SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is
dated as of December 14, 2007 by and between
AIG SUNAMERICA ASSET MANAGEMENT
CORP., a Delaware corporation (the Adviser), and
XXXXXXX CAPITAL MANAGEMENT, LLC, a
Delaware limited liability company (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 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 or portions
thereof, as applicable (the Portfolio or Portfolios),
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
Portfolios. In addition, the custodian shall provide
the Subadviser with daily reports regarding the cash
levels in the Portfolios. The custodian designated
by the Adviser to hold the assets of each Portfolio
will automatically invest any uninvested cash assets
of each Portfolio on a daily basis. 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 Trusts current
prospectus and statement of additional information;
and (b) applicable laws and regulations.
The Subadviser represents and
warrants to the Adviser that each Portfolio will at
all times be operated and managed in compliance
with (a) all applicable federal and state laws,
including securities, commodities and banking laws,
governing its operations and investments; (b) the
diversification requirements specified in the Internal
Revenue Services regulations under Section 817(h)
of the Internal Revenue Code of 1986, as amended
(the Code) so as not to jeopardize the treatment of
the variable annuity contracts which offer the
Portfolios (the Contracts) as annuity contracts for
purposes of the Code; (c) the provisions of the Act
and rules adopted thereunder; (d) the objectives,
policies, restrictions and limitations for the
Portfolios as set forth in the Trusts current
prospectus and statement of additional information
as most recently provided by the Adviser to the
Subadviser; and (e) the policies and procedures as
adopted by the Trustees of the Trust, as most
recently provided by the Adviser to the Subadviser.
The Adviser agrees that it, and not the Subadviser,
will be solely responsible for insuring that each
Portfolio (a) is in compliance with 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;
and (b) complies with any limits in its current
prospectus or statement of additional information
concerning concentration of investments or the
amount of assets that may be invested by the
Portfolio in any one or more securities. 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.
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. For purposes of complying
with the preceding sentence the Subadviser may
rely on a list, as amended from time to time, of
subadvisers of the Portfolios or other series of the
Trust, and any subadviser to other investment
companies that are under common control with the
Trust, as provided by the Adviser.
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 Subadvisers
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 firms
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
Subadvisers 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 Subadvisers 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
Portfolios 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, covering fees and expenses,
the Adviser may direct the Subadviser to effect a
specific percentage of a Portfolios 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
Subadvisers 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 Advisers
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 calculating the
Subadvisers 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 the
Subadvisers 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. Proxy Voting. The Adviser will
vote proxies relating to the Portfolios 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 Portfolios 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 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 Trusts
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,
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, 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 Subadvisers 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 or its affiliates or
such directors/trustees, officers or controlling
person may become subject under the Act, the 1933
Act, under other statutes, common law or otherwise,
which may be based on (i) the Subadvisers
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 Subadvisers
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.
(c) The Subadviser shall not be
liable to the Adviser for (i) any acts of the Adviser
or any other subadviser to the Portfolios with
respect to the portion of the assets of a Portfolio
not managed by Subadviser and (ii) acts of the
Subadviser which result from or are based upon
acts of the Adviser, including, but not limited to:
(A) a failure of the Adviser to provide accurate and
current information with respect to any records
maintained by Adviser or any other subadviser to a
Portfolio, which records are not also maintained by
or otherwise available to the Subadviser upon
reasonable request; and (B) acts of the Subadviser
that were made in reasonable reliance upon
information provided to it by the Adviser. The
Adviser agrees that Subadviser shall manage the
portion of the assets of a Portfolio allocated to it as
if it was a separate operating portfolio and shall
comply with Section 1 of this Subadvisory
Agreement (including, but not limited to, the
investment objectives, policies and restrictions
applicable to a Portfolio and qualifications of a
Portfolio as a regulated investment company under
the Code) only with respect to the portion of assets
of a Portfolio allocated to Subadviser. The Adviser
shall indemnify the Subadviser (and its officers,
directors/trustees, 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 the conduct of the Adviser,
the Trust and any other subadviser with respect to
the portion of a Portfolios assets not allocated to
Subadviser.
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 90 days written notice to the
Adviser and the Trust; provided, however, that this
Agreement may not be terminated by the
Subadviser unless another subadvisory agreement
has been approved by the Trust in accordance with
the Act, or after six months written notice,
whichever is earlier. 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,
settle, reconcile, or otherwise facilitate 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 or 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 necessary or appropriate for the
Subadviser to carry out its duties on behalf of its
clients, including the Portfolios, and where
Subadviser has obtained a confidentiality agreement
or otherwise has reasonable expectations that such
information will not be misused. 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. 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, or
by overnight courier, addressed as follows:
Subadviser: Xxxxxxx Capital
Management, LLC
0000 00xx Xxxxxx -
Xxxxx 0000
Xxxxxx, XX 00000
Attention:
Xxxxxx X.X. Xxxxxx
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.
AIG
SUNAMERICA ASSET MANAGEMENT
CORP.
By: /s/ XXXXX
X. XXXXXXX
Name: Xxxxx
X. Xxxxxxx
Title:
President &
CEO
XXXXXXX
CAPITAL MANAGEMENT, LLC
By: /s/
XXXXXXXXXXX X. XXXXXXX
Name:
Xxxxxxxxxxx X.
Xxxxxxx
Title:
President
Schedule A
Portfolio(s)
Annual Fee(as a percentage of the average
daily net assets the Subadviser manages
in the portfolio)
Focus Growth
Portfolio
0.40%
Focus Growth
and Income
Portfolio
0.45% on the first $500MM*
0.40% thereafter
* For the purposes of the breakpoint on
the Focus Growth and Income Portfolio, the
asset level at which the fee rate breaks
shall be based upon the average daily net
assets of all portfolios of SunAmerica Series
Trust for which Marsico serves as subadviser.
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- Subadvisory Agreement (Final 10-02-07) SST.doc
