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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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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AIG SUNAMERICA RETIREMENT MARKETS, INC.
21650 Oxnard Street [LOGO AIG SUNAMERICAN]
Woodland Hills, CA 91367
(800) 445-7862
March 16, 2006
Dear Contract Owner:
We are writing to provide you with the enclosed information statement. The
information statement provides information regarding a recent subadviser change
to the Focus Value Portfolio (the "Portfolio") of Seasons Series Trust (the
"Trust"). On December 14, 2005, the Board of Trustees approved a decision to
replace American Century Investment Management, Inc. ("American Century") as a
subadviser for a portion of the assets of the Portfolio. Accordingly, the Board
of Trustees approved the engagement of Northern Trust Investments, N.A. ("NTI")
to replace American Century. Effective January 23, 2006, NTI began managing a
portion of the Portfolio's assets.
THE CHANGE IN PORTFOLIO MANAGEMENT DID NOT RESULT IN ANY MODIFICATIONS TO
THE PRINCIPAL INVESTMENT OBJECTIVE OR INVESTMENT STRATEGY OF THE PORTFOLIO AS
STATED IN THE TRUST'S PROSPECTUS OR TO THE MANAGEMENT FEE PAYABLE BY THE
PORTFOLIO.
As a matter of regulatory compliance, we are sending you this information
statement, which describes, among other things, the management structure of the
Portfolio, the ownership of NTI and the terms of the subadvisory agreement with
NTI, which has been approved by the Trustees, including the Independent
Trustees.
THIS DOCUMENT IS FOR YOUR INFORMATION ONLY AND YOU ARE NOT REQUIRED TO
TAKE ANY ACTION. Should you have any questions about these changes or if we can
be of service to you in any other way, 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
FOCUS VALUE PORTFOLIO
P.O. BOX 54299
LOS ANGELES, CA 90054-0299
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INFORMATION STATEMENT
REGARDING SUBADVISER CHANGE
FOR THE FOCUS VALUE PORTFOLIO
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This information statement is being provided to the shareholders of the
Focus Value Portfolio (the "Portfolio") 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"), 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 March 16, 2006 to
contract owners who chose the Portfolio as an investment option prior to January
31, 2006.
PURPOSE OF THE INFORMATION STATEMENT
On December 14, 2005, the Board of Trustees approved a decision to replace
American Century Investment Management, Inc. ("American Century") as a
subadviser for a portion of the assets of the Portfolio. Accordingly, the Board
of Trustees approved the engagement of Northern Trust Investments, N.A. ("NTI")
to replace American Century. Effective January 23, 2006, NTI began managing a
portion of the Portfolio's assets. Third Avenue Management, LLC and J.P. Morgan
Investment Management Inc. will continue to manage the remainder of the assets
of the Portfolio.
THE TRUST
The Portfolio is an 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
certain 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 for which it does not manage the assets. SunAmerica selects
subadvisers it believes will provide the portfolios with the highest quality
investment services. 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 portfolios regarding securities to be purchased and sold.
The subadvisers are independent of SunAmerica and discharge their
responsibilities subject to the policies of the
1
Trustees and the oversight and supervision of SunAmerica, which pays the
subadvisers' fees. The portfolios do not pay fees directly to a subadviser.
However, in accordance with procedures adopted by the Trustees, a subadviser may
effect portfolio transactions through an affiliated broker-dealer, acting as an
agent not as principal, and the affiliated broker-dealer may receive brokerage
commissions in connection therewith as permitted by Section 17(e) of the
Investment Company Act of 1940, as amended (the "1940 Act"), the rules and
interpretations thereunder and other applicable securities laws.
THE SUBADVISORY AGREEMENT
American Century served as a subadviser to the portion of the assets of
the Portfolio that NTI now serves as subadviser. SunAmerica recommended NTI in
the ordinary course of its ongoing evaluation of the Portfolio's performance and
investment strategy and after research and qualitative and quantitative
analysis. In accordance with the Trustees' approval of the engagement of NTI to
manage a portion of the assets of the Portfolio in place of American Century,
they approved a subadvisory agreement with NTI. The subadvisory agreement
between NTI and SunAmerica became effective January 23, 2006 (the "Subadvisory
Agreement").
The Subadvisory Agreement provides that (i) the Subadviser shall manage a
portion of the assets of the Portfolio, (ii) SunAmerica shall compensate the
Subadviser for its services, (iii) the Subadviser is authorized to select the
brokers or dealers to effect portfolio transactions for the Portfolio, and (iv)
the Subadviser shall comply with the Portfolio's investment policies and
restrictions and with applicable law. The Subadvisory Agreement will not result
in an increase in fees to shareholders. The Subadvisory Agreement is attached to
this information statement as Exhibit A.
Under the Advisory Agreement, the annual rate of the investment advisory
fee payable to SunAmerica for the Portfolio is 1.00% of the Portfolio's average
daily net assets or $682,861 for the fiscal year ended March 31, 2005. For the
same period, SunAmerica paid subadvisory fees in the aggregate amount of 0.49%
of average daily net assets, or $329,941, and thus, SunAmerica retained $352,920
of its advisory fee. Had NTI served as subadviser for such period, SunAmerica
would have paid subadvisory fees in the aggregate amount of approximately
$309,630.
INFORMATION ABOUT THE SUBADVISER
NTI is located at 50 South La Salle Street, Chicago, Illinois 60675. NTI
is an investment adviser registered under the 1940 Act. NTI primarily manages
assets for defined contribution and benefit plans, investment companies and
other institutional investors. NTI is a subsidiary of The Northern Trust Company
("TNTC"). TNTC is an Illinois state chartered banking organization and a member
of the Federal Reserve System. Formed in 1889, it administers and manages assets
for individuals, personal trusts, defined contribution and benefit plans and
other institutional and corporate clients. It is the principal subsidiary of
Northern Trust Corporation, a bank holding company. Northern Trust Corporation,
through its subsidiaries, has for more than 100 years managed the assets of
individuals, charitable organizations, foundations and large corporate
investors. As of December 31, 2005, Northern Trust Corporation and its
subsidiaries had assets under custody of $2.9 trillion and assets under
investment management of $618 billion.
The names and positions of the directors and the principal executive
officers of NTI are as follows:
NAME POSITION
---- --------
Carl Beckman Treasurer and Senior Vice President
Craig Carberry Secretary and Senior Attorney
Orie Leslie Dudley, Jr. Director, Executive Vice President and Chief
Investment Officer
Mark C. Gossett Director, Senior Vice President and Chief Operating
Officer
Lyle Logan Director and Senior Vice President
Barry R. Sagraves Director and Senior Vice President
Jana R. Schreuder Director and Executive Vice President
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Terence J. Toth Chairman, President and Chief Executive Officer
Scott Taccetta Controller and Vice President
Michael A. Vardas Director and Senior Vice President
Frederick H. Waddell Director and Executive Vice President
Lloyd A. Wennlund Director and Executive Vice President
The address for the principal executive officer and each of the directors
is 50 South LaSalle Street, Chicago, Illinois 60675-5986.
NTI is the investment subadviser to the SunAmerica Focused Multi-Cap Value
Portfolio, which is managed with a similar investment objective as the
Portfolio. As of November 31, 2005, the SunAmerica Focused Multi-Cap Value
Portfolio had approximately $590 million in assets, a portion of which is
managed by NTI.
FACTORS CONSIDERED BY THE BOARD OF TRUSTEES
The Trustees received materials related to certain factors used in their
consideration of whether to approve the Subadvisory Agreement, including: (1)
the nature, extent and quality of services to be provided by NTI; (2) the size
and structure of the subadvisory fees charged in connection with NTI's
management of the Portfolio, compared to subadvisory fee rates of a group of
funds with similar investment objectives (respectively, the "Expense
Group/Universe" and the "Subadvisory Expense Group/Universe"), as selected by an
independent third-party provider of investment company data; (3) the investment
performance of the Portfolio and the performance of a comparable portfolio
managed by NTI; (4) the costs of services and the benefits potentially derived
by NTI; (5) the terms of the Subadvisory Agreement; (6) whether the Portfolio
will benefit from possible economies of scale by engaging NTI; and (7)
information regarding NTI's compliance and regulatory history. In addition, the
Trustees considered the organization capability and financial condition of NTI
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 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, including the
Independent Trustees, considered the nature, quality and extent of services to
be provided by NTI. The Trustees noted that NTI would be responsible for
providing investment management services, including investment research, advice
and supervision, and determining which securities shall be purchased or sold by
the Portfolio. The Trustees reviewed NTI's history, structure and size, and
investment experience. The Trustees were informed that in SunAmerica's judgment,
NTI has the size, visibility and resources to attract and retain highly
qualified investment professionals.
The Trustees reviewed the qualifications, background and responsibilities
of NTI's personnel who would be responsible for providing investment management
services to the Portfolio. The Trustees concluded that they were satisfied with
the nature, quality and extent of the services to be provided by NTI and that
there was a reasonable basis on which to conclude that it would provide high
quality services to the Portfolio.
Fees and Expenses. The Trustees received and reviewed information
regarding the Portfolio's anticipated subadvisory fees compared against the
subadvisory fees and expense ratios of other similar funds in its category as
tracked by an independent third-party provider of investment company data. It
was noted that with respect to subadvisory fees, SunAmerica negotiated such fees
with NTI at arms-length.
The Trustees considered that the Portfolio's subadvisory fee rate payable
to NTI was below the median of its Subadvisory Expense Group and that the
aggregate subadvisory fees paid by SunAmerica would increase as result of the
subadvisory change. The Trustees also considered that the subadvisory fees are
paid by SunAmerica and not by the Portfolio such that the increase in
subadvisory fees will not effect the Portfolio's total expenses. In addition, it
was noted that subadvisory fees may vary widely within a Subadvisory Expense
Group/Universe for
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various reasons, including market pricing demands, existing relationships,
experience and success, and individual client needs.
On the basis of the information considered, the Trustees concluded that
the subadvisory fee rate 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 reflecting the
Portfolio's investment performance and the investment performance of fund
managed by NTI with a substantially similar investment objective and investment
strategy. Generally, the performance information reviewed included annualized
returns for the one-, three- and five-year periods. It was noted that the
Trustees monitor and review the performance of the Portfolio on a quarterly
basis.
The Trustees considered that the American Century's performance as a
subadviser to the Portfolio was in the 5th quintile of the Morningstar Large Cap
Value Category and the Lipper Multi-Cap Value Category for the one- and
three-year periods. It was also noted that the other subadvisers of the
Portfolio performed very well in such periods. Furthermore, the Trustees took
into account SunAmerica's discussion of the Portfolio's performance and NTI's
performance with its NTI Large Cap Value Portfolio, which has a similar
investment objective and investment strategy as the Portfolio. The Trustees
concluded that American Century's performance with respect to the Portfolio was
such that the change to NTI could improve the Portfolio's performance.
Cost of Services & Benefits Derived. With respect to indirect costs and
benefits, the Trustees were informed, based on SunAmerica's judgment, that (1)
any indirect costs incurred by NTI in connection with rendering investment
advisory services to the Portfolio were inconsequential to the analysis of the
adequacy of its subadvisory fee, and (2) any collateral benefits derived as a
result of providing advisory services to the Portfolio are de minimis and do not
impact upon the reasonableness of the subadvisory fee. The Trustees concluded
that any benefits that NTI could be expected to receive with regard to providing
investment advisory and other services to the Portfolio were not unreasonable.
Profitability and Economies of Scale. In considering the profitability to
NTI in connection with its relationship with the Portfolio, the Trustees noted
that the fees under the Subadvisory Agreement are paid by SunAmerica. The
Trustees also relied on the ability of SunAmerica to negotiate the Subadvisory
Agreement and the fees thereunder at arm's length. For each of the above
reasons, the profitability to NTI from its relationship with the Portfolio 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 NTI's management of the Portfolio was not considered a material
factor to the Trustees' consideration of NTI.
Terms of Subadvisory Agreement. The Trustees, including the Independent
Trustees, reviewed the terms of the Subadvisory Agreement including the duties
and responsibilities undertaken by NTI. The Trustees noted that the Subadvisory
Agreement provides that NTI 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 Subadvisory Agreement and concluded that the
terms of the Subadvisory Agreement are reasonable, fair and in the best interest
of the Portfolio and its shareholders.
Compliance. The Trustees considered whether NTI was subject to any recent
regulatory or compliance-related actions or investigations. The Trustees
concluded that there was no material litigation or proceeding that would
materially effect NTI's ability to advise the Portfolio.
Conclusions. In reaching their decision to approve the Subadvisory
Agreement, the Trustees based their decision on the totality of the factors and
each Trustee contributed different weight to 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 NTI possesses the capability and resources
to perform the duties required of it under its Subadvisory Agreement.
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OWNERSHIP OF SHARES
As of January 31, 2006, there were 7,548,441 shares of the Portfolio
outstanding. All outstanding shares of the Portfolio are owned of record, in the
aggregate by the following:
SHARES %
------ ------
AIG SunAmerica Life Assurance Company 7,515,228 99.56%
Variable Annuity Account Five
FSA Variable Annuity Account Five 33,213 0.44%
--------- -----
TOTAL SHARES OUTSTANDING 7,548,441 100%
To SunAmerica's knowledge, no person owns a contract or interests therein
for more than 5% of the outstanding shares of the 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 the Portfolio as of December
31, 2005.
BROKERAGE COMMISSIONS
For the fiscal year ended March 31, 2005, the Portfolio paid $154,114 in
brokerage commissions, of which $10,548, or 6.84%, was paid to affiliated
broker/dealers.
SHAREHOLDER REPORTS
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.
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: March 16, 2006
5
EXHIBIT A
SUBADVISORY AGREEMENT
This SUBADVISORY AGREEMENT is dated as of January 23, 2006 by and between
AIG SUNAMERICA ASSET MANAGEMENT CORP., a Delaware corporation (the "Adviser"),
and NORTHERN TRUST INVESTMENTS, N.A., an Illinois 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
pursuant to it which the Adviser may delegate one or more of its duties to a
subadviser pursuant to a written subadvisory agreement; and
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "Act"), as an open-end management investment company and may
issue shares of beneficial interest, no par value per share, in separately
designated portfolios representing separate funds with their own investment
objectives, policies and purposes; and
WHEREAS, the Subadviser is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Adviser desires to retain the Subadviser to furnish
investment advisory services to the investment portfolio(s) of the Trust listed
on Schedule A attached hereto (the "Portfolio(s)"), and the Subadviser is
willing to furnish such services;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. DUTIES OF THE SUBADVISER. The Adviser hereby engages the services of
the Subadviser in furtherance of its Investment Advisory and Management
Agreement with the Trust. Pursuant to this Subadvisory Agreement and subject to
the oversight and review of the Adviser, the Subadviser will manage the
investment and reinvestment of that portion of the assets of the Portfolio
designated from time to time by the Adviser. 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 Subadviser is required
to maintain on behalf of the Trust, 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)
subject to Section 2 hereof, place orders for the execution of such securities
transactions with or through such brokers, dealers or issuers as the Subadviser
may select and (c) purchase, sell, exchange or convert foreign currency in the
spot or forward markets as necessary to facilitate transactions in international
securities for the Portfolio(s). The Subadviser shall discharge the foregoing
responsibilities subject to the control of the Adviser and the officers and the
Trustees of the Trust and in compliance with such policies as the Trustees of
the Trust may from time to time establish, and in compliance with (a) the
objectives, policies, restrictions and limitations for the Portfolio(s) as set
forth in the Trust's current prospectus and statement of additional information;
and (b) applicable laws and regulations.
The Subadviser shall have no power, authority, responsibility, or
obligation hereunder to take any action with regard to any claim or potential
claim in any bankruptcy proceedings, class action securities litigation, or
other litigation or proceedings affecting securities held at any time in the
Portfolio, including, without limitation, to file proofs of claim or other
documents related to such proceedings (the "Litigation"), or to investigate,
initiate, supervise, or monitor the Litigation involving Portfolio assets, and
the Adviser acknowledges and agrees that no such power, authority,
responsibility or obligation is delegated hereunder. Nevertheless, the
Subadviser agrees that it shall provide the Adviser with any and all
documentation or information relating to the Litigation in its possession as may
reasonably be requested by the Adviser.
A-1
The Subadviser represents and warrants to the Adviser that it will
manage the portion of the assets of the Portfolio allocated to it at all times
in compliance with all applicable federal and state securities, commodities and
banking laws governing its operations and investments. Without limiting the
foregoing and subject to Section 11(c) hereof, the Subadviser represents and
warrants that it will manage its portion of the Portfolio's assets in compliance
with (a) the applicable provisions of Subchapter M, chapter 1 of the Code
("Subchapter M") for the Portfolio to be treated as a "regulated investment
company" under Subchapter M; (b) the diversification requirements currently
specified in the Internal Revenue Service's regulations under Section 817(h) of
the Code, or any changes thereto of which the Subadviser is notified by the
Adviser, as they apply to their portion of the Portfolio; (c) the provisions of
the Act and rules adopted thereunder; (d) applicable state insurance laws to the
extent the Adviser notifies the Subadviser thereof.; (e) the objectives,
policies, restrictions and limitations for the Portfolio(s) as set forth in the
Trust's current prospectus and statement of additional information as most
recently provided by the Adviser to the Subadviser; and (f) the policies and
procedures as adopted by the Trustees of the Trust. The Subadviser shall furnish
information to the Adviser, as requested, for purposes of compliance with the
distribution requirements necessary to avoid payment of any excise tax pursuant
to Section 4982 of the Code. For purposes of (d) in the preceding sentence,
disclosure in the Trust's current prospectus and/or statement of additional
information as most recently provided by the Adviser to the Subadviser of
applicable state insurance laws and regulations shall constitute "notice"
thereof. For purposes of compliance with this paragraph, the Subadviser shall be
entitled to treat the portion of the assets of the Portfolio that it manages as
though such portion constituted the entire portfolio, and the Subadviser shall
not be responsible in any way for the compliance of other portions of the
Portfolio or for compliance of the Portfolio as a whole with this paragraph.
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 information 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 and the Adviser each agree: (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 other.
The Adviser represents and warrants to the Subadviser (1) that the
Adviser has been duly appointed in accordance with the Act to provide investment
services to the Portfolio as contemplated by the Advisory Agreement; (2) that
the execution, delivery and performance of this Agreement are within the
Adviser's powers, have been and remain duly authorized by all necessary action
and will not violate or constitute a default under any applicable law or
regulation or of any decree, order, judgment, agreement or instrument binding on
the Adviser; and (3) compliance with all applicable laws and rules, including
without limitation (a) the provisions of the Act and rules adopted thereunder
that relate to the investment of Portfolio assets, including depositing those
assets in custody with institutions designated by the Corporation; and (b)
federal and state securities and commodities laws applicable to Adviser's
portfolio management responsibilities.
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.
2. PORTFOLIO TRANSACTIONS. The Subadviser is responsible for decisions to
buy or sell securities and other investments for the assets of the 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
A-2
created by this Agreement or otherwise solely by reason of the Subadviser's
having caused the 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, but only as they apply to the Subadviser's
affiliates, 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 the 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, including but not limited to any reports prepared
by independent third parties relating to the execution costs of such
transactions. To the extent consistent with applicable law, the Subadviser may
aggregate purchase or sell orders for the Portfolio with contemporaneous
purchase or sell orders of other clients of the Subadviser or its affiliated
persons. In such event, allocation of the securities so purchased or sold, as
well as the expenses incurred in the transaction, will be made by the Subadviser
in the manner the Subadviser determines to be equitable and consistent with its
and its affiliates' fiduciary obligations to the Portfolio and to such other
clients. The Adviser hereby acknowledges that such aggregation of orders may not
result in more favorable pricing or lower brokerage commissions in all
instances.
3. COMPENSATION OF THE SUBADVISER. The Subadviser shall not be entitled to
receive any payment from the Trust and shall look solely and exclusively to the
Adviser for payment of all fees for the services rendered, facilities furnished
and expenses paid by it hereunder. As full compensation for the Subadviser under
this Agreement, the Adviser agrees to pay 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 the Portfolio listed thereon. Such fee shall be
accrued daily and paid monthly as soon as practicable after the end of each
month (i.e., the applicable annual fee rate divided by 365 applied to each prior
days' net assets in order to calculate the daily accrual). For purposes of
calculating the Subadviser's fee, the average daily net asset value of the
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 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. ADVERTISING. Subadviser shall not provide or in any way distribute any
sales or advertising materials related to the Trust, to any employee or
representative of AIG SunAmerica Capital Services, Inc. ("SACS") or its
affiliates, including wholesaling personnel, unless such material has been
received and approved, in writing, by the Adviser.
8. PROXY VOTING. The Portfolio has appointed Investor Responsibility
Research Center as the proxy-voting agent and 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
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services to the Trust promptly to forward to the proxy voting service copies of
all proxies and shareholder communications relating to securities held by the
Portfolio (other than materials relating to legal proceedings).
9. 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 Subadviser on behalf of the Trust pursuant to the
requirements of Rule 31a-1 of that Act. Copies of 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 will be provided 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.
10. 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.
11. 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 Subadviser's rendering of services under this Agreement or the sale
of securities of the Trust.
(b) The Subadviser agrees to indemnify and hold harmless the Adviser
(and its officers, directors/trustees, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the Adviser) and/or
the Trust (and its officers, directors/trustees, agents, employees, controlling
persons, shareholders and any other person or entity affiliated with the Trust)
against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses), to which the Adviser and/or the
Trust and their affiliates or such directors/trustees, officers or controlling
person may become subject under the Act, the 1933 Act, under other statutes,
common law or otherwise, which arise from the Subadviser's disabling conduct,
including but not limited to any material failure by the Subadviser to comply
with the provisions and representations and warranties set forth in Section 1 of
this Agreement; provided, however, that in no case is the Subadviser's indemnity
in favor of any person deemed to protect such other persons against any
liability to which such person would otherwise be subject by reasons of willful
misfeasance, bad faith, or gross negligence in the performance of his, her or
its duties or by reason of his, her or its reckless disregard of obligations and
duties under this Agreement.
(c) 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 the
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 the Portfolio,
which records are not also maintained by the Subadviser or, to the extent such
records relate 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 the
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 the Portfolio and qualifications of the Portfolio as
a regulated investment company under the Code) only with respect
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to the portion of assets of the Portfolio allocated to Subadviser. 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 the conduct of the Adviser, the Trust and any other subadviser with
respect to the portion of the Portfolio's assets not allocated to the Subadviser
and with respect to any other portfolio of the Trust.
12. 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.
13. TERM OF THE AGREEMENT. This Agreement shall continue in full force and
effect with respect to the 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 the 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 the 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 the 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 any 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. 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.
18. SEPARATE SERIES. Pursuant to the provisions of the Declaration, the
Portfolio is a separate series of the Trust, and all debts, liabilities,
obligations and expenses of the Portfolio shall be enforceable only against the
assets of the Portfolio and not against the assets of any other Portfolio or of
the Trust as a whole.
19. 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 Portfolio, 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
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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, or to the extent such disclosure is reasonably required by auditors
or attorneys of the Subadviser in connection with the performance of their
professional services or as may otherwise be contemplated by this Agreement.
Notwithstanding the foregoing, the Subadviser may disclose the total return
earned by the Portfolio and may include such total return in the calculation of
composite performance information. The Adviser will not disclose or use any
confidential information pertaining to the Subadviser obtained as a result of
this service relationship except as contemplated by this Agreement or as
required by law.
20. 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: Northern Trust Investments, N.A.
50 South LaSalle St., M-9
Chicago, Illinois 60675
Attention: Legal Department
Adviser: AIG SunAmerica Asset Management Corp.
Harborside Financial Center
3200 Plaza 5
Jersey City, NJ 07311
Attention: Gregory N. Bressler
Senior Vice President and
General Counsel
with a copy to: IG Retirement Services, Inc.
1 SunAmerica Center
Century City
Los Angeles, CA 90067-6022
Attention: Mallary L. Reznik
Assistant Secretary of Seasons
Series Trust
21. SURVIVAL. Sections 9, 10, 11, 14, 16, 17, 18, 19 and this Section 21
shall survive the termination of this Agreement for any cause whatsoever.
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
NOTHERN TRUST INVESTMENTS, N.A.
By: /s/ JAMES A. AICHESON
-----------------------------------
Name: James A. Aitcheson
Title: Senior Vice President
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