EXHIBIT (d)(xiv)
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of January 1, 1999, by and
between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and XXXXXX INVESTMENT MANAGEMENT, INC., a Massachusetts corporation
(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, (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, 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 or portfolios 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 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 as delivered in writing to the Subadviser, and in
compliance with (a) the objectives, policies, and limitations for the
Portfolio(s) set forth in the Trust's current prospectus and statement of
additional information as delivered to the Subadviser, and (b) applicable laws
and regulations.
The Subadviser agrees that it will operate and manage the
Portfolio set forth in Schedule A (1) in compliance with all applicable federal
and state laws governing the Subadviser's management of the Portfolio and
investments; and (2) so as not to jeopardize either the treatment of the
SunAmerica Series Trust variable annuity contracts issued by Variable Separate
Account and FS Variable Separate Account (File Nos. 33-47473 and 33-85014,
respectively; hereinafter "Contracts") as annuity contracts for purposes of the
Internal Revenue Code of 1986, as amended (the "Code"). Without limiting the
foregoing, the Subadviser agrees to manage the Portfolio in compliance with (a)
the provisions of the Act and rules adopted thereunder; (b) the diversification
requirements specified in the Internal Revenue Service's regulations under
Section 817(h) of the Code; (c) applicable state insurance laws; and (d)
applicable federal and state securities, commodities and banking laws; provided
that Adviser shall provide Subadviser with written direction as to the
requirements of applicable state insurance laws and applicable federal and state
banking laws. For purposes of the preceding sentence, disclosure in the Trust's
prospectus and/or statement of additional information of applicable state
insurance laws and regulations and applicable federal and state banking laws and
regulations shall constitute "written direction" thereof. The Adviser
acknowledges and agrees that the Subadviser's compliance with its obligations
under this Agreement will be based, in part, on information supplied by the
Adviser, or an agent thereof, as to each Portfolio, including but not limited
to, portfolio security lot level realized and unrealized gain/loss allocation.
The Adviser agrees that all such information will be supplied on a timely basis.
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 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. The
Subadviser shall not have any responsibility for the administrative affairs of
the Portfolio, including any responsibility for the calculation of the net asset
value of the Portfolio's shares or shareholder accounting services; provided,
however, that the Subadviser shall, as requested from time to time by the
Adviser, assist the Adviser in obtaining pricing information relating to the
Portfolio's investment securities.
2. PORTFOLIO TRANSACTIONS. The Subadviser is responsible for
decisions to buy or sell securities and other investments of 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
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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. 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.
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 the Subadviser a fee
at the annual rates set forth in Schedule A hereto with respect to 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 be determined by taking an
average of all determinations of such net asset value during the month. If the
Subadviser shall
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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 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. While the Subadviser is not being engaged to serve
as the Trust's official record keeper, the Subadviser nevertheless hereby
undertakes and agrees to maintain, in the form and for the period required by
Section 204 of the Advisers Act and Rule 204-2 thereunder, all records relating
to the investments of the Portfolio(s) that are required to be maintained by the
Subadviser pursuant to the requirements of Rule 204-2 under the Advisers Act.
The Subadviser will also, in connection with the purchase and sale of securities
for each Portfolio, arrange for the transmission to the custodian for the Trust
on a daily basis, such confirmation, trade tickets, and other documents and
information, that identify securities to be purchased or sold on behalf of the
Portfolio, as may be reasonably necessary to enable the custodian to perform its
administrative and recordkeeping responsibilities with respect to the Portfolio.
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. The Adviser covenants as follows:
(a) The Adviser will (and will cause its affiliates (including
the Trust) (each an "Affiliate") to) use the name "Xxxxxx Investment
Management", "Xxxxxx Investments", "Xxxxxx" or any derivation thereof only for
so long as this Agreement remains in effect. At such times as this Agreement is
no longer in effect, the Adviser will, and will cause each Affiliate to, cease
using any such name or any other name indicating that any Portfolio is advised
by or otherwise connected to the Subadviser.
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(b) It will not, and will cause its Affiliates to not, refer
to the Subadviser or any Affiliate in any sales literature or promotional
material except with the prior approval of the Subadviser. In the case of
materials, such as the portfolio's prospectus, required by law to be prepared,
such approval shall not be unreasonably withheld.
(c) It will permit the Portfolios to be used as a funding
vehicle only for insurance contracts issued by SunAmerica Inc. or any of its
affiliates.
(d) It will not (and will cause it Affiliates to not) engage
in marketing programs (written or otherwise) directed toward Xxxxxx Capital
Manager Annuity Contract ("PCM") which directly solicit transfers from PCM to
the Adviser's products or those of its Affiliates. For purposes of the
foregoing, general marketing efforts by SunAmerica Inc. and its affiliates shall
not constitute a direct solicitation of PCM contract holders. The Adviser will
not (and will cause its Affiliates to not) create or use marketing materials
which provide direct comparisons between PCM and the Adviser's products or those
of any of its Affiliates. The Adviser, in connection with any exchange program,
will not (and will cause its Affiliates to not) reimburse voluntarily, or enter
into any contract or policy after the date hereof providing for the
reimbursement of, any deferred sales charges to encourage the transfer of assets
from PCM to the Adviser's products or those of any Affiliate. For purposes
hereof, the term "Affiliate" shall not be construed to include agents of
SunAmerica Inc. or affiliates thereof, who are not employees of such entities.
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, 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 Trust, any shareholder of the Trust or the
Adviser 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 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 liability arising from the Subadviser's conduct under this Agreement.
(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 persons may become subject
under the 1933 Act, under other statutes, at common law or otherwise, which may
be based upon (i) any wrongful act or material breach of this Agreement by the
Subadviser resulting from Subadviser's disabling conduct, or (ii) any untrue
statement of a material fact in the Trust's registration statement or omission
to state a material fact required to be stated therein or necessary to make the
statement therein not misleading, if such statement or omission was made in
reliance on
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information furnished by the Subadviser to use in such registration statement,
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.
10. 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.
11. TERM OF THE AGREEMENT. This Agreement shall continue in full force
and effect with respect to each Portfolio until the earlier of (a) two years
from the date this Agreement is approved by the Trustees, or (b) the first
meeting of the shareholders of the Portfolio of the Trust after the date hereof.
If approved at such meeting by the affirmative vote of a majority of the
outstanding voting securities (as defined in the Act), of the Portfolio with
respect to such Portfolio, voting separately from any other series of the Trust,
this Agreement shall continue in full force and effect with respect to such
Portfolio 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, provided, however, that if the shareholders
fail to approve the Agreement as provided herein, the Subadviser may continue to
serve hereunder in the manner and to the extent permitted by the Act and rules
thereunder. The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the Act and the rules and regulations thereunder.
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 60 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.
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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" 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:
Subadviser: Xxxxxx Investment Management, Inc.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
000 Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Senior Vice President and
General Counsel
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with a copy to: SunAmerica Inc.
0 XxxXxxxxxx Xxxxxx
Xxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxx
Senior Vice President,
General Counsel - Corporate Affairs
and 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: /s/ XXXXX X. XXXXXXX
--------------------
Name: Xxxxx X. Xxxxxxx
Title: President
XXXXXX INVESTMENT MANAGEMENT, INC.
By: /s/ XXXXXX X. SILVER
--------------------
Name: Xxxxxx X. Silver
Title: Senior Managing Director
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SCHEDULE A
FOR
(AS PERCENTAGE OF
AVERAGE DAILY NET ASSETS OF
PORTFOLIO(S) THE PORTFOLIO)
------------------------------- -----------------------------
Xxxxxx Growth .50% on the first $150MM
.45% on the next $150MM
.35% over $300MM
International Growth and Income .65% on the first $150MM
.55% on the next $150MM
.45% over $300MM
Emerging Markets 1.00% on the first $150MM
.95% on the next $150MM
.85% over $300MM
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