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EXHIBIT xiii
[FORM OF]
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of [DATE] by and between
SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the "Adviser"), and
WM ADVISORS, INC., [BUSINESS TYPE] (the "Subadviser").
WITNESSETH:
WHEREAS, the Adviser and SunAmerica Series Trust, a Massachusetts
business trust (the "Trust"), have entered into an Investment Advisory and
Management Agreement dated as of January 1, 1999, as amended from time to time
(the "Advisory Agreement"), pursuant to which the Adviser has agreed to provide
investment management, advisory and administrative services to the Trust, and
pursuant to it which the Adviser may delegate one or more of its duties to a
subadviser pursuant to a written subadvisory agreement; 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 beneficial interest, no par value per share, in separately
designated portfolios 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 portfolio(s) of the Trust listed
on Schedule A attached hereto (the "Portfolio(s)"), 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. 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. The Subadviser
will determine, in its discretion and subject to the oversight and review of the
Adviser, the securities and other investments 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,
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and in compliance with (a) the objectives, policies, restrictions and
limitations for the Portfolio(s) as set forth in the Trust's current prospectus
and statement of additional information; and (b) applicable laws and
regulations.
The Subadviser represents and warrants to the Adviser that each
Portfolio will at all times be operated and managed (a) in compliance with al1 1
l applicable federal and state laws, including securities, commodities and
banking laws, governing its operations and investments; (b) so as not to
jeopardize either the treatment of the variable annuity contracts which offer
the Portfolio(s) (the "Contracts") as annuity contracts for purposes of the
Internal Revenue Code of 1986, as amended (the "Code"), or the eligibility of
the Contracts to qualify for sale to the public in any state where they may
otherwise be sold; and (c) to minimize any taxes and/or penalties payable by the
Trust or the Portfolio(s). Without limiting the foregoing, the Subadviser
represents and warrants that it will manage each Portfolio in compliance with
(a) the applicable provisions of Subchapter M, chapter 1 of the Code
("Subchapter M") for each Portfolio to be treated as a "regulated investment
company" under Subchapter M; (b) the diversification requirements specified in
the Internal Revenue Service's regulations under Section 817(h) of the Code; (c)
the provisions of the Act and rules adopted thereunder; (d) applicable state
insurance laws; (e) the objectives, policies, restrictions and limitations for
the Portfolio(s) as set forth in the Trust's current prospectus and statement of
additional information as most recently provided by the Adviser to the
Subadviser; and (f) the policies and procedures as adopted by the Trustees of
the Trust. The Subadviser shall furnish information to the Adviser, as
requested, for purposes of compliance with the distribution requirements
necessary to avoid payment of any excise tax pursuant to Section 4982 of the
Code.
The Subadviser further represents and warrants that to the extent that
any statements or omissions made in any Registration Statement for the Contracts
or 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 agrees: (a) 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
(b) from time to time and upon reasonable request, to supply evidence of such
coverage to the Adviser.
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.
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2. PORTFOLIO TRANSACTIONS. (a) The Subadviser is responsible for
decisions to buy or sell securities and other investments for the assets of 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, 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; provided, however, that for each Portfolio the average annual
percentage of portfolio transactions which are engaged in with the Subadviser's
affiliates, the Adviser and its affiliates or any other subadviser to the Trust
and its respective affiliates, may not exceed 25 % of the Portfolio's total
transactions in securities and other investments during the Trust's fiscal year.
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. 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 secur1 1 ities 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
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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 direct the Subadviser to
effect a specific percentage of a Portfolio's transactions in securities and
other investments to 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:
(1) 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;
(2) 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, or such other factors as
market conditions, share values, capabilities of the
particular broker-dealer or futures commission merchant,
etc.;
(3) If the Subadviser directs payments of an excessive
amount of commissions, the executions may not be
accomplished as rapidly. In addition, the Subadviser may
forfeit the possible advantage derived from the
aggregation of multiple orders as a single "bunched"
transaction where Subadviser would, in some instances,
be in a better position to negotiate commissions; and
(4) Subadviser does not make commitments to allocate fixed
or definite amounts of commissions to brokers. As such
the Subadviser may be unable to fulfill the Adviser's
request for direction due to the reasons stated above.
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). For purposes of
calculating the Subadviser's fee, the average daily net asset value of a
Portfolio shall mean the average daily net assets for which the Subadviser
actually provides advisory services, and shall be determined by taking an
average of all determinations of such net asset value during the month. If the
Subadviser shall provide its services under this Agreement for less than the
whole of any month, the fo1 1 regoing compensation shall be prorated.
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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 in order to facilitate meetings or other
similar functions. 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 so long as its services to the
Trust are not impaired thereby. 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. 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 of the Portfolio(s) 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.
8. REFERENCE TO THE SUBADVISER. Neither the Trust nor the Adviser
or any affiliate or agent thereof shall make reference to or use the name 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.
9. 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/trustees, 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 (and its officers,
directors/trustees, agents, employees, controlling persons, shareholders and any
other person or entity affiliated
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with the Adviser) or to the Trust (and its officers, directors/trustees, agents,
employees, controlling persons, shareholders and any other person or entity
affiliated with the Trust) for any act or omission in the course of, or
connected with, rendering services hereunder, including wi10 1 thout 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) from any and all losses, claims, damages, liabilities or
litigation (including reasonable legal and other expenses) arising from
Subadviser's rendering of services under this Agreement.
(b) The Subadviser agrees to indemnify and hold harmless the
Adviser (and its officers, directors/trustees, agents, employees, controlling
persons, shareholders and any other person or entity affiliated with the
Adviser) and/or the Trust (and its officers, directors/trustees, agents,
employees, controlling persons, shareholders and any other person or entity
affiliated with the Trust) against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses), to
which the Adviser and/or the Trust and their affiliates or such
directors/trustees, officers or controlling person may become subject under the
Act, the 1933 Act, under other statutes, common law or otherwise, which arise
from the Subadviser's disabling conduct, including but not limited to any
material failure by the Subadviser to comply with the provisions and
representations and warranties set forth in Section 1 of this Agreement;
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 obligations and duties under this
Agreement.
10. PERMISSIBLE INTERESTS. Trustees and agents of the Trust are or
may be interested in the Subadviser (or any successor thereof) as
directors/trustees, partners, officers, or shareholders, or otherwise;
directors/trustees, 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.
11. 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,
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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; provided, however, that this
Agreement may not be terminated by the Subadviser unless another subadvisory
agreement has been approved by the Trust in accordance with the Act, or after
six months' written notice, whichever is earlier. 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.
12. SEVERABILITY. 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.
13. 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.
14. 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.
15. PERSONAL LIABILITY. The Declaration of the Trust establishing
the Trust (the "Declaration"), is on file in the office of the Secretary of the
Commonwealth of Massachusetts, and, in accordance with that Declaration, no
Trustee, shareholder, officer, employee or agent of the Trust shall be held to
any personal liability, nor shall resort be had to their private property for
satisfaction of any obligation or claim or otherwise in connection with the
affairs of the Trust, but the "Trust Property," as defined in the Declaration,
only shall be liable.
16. SEPARATE SERIES. Pursuant to the provisions of the Declaration,
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.
17. 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: [NAME/ADDRESS]
Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
000 Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx
Senior Vice President and
General Counsel
with a copy to: SunAmerica Inc.
0 XxxXxxxxxx Xxxxxx
Xxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Secretary
IN WITNESS WHEREOF, the parties have caused their respective
duly authorized officers to execute this Agreement as of the date first above
written.
SUNAMERICA ASSET MANAGEMENT CORP.
By:
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Name: Xxxxx X. Xxxxxxx
Title: President
WM ADVISORS, INC.
By:
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Name: [NAME]
Title: [TITLE]
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SCHEDULE A
ANNUAL FEE
(AS A PERCENTAGE OF THE AVERAGE
DAILY NET ASSETS THE SUBADVISER
PORTFOLIO(s) MANAGES IN THE PORTFOLIO)
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Asset Allocation Portfolio .40% on the first $50 million;
.30% on the next $100 million;
.25% on the next $100 million;
.20% thereafter.
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