SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of ____________, 1997 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 Seasons Series Trust, a Massachusetts business
trust (the "Trust"), have entered into an Investment Advisory and Management
Agreement dated as of August 8, 1996, (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, par value $.01 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 Seasons variable annuity contracts issued by
Variable Annuity Account Five (File No. 333-08859; 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 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
ed 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 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
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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 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.
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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.
(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
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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 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 succesor) 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
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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 Subadvisor
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.
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.
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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
Attn: 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
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: ____________________________________
Name: Xxxxx X. Xxxxxxx
Title:President
XXXXXX INVESTMENT MANAGEMENT, INC.
By: ____________________________________
Name:
Title:
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SCHEDULE A
FEE
(AS PERCENTAGE OF
AVERAGE DAILY NET ASSETS OF
PORTFOLIO(S) THE PORTFOLIO)
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Asset Allocation: Diversified Growth .55% on the first $150MM
.50% on the next $150MM
.40% over $300MM
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