to the portion of the
assets of the Fund 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 the Fund, 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 Managed Assets as if it was a separate operating portfolio and
shall comply with subsections (a) and (b) of Section 1 of this Subadvisory Agreement (including,
but not limited to, the investment objectives, policies and restrictions applicable to the Fund and
qualifications of the Fund as a regulated investment company under the Code) only with respect to
the Managed Assets. 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 the Fund’s assets not allocated to the Subadviser.
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
Fund or to otherwise perform services as a Subadviser, 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 as discussed above, or if the Adviser or the Board of
Directors of the Corporation 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 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 Fund and may include such
total return in the calculation of composite performance information.
13. Reserved.
14. Term of the Agreement. This Agreement shall continue in full force and effect
with respect to the Fund 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 Fund, voting separately from any other series of the Corporation.
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With respect to the Fund, this Agreement may be terminated at any time, without payment of a
penalty by the Fund, 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 Fund, 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. This Agreement may be terminated by the Subadviser at any time, with
respect to both the Adviser and the Fund, without the payment of any penalty, on 90 days’ written
notice to the Adviser and the Corporation. This Agreement shall automatically terminate, without
the payment of any penalty, in the event of its assignment (as defined by the Act and the rules
thereunder).
This Agreement will also automatically terminate, without the payment of any penalty, 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 and all prior and contemporaneous conversations, agreements, understandings,
representations, and negotiations with respect to the subject matter hereof are merged herein and
superseded hereby. The parties intend and agree that if any portion of this Agreement is declared
by any regulatory agency (through a formal or informal process), any court of competent
jurisdiction, any statute, or any rule to be invalid, void, voidable or unenforceable, the
remainder of the Agreement shall remain in full force and effect in every other respect. In
particular, and not in limitation of the foregoing, the parties hereby agree that if any portion of
the Agreement is declared unenforceable against the Fund, or against any party so long as the Fund
is a party, then that portion of the Agreement, without further action by the parties, shall be
deemed to have been reformed without the Fund as a party.
16. Amendments. No modification of any provision of this Agreement shall be valid
unless in writing signed by all parties hereto 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 without regard to the conflicts provisions thereof, 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.
18. 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,
or by any means of overnight delivery that provides evidence of delivery, addressed as follows:
| Subadviser: | Xxxxxxx Xxxxx Investment Management, L.P. | |||
| 000 Xxxxxxxx Xxxx Xxxx (0X) | ||||
| Xxxxxxxxxx, Xxx Xxxxxx 00000 | ||||
| Attention: General Counsel | ||||
| Adviser: | AIG SunAmerica Asset Management Corp. | |||
| Harborside Financial Center | ||||
| 0000 Xxxxx 0 | ||||
| Xxxxxx Xxxx, Xxx Xxxxxx 00000-0000 | ||||
| Attention:Legal Department |
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| Fund: | SunAmerica Focused Alpha Large-Cap Fund, Inc. | |||
| c/o AIG SunAmerica Asset Management Corp. | ||||
| Harborside Financial Center | ||||
| 0000 Xxxxx 0 | ||||
| Xxxxxx Xxxx, Xxx Xxxxxx 00000-0000 | ||||
| Attention: Legal Department |
19. Indemnity Agreement.
(a) The Fund, the Adviser, the Subadviser, and each other subadviser to the Fund have entered
into a Purchase Agreement dated as of on or about December 22, 2005, with Xxxxxxx Xxxxx & Co., and
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx, Incorporated and other co-managers and underwriters named in
Schedule A (collectively, the “Underwriters”) to that agreement (the “Purchase Agreement”).
Section 1(a) of the Purchase Agreement requires each of the Fund, the Adviser, the Subadviser, and
each other subadviser to make stipulated representations and warranties jointly and severally to
the Underwriters. Section 3 of the Purchase Agreement requires each of the Fund, the Adviser, the
Subadviser, and each other subadviser to make jointly and severally stipulated covenants with the
Underwriters on behalf of the Fund and others. Sections 1(e), 5(d), 5(j), 5(k), 8, and other
provisions of the Purchase Agreement require each of the Fund, the Adviser, the Subadviser, and
each other subadviser to provide officer’s certificates and other documents to the Underwriters
relating to such representations, warranties, and covenants. Sections 4(b), 5(l), 6(a), 6(c),
6(e), 7, and 9(b) and other provisions of the Purchase Agreement require each of the Fund, the
Adviser, the Subadviser, and each other subadviser to jointly and severally indemnify and hold
harmless the Underwriters and others against all loss, liability, claim, damage or expense
whatsoever on the terms and conditions contemplated by relevant provisions of Section 6, to
otherwise make contribution to the Underwriters on the terms and conditions contemplated by Section
7, and to otherwise pay the expenses of the Underwriters if the Purchase Agreement is terminated
under Section 5(l) or Section 9.
(b) The Fund and the Adviser acknowledge that the provisions of the Purchase Agreement (other
than Section 1(c)) concern matters that ordinarily would not be within the knowledge or control of
the Subadviser, and that such matters are instead within the exclusive knowledge and control of the
Fund itself and of the Adviser. Therefore, the parties to this Agreement are establishing among
themselves an equitable bearing of responsibility by the Fund and the Adviser for claims that the
Underwriters or other persons might seek to bring against the Subadviser under Sections 1(a), 1(e),
3, 4(b), 5(d), 5(j), 5(k), 5(l), 6, 7, 8, and 9(b) of the Purchase Agreement or similar provisions
of the Purchase Agreement, as follows.
(c) The Fund (to the fullest extent permitted by law) and the Adviser (without reservation)
(together, the “Indemnifying Parties”) shall jointly and severally indemnify and hold harmless the
Subadviser and its officers, directors, partners, agents, employees, controlling persons,
shareholders, and any other person or entity affiliated with the Subadviser (separately an
“Indemnified Party” and together the “Indemnified Parties”) from and against any and all losses,
claims, damages, liabilities, or expenses (including attorney’s fees) threatened to be or actually
asserted against or incurred by each or all of the Indemnified Parties arising out of any claim
brought by any of the Underwriters, any person who controls any Underwriter, or any other person
who asserts rights under the Purchase Agreement, any current or former investor, self-regulatory
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organization, regulatory agency, or other governmental authority (separately or together,
“Claim” or “Claims”) by reason of any of the following: (1) the representations and warranties and
covenants made by the Subadviser pursuant to Sections 1(a), 1(e), 3, 5(d), 5(j), 5(k), and 8 of the
Purchase Agreement and any similar provisions of the Purchase Agreement; (2) the indemnification
and contribution provisions set forth in Sections 6 and 7 of the Purchase Agreement and any similar
provisions of the Purchase Agreement; or (3) the expense reimbursement provisions set forth in
Sections 4(b), 5(l), and 9(b) of the Purchase Agreement and any similar provisions of the Purchase
Agreement. The parties agree that actual or constructive knowledge by an Indemnified Party of any
fact alleged to have been misrepresented or omitted is not a defense against the obligation to
indemnify the Indemnified Party under this Agreement.
(d) Each Indemnified Party shall give notice as promptly as reasonably practicable to each
Indemnifying Party of any Claim in respect of which indemnity may be sought hereunder, but failure
to so notify an Indemnifying Party shall not relieve such Indemnifying Party from any liability
hereunder to the extent that the Indemnifying Party is not materially prejudiced as a result
thereof. An Indemnifying Party may recommend counsel to represent an Indemnified Party in
connection with a Claim. The Indemnified Party may decline to be represented by the recommended
counsel, and may instead select its own counsel to represent it with respect to a Claim. In no
event shall the Indemnifying Parties be liable for fees and expenses of more than one counsel at
any given time for each of the Indemnified Parties (in addition to any local counsel) in connection
with any one action, or separate but similar or related actions in the same jurisdiction, arising
out of the same general allegations or circumstances and in which a Claim has been made. No
Indemnified Party shall settle or compromise or consent to the entry of any judgment with respect
to any Claim asserted in any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever in respect of which
indemnification could be sought under this Agreement, without the prior written consent of the
Indemnifying Parties, which shall not be unreasonably withheld. The Indemnifying Parties shall
promptly reimburse each of the Indemnified Parties for any and all costs and expenses of counsel
and other costs, as and at the time when incurred, by each Indemnified Party in investigating,
defending against, settling, paying judgments entered in response to, or otherwise responding to
any Claim.
(e) Each of the Indemnified Parties and the Indemnifying Parties further agree that with
respect to any Claim for which indemnification is sought hereunder, they will submit to the
jurisdiction of the court or agency in which any action or investigation or proceeding asserting a
Claim is pending, if so requested by either of the Indemnifying Parties or any of the Indemnified
Parties. The Indemnified Parties and the Indemnifying Parties each further agree to cooperate in
the defense of any Claim, action or proceeding in which any of them may seek indemnity, including
the furnishing of witnesses and documents as requested by either of the Indemnifying Parties or any
of the Indemnified Parties, and acknowledge that documents and witnesses subject to their custody
and control may be required for responding to discovery requests, for the defense of actions and
proceedings, and for purposes of settlement. The Indemnifying Parties shall promptly reimburse
each Indemnified Party for any and all costs and expenses incurred by that Indemnified Party in
undertaking such cooperation. Indemnification shall not be denied based on the failure of an
Indemnified Party to produce any documents or witnesses whose production is not required under a
proper application of the applicable rules of civil procedure and/or local court rules, including
the rules on attorney-client privilege and attorney work product.
10
(f) All notices and other communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted by any standard form of telecommunication or any
other form of delivery providing a receipt. Notices to the Indemnifying Parties shall be directed,
as appropriate, to the addresses listed in Section 18 above.
20. Effect of Agreement. This Agreement shall inure to the benefit of and be binding
upon the Fund, the Adviser, the Subadviser and Indemnified Parties, and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties hereto and their respective successors
any legal or equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the parties hereto and their respective successors, and
for the benefit of no other person, firm or corporation. No purchaser of securities of the Fund
from any Underwriter shall be deemed to be a successor by reason of such purchase.
21. Jurisdiction. Jurisdiction and venue of any dispute relating to this
Agreement shall be limited to any court located in the County of New York.
22. Representations of Adviser. The Adviser hereby warrants and represents to the
Subadviser that (i) it has obtained all applicable licenses, permits, registrations and approvals
that may be required in order to serve in its designated capacities with respect to the Fund, and
shall continue to keep current such licenses, permits, registrations and approvals for so long as
this Agreement is in effect; (ii) it will immediately notify the Subadviser of the occurrence of
any event that would disqualify it from serving in its designated capacities with respect to the
Fund; (iii) this Agreement has been duly and validly authorized, executed and delivered on behalf
of the Adviser and is a valid and binding agreement of the Adviser enforceable in accordance with
its terms; and (iv) it has received a copy of the Subadviser’s Advanced Disclosure Statement (“Form
ADV”) at least 48 hours prior to the execution of this Agreement and has delivered a copy of the
same to the Company, as required by applicable law.
23. Certain Information. The parties hereto shall promptly notify the other party
in writing of the occurrence of any of the following events: (a) the party shall fail to be
registered as an investment adviser under the Advisers Act and under the laws of any jurisdiction
in which the party is required to be registered as an investment adviser in order to perform its
obligations under this Agreement, (b) the party has a reasonable basis for believing that the Fund
has ceased to qualify or might not qualify as a regulated investment company under Subchapter M of
the Code (c) the party shall have been served or otherwise have notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or
body, involving the affairs of the Fund, and (d) the principal officers of the party or any
portfolio manager of the Fund shall have changed.
11
IN WITNESS WHEREOF, the parties have caused their respective duly authorized officers to execute
this Agreement as of the date first above written.
| SUNAMERICA FOCUSED ALPHA LARGE-CAP FUND, INC. | ||||||||
| By: | ||||||||
| Title: President | ||||||||
| AIG SUNAMERICA ASSET MANAGEMENT CORP. | ||||||||
| By: | ||||||||
| Title: President and CEO | ||||||||
| XXXXXXX XXXXX INVESTMENT MANAGERS, L.P. doing | ||||||||
| business as MERCURY ADVISORS | ||||||||
| By: | ||||||||
| Title: | ||||||||
12
SCHEDULE A
| Fee Rate (as a percentage of daily total | ||||||
| assets the Subadviser manages for the | ||||||
| Fund | Fund) | |||||
SunAmerica Focused Alpha
|
0.40% | |||||
Large-Cap Fund, Inc. |
||||||
