Exhibit (d)(iii)
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of February 20, 2004 by and
between AIG SUNAMERICA ASSET MANAGEMENT CORP., a Delaware Trust, the "Adviser"),
and X.X. XXXXXX INVESTMENT MANAGEMENT INC., a Delaware Trust (the "Subadviser").
WITNESSETH:
WHEREAS, the Adviser and SunAmerica Equity Funds, a Massachusetts business
trust (the "Trust"), have entered into an Investment Advisory and Management
Agreement dated as of January 1, 1999, (the "Advisory Agreement") pursuant to
which the Adviser has agreed to provide investment management, advisory and
administrative services to the Trust; and
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue shares of common stock, par value $.01 per share, in separately designated
series representing separate funds with their own investment objectives,
policies and purposes; and
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Adviser desires to retain the Subadviser to furnish investment
advisory services to the investment series of the Trust listed on Schedule A
attached hereto (the "Portfolio"), and the Subadviser is willing to furnish such
services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Duties of the Subadviser. (a) The Adviser hereby engages the services of
the Subadviser in furtherance of its Investment Advisory and Management
Agreement with the Trust. Pursuant to this Subadvisory Agreement and subject to
the oversight and review of the Adviser, the Subadviser will manage the
investment and reinvestment of the assets of each Portfolio listed on Schedule A
attached hereto. The Subadviser will determine in its discretion, and subject to
the oversight and review of the Adviser, the securities to be purchased or sold,
will provide the Adviser with records concerning its activities which the
Adviser or the Trust is required to maintain, and will render regular reports to
the Adviser and to officers and Trustees of the Trust concerning its discharge
of the foregoing responsibilities. The Subadviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Trustees of the
Trust and in compliance with such policies as the Trustees of the Trust may from
time to time establish and communicate to Subadviser, and in compliance with (a)
the objectives, policies, and limitations for the Portfolio set forth in the
Trust's current prospectus and statement of additional information as provided
to Subadviser, and (b) applicable laws and regulations.
The Subadviser represents and warrants to the Adviser that it will
manage the assets of each Portfolio set forth in Schedule A in compliance with
all applicable federal and state laws governing its operations and investments.
Without limiting the foregoing and subject to Section 11(c) hereof, the
Subadviser represents and warrants (1) that the Subadviser's management of the
assets of a Portfolio will be designed to achieve qualification by each
Portfolio to be treated as a "regulated investment company" under subchapter M,
chapter 1 of the Internal Revenue Code of 1986, as amended (the "Code"), and (2)
compliance with (a) the provisions of the Act and rules adopted thereunder that
relate to the investment of Portfolio assets, including depositing those assets
in custody with institutions designated by the Trust; and (b) federal and state
securities and commodities laws applicable to Subadviser's portfolio management
responsibilities; provided that for purposes of Section 17(a), (d) and (e) of
the Act, the Subadviser shall effect compliance only in relation to its own
affiliates and to affiliated persons identified to it by the Adviser. The
Subadviser further represents and warrants that to the extent any statements or
omissions made in any Registration Statement for shares of the Trust, or any
amendment or supplement thereto, are made in reliance upon and in conformity
with information furnished by the Subadviser expressly for use therein, such
Registration Statement and any amendments or supplements thereto will, when they
become effective, conform in all material respects to the requirements of the
Securities Act of 1933 and the rules and regulations of the Commission
thereunder (the "1933 Act") and the Act and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
The Subadviser accepts such employment and agrees, at its own expense,
to render the services set forth herein and to provide the office space,
furnishings, equipment and personnel required by it to perform such services on
the terms and for the compensation provided in this Agreement.
(b) The Subadviser agrees: (i) to maintain a level of errors and
omissions or professional liability insurance coverage that, at all times during
the course of this Agreement, is appropriate given the nature of its business,
and (ii) from time to time and upon reasonable request, to supply evidence of
such coverage to the Adviser.
2. Portfolio Transactions. (a) The Subadviser is responsible for decisions,
and is hereby authorized, to buy or sell securities and other investments for
each Portfolio, broker-dealers and futures commission merchants' selection, and
negotiation of brokerage commission and futures commission merchants' rates. As
a general matter, in executing Portfolio transactions, the Subadviser may employ
or deal with such broker-dealers or futures commission merchants as may, in the
Subadviser's best judgement, provide prompt and reliable execution of the
transactions at favorable prices and reasonable commission rates. In selecting
such broker-dealers or futures commission merchants, the Subadviser shall
consider all relevant factors including price (including the applicable
brokerage commission, dealer spread or futures commission merchant rate), the
size of the order, the nature of the market for the security or other
investment, the timing of the transaction, the reputation, experience and
financial stability of the broker-dealer or futures commission merchant
involved, the quality of the service, the difficulty of execution, the execution
capabilities and operational facilities of the firm involved,
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and, in the case of securities, the firm's risk in positioning a block of
securities. Subject to such policies as the Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), the Subadviser shall not be deemed to have acted unlawfully or
to have breached any duty created by this Agreement or otherwise solely by
reason of the Subadviser's having caused a Portfolio to pay a member of an
exchange, broker or dealer an amount of commission for effecting a securities
transaction in excess of the amount of commission another member of an exchange,
broker or dealer would have charged for effecting that transaction, if the
Subadviser determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such member of an exchange, broker or dealer viewed in terms of
either that particular transaction or the Subadviser's overall responsibilities
with respect to such Portfolio and to other clients as to which the Subadviser
exercises investment discretion. In accordance with Section 11(a) of the 1934
Act and Rule 11a2-2(T) thereunder, and subject to any other applicable laws and
regulations including Section 17(e) of the Act and Rule 17e-1 thereunder, the
Subadviser may engage its affiliates, the Adviser and its affiliates or any
other subadviser to the Trust and its respective affiliates, as broker-dealers
or futures commission merchants to effect Portfolio transactions in securities
and other investments for a Portfolio. The Subadviser will promptly communicate
to the Adviser and to the officers and the Trustees of the Trust such
information relating to Portfolio transactions as they may reasonably request,
including but not limited to, reports prepared by independent third parties
relating to the execution costs of such transactions. To the extent consistent
with applicable law, the Subadviser may aggregate purchase or sell orders for
the Portfolio with contemporaneous purchase or sell orders of other clients of
the Subadviser or its affiliated persons. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadviser in the manner the Subadviser
determines to be equitable and consistent with its and its affiliates' fiduciary
obligations to the Portfolio and to such other clients. The Adviser hereby
acknowledges that such aggregation of orders may not result in more favorable
pricing or lower brokerage commissions in all instances.
(b) Notwithstanding Section 2(a) above, for such purposes as obtaining
investment research products and services, covering fees and expenses, and
rewarding sales or distribution, the Adviser may request the Subadviser to
effect a specific percentage of the transactions in securities and other
investments it effects on behalf of the Portfolio with certain broker-dealers
and futures commission merchants. In designating the use of a particular
broker-dealer or futures commission merchant, the Adviser and Subadviser
acknowledge and agree that all brokerage transactions are subject to best
execution. As such, Subadviser will use its best efforts to direct non-risk
commission transactions to a particular broker-dealer or futures commission
merchant designated by the Adviser provided that the Subadviser obtains best
execution. Adviser acknowledges that Subadviser may be unable to fulfill the
Adviser's request for direction for a number of reasons, including, but not
limited to: 1) such direction may result in the Subadviser paying a higher
commission, depending upon the Subadviser's arrangements with the particular
broker-dealer or futures commission merchant, etc; 2) if the Subadviser directs
payments of an excessive amount of commissions, the executions may not be
accomplished as rapidly; 3) the Subadviser may forfeit the possible advantage
derived from the aggregation of multiple orders as a single "bunched"
transaction where Subadviser would, in
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some instances, be in a better position to negotiate commissions; and 4)
Subadviser does not make commitments to allocate fixed or definite amounts of
commissions to brokers.
3. Compensation of the Subadviser. The Subadviser shall not be entitled to
receive any payment from the Trust and shall look solely and exclusively to the
Adviser for payment of all fees for the services rendered, facilities furnished
and expenses paid by it hereunder. As full compensation for the Subadviser under
this Agreement, the Adviser agrees to pay to the Subadviser a fee at the annual
rates set forth in Schedule A hereto with respect to the assets managed by the
Subadviser for each Portfolio listed thereon. Such fee shall be accrued daily
and paid monthly as soon as practicable after the end of each month (i.e., the
applicable annual fee rate divided by 365 applied to each prior days' net assets
in order to calculate the daily accrual). If the Subadviser shall provide its
services under this Agreement for less than the whole of any month, the
foregoing compensation shall be prorated.
4. Other Services. At the request of the Trust or the Adviser, the
Subadviser in its discretion may make available to the Trust office facilities,
equipment, personnel and other services. Such office facilities, equipment,
personnel and services shall be provided for or rendered by the Subadviser and
billed to the Trust or the Adviser at the Subadviser's cost.
5. Reports. The Trust, the Adviser and the Subadviser agree to furnish to
each other, if applicable, current prospectuses, statements of additional
information, proxy statements, reports of shareholders, certified copies of
their financial statements, and such other information with regard to their
affairs and that of the Trust as each may reasonably request.
6. Status of the Subadviser. The services of the Subadviser to the Adviser
and the Trust 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, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
7. Advertising. Subadviser shall not provide or in any way distribute any
sales or advertising materials, whether or not related to the Trust, to any
employee or representative of AIG SunAmerica Capital Services, Inc. ("SACS") or
its affiliates, including wholesaling personnel, unless such material has been
received and approved, in writing, by the Adviser.
8. Proxy Voting. The Adviser will vote proxies relating to the Portfolio's
securities. The Adviser will vote all such proxies in accordance with the proxy
voting policies and procedures adopted by the Board of Trustees of the Trust.
The Adviser may, on certain non-routine matters, consult with the Subadviser
before voting proxies relating to the Portfolio's securities. The Adviser will
instruct the custodian and other parties providing services to the Trust
promptly to forward to the proxy voting service copies of all proxies and
shareholder communications relating to securities held by each Portfolio (other
than materials relating to legal proceedings).
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
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investments of the Portfolio that are required to be maintained by the Trust
pursuant to the requirements of Rule 31a-1 of that Act. 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 Trust are the property of the Trust and will be
surrendered promptly to the Trust or the Adviser on request.
The Subadviser agrees that all accounts, books and other records
maintained and preserved by it as required hereby shall be subject at any time,
and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Trust's auditors,
the Trust or any representative of the Trust, the Adviser, or any governmental
agency or other instrumentality having regulatory authority over the Trust.
10. Reference to the Subadviser. Neither the Trust nor the Adviser or any
affiliate or agent thereof shall make reference to or use the name or logo of
the Subadviser or any of its affiliates in any advertising or promotional
materials without the prior approval of the Subadviser, which approval shall not
be unreasonably withheld.
11. Liability of the Subadviser. (a) In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
("disabling conduct") hereunder on the part of the Subadviser (and its officers,
directors, agents, employees, controlling persons, shareholders and any other
person or entity affiliated with the Subadviser), the Subadviser shall not be
subject to liability to the Adviser, its officers, directors, agents, employees,
controlling persons or shareholders or to the Trust or to any shareholder of the
Trust for any act or omission in the course of, or connected with, rendering
services hereunder, including without limitation, any error of judgment or
mistake of law or for any loss suffered by any of them in connection with the
matters to which this Agreement relates, except to the extent specified in
Section 36(b) of the Act concerning loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services. Except for such
disabling conduct, the Adviser shall indemnify the Subadviser (and its officers,
directors, partners, agents, employees, controlling persons, shareholders and
any other person or entity affiliated with the Subadviser) (collectively, the
"Indemnified Parties") from any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses) arising from the
Subadviser's providing services under this Agreement or the sale of securities
of the Trust.
(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 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.
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(c) The Subadviser shall not be liable to the Adviser its officers,
directors, agents, employees, controlling persons or shareholders or to the
Trust or its shareholders for (i) any acts of the Adviser and (ii) acts of the
Subadviser which result from or are based upon acts of the Adviser, including,
but not limited to, a failure of the Adviser to provide accurate and current
information with respect to any records maintained by Adviser or any other
subadviser to a Portfolio, which records are not also maintained by the
Subadviser or, to the extent such records relate to the 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 assets of
a Portfolio and shall comply with subsections (a) and (b) of Section 1of this
Subadvisory Agreement (including, but not limited to, the investment objectives,
policies and restrictions applicable to a Portfolio and qualifications of a
Portfolio as a regulated investment company under the Code). 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 Trust and with respect to any other
portfolio of the Trust.
(d) Under no circumstances shall the Adviser or the Subadviser be
liable to any indemnitee for indirect, special or consequential damages, even if
the Adviser or the Subadviser is apprised of the likelihood of such damages.
12. Permissible Interests. Trustees and agents of the Trust are or may be
interested in the Subadviser (or any successor thereof) as directors, partners,
officers, or shareholders, or otherwise; directors, partners, officers, agents,
and shareholders of the Subadviser are or may be interested in the Trust as
Trustees, or otherwise; and the Subadviser (or any successor) is or may be
interested in the Trust in some manner.
13. Term of the Agreement. This Agreement shall continue in full force and
effect with respect to each Portfolio until two years from the date hereof, and
from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Trustees of
the Trust 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 Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio voting separately from any other
series of the Trust.
With respect to each Portfolio, this Agreement may be terminated at
any time, without payment of a penalty by the Portfolio or the Trust, by vote of
a majority of the Trustees, or by vote of a majority of the outstanding voting
securities (as defined in the Act) of the Portfolio, voting separately from any
other series of the Trust, or by the Adviser, on not less than 30 nor more than
60 days' written notice to the Subadviser. With respect to each Portfolio, this
Agreement may be terminated by the Subadviser at any time, without the payment
of any penalty, on 90 days' written notice to the Adviser and the Trust. The
termination of this Agreement with respect to any Portfolio or the addition of
any Portfolio to Schedule A hereto (in the manner required by the Act) shall not
affect the continued effectiveness of this Agreement with respect to each other
Portfolio subject hereto. This Agreement shall automatically terminate in the
event of its assignment (as defined by the Act).
This Agreement will also terminate in the event that the Advisory
Agreement by and between the Trust and the Adviser is terminated.
14. Severability. This Agreement constitutes the entire Agreement between
the parties hereto. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
15. Amendments. This Agreement may be amended by mutual consent in writing,
but the consent of the Trust must be obtained in conformity with the
requirements of the Act.
16. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New York and the applicable provisions of the Act. To the
extent the applicable laws of the State of New York, or any of the provisions
herein, conflict with the applicable provisions of the Act, the latter shall
control.
17. Separate Series. Pursuant to the provisions of the Declaration of
Trust, each Portfolio is a separate series of the Trust, and all debts,
liabilities, obligations and expenses of a particular Portfolio shall be
enforceable only against the assets of that Portfolio and not against the assets
of any other Portfolio or of the Trust as a whole.
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, addressed as follows:
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Subadviser: X.X. Xxxxxx Investment Management Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Mutual Funds - Legal
Adviser: AIG SunAmerica Asset Management Corp.
Harborside Financial Center
0000 Xxxxx 0
Xxxxxx Xxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Senior Vice President and
General Counsel
IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.
AIG SUNAMERICA ASSET MANAGEMENT CORP.
By:
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and CEO
X.X. XXXXXX INVESTMENT MANAGEMENT INC.
By:
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
SCHEDULE A
Fee Rate (as a percentage of daily net
assets the Subadviser manages for the
Portfolio Portfolio)
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Tax Managed Equity Portfolio 0.45% on first $200 million
0.40% on next $200 million
0.35% thereafter