Exhibit (d)(xi)
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of October 1, 2002 by
and between SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the
"Adviser"), and SALOMON BROTHERS ASSET MANAGEMENT, INC., a Delaware 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 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
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 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 a "investment adviser" as defined 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. (a) 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 a portion 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, 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, and (b) applicable laws and regulations.
The Subadviser represents and warrants to the Adviser that the
portion of assets allocated to it of each of the Portfolios set forth in
Schedule A will at all times be operated and managed (1) in compliance with all
applicable federal and state laws governing its operations 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. 33-08859;
hereinafter "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. Without limiting the foregoing, the Subadviser represents and
warrants (1) qualification, election and maintenance of such election by each
Portfolio to be treated as a "regulated investment company" under Subchapter M,
chapter 1 of the Code, and (2) 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; (d) applicable federal and state securities,
commodities and banking laws; and (e) 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 1940 Act and
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
The Subadviser accepts such employment and agrees, at its own
expense, to render the services set forth herein and to provide the office
space, furnishings, equipment and personnel required by it to perform such
services on the terms and for the compensation provided in this Agreement.
(b) The Subadviser agrees: (i) 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 (ii) from time to time and upon reasonable request, to supply
evidence of such coverage to the Adviser.
2. PORTFOLIO TRANSACTIONS. The Subadviser is responsible for
decisions to buy or sell securities and other investments for a portion 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
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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, 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 it's best
efforts to direct non-risk commission transactions to
a particular broker-dealer in futures commission
merchant
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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, 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. The Subadvisers will not be held
accountable for actions taken in response to the
Adviser's specific request for direction in the
absence of disabling conduct described in paragraph
ten herein.
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
portion of 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).
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 Subadviser's cost.
5. REPORTS. The Trust, the Adviser and the Subadviser agree to
furnish to each other, if applicable, current prospectuses, statements of
additional information, proxy statements, reports of shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs and that of the Trust as each may reasonably request.
6. STATUS OF THE SUBADVISER. The services of the Subadviser to
the Adviser and the Trust are not to be deemed exclusive, and the Subadviser
shall be free to render similar services
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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 Subadviser will vote proxies relating to the
assets of each Portfolio for which Subadviser exercises investment discretion.
With regard to legal proceedings, including bankruptcies or class actions,
involving securities held or previously held by a Portfolio or the issuers of
the securities, notice will be given to the Adviser by the Subadviser. The
Adviser will instruct the custodian and other parties providing services to the
Trust promptly to forward to Subadviser copies of all proxies and shareholder
communications relating to securities held by each Portfolio. The Adviser agrees
that Subadviser will not be responsible or liable for failing to vote any
proxies where it has not received such proxies or related shareholder
communications on a timely basis and liability of the Subadviser is subject to
the same standards as in paragraph 10.
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
1940 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 1940 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.
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, 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 or to any shareholder of 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.
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(b) The Subadviser shall not be liable to the Adviser,
its officers, directors, agents, employees, controlling persons or shareholders
or to the Trust or its shareholders for (i) any acts of the Adviser or any other
subadviser to the Portfolio 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
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 the Subadviser or, to the extent such
records related to the portion of the assets managed by the Subadviser,
otherwise available to the Subadviser upon reasonable request. The Adviser and
Subadviser each agree that the 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 subsections (a) and (b) of 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 Indemnified Parties 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 Portfolio's assets not allocated to the Subadviser and with respect
to any other portfolio of the Trust.
11. PERMISSIBLE INTERESTS. Trustees and agents of the Trust are or
may be interested in the Subadviser (or any successor thereof) as directors,
partners, officers, or shareholders, or otherwise; directors, partners,
officers, agents, and shareholders of the Subadviser are or may be interested in
the Trust as trustees, or otherwise; and the Subadviser (or any successor) is or
may be interested in the Trust in some manner.
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. 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).
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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. 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: Salomon Brothers Asset Management, Inc.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxxxx Xxxxx
General Counsel
Adviser: SunAmerica Asset Management Corp.
The SunAmerica Center
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000-0000
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: Xxxxxxx X. Xxxxxx
Secretary, Seasons Series Trust
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IN WITNESS WHEREOF, the parties have caused their respective duly
authorized officers to execute this Agreement as of the date first above
written.
SUNAMERICA ASSET MANAGEMENT CORP.
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
SALOMON BROTHERS ASSET MANAGEMENT, INC.
By: /s/ A. Xxxxx Xxxxxxx
--------------------
Name: A. Xxxxx Xxxxxxx
Title: Managing Director
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