SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
(Amendment No..____)
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14c-5
(d)(2))
[X] Definitive Information Statement
SEASONS SERIES TRUST
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
______________________________________________________________________
2) Aggregate number of securities to which transaction applies:
______________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________
4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
5) Total fee paid:
______________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
______________________________________________________________________
AIG SUNAMERICA RETIREMENT MARKETS, INC. (AIG SUNAMERICA LOGO)
21650 Oxnard Street THE RETIREMENT SPECIALIST
Woodland Hills, CA 91367
(800) 445-7862
January 27, 2006
Dear Contract Owner:
We are writing to provide contract owners invested in the Small Cap and
Strategic Fixed Income Portfolios (the "Portfolios") of Seasons Series Trust
(the "Trust") with the enclosed information statement. The information statement
provides information regarding a recent change in control of Salomon Brothers
Asset Management Inc. ("SaBAM"), a subadviser to the Portfolios. The change of
control occurred on December 1, 2005 when Legg Mason, Inc. acquired
substantially all of the outstanding shares of capital stock of SaBAM from
SaBAM's previous parent company, Citigroup, Inc. The transaction has not had and
is not expected to have any impact on SaBAM's management or on SaBAM's ability
to provide the type, quality or quantity of services that it currently provides
to the Portfolios.
As a matter of regulatory compliance, we are sending you this information
statement which describes, among other things, the management structure of the
Portfolios, the ownership of SaBAM, and the terms of the new subadvisory
agreement with SaBAM, which has been approved by the Trustees of the Trust.
If you have any questions regarding this change, please call our SunLine
customer service center between the hours of 5 a.m. PST and 5 p.m. PST at (800)
445-7862.
Sincerely,
/s/ JANE ALDRICH
- -------------------------------
Jane Aldrich, CFA
Senior Vice President
AIG SunAmerica Retirement Markets, Inc.
SEASONS SERIES TRUST
SMALL CAP PORTFOLIO
STRATEGIC FIXED INCOME PORTFOLIO
P.O. BOX 54299
LOS ANGELES, CA 90054-0299
----------
INFORMATION STATEMENT
REGARDING A NEW SUBADVISORY AGREEMENT WITH
SALOMON BROTHERS ASSET MANAGEMENT INC.
----------
This information statement is being provided to the shareholders of the
Small Cap and Strategic Fixed Income Portfolios (the "Portfolios") of Seasons
Series Trust (the "Trust") in lieu of a proxy statement, pursuant to the terms
of an exemptive order the Trust has received from the Securities and Exchange
Commission. The exemptive order permits the Trust's investment adviser, AIG
SunAmerica Asset Management Corp. ("SunAmerica" or the "Adviser"), to hire new
subadvisers and to make changes to existing subadvisory contracts with the
approval of the Board of Trustees (the "Trustees"), but without obtaining
shareholder approval. This information statement is being furnished on behalf of
the Trustees of the Trust.
WE ARE NOT ASKING FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
THIS DOCUMENT IS FOR INFORMATIONAL PURPOSES ONLY AND YOU ARE NOT REQUIRED
TO TAKE ANY ACTION.
This information statement will be mailed on or about January 27, 2006 to
contract owners who chose either or both of the Portfolios as an investment
option prior to December 1, 2005.
PURPOSE OF THE INFORMATION STATEMENT
On December 1, 2005, Legg Mason, Inc. ("Legg Mason") acquired substantially
all of the outstanding shares of capital stock of Salomon Brothers Asset
Management Inc. ("SaBAM") from Citigroup, Inc., SaBAM's previous parent company
(the "Transaction"). The Transaction has not had and is not expected to have any
immediate impact on SaBAM's management of the Portfolios or on SaBAM's ability
to provide the type, quality or quantity of services that it currently provides
to the Portfolios. However, the Transaction has resulted in a change of control
of SaBAM and an assignment of the subadvisory agreement between SunAmerica and
SaBAM dated October 1, 2002, as amended (the "Prior Subadvisory Agreement"). As
required by Section 15(a) of the Investment Company Act of 1940 (the "1940
Act"), the terms of the Prior Subadvisory Agreement provided for its automatic
termination upon such an assignment.
This information statement is intended to inform you that the Trustees of
the Trust approved a new Subadvisory Agreement between SunAmerica and SaBAM with
respect to the Portfolios, which agreement became effective upon the closing of
the Transaction (the "New Subadvisory Agreement"). This information statement
also describes generally the terms of the Transaction and the terms of the New
Subadvisory Agreement, which are substantially identical to the Prior
Subadvisory Agreement. The advisory fees paid by the Trust and the subadvisory
fees paid by SunAmerica did not increase as a result of the Transaction. This
information statement is being mailed to shareholders beginning on or about
January 27, 2006.
THE TRUST
The Portfolios are investment series of the Trust, a Massachusetts business
trust. The Trust entered into an Investment Advisory and Management Agreement
(the "Advisory Agreement") with SunAmerica on January 1, 1999, as amended from
time to time, with the approval of the Trustees. SunAmerica is an indirect,
wholly-owned subsidiary of American International Group, Inc., and is located at
Harborside Financial Center, 3200 Plaza 5, Jersey City, New Jersey 07311.
SunAmerica selects the subadvisers for the Trust's Portfolios, manages portions
of certain
1
Portfolios, provides various administrative services and supervises the
Portfolios' daily business affairs, subject to review by the Trustees. The
Advisory Agreement authorizes SunAmerica to retain subadvisers for the
portfolios or portions thereof for which it does not manage the assets.
SunAmerica selects subadvisers it believes will provide the portfolios with the
highest quality investment services, while obtaining, within the portfolios'
investment objective, a distinct investment style. SunAmerica monitors the
activities of the subadvisers and, from time to time, will recommend the
replacement of a subadviser on the basis of investment performance, style drift
or other consideration.
The subadvisers to the Trust's Portfolios act pursuant to agreements with
SunAmerica. Their duties include furnishing continuing advice and
recommendations to the relevant portions of the portfolios regarding securities
to be purchased and sold. The subadvisers are independent of SunAmerica and
discharge their responsibilities subject to the Trust's policies and the
oversight and supervision of SunAmerica. SunAmerica pays the subadvisers for
services rendered and the Trust's Portfolios do not pay fees directly to the
subadvisers.
THE NEW SUBADVISORY AGREEMENT
Pursuant to the Prior Subadvisory Agreement with SunAmerica, SaBAM served
as the subadviser to the Portfolios until the Prior Subadvisory Agreement was
terminated upon the change of control of SaBAM. At the Board meeting held on
September 8, 2005, the Trustees approved the New Subadvisory Agreement between
SunAmerica and SaBAM, which is identical in all material respects to the Prior
Subadvisory Agreement, to become effective upon the closing of the Transaction.
The subadvisory fee rate payable to SaBAM under the New Subadvisory Agreement is
identical to the subadvisory fee rate payable under the Prior Subadvisory
Agreement. The New Subadvisory Agreement became effective on December 1, 2005.
Under the Advisory Agreement, SunAmerica receives from the Trust a fee,
accrued daily and payable monthly, based on the net Assets of each Portfolio at
the following annual rates: Small Cap Portfolio, 0.85% on the first $250
million, 0.80% on the next $250 million, and 0.75% thereafter, or $753,991 for
the period ended March 31, 2005; Strategic Fixed Income Portfolio, 0.80% on the
first $200 million, 0.75% on the next $300 million, and 0.70% thereafter, or
$16,165 for the period ended March 31, 2005. The term "Assets" means the average
daily net assets of the respective Portfolio. For the period from February 14,
2005 through March 31, 2005, SunAmerica paid SaBAM fees equal to the annual rate
of 0.18% or $19,602, with respect to the Small Cap Portfolio, and 0.14%, or
$2,744 with respect to the Strategic Fixed Income Portfolio.
The New Subadvisory Agreement is substantially identical in form and
substance to the Prior Subadvisory Agreement, in that each (i) provides that
SaBAM manage a portion of the Portfolios allocated to it on a discretionary
basis, (ii) provides for SunAmerica to compensate SaBAM for its services, (iii)
authorizes SaBAM to select the brokers or dealers to effect portfolio
transactions for the Portfolios, and (iv) requires SaBAM to comply with the
Portfolios' investment policies and restrictions and with applicable law. The
New Subadvisory Agreement will not result in an increase in fees to
shareholders. The form of the New Subadvisory Agreement is attached to this
information statement as Exhibit A.
INFORMATION ABOUT SABAM
SaBAM is located at 399 Park Avenue, New York, NY 10022. SaBAM is a
wholly-owned subsidiary of Legg Mason, Inc., a publicly owned financial services
holding company that provides asset management, securities brokerage, investment
banking and related financial services through its subsidiaries. Legg Mason is
located at 100 Light St., Baltimore, Maryland 21202. As of September 30, 2005,
SaBAM managed approximately $91.65 billion in assets.
The names and positions of the directors and the principal executive
officer of SaBAM are as follows
NAME POSITION
---- --------
Peter Wilby Director and Managing Director
Michael Even Director
Evan Merberg Director
The address for each of the named directors and officer is 399 Park Avenue, New
York, NY 10022.
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With respect to each Portfolio, SaBAM is the investment adviser for another
mutual fund that has a similar investment objective. The name of the fund,
together with information concerning the fund's assets, the annual fees paid (as
a percentage of average net assets) to SaBAM for its services, are set forth
below.
ASSETS AS OF
SEPTEMBER 30, 2005 FEE RATE
FUND NAME (MILLIONS) (% OF AVERAGE DAILY NET ASSETS)
--------- ------------------ -------------------------------
Smith Barney Small Cap Value Fund $784.9 0.75%
(managed similar to Small Cap Portfolio)
John Hancock I Special Value Trust $ 40.3 0.55%
(managed similar to Small Cap Portfolio)
Salomon Institutional Emerging Markets $ 97.8 0.70%
Debt Fund (managed similar to Strategic
Fixed Income Portfolio)
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES
At a meeting held on September 8, 2005, the Trustees received materials
related to certain factors used in their consideration of whether to approve the
New Subadvisory Agreement, including (1) the nature, extent and quality of
services provided by SaBAM; (2) the size and structure of the subadvisory fees
charged in connection with SaBAM's management of the Portfolios, compared to
subadvisory fee rates of a group of funds with similar investment objectives
(the "Subadvisor Expense Group/Universe"), as selected by an independent
third-party provider of investment company data; (3) the investment performance
of the Portfolios ("Performance Group/Universe") and against benchmarks and/or
indices; (4) the terms of the New Subadvisory Agreement; (5) whether the
Portfolios will benefit from possible economies of scale; and (6) information
regarding SaBAM's compliance and regulatory history. In addition, the Trustees
considered the organization capability and financial condition of SaBAM and the
conditions and trends prevailing in the economy, the securities markets and the
investment company industry.
The Trustees of the Trust, including a majority of the Trustees who are not
interested persons of the Trust (the "Independent Trustees") as defined in the
1940 Act, were separately represented by counsel that is independent of
SunAmerica in connection with their consideration of approval of the New
Subadvisory Agreement. The matters discussed below were also considered
separately by the Independent Trustees in executive sessions during which such
independent counsel provided guidance to the Independent Trustees.
Nature, Extent and Quality of Services. The Trustees considered the nature,
quality and extent of services provided by SaBAM. The Trustees noted that SaBAM
is responsible for providing investment management services, including
investment research, advice and supervision, and determining which securities
shall be purchased or sold by the Portfolios. The Trustees reviewed SaBAM's
history, structure, size and investment experience. The Trustees were informed
that in management's judgment, that SaBAM has the size, visibility and resources
to attract and retain highly qualified investment professionals.
The Trustees reviewed the qualifications, background and responsibilities
of SaBAM's staff who is or would be responsible for providing investment
management services to the Portfolios. The Trustees concluded that they were
satisfied with the nature, quality and extent of the services provided by SaBAM
and that there was a reasonable basis on which to conclude that it would
continue to provide high quality services to the Portfolios.
Fees and Expenses. In connection with the Trustees' review of the New
Subadvisory Agreement, the Trustees received and reviewed information regarding
the Portfolios' subadvisory fees compared against such expense ratios of funds
in their respective Subadvisor Expense Group/Universe. It was noted that with
respect to subadvisory fees, SunAmerica negotiated the fees with SaBAM at
arms-length. The Trustees also considered that the subadvisory fees are paid by
SunAmerica out of its advisory fee and not by the Portfolios, and that
subadvisory
3
fees may vary widely within a Subadvisor Expense Group/Universe for various
reasons, including market pricing demands, existing relationships, experience
and success, and individual client needs.
The Trustees noted that the Small Cap Portfolio's subadvisory fees were
below the median of its Subadvisor Expense Group and its Subadvisor Expense
Universe. In addition, the Trustees noted that the Strategic Fixed Income
Portfolio's subadvisory fees were approximately 4 basis points above the median
of its Subadvisory Expense Group and that there were too few comparable funds in
the Portfolio's Subadvisory Expense Universe to provide a meaningful comparison.
On the basis of the information considered, the Trustees concluded that the
subadvisory fee rate for each Portfolio was fair and reasonable in light of the
usual and customary charges made for services of the same nature and quality and
the other factors considered.
Investment Performance. The Trustees, including the Independent Trustees,
received and reviewed information prepared by SunAmerica and by Morningstar,
Inc. and Lipper, Inc., third party providers of investment company information
regarding the Small Cap Portfolio investment performance compared against its
benchmark and other funds in its Performance Group/Universe. The Trustees
considered that the Small Cap Portfolio's performance trailed the Lipper Small
Cap Core Index and the median of its Performance Group and Performance Universe
for the one-, three- and five-year periods and the period since inception.
Furthermore, the Trustees took into account management's discussion of the Small
Cap Portfolio's performance and concluded that the Portfolio's underperformance
was being addressed. With respect to the Strategic Fixed Income Portfolio, the
Trustees did not consider performance because there was less than six months of
performance history.
Profitability and Economies of Scale. In considering the profitability to
SaBAM in connection with its relationship with the Portfolios, the Trustees
noted that the fees under the New Subadvisory Agreement are paid by SunAmerica.
The Trustees also relied on the ability of SunAmerica to negotiate the New
Subadvisory Agreement and the fees thereunder at arm's length. For each of the
above reasons, the profitability to SaBAM from its relationship with the
Portfolios was determined not to be a material factor in the Trustees'
deliberations. For similar reasons, the potential for the Portfolio to
experience economies of scale from SaBAM's management of the Portfolios was not
considered a material factor to the Trustees' consideration of SaBAM.
Terms of New Subadvisory Agreement. The Trustees, including the Independent
Trustees, reviewed the terms of the New Subadvisory Agreement, including the
duties and responsibilities undertaken by SaBAM. The Trustees noted that the New
Subadvisory Agreement provides that SaBAM will pay all of its own expenses in
connection with the performance of its duties as well as the cost of maintaining
the staff and personnel as necessary for it to perform its obligations. The
Trustees also considered other provisions of the New Subadvisory Agreement and
concluded that the terms of the New Subadvisory Agreement are reasonable, fair
and in the best interests of the Portfolios and their shareholders.
Compliance. The Trustees considered SaBAM's compliance and regulatory
history, including information whether it was involved in any regulatory actions
or investigations. The Trustees concluded that there was no material litigation
or proceeding that would materially effect SaBAM's ability to advise the
Portfolios.
Conclusions. In reaching their decision to recommend the approval of the
New Subadvisory Agreement, the Trustees did not identify any single factor as
being controlling, but based their recommendation on all of the factors it
considered and each Trustee individually weighing the various factors. Based
upon the materials they reviewed, the representations made to them and the
considerations described above, and as part of their deliberations, the
Trustees, including the Independent Trustees, concluded that SaBAM possesses the
capability and resources to perform the duties required of it under the New
Subadvisory Agreement.
4
OWNERSHIP OF SHARES
As of December 1, 2005, there were 13,532,159 shares of the Small Cap
Portfolio outstanding. All outstanding shares of the Portfolio are owned of
record, in the aggregate by the following:
SMALL CAP PORTFOLIO
-------------------
SHARES %
---------- ------
AIG SunAmerica Life Assurance Company
Variable Annuity Account Five .... 13,490,209 99.69%
FSA Variable Annuity Account Five ... 41,950 0.31%
---------- ------
TOTAL SHARES OUTSTANDING ......... 13,532,159 100.00%
As of December 1, 2005, there were 3,613,617 shares of the Strategic Fixed
Income Portfolio outstanding. All outstanding shares of the Portfolio are owned
of record, in the aggregate by the following:
STRATEGIC FIXED INCOME PORTFOLIO
--------------------------------
SHARES %
--------- -------
AIG SunAmerica Life Assurance Company
Variable Annuity Account Five .... 1,089,505 30.15%
FSA Variable Annuity Account Five ... 21,682 0.60%
AIG SunAmerica Life Assurance Company 2,502,430 69.25%
--------- ------
TOTAL SHARES OUTSTANDING ......... 3,613,617 100.00%
To SunAmerica's knowledge, no person owns a Contract or interests therein
for more than 5% of the outstanding shares of either Portfolio. The Trustees and
officers of the Trust and members of their families as a group, beneficially
owned less than 1% of the beneficial interest of either Portfolio as of December
31, 2005.
BROKERAGE COMMISSIONS
The table below sets forth, for the Small Cap Portfolio's fiscal year ended
March 31, 2005, the aggregate brokerage commissions paid, the commissions paid
to affiliated broker/dealers and the amount paid to affiliated broker/dealers as
a percentage of the Small Cap Portfolio's aggregate brokerage commissions.
PERCENTAGE OF
AGGREGATE AMOUNT PAID TO COMMISSIONS PAID TO
BROKERAGE AFFILIATED BROKER- AFFILIATED
PORTFOLIO COMMISSIONS DEALERS BROKER-DEALERS
- ------------------- ----------- ------------------ -------------------
Small Cap Portfolio $300,628 $5,771 1.92%
The Small Cap Portfolio effected brokerage transactions with Citigroup Global
Markets, Inc., who was an affiliated broker-dealer of SaBAM prior to the
Transaction. The Strategic Fixed Income Portfolio did not engage in any
brokerage transactions with affiliated broker/dealers for the period ended March
31, 2005.
SHAREHOLDER REPORTS
The Trust has previously sent its Annual and Semi-Annual Reports to its
shareholders. Copies of the most recent annual and semi-annual reports of the
Trust are available without charge and may be obtained by writing the Trust at
P.O. Box 54299, Los Angeles, California 90054-0299 or by calling 1-800-445-7862.
5
SHAREHOLDER PROPOSALS
The Trust is not required to hold annual shareholder meetings, and
therefore, it cannot be determined when the next meeting of shareholders will be
held. If a shareholder wishes to submit proposals for consideration at a future
shareholder meeting, the Trust must receive the proposal a reasonable time
before the solicitation is to be made. Written proposals should be sent to Nori
L. Gabert, Esq., Secretary of Seasons Series Trust, 2929 Allen Parkway, Houston,
Texas 77019.
By Order of the Trustees,
/s/ NORI L. GABERT
----------------------------------------
Nori L. Gabert
Secretary
Seasons Series Trust
Dated: January 27, 2006
6
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of December 1, 2005 by and between
AIG 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,
EXHIBIT A
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
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, 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:
EXHIBIT A
(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 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 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 1940
Act, all records relating to the investments of the Portfolio(s) that
EXHIBIT A
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.
(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. 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, 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, self regulatory
organizations, or to the extent such disclosure is necessary for employees of
the Subadviser to carry out its duties on behalf of the Portfolio(s) as
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.
EXHIBIT A
12. 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.
13. TERM OF THE AGREEMENT. This Agreement shall continue in full force and
effect with respect to each Portfolio until two years from the date hereof, and
from year to year thereafter so long as such continuance is specifically
approved at least annually (i) by the vote of a majority of those Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio voting separately from any other
series of the Trust.
With respect to each Portfolio, this Agreement may be terminated at
any time, without payment of a penalty by the Portfolio or the Trust, by vote of
a majority of the Trustees, or by vote of a majority of the outstanding voting
securities (as defined in the Act) of the Portfolio, voting separately from any
other series of the Trust, or by the Adviser, on not less than 30 nor more than
60 days' written notice to the Subadviser. With respect to each Portfolio, this
Agreement may be terminated by the Subadviser at any time, without the payment
of any penalty, on 90 days' written notice to the Adviser and the Trust. The
termination of this Agreement with respect to any Portfolio or the addition of
any Portfolio to Schedule A hereto (in the manner required by the Act) shall not
affect the continued effectiveness of this Agreement with respect to each other
Portfolio subject hereto. This Agreement shall automatically terminate in the
event of its assignment (as defined by the Act).
This Agreement will also terminate in the event that the Advisory
Agreement by and between the Trust and the Adviser is terminated.
14. 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.
15. 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.
16. 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.
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. 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.
300 First Stamford Place
Stamford, Connecticut 06902
Attention: Christine Syder
General Counsel
Adviser: AIG SunAmerica Asset Management Corp.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311
Attention: Gregory Bressler
Senior Vice President and General Counsel
EXHIBIT A
with a copy to: AIG SunAmerica Inc.
1 SunAmerica Center
Century City
Los Angeles, CA 90067-6022
Attention: Mallary L. Reznik
Seasons Series Trust
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/ PETER A. HARBECK
------------------------------------
Name: Peter A. Harbeck
Title: President and Chief
Executive Officer
SALOMON BROTHERS ASSET MANAGEMENT, INC.
By: /s/ JOEL SAUBER
------------------------------------
Name: Joel Sauber
Title: Managing Director
EXHIBIT A
SCHEDULE A
ANNUAL FEE
(AS A PERCENTAGE OF THE AVERAGE DAILY NET ASSETS THE
PORTFOLIO(S) SUBADVISER MANAGES IN THE PORTFOLIO)
- ------------ ----------------------------------------------------
Strategic Fixed Income Portfolio 0.41%
Small Cap Portfolio 0.50%
EXHIBIT A