Exhibit(d)(xv)
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of August ____, 2002 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and XXXXXXXXX INVESTMENT COUNSEL, LLC, a Delaware limited
liability company (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, 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 all
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.
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
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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 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 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:
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(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 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 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.
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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. 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 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 Subadviser will vote proxies relating to the
Assets of each Portfolio for which Subadviser exercises investment discretion.
Subadviser will vote all such proxies in accordance with such proxy voting
guidelines as Subadviser may, from time to time, establish. Subadviser will
not, however, advise or act for the Adviser, the Trust or a Portfolio in any
legal proceedings, including bankruptcies or class actions, involving
securities held or previously held by a Portfolio or the issuers of the
securities ("Legal Proceedings"). The Adviser will instruct the custodian and
other parties providing services to the Trust promptly to forward to
Subadviser copies of all proxies and shareholder communications relating to
securities held by each Portfolio (other than materials relating to Legal
Proceedings). The Adviser agrees that Subadviser will not be responsible or
liable for failing to vote any proxies where it has not received such proxies
or related shareholder communications on a timely basis.
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 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.
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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 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/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 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 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) 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.
12. 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
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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; 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.
14. 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.
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. 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
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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.
18. 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.
19. 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:
Subadviser: Xxxxxxxxx Investment Counsel, LLC.
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 of SunAmerica Series Trust
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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:
------------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
XXXXXXXXX INVESTMENT COUNSEL, LLC
By:
------------------------------------------------
Name:
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)
------------ ----------------------------------
Foreign Value Portfolio 0.625% first $50 million
0.465% next $150 million
0.375% next $300 million
0.350% over $500 million
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