SUB-ADVISORY AGREEMENT
BETWEEN
AEGON/TRANSAMERICA FUND ADVISERS, INC. AND
BANC OF AMERICA CAPITAL MANAGEMENT, LLC
This Agreement is entered into as of June 15, 2004 between
AEGON/TRANSAMERICA FUND ADVISERS, INC., a Florida corporation (referred to
herein as "ATFA"), and Banc of America Capital Management, LLC, a limited
liability company organized and existing under the laws of the State of North
Carolina (referred to herein as "BACAP").
WHEREAS, ATFA entered into an Investment Advisory Agreement
(referred to herein as the "Advisory Agreement"), dated as of June 15, 2004 with
Transamerica IDEX Mutual Funds, a Massachusetts business trust (herein referred
to as "Transamerica IDEX") on behalf of TA IDEX Xxxxxxx International Growth
(the "Fund"), under which ATFA has agreed, among other things, to act as
investment adviser to the Fund.
WHEREAS, the Advisory Agreement provides that ATFA may engage BACAP
to furnish investment information and advice to assist ATFA in carrying out its
responsibilities under the Advisory Agreement as investment adviser to the Fund.
WHEREAS, it is the purpose of this Agreement to express the mutual
agreements of the parties hereto with respect to the services to be provided by
BACAP to ATFA and the terms and conditions under which such services will be
rendered.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, the parties hereto agree as follows:
1. SERVICES OF BACAP. BACAP shall act as investment counsel to ATFA
with respect to the Fund. In this capacity, BACAP shall have the following
responsibilities:
(a) provide a continuous investment program for the Fund including
advice 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;
(b) to cause its representatives to attend meetings of ATFA or
Transamerica IDEX (by telephone or otherwise) when reasonably
necessary and to furnish oral or written reports, as ATFA may
reasonably require, in order to keep ATFA and its officers and
the Trustees of Transamerica IDEX and appropriate officers of
Transamerica IDEX fully informed as to the condition of the
investment portfolio of the Fund, the investment
recommendations of BACAP, and the investment considerations
which have given rise to those recommendations;
(c) to furnish such statistical and analytical information and
reports as may reasonably be required by ATFA from time to
time; and
(d) to supervise the purchase and sale of securities as
sub-adviser as described below;
(e) Investment Sub-Advisory Services. BACAP 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 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 ATFA or Transamerica IDEX by notice in writing to BACAP;
provided that BACAP shall be entitled to rely on and comply
with the Prospectus most recently furnished to BACAP by ATFA.
BACAP 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, BACAP, on behalf of the Fund, is
authorized, in its discretion and without prior consultation
with Transamerica IDEX or ATFA, to:
(1) Buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds and other securities or assets; and
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(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 BACAP may select.
(f) BACAP will enter into an agreement with its affiliated
company, Xxxxxxx Capital Management, LLC ("MCM"), under which
MCM as a subcontractor to BACAP will provide some or all of
the services to be provided by BACAP under this Agreement. It
is understood and agreed that BACAP shall have full authority
to delegate to MCM any and all of its duties,
responsibilities, power and authority under this Agreement.
ATFA agrees to accept such services from MCM and to cooperate
reasonably with BACAP and MCM to facilitate the subcontracting
arrangement.
2. OBLIGATIONS OF ATFA. ATFA shall have the following obligations
under this Agreement:
(a) to keep BACAP continuously and fully informed as to the
composition of the Fund's investment portfolio and the nature
of the Fund's assets and liabilities from time to time;
(b) to furnish BACAP with copies of each of the following
documents and all future amendments and supplements to such
documents, if any, as soon as practicable after such documents
become available;
(1) The Agreement and Declaration of Trust of Transamerica
IDEX, as filed with the State of Massachusetts, as in effect
on the date hereof and as amended from time to time
("Articles");
(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 ATFA and BACAP and approving
the form of the Advisory Agreement and this Agreement;
(4) 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 on behalf of the Fund (as
defined above); and
(6) A certified copy of any publicly available financial
statement or report prepared for Transamerica IDEX on behalf
of the Fund by certified or independent public accountants,
and copies of any financial statements or reports made by the
Fund to its shareholders or to any government body or
securities exchange.
(c) to furnish BACAP with any further materials or information which
BACAP may reasonably request to enable it to perform its functions
under this Agreement;
(d) to compensate BACAP for its services under this Agreement as
set forth in Schedule A. The fee shall accrue daily and be
paid monthly in arrears within 15 days after the end of each
month. In the event that this Agreement shall be effective for
only part of a period, then an appropriate pro-ration of the
fee that would have been payable hereunder shall be made,
based on the number of calendar days in such period and the
number of calendar days during the period in which this
Agreement was in effect.
3. BROKERAGE.
(a) BACAP 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, BACAP 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
BACAP 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
BACAP 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 BACAP, or
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any affiliated person thereof, except in accordance with the federal securities
laws and the rule and regulations thereunder.
(b) On occasions when BACAP deems the purchase or sale
of a security to be in the best interest of the Fund as well as other clients of
BACAP, BACAP, 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 BACAP in the manner BACAP considers to be fair and equitable and
consistent with its fiduciary obligations to the Fund and to its other clients.
(c) Without limiting BACAP's discretion in seeking best
execution by placing orders and negotiating commissions with broker-dealers it
selects, BACAP agrees that orders with broker-dealers for the purchase or sale
of portfolio securities by the Fund shall be placed in accordance with
reasonable standards set forth in the Advisory Agreement if ATFA timely brings
them to BACAP's attention, subject to compliance with applicable laws and
procedures adopted by the Trustees of Transamerica IDEX. ATFA may direct BACAP
to effect a portion of all transactions in portfolio securities for the Fund
through broker-dealers in a manner that will generate resources to help pay
certain expenses that the Fund is required to pay or for which the Fund is
required to arrange payment or for any other lawful purposes. BACAP will treat
such a direction as a decision by ATFA to retain, to the extent of the
direction, the discretion that BACAP otherwise would exercise to select
broker-dealers and negotiate commissions for the Fund. There may be occasions
when BACAP is unable to obtain best execution because, for example, BACAP cannot
evaluate the services provided by the selected broker, the selected broker may
not be as efficient in executing transactions as another broker, or the trade
cannot be aggregated with other trades sent to other brokers.
(d) BACAP is authorized to place orders on behalf of the
Fund through BACAP or any affiliate thereof if BACAP or its affiliate is
registered as a broker or dealer with the SEC or as a FCM with the Commodities
Futures Trading Commission ("CFTC"), to any of its affiliates that are brokers
or dealers or FCBs or such other entities which provide similar services in
foreign countries, or to such brokers or dealers that also provide research or
statistical research and material, or other services to the Funds or BACAP. Such
allocation shall be in such amounts and proportions as BACAP shall determine
consistent with the above standards, and, upon, request, BACAP will report on
said allocation to ATFA and Board of Trustees of Transamerica IDEX, indicating
the brokers, dealers or FCBs to which such allocations have been made and the
basis therefor.
(e) In particular, BACAP may use Banc of America
Securities, LLC ("BAS"), or any other broker or dealer affiliated with BACAP
("affiliated broker"), to execute trades for the Fund, provided that BACAP seeks
best execution in using the affiliated broker. An affiliated broker will not act
as principal for its own account, but may execute transactions as agent for the
Fund on an exchange floor, and receive and retain all commissions, fees, and
benefits without complying further with Section 11(a) of the Securities Exchange
Act. An affiliated broker also may execute agency cross trades, in which it
simultaneously acts as broker for the Fund and for another customer on the other
side of the trade. Agency cross trades may enable BACAP to purchase or sell a
block of securities for the Fund at a set price, and to avoid unfavorable price
movements caused by trading a large order on the market. BACAP will comply with
all legal requirements concerning the use of an affiliated broker, including
Rules 10f-3 and 17e-1 under the Investment Company Act and Rule 206(3)-2 under
the Investment Advisers Act. ATFA is aware that BACAP's affiliation with an
affiliated broker could give BACAP an indirect interest in commissions received
by the affiliated broker, and that agency cross trades could create potentially
conflicting divisions of loyalties and responsibilities because the affiliated
broker acts for both sides of the trade. ATFA may at any time revoke its consent
to the execution of agency cross trades for the Fund by giving written notice to
BACAP or the affiliated broker.
4. PURCHASES BY AFFILIATES. Although BACAP will not purchase
securities issued by the Fund, BACAP's officers, directors, and employees may
purchase from the Fund shares issued by the Fund at the current price available
to the public, or at such price with reductions in sales charge as may be
permitted in the current Transamerica IDEX prospectus in accordance with Section
22(d) of the Investment Company Act of 1940, as amended (the "1940 Act").
5. SERVICES TO OTHER CLIENTS. Nothing contained in this Agreement
shall limit or restrict (i) the freedom of BACAP, 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
BACAP, 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.
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6. SUB-ADVISER'S USE OF THE SERVICES OF OTHERS. BACAP may, as noted
above in section 1(f), (at its cost) employ, retain, or otherwise avail itself
of the services or facilities of subcontractors such as MCM, or 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 transactions in specific securities, or such other information, advice, or
assistance as BACAP may deem necessary, appropriate, or convenient for discharge
of its obligations hereunder or otherwise helpful to the Fund, as appropriate,
or in the discharge of BACAP overall responsibilities with respect to the other
accounts that it serves as investment manager or counselor.
7. LIMITATION OF LIABILITY OF THE SUB-ADVISER. Neither BACAP, MCM
nor any of their respective officers, directors, or employees, or any other
person performing executive, administrative, trading, or other functions for
BACAP or MCM, the Fund (at the direction or request of BACAP) or ATFA in
connection with BACAP's discharge of its obligations undertaken or reasonably
assumed with respect to this Agreement, shall be liable for any error of
judgment or mistake of law or for any loss suffered by ATFA or the Fund, or for
any error of facts or mistake of law contained in any report or date provided by
BACAP or MCM, except for any error, mistake or loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties on
behalf of the Fund or from reckless disregard by BACAP, MCM or any such person
of the duties of BACAP pursuant to this Agreement.
No statement in this Agreement or any other document constitutes a
representation by BACAP regarding the rate of growth or return of the Fund.
Neither BACAP nor any of its officers, directors, or employees make any
representations or warranties, express or implied, that any level of performance
or investment results will be achieved by the Fund or that the Fund will perform
comparably with any standard or index, including other BACAP client accounts.
8. REPRESENTATIONS.
The parties hereto represent, warrant, and agree as follows:
(a) ATFA and BACAP each: (i) is registered as an
investment adviser under the Advisers Act and any applicable state laws and will
continue to be so registered for so long as this Agreement remains in effect;
(ii) is not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement; (iii) has met, and will continue to
meet for so long as this Agreement remains in effect, any applicable federal or
state requirements, or the applicable requirements of any regulatory or industry
self-regulatory agency, necessary to be met in order to perform the services
contemplated by this Agreement; (iv) has the authority to enter into and perform
the services contemplated by this Agreement; and (v) will immediately notify the
other party of the occurrence of any event that would disqualify such other
party from serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise.
(b) BACAP 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 the Fund with a copy of
such code of ethics, together with evidence of its adoption.
(c) BACAP has provided ATFA and Transamerica IDEX with a
copy of its Form ADV as most recently filed with the SEC and will annually
furnish a copy of Part 2 of Form ADV to ATFA. (d) Any subcontractor such as MCM
will also meet the requirements of this section 8.
9. 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 Trustees of Transamerica IDEX
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 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 called
for the purpose of voting on such approval, of a majority of the Trustees of
Transamerica IDEX who are not parties to this Agreement or interested persons of
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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.
10. 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 BACAP. This Agreement may also be terminated by ATFA: (i) on at least
60 days' prior written notice to BACAP, without the payment of any penalty; or
(ii) if BACAP becomes unable to discharge its duties and obligations under this
Agreement. BACAP 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
ATFA. This Agreement shall terminate automatically in the event of its
assignment or upon termination of the Advisory Agreement. Upon any termination,
fees shall be payable to BACAP through the effective date on a pro-rated basis
in accordance with section 2(d).
11. 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 material amendment of this Agreement shall be effective until
approved by vote or a majority of the Fund outstanding voting securities and a
vote of a majority of those Trustees of Transamerica IDEX who are no 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 amendment, unless otherwise
permitted in accordance with the 1940 Act.
12. MISCELLANEOUS.
(a). Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York without giving effect to the
conflicts of laws principles thereof, and the 1940 Act. To the extent that the
applicable laws of the State of New York 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 Articles 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 interpretation 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 ATFA and BACAP agree to the contrary.
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(f). BACAP/Xxxxxxx Name: Transamerica IDEX Mutual Funds may
use any name including or derived from the name "BACAP" or "Xxxxxxx" in
connection with a fund only for so long as this Agreement, or any extension,
renewal or amendment hereof remains in effect, including any similar agreement
with any organization which shall succeed to BACAP's or Xxxxxxx'x business as
investment adviser or distributor. Upon termination of this Agreement, ATFA and
Transamerica IDEX Mutual Funds (to the extent that it lawfully can) will cause
the fund to cease to use such a name or any other name indicating that it is
advised by or otherwise connected with BACAP or Xxxxxxx or any organization
which shall have so succeeded to BACAP's or Xxxxxxx'x business.
13. COMPLIANCE WITH LAWS.
(a) In all matters relating to the performance of this Agreement,
BACAP will act in conformity with the Transamerica IDEX Declaration of Trust,
Bylaws, and current prospectus and with the instructions and direction of ATFA
and the Fund's Trustees.
(b) BACAP shall conform with (1) the 1940 Act and all rules and
regulations thereunder, and releases and interpretations thereto (including any
no-action letters and exemptive orders which have been granted by the SEC to
Transamerica IDEX, ATFA and/or BACAP and (2) with all other applicable federal
and state laws and regulations pertaining to management of investment companies.
(c) ATFA shall perform quarterly and annual tax compliance tests to
ensure that the Fund is in compliance with Subchapter M of the Internal Revenue
Code ("IRC"). In connection with such compliance tests, ATFA shall prepare and
provide reports to BACAP within 10 business days of a calendar quarter end
relating to the diversification of the Fund under Subchapter M. BACAP shall
review such reports for purposes of determining compliance with such
diversification requirements. If it is determined that the Fund is not in
compliance with the requirements noted above, BACAP, in consultation with ATFA,
will take prompt action to bring the Fund back into compliance within the time
permitted under the IRC.
14. REFERENCE TO SUB-ADVISER. Neither ATFA nor Transamerica IDEX
will publish or distribute any information, including but not limited to
registration statements, advertising or promotional material, regarding the
provision of investment advisory services by BACAP pursuant to this Agreement,
or use in advertising, publicity or otherwise the name of BACAP or any of its
affiliates, or any trade name, trademark, trade device, service xxxx, symbol or
any abbreviation, contraction or simulation thereof of BACAP or its affiliates,
without the prior written consent of BACAP. Notwithstanding the foregoing, ATFA
may distribute information regarding the provision of investment advisory
services by BACAP to the Fund's Board of Trustees ("Board Materials") without
the prior written consent of BACAP.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
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SCHEDULE A
FUND ANNUAL PERCENTAGE OF MONTHLY AVERAGE DAILY NET ASSETS
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0.50% of the first $300 million of the Fund's average daily net assets; 0.45%
of the Fund's average daily net assets over $300 million to $400 million;
TA IDEX XXXXXXX INTERNATIONAL GROWTH 0.40% of the Fund's average daily net assets over $400 million to $1 billion;
and 0.35% of assets in excess of $1 billion
