SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of May 1, 2008
by and between AIG SUNAMERICA ASSET MANAGEMENT
CORP., a Delaware corporation (the "Adviser"), and PACIFIC
INVESTMENT MANAGEMENT COMPANY 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, as agent and attorney-in-fact of the Trust,
may, when it deems appropriate and without prior consultation with the
Adviser, (a) buy, sell, exchange, convert and otherwise trade in any stocks,
bonds and other securities including money market instruments, whether
the issuer is organized in the United States or outside the United States, (b)
place orders for the execution of such securities transactions with or
through such brokers, dealers or issuers as the Subadviser may select and
(c) purchase, sell, exchange or convert foreign currency in the spot or
forward markets as necessary to facilitate transactions in international
securities for the Portfolio(s). In addition, the custodian shall provide the
Subadviser with daily reports regarding the cash levels in the Portfolio.
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
the Subadviser will manage each Portfolio in compliance with all
applicable federal and state laws, including securities, commodities and
banking laws, governing its operations and investments. 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 Internal Revenue Code of 1986, as
amended ("Subchapter M") ("the Code") 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 solely to
the extent that the Adviser has informed the Subadviser of such
requirements; (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
reasonably requested, for purposes of the Trust's 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 solely
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
not contain any untrue statement of a material fact regarding the
Subadviser or omit to state any material fact regarding the Subadviser
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.
The Subadviser also represents and warrants that in
furnishing services hereunder, the Subadviser will not consult with any
other subadviser of the Portfolios or other series of the Trust, to the extent
any other subadvisers are engaged by the Adviser, or any other
subadvisers to other investments companies that are under common
control with the Trust, concerning transactions of the Portfolios in
securities or other assets, other than for purposes of complying with the
conditions of paragraphs (a) and (b) of rule 12d3-1 under the Act.
Notwithstanding any other provision to the contrary, the
Subadviser shall have no obligation to perform the following services: (a)
shareholder services or support functions, such as responding to
shareholders' questions about a Portfolio or its investments or strategies;
(b) provision of legal, accounting or tax advice with respect to a Portfolio
or its investments by the Subadviser's in-house legal, accounting or tax
departments; (c) providing employees of the Subadviser to serve as
officers of a Portfolio; or (d) providing a Porfolio's Chief Compliance
Officer and associated staff.
The Subadviser may delegate portfolio management and
administrative duties to its affiliates and may share such information as
necessary to accomplish these purposes. Additionally, the Subadviser will
have the ability to delegate back office services to State Street Investment
Manager Solutions, LLC. In all cases, the Subadviser shall remain liable
as if such services were provided directly. No additional fees shall be
imposed for such services except as otherwise agreed.
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. Subadviser is authorized on behalf of each
Portfolio to (i) enter into agreements and execute any documents (e.g., any
derivatives documentation such as exchange traded and over-the-counter,
as applicable) required to make investments pursuant to the investment
guidelines and (ii) acknowledge the receipt of brokers' risk disclosure
statements, electronic trading disclosure statements and similar
disclosures. Upon the reasonable request of the Adviser, the Subadviser
will provide copies of any such agreements or other documents to the
Adviser. 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. 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, and covering fees
and expenses, 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 believes it can obtain 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. Subadviser shall bear no
liability to any party for any failure to obtain best
execution or when relying on the Adviser's
directions to effect transactions as described in this
subparagraph.
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 such amounts as negotiated by the
Adviser and Subadviser.
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, 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. Proxy Voting. The Adviser will vote proxies relating to
the Portfolio's securities. The Adviser will vote all such proxies in
accordance with such proxy voting guidelines and procedures adopted by
the Board of Trustees. The Adviser may, on certain non-routine matters,
consult with the Subadviser before voting proxies relating to the
Portfolio's securities. The Adviser will instruct the custodian and other
parties providing services to the Trust promptly to forward to the proxy
voting service copies of all proxies and shareholder communications
relating to securities held by each Portfolio (other than materials relating
to legal proceedings).
8. 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 are maintained on behalf of the Trust.
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.
9. 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.
10. 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, member, partners, 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, members, 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 Securities Act of 1933 (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.
11. Permissible Interests. Trustees and agents of the Trust are
or may be interested in the Subadviser (or any successor thereof) as
directors/trustees, partners, officers, or shareholders, or otherwise;
directors/trustees, partners, officers, agents, and shareholders of the
Subadviser are or may be interested in the Trust as trustees, or otherwise;
and the Subadviser (or any successor) is or may be interested in the Trust
in some manner.
12. 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 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.
13. 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.
14. 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.
15. 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.
16. 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.
17. 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.
18. Confidentiality. The Subadviser will not disclose or use
any records or information obtained pursuant to this Agreement in any
manner whatsoever except as expressly authorized in this Agreement or as
reasonably required to execute transactions on behalf of the Portfolios, and
will keep confidential any non-public information obtained directly as a
result of this service relationship, and the Subadviser shall disclose such
non-public information only if the Adviser or the Board of Trustees has
authorized such disclosure by prior written consent, or if such information
is or hereafter otherwise is known by the Subadviser or has been
disclosed, directly or indirectly, by the Adviser or the Trust to others and
this fact becomes ascertainable from public or published information or
trade sources, or if such disclosure is expressly required or requested by
applicable federal or state regulatory authorities, or to the extent such
disclosure is reasonably required by auditors or attorneys of the
Subadviser in connection with the performance of their professional
services or as may otherwise be contemplated by this Agreement.
Notwithstanding the foregoing, the Subadviser may disclose the total
return earned by the Portfolios and may include such total return in the
calculation of composite performance information.
19. Representations and Agreements of the Adviser. The
Adviser represents, warrants and covenants that:
(i) Each Portfolio is a "qualified institutional buyer" ("QIB")
as defined in Rule 144A under the Securities Act of 1933,
as amended, and the Adviser will promptly notify the
Subadviser if a Portfolio ceases to be a QIB; and
(ii) Each Portfolio is a "qualified eligible person" ("QEP") as
defined in Commodity Futures Trading Commission Rule
4.7 ("CFTC Rule 4.7"), the Adviser will promptly notify
the Subadviser if a Portfolio ceases to be a QEP, and the
Adviser hereby consents to each Portfolio being treated as
an "exempt account" under CFTC Rule 4.7.
20. Delivery of Part II of Form ADV. The Adviser
acknowledges it has received, at least 48 hours prior to the execution of
this Agreement, a copy of Part II of the Subadviser's Form ADV, as
amended.
21. Notices. All notices shall be in writing and deemed
properly given when delivered or mailed by electronic mail or United
States certified or registered mail, return receipt requested, postage
prepaid, addressed as follows:
Subadviser: Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Fax: 000-000-0000
Attention: General Counsel
Email: XXXXxxxxxx@xxxxx.xxx
Cc: Xxxxx Xxxxxxx, Vice President
Email: xxxxx.xxxxxxx@xxxxx.xxx
Adviser: AIG SunAmerica Asset Management Corp.
Harborside Financial Center
0000 Xxxxx 0
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Senior Vice President and
General Counsel
with a copy to: AIG Retirement Services, Inc.
0 XxxXxxxxxx Xxxxxx
Xxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Deputy 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.
PURSUANT TO AN EXEMPTION FROM THE COMMODITY
FUTURES TRADING COMMISSION IN CONNECTION WITH ACCOUNTS
OF QUALIFIED ELIGIBLE PERSONS, THIS ACCOUNT DOCUMENT IS
NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE
COMMISSION. THE COMMODITY FUTURES TRADING COMMISSION
DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A
TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF
COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY,
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT
REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS
ACCOUNT DOCUMENT.
AIG SUNAMERICA ASSET
MANAGEMENT CORP.
By:
______________________________
Name: Xxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
PACIFIC INVESTMENT
MANAGEMENT COMPANY LLC
By: ______________________________
Name:
Title: Managing Director
Schedule A
Portfolio(s)
Annual Fee
(as a percentage of the average
daily net assets the Subadviser
manages in the portfolio)
Total Return Bond Portfolio
0.25%
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