INVESTMENT SUBADVISORY AGREEMENT
BETWEEN
AETNA LIFE INSURANCE AND ANNUITY COMPANY
AND
X. XXXX PRICE ASSOCIATES, INC.
INVESTMENT SUBADVISORY AGREEMENT, made as of the 14th day of December 2000
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between Aetna Life Insurance and Annuity Company (the "Adviser"), an insurance
corporation organized and existing under the laws of the State of Connecticut,
and X. Xxxx Price Associates, Inc. ("Subadviser"), a corporation organized and
existing under the laws of the State of Maryland.
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated as
of December 14th, 2000 ("Advisory Agreement") with Portfolio Partners, Inc.
----
("Company"), which is engaged in business as an open-end management investment
company registered under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, the Company is and will continue to be a series fund having two or
more investment portfolios, each with its own assets, investment objectives,
policies and restrictions; and
WHEREAS, the Company shareholders are and will be separate accounts maintained
by insurance companies for variable life insurance policies and variable
annuity contracts (the "Policies") under which income, gains, and losses,
whether or not realized, from assets allocated to such accounts are, in
accordance with the Policies, credited to or charged against such accounts
without regard to other income, gains, or losses of such insurance companies;
and
WHEREAS, the Subadviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Board of Directors and the Adviser desire to retain the Subadviser
as subadviser for the X. Xxxx Price Growth Equity Portfolio (the "Portfolio"),
a portfolio of the Company, to furnish certain investment advisory services to
the Adviser and the Company and the Subadviser is willing to furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual promises herein set
forth, the parties hereto agree as follows:
1. APPOINTMENT. Adviser hereby appoints the Subadviser as its investment
Subadviser with respect to the Portfolio for the period and on the terms set
forth in this Agreement. The Subadviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. DUTIES OF THE SUBADVISER
A. INVESTMENT SUBADVISORY SERVICES. Subject to the supervision of the
Company's Board of Directors ("Board") and the Adviser, the Subadviser
shall act as the investment Subadviser and shall supervise and direct the
investments of the Portfolio in accordance with the portfolio's
investment objective, policies, and restrictions as provided in the
Company's Prospectus and Statement of Additional Information, as
currently in effect and as amended or supplemented from time to time
(hereinafter referred to as the "Prospectus"), and such other limitations
as the Company may impose by notice in writing to the Subadviser. The
Subadviser shall obtain and evaluate such information relating to the
economy, industries, businesses, securities markets, and individual
securities as it may deem necessary or useful in the discharge of its
obligations hereunder and shall formulate and implement a continuing
program for the management of the assets and resources of the Portfolio
in a manner consistent with the Portfolio's investment objective,
policies, and restrictions, and in compliance with the requirements
applicable to registered investment companies under applicable laws and
those requirements applicable to both regulated investment companies and
segregated asset accounts under Subchapters M and L of the Internal
Revenue Code of 1986, as amended ("Code"). To implement its duties, the
Subadviser is hereby authorized to:
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(i) buy, sell, exchange, convert, lend, and otherwise trade in any
stocks, bonds, and other securities or assets on behalf of the
Portfolio; and
(ii) directly or through the trading desks of X. Xxxx Price
Associates, Inc. place orders and negotiate the commissions (if
any) for the execution of transactions in securities or other
assets with or through such brokers, dealers, underwriters or
issuers as the Subadviser may select.
B. SUBADVISER UNDERTAKINGS. In all matters relating to the performance
of this Agreement, the Subadviser shall act in conformity with the
Company's Articles of Incorporation, By-Laws, and current Prospectus and
with the written instructions and directions of the Board and the
Adviser. The Subadviser hereby agrees to:
(i) regularly (but no less frequently than quarterly) report to the
Board and the Adviser with respect to the implementation of the
investment program and, in addition, provide such statistical
information and special reports concerning the Portfolio and/or
important developments materially affecting the investments held,
or contemplated to be purchased, by the Portfolio, as may
reasonably be requested by the Board or the Adviser and agreed to
by the Subadviser, including attendance at Board meetings, as
reasonably requested, to present such information and reports to
the Board;
(ii) consult with the Company's pricing agent regarding the valuation
of securities that are not registered for public sale, not traded
on any securities markets, or otherwise may be deemed illiquid
for purposes of the 1940 Act and for which market quotations are
not readily available;
(iii) establish appropriate personal contacts with the Adviser and
the Company's Administrator in order to provide the Adviser and
Administrator with information as reasonably requested by the
Adviser or Administrator; and
(iv) execute account documentation, agreements, contracts and other
documents as the Adviser shall be requested by brokers, dealers,
counterparties and other persons to execute in connection with
its management of the assets of the Portfolio, provided that the
Subadviser receives the express agreement and consent of the
Adviser and/or the Board to execute such documentation,
agreements, contracts and other documents. In such respect, and
only for this limited purpose, the Subadviser shall act as the
Adviser and/or the Portfolio's agent and attorney-in-fact.
C. The Subadviser, at its expense, will furnish: (i) all necessary
investment and management facilities and investment personnel, including
salaries, expenses and fees of any personnel required for it to
faithfully perform its duties under this Agreement; and (ii)
administrative facilities, including bookkeeping, clerical personnel and
equipment required for it to faithfully and fully perform its duties and
obligations under this Agreement.
D. The Subadviser will select brokers and dealers to effect all
Portfolio transactions subject to the conditions set forth herein. The
Subadviser will place all necessary orders with brokers, dealers, or
issuers, and will negotiate brokerage commissions if applicable. The
Subadviser is directed at all times to seek to execute brokerage
transactions for the Portfolio in accordance with such policies or
practices as may be established by the Board and the Adviser and
described in the current Prospectus as amended from time to time. In
placing orders for the purchase or sale of investments for the Portfolio,
in the name of the Portfolio or its nominees, the Subadviser shall use
its best efforts to obtain for the Portfolio the best execution
available, considering all of the circumstances, and shall maintain
records adequate to demonstrate compliance with this requirement.
Subject to the appropriate policies and procedures approved by the
Adviser and the Board, the Subadviser may, to the extent authorized by
Section 28(e) of the Securities Exchange Act of 1934, cause the Portfolio
to
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pay a broker or dealer that provides brokerage or research services to
the Subadviser, an amount of commission for effecting a portfolio
transaction in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the
Subadviser determines, in good faith, that such amount of commission is
reasonable in relationship to the value of such brokerage or research
services provided viewed in terms of that particular transaction or the
Subadviser's overall responsibilities to the Portfolio or its other
advisory clients. To the extent authorized by said Section 28(e) and the
Adviser and the Board, 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 such action. In addition, subject to
seeking the best execution available, the Subadviser may also consider
sales of shares of the Portfolio as a factor in the selection of brokers
and dealers.
E. On occasions when the Subadviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients of the Subadviser, the Subadviser, to the extent permitted by
applicable laws and regulations, and subject to the Adviser's initial
approval of the Subadviser's procedures, may, but shall be under no
obligation to, aggregate the orders for securities to be purchased or
sold to attempt to obtain a more favorable price or lower brokerage
commissions and efficient execution. 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
considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to its other clients.
F. With respect to the provision of services by the Subadviser
hereunder, the Subadviser will maintain all accounts, books and records
with respect to the Portfolio as are required of an investment adviser of
a registered investment company pursuant to the 1940 Act and the Advisers
Act and the rules under both statutes.
G. The Subadviser and the Adviser acknowledge that the Subadviser is
not the compliance agent for the Portfolio, and does not have access to
all of the Company's books and records necessary to perform certain
compliance testing. However, to the extent that the Subadviser has agreed
to perform the services specified in Section 2A, the Subadviser shall
perform compliance testing with respect to the Portfolio based upon
information in its possession and upon information and written
instructions received from the Adviser or the Administrator. The Adviser
or Administrator shall promptly provide the Subadviser with copies of the
Company's current Prospectus, Articles of Incorporation and By-Laws and
any written policies or procedures adopted by the Board applicable to the
Portfolio and any amendments or revisions thereto.
H. Unless the Adviser gives the Subadviser written instructions to the
contrary, the Subadviser shall use its good faith judgment in a manner
which it reasonably believes best serves the interests of the Portfolio's
shareholders to vote or abstain from voting all proxies solicited by or
with respect to the issuers of securities in which assets of the
Portfolio may be invested. The Adviser shall furnish the Subadviser with
any further documents, materials or information that the Subadviser may
reasonably request to enable it to perform its duties pursuant to this
Agreement.
I. Subadviser hereby authorizes Adviser to use Subadviser's name and
any applicable trademarks in the Company's Prospectus, as well as in any
advertisement or sales literature used by the Adviser or its agents to
promote the Company and/or to provide information to shareholders of the
Portfolio in accordance with the terms of the License Agreement entered
into between the parties hereto dated October 28, 1997.
Subadviser will provide reasonable marketing support to Adviser in
connection with the promotion of the Portfolio.
3. COMPENSATION OF SUBADVISER. The Adviser will pay the Subadviser, with
respect to the Portfolio, the compensation specified in Appendix A to this
Agreement. Payments shall be made to the Subadviser on the second day of each
month; however, this advisory fee will be calculated based on the daily average
value of the Portfolio's assets and accrued on a daily basis. Compensation for
any partial period shall be pro-rated based on the length of the period.
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4. LIABILITY OF SUBADVISER. Neither the Subadviser nor any of its directors,
officers, employees or agents shall be liable to the Adviser, the Company, or
the Company's shareholders for any loss or expense suffered by the Adviser, the
Company, or the Company's shareholders resulting from its acts or omissions as
Subadviser to the Portfolio, except for losses or expenses to the Adviser, the
Company, or the Company's shareholders resulting from willful misconduct, bad
faith, or gross negligence in the performance of, or from reckless disregard
of, the Subadviser's duties under this Agreement. Neither the Subadviser nor
any of its agents shall be liable to the Adviser, the Company, or the Company's
shareholders for any loss or expense suffered as a consequence of any action or
inaction of other service providers to the Company in failing to observe the
instructions of the Adviser, provided such action or inaction of such other
service providers to the Company is not a result of the willful misconduct, bad
faith or gross negligence in the performance of, or from reckless disregard of,
the duties of the Subadviser under this Agreement.
5. NON-EXCLUSIVITY. The services of the Subadviser to the Portfolio and the
Company are not to be deemed to be exclusive, and the Subadviser shall be free
to render investment advisory or other services to others (including other
investment companies) and to engage in other activities. It is understood and
agreed that the directors, officers, and employees of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors,
trustees, or employees of any other firm or corporation, including other
investment companies.
6. ADVISER OVERSIGHT AND COOPERATION WITH REGULATORS. The Subadviser shall
cooperate in providing records, reports and other materials relating to the
Company that are in its possession, at the request of the Adviser, and in
response to inquiries by regulatory and administrative bodies having proper
jurisdiction over the Company, in connection with the services provided
pursuant to this Agreement; provided, however, that this agreement to cooperate
does not apply to the provision of information, reports and other materials
which the Subadviser reasonably believes the regulatory or administrative body
does not have the authority to request or which is privileged or confidential
information of the Subadviser.
7. RECORDS. The records relating to the services provided under this
Agreement required to be established and maintained by an investment adviser
under applicable law or those required by the Adviser or the Board of Directors
for the Subadviser to prepare and provide shall be the property of the Company
and shall be under its control; however, the Company shall permit the
Subadviser to retain such records (either in original or in duplicate form) as
it shall reasonably require in order to carry out its duties. In the event of
the termination of this Agreement, such records shall promptly be returned to
the Company by the Subadviser free from any claim or retention of rights
therein. The Subadviser shall keep confidential any information concerning the
Adviser or any Subadviser's duties hereunder and shall disclose such
information only if the Company has authorized such disclosure or if such
disclosure is expressly required or requested by applicable federal or state
regulatory authorities.
8. DURATION OF AGREEMENT. This Agreement shall become effective with respect
to the Portfolio on the later of the date of its execution or the date of the
commencement of operations of the Portfolio. This Agreement will continue in
effect for a period of more than two years from the date of its execution only
so long as such continuance is specifically approved at least annually by the
Board, provided that in such event such continuance shall also be approved by
the vote of a majority of the Directors who are not "interested persons" (as
defined in the 0000 Xxx) of any party to this Agreement ("Independent
Directors") cast in person at a meeting called for the purpose of voting on
such approval.
9. REPRESENTATIONS OF SUBADVISER. The Subadviser represents, warrants, and
agrees as follows:
A. The Subadviser: (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or
the Advisers Act from performing the services contemplated by this
Agreement;
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(iii) has met, and will use its best efforts to continue to meet for so
long as this Agreement remains in effect, any other applicable federal or
state requirements, or the applicable requirements of any regulatory or
industry self-regulatory organization, necessary to be met in order to
perform the services contemplated by this Agreement; (iv) has the
authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify the Adviser of the occurrence
of any event that would disqualify the Subadviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of
the 1940 Act or otherwise.
B. The Subadviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and, if it has not
already done so, will provide the Adviser and the Company with a copy of
such code of ethics, together with evidence of its adoption.
C. The Subadviser has provided the Adviser and the Company with a copy
of its Form ADV as most recently filed with the SEC and hereafter will
furnish a copy of its annual amendment to the Adviser.
10. PROVISION OF CERTAIN INFORMATION BY SUBADVISER. The Subadviser will
promptly notify the Adviser in writing of the occurrence of any of the
following events:
A. the Subadviser fails to be registered as an investment adviser under
the Advisers Act or under the laws of any jurisdiction in which the
Subadviser is required to be registered as an investment adviser in order
to perform its obligations under this Agreement;
B. the Subadviser or the Company is served or otherwise receives notice
of any action, suit, proceeding, inquiry, or investigation, at law or in
equity, before or by any court, public board, or body, involving the
affairs of the Company;
C. a controlling stockholder of the Subadviser or the portfolio manager
of the Portfolio changes or there is otherwise an actual change in
control or management of the Subadviser.
11. PROVISION OF CERTAIN INFORMATION BY THE ADVISER. The Adviser will
promptly notify the Subadviser in writing of the occurrence of any of the
following events:
A. the Adviser fails to be registered as an investment adviser under
the Advisers Act or under the laws of any jurisdiction in which the
Adviser is required to be registered as an investment adviser in order to
perform its obligations under this Agreement;
B. the Adviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry, or investigation, at law or in equity, before
or by any court, public board, or body, involving the affairs of the
Company;
C. a controlling stockholder of the Adviser changes or there is
otherwise an actual change in control or management of the Adviser.
12. TERMINATION OF AGREEMENT. Notwithstanding the foregoing, this Agreement
may be terminated at any time, without the payment of any penalty, by vote of
the Board or by a vote of a majority of the outstanding voting securities of
the Portfolio on 60 days' prior written notice to the Subadviser. This
Agreement may also be terminated by the Adviser: (i) on at least 120 days'
prior written notice to the Subadviser, without the payment of any penalty;
(ii) upon material breach by the Subadviser of any of the representations and
warranties, if such breach shall not have been cured within a 20-day period
after notice of such breach; or (iii) if the Subadviser becomes unable to
discharge its duties and obligations under this Agreement. The Subadviser may
terminate this Agreement at any time, without the payment of any penalty, on at
least 90 days' prior notice to the Adviser. This Agreement shall terminate
automatically in the event of its assignment or upon termination of the
Advisory Agreement between the Company and the Adviser.
13. AMENDMENT OF AGREEMENT. No provision of this Agreement may be changed,
waived, discharged, or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge,
or termination is sought, and no material amendment of this Agreement shall be
effective until
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approved by vote of a majority of the Independent Directors cast in person at a
meeting called for the purpose of such approval.
14. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Maryland without giving effect to the conflicts
of laws principles thereof, and the 1940 Act. To the extent that the
applicable laws of the State of Maryland conflict with the applicable
provisions of the 1940 Act, the latter shall control.
B. CAPTIONS. The Captions contained in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
C. ENTIRE AGREEMENT. This Agreement represents the entire agreement and
understanding of the parties hereto and shall supersede any prior
agreements between the parties concerning management of the Portfolio and
all such prior agreements shall be deemed terminated upon the
effectiveness of this Agreement.
D. INTERPRETATION. Nothing herein contained shall be deemed to require
the Company to take any action contrary to its Articles of Incorporation,
By-Laws, or any applicable statutory or regulatory requirement to which
it is subject or by which it is bound, or to relieve or deprive the Board
of its responsibility for and control of the conduct of the affairs of
the Company.
E. DEFINITIONS. Any question of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such
term or provision of the 1940 Act and to interpretations thereof, if any,
by the United States courts or, in the absence of any controlling
decision of any such court, by rules, releases or orders of the SEC
validly issued pursuant to the Act. As used in this Agreement, the terms
"majority of the outstanding voting securities," "affiliated person,"
"interested person," "assignment," "broker," "investment adviser," "net
assets," "sale," "sell," and "security" shall have the same meaning as
such terms have in the 1940 Act, subject to such exemptions as may be
granted by the SEC by any rule, release or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of
this Agreement is made less restrictive by a rule, release, or order of
the SEC, whether of special or general application, such provision shall
be deemed to incorporate the effect of such rule, release, or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
Aetna Life Insurance and Annuity Company
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Attest: /s/ Xxxx X. Kabbitt Xxxxxx X. Xxxxxxxxxxx
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Assistant Corporate Title Vice President
Title Secretary
X. Xxxx Price Associates, Inc.
By: /s/ Xxxxx X. Xxxxxx
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Attest: Managing Director
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Title Xxxxx X. Xxxxxx
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Title
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APPENDIX A
FEE SCHEDULE
X. Xxxx Price Growth Equity .40% on the first $500 million of average
daily net assets
.375% on assets over $500 million
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