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EXHIBIT(d)(iii)
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of November 29, 2000, by and between
SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the "Adviser"), and
BANC OF AMERICA CAPITAL MANAGEMENT, INC., a Maryland 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, 2000, 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 which the Adviser may delegate one or more of its duties to a
Subadviser; 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 as may be reasonably requested from time to time.
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
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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, in
performing its responsibilities hereunder, 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 as communicated by
Adviser to Subadviser in writing; (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 polices and procedures as adopted by the Trustees
of the Trust as most recently provided by the Adviser to the Subadviser. 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 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. 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
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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 and
may affect the size of the position obtained for or disposed of by a Portfolio.
(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
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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. 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, 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 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.
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 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.
7. 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.
8. 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) 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
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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) 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
persons become subject under the 1933 Act, under other statutes, at common law
or otherwise, arising out of or resulting from any disabling conduct on the part
of the Subadviser, 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 which arises out of or results from
Subadviser's disabling conduct; provided, however, that in no case is the
Subadviser's indemnity in favor of any person deemed to protect such other
persons against any liability to which such person would otherwise be subject by
reasons of willful misfeasance, bad faith, or gross negligence in the
performance of his, her or its duties or by reason of his, her or its reckless
disregard of obligations and duties under this Agreement.
9. TERM OF THE AGREEMENT. This Agreement shall continue in full force
and effect with respect to each Portfolio until two years from the date hereof,
and from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio voting separately from any other
series of the Trust.
With respect to each Portfolio, this Agreement may be terminated
at any time, without payment of a penalty by the Portfolio or the Trust, by vote
of a majority of the Trustees, or by vote of a majority of the outstanding
voting securities (as defined in the Act) of the Portfolio, voting separately
from any other series of the Trust, or by the Adviser, on not less than 30 nor
more than 60 days' written notice to the Subadviser. With respect to each
Portfolio, this Agreement may be terminated by the Subadviser at any time,
without the payment of any penalty, on 90 days' written notice to the Adviser
and the Trust. The termination of this Agreement with respect to any Portfolio
or the addition of any Portfolio to Schedule A hereto (in the manner required by
the Act) shall not affect the continued effectiveness of this Agreement with
respect to each other Portfolio subject hereto. This Agreement shall
automatically terminate in the event of its assignment (as defined by the Act).
This Agreement will also terminate in the event that the Advisory Agreement by
and between the Trust and the Adviser is terminated. Notwithstanding the
foregoing, in the event the Securities and Exchange Commission issues an order
conditionally or unconditionally exempting such assignment from the provisions
of Section 15(a) of the Act, this Agreement shall continue in full force and
effect, subject to any terms or conditions of such order.
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10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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: Banc of America Capital Management, Inc.
Bank of America Plaza, NC1-002-33-3
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Managing Director and
Chief Administrative Officer
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
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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:
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
BANC OF AMERICA CAPITAL MANAGEMENT, INC.
By:
---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director and
Chief Administrative Officer
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SCHEDULE A
ANNUAL FEE
(AS A PERCENTAGE OF THE AVERAGE
PORTFOLIO(S) DAILY NET ASSETS IN THE PORTFOLIO)
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Cash Management 0.15% to $750MM
0.10% over $750MM
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