EXHIBIT 99 (d)(ii)
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of ___________, 2004 by and
among AIG SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), AIG Series Trust, a Delaware statutory trust (the "Trust") and
Trajectory Asset Management LLC, a Delaware limited liability company (the
"Subadviser").
WITNESSETH:
WHEREAS, the Adviser and the Trust have entered into an Investment
Advisory and Management Agreement dated as of ___________________, 2004, 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
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, with or without par value, 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 ("Advisers Act"); 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 (each, a "Fund" and collectively, the "Funds"), 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 AND ADVISER.
(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 Fund 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 and determinations as the Adviser and
Trustees of the Trust may from time to time establish and communicate to the
Subadviser, AND IN COMPLIANCE WITH (i) THE OBJECTIVES, POLICIES, AND LIMITATIONS
FOR THE FUND SET FORTH IN THE TRUST'S CURRENT PROSPECTUS, STATEMENT OF
ADDITIONAL INFORMATION, AND THE PUT AGREEMENT BETWEEN THE TRUST AND
PRUDENTIAL GLOBAL FUNDING, INC. DATED AS SET FORTH ON SCHEDULE A FOR EACH FUND
(THE "PUT AGREEMENT") as provided to the Subadviser, and (ii) the Trust's
governing documents.
(b) The Subadviser represents and warrants to the Adviser that
each Fund set forth in Schedule A managed by the Subadviser will at all times be
managed in compliance with:
(i) (A) the provisions of the Act and rules that relate to
the investment of Fund assets, including depositing those assets in custody with
institutions designated by the Trust; and (B) applicable federal securities and
commodities laws and the anti-fraud provisions of state securities laws;
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, which information Adviser
agrees to provide.
(ii) the Trust's current prospectus and statement of
additional information, as supplemented or amended, as provided to the
Subadviser;
(iii) the Trust's Declaration of Trust;
(iv) THE PORTFOLIO MANAGEMENT REQUIREMENTS OF THE PUT
AGREEMENT AND ANY OTHER WRITTEN POLICIES CONSISTENT WITH THE PUT AGREEMENT AND
ADOPTED BY THE TRUST, EACH OF WHICH SHALL BE REVIEWED IN ADVANCE WITH THE
SUBADVISER AND SUBJECT TO THE SUBADVISER'S APPROVAL, WHICH SHALL NOT BE
UNREASONABLY WITHHELD.
(v) the policies adopted by each Fund to be treated as a
"regulated investment company" under subchapter M, chapter 1 of the Internal
Revenue Code of 1986, as amended (the "Code");
(c) The Subadviser further represents and warrants that only
with respect to any statements or omissions made in any Registration Statement
for shares of the Trust, or any amendment or supplement thereto, 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, as amended (the
"1933 Act"), the Act and the rules and regulations of the Commission thereunder,
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 Adviser acknowledges and agrees that the
Subadviser shall have the right and a reasonable opportunity to review and
comment on the Trust's Registration Statement and any amendments and supplements
thereto and any other Trust filings with the U.S. Securities and Exchange
Commission ("SEC") prior to the filing of such documents with the SEC in
accordance with Section 5 hereof. For the purpose of clarifying its obligations
pursuant to this Section 1(e), the Subadviser shall provide a letter to the
Adviser, which letter may be amended from time to time, setting forth the
information in the Registration Statement that is provided by the Subadviser.
(d) 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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(e) The Subadviser agrees that beginning no later than the date
upon which the Fund commences the sale of its shares to retail investors: (i) to
maintain a level of errors and omissions or professional liability insurance
coverage in an amount not less than $5,000,000 and to maintain such coverage at
all times during the course of this Agreement and (ii) from time to time and
upon reasonable request, to supply evidence of such coverage to the Adviser.
Notwithstanding the foregoing, Subadviser's indemnification obligation pursuant
to Section 10 of this Agreement shall begin upon the execution of this Agreement
and not upon the procurement of insurance coverage.
(f) Each of the Adviser and Subadviser agree to immediately
inform the other parties to this Agreement in the event the SEC or other
governmental agency is conducting an examination or investigation of the Trust
or has suspended or revoked its registration.
(i) The Subadviser represents and warrants to the Adviser that
(i) it is duly formed, validly existing and in good standing in the state of
Delaware and has full power and authority to enter into and perform its
obligations under this Agreement and (ii) it is a registered investment adviser
under the Advisers Act. The Subadviser undertakes to promptly inform the Adviser
if any of the foregoing ceases to be true.
(g) The Adviser represents and warrants to the Subadviser that
(i) it is duly formed, validly existing and in good standing in the state of
Delaware and has full power and authority to enter into and perform its
obligations under this Agreement and (ii) it is a registered investment adviser
under the Investment Advisers Act of 1940, as amended ("Advisers Act"). The
Adviser undertakes to promptly inform the Subadviser if any of the foregoing
ceases to be true.
(h) The Adviser represents and warrants to the Subadviser that
it will operate each Fund set forth in Schedule A in compliance with (i) the
Trust's current prospectus and statement of additional information; (ii) the
Trust's Declaration of Trust (iii) the provisions of the Act and rules adopted
thereunder other than those that relate to the investment of Fund assets; and
(iv) applicable federal securities and commodities laws and the anti-fraud
provisions of state securities laws.
(i) The Adviser further represents and warrants that only with
respect to any statements or omissions made in any Registration Statement for
shares of the Trust, or any amendment or supplement thereto, made in reliance
upon and in conformity with information furnished by the Adviser expressly for
use therein, excluding information furnished by the Subadviser, 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, as amended (the "1933 Act"), the Act and the rules and
regulations of the Commission thereunder, 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.
2. FUND TRANSACTIONS. The Subadviser is responsible for decisions,
and is hereby authorized, to buy or sell securities and other investments for
each Fund, the selection of broker-dealers and futures commission merchants' and
the negotiation of brokerage commission and
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futures commission merchant rates. As a general matter, in executing Fund
transactions, the Subadviser may employ or deal with such broker-dealers or
futures commission merchants as may, in the Subadviser's best judgment, provide
prompt and reliable execution of the transactions at favorable prices and
reasonable commission rates. In selecting such broker-dealers or futures
commission merchants, the Subadviser shall consider 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 Fund to pay a member of an exchange,
broker or dealer an amount of commission for effecting a securities transaction
in excess of the amount of commission another member of an exchange, broker or
dealer would have charged for effecting that transaction, if the Subadviser
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
member of an exchange, broker or dealer viewed in terms of either that
particular transaction or the Subadviser's overall responsibilities with respect
to a Fund and to other clients as to which the Subadviser exercises investment
discretion. In accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T)
thereunder, and subject to any other applicable laws and regulations, including
Section 17(e) of the Act and Rule 17e-1 thereunder, the Subadviser may engage
its affiliates, the Adviser and its affiliates or any other subadviser to the
Trust and its respective affiliates, as broker-dealers or futures commission
merchants to effect Fund transactions in securities and other investments for a
Fund. The Subadviser will promptly communicate to the Adviser and to the
officers and the Trustees of the Trust such information relating to Fund
transactions as they may reasonably request, including but not limited to,
reports prepared by independent third parties relating to the execution costs of
the transactions. To the extent consistent with applicable law, the Subadviser
may aggregate purchase or sell orders for the Fund 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 Fund 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.
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 Fund 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
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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. REPORTS. 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, sub-certifications in connection with the filing of
Form N-CSR, which sub-certifications will be furnished in advance to the
Subadviser, and such other information with regard to their affairs and that of
the Trust as each may reasonably request.
5. STATUS OF THE SUBADVISER. 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. The Adviser and Subadviser
acknowledge that they have entered into a contractual arrangement that addresses
the right of the parties to perform services for other clients, subject to the
Adviser's and Subadviser's fiduciary duties to the Trust.
6. 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 Fund that are required to be
maintained by the Subadviser as a registered investment adviser pursuant to Rule
204-2 of the Advisers Act. Any records required to be maintained and preserved
pursuant to applicable law 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. Nothing herein shall prevent
the Subadviser from keeping additional copies or required records or using the
performance track record of the Funds, including following the termination of
this Agreement, to extent such use is otherwise consistent with applicable law,
rules and regulations.
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 SEC, 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.
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. Each Fund has appointed Investor Responsibility
Research Center as the proxy-voting agent and will vote all such proxies in
accordance with the proxy voting policies and procedures adopted by the Board of
Trustees. With respect to certain vote items, a Fund may request guidance or a
recommendation from the adviser, administrator or subadviser of the Fund. The
Subadviser shall no have responsibilities in connection with proxy voting for a
Fund unless it is affirmatively requested to make a proxy voting recommendation.
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9. REFERENCE TO THE SUBADVISER. Neither the Adviser nor any
affiliate or agent thereof shall make reference to or use the name, logo or
other information relating to the Subadviser or any of its affiliates in any
advertising or promotional materials ("Materials") without the prior written
approval of the Subadviser, which approval shall not be unreasonably withheld.
Such written notice will proscribe a reasonable period, commencing upon receipt
of the Materials, in which the Subadviser may provide its written comments or
objections, if any.
10. LIABILITY OF THE SUBADVISER.
(a) EXCEPT FOR DAMAGES RESULTING DIRECTLY FROM MATERIAL BREACHES
OF REPRESENTATIONS AND WARRANTIES IN SECTION 1 OF THIS AGREEMENT, willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder ("disabling conduct") on the part of 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 or to any third party 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
Trust and the Adviser shall indemnify and hold harmless the Subadviser, their
affiliates and each of their members and managers and each person, if any, who
controls the Subadviser within the meaning of Section 15 of the 1933 Act,
(collectively, the "Subadviser Indemnified Parties") against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses) incurred by a Subadviser Indemnified Party arising from the
Subadviser's providing services under this Agreement, including under the 1933
Act, under other statutes, at common law or otherwise.
(b) The Subadviser agrees to indemnify and hold harmless the
Adviser, the Trust and their affiliates and each of their shareholders,
directors and officers and each person, if any, who controls the Adviser within
the meaning of Section 15 of the 1933 Act (collectively, the "Adviser
Indemnified Parties") against any and all losses, claims, damages, liabilities
or litigation (including reasonable legal and other expenses), to which an
Adviser Indemnified Party may become subject under the 1933 Act, under other
statutes, at common law or otherwise, directly caused by the 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 material
breaches of representations and warranties in Section 1 of this Agreement,
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
11. TERM OF THE AGREEMENT. This Agreement shall continue in full
force and effect with respect to each Fund until two years from the Fund's
commencement of investment operations, 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
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of the outstanding voting securities of the Fund voting separately from any
other series of the Trust.
With respect to each Fund, this Agreement may be terminated at any
time, without payment of a penalty by the Fund 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 Fund, voting separately from any other
series of the Trust on not less than 30 nor more than 60 days' written notice to
the Subadviser. Before any proposed termination of this Agreement, including
without limitation terminations through assignment or termination of the
Advisory Agreement, the Subadviser shall have the opportunity to attend the
Trust board meeting and discuss with the disinterested Trustees of the Trust any
potential termination of this Agreement ("Subadviser Notice"). The Subadviser
shall be given at least 15 days notice of such meeting in order to make
arrangements to attend the meeting. The Subadviser agrees that once such notice
is received, it shall make itself available to attend the meeting. If the
Subadviser does not make itself available to attend the meeting, this Agreement
may be terminated without giving the Subadviser an opportunity to discuss the
termination with the disinterested Trustees of the Trust. With respect to each
Fund, 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 the Subadviser will make itself available for a meeting with the
disinterested Trustees prior to such termination becoming effective so long as
such meeting is held within 120 days of the date the Subadviser gave its initial
notice of termination. The termination of this Agreement with respect to any
Fund or the addition of any Fund 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 Fund subject hereto. This Agreement shall automatically
terminate in the event of its assignment (as defined by the Act and the rules
promulgated thereunder).
This Agreement will also terminate in the event that the Advisory
Agreement by and between the Trust and the Adviser is terminated.
12. 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.
13. AMENDMENTS. This Agreement may be amended by consent of the
parties in writing, but the consent of the Trust must be obtained in conformity
with the requirements of the Act and the rules promulgated thereunder.
14. GOVERNING LAW. This Agreement is made pursuant to and shall be
construed in accordance with the laws of the State of New York and the
applicable provisions of the Act, without giving effect to any conflicts of law,
notwithstanding the place where the Agreement is executed by any party or the
location of any office, venture, party or operation of the Trust.
15. SEPARATE SERIES. Pursuant to the provisions of the Declaration
of Trust and the laws of the State of Delaware, each Fund is a separate series
of the Trust, and all debts,
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liabilities, obligations and expenses of a particular Fund shall be enforceable
only against the assets of that Fund and not against the assets of any other
Fund or of the Trust as a whole.
16. 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:
Trajectory Asset Management LLC
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Adviser:
AIG SunAmerica Asset Management Corp.
Harborside Financial Center
0000 Xxxxx 0
Xxxxxx Xxxx, XX 00000
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 & CEO
TRAJECTORY ASSET MANAGEMENT LLC
By:
---------------------------------
Name:
Title:
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SCHEDULE A
Portfolio Fee
2010 HIGH WATERMARK FUND For work performed as the
0000 XXXX XXXXXXXXX FUND subadviser on the Funds, the
2020 HIGH WATERMARK FUND Subadviser shall receive
2025 HIGH WATERMARK FUND forty-three percent (43%) of the
net management fee. Net
management fee will be
calculated monthly as the gross
management fee less any fund
reimbursement made by the
Adviser. For a period not to
exceed two years from the
inception of the Trust, if the
cumulative monthly subadvisory
fees are less than fifteen basis
points (15 bps) of the Trusts'
assets, the Subadviser will
receive a monthly draw of 15 bps
on composite net assets within
the Trust. Future subadvisory
fees will be offset by the
amount previously paid that
exceeded the subadvisory fees
earned, until such time that the
excess is recouped by the
Adviser.
