Exhibit (h.7)
FIFTH AMENDMENT TO FINANCIAL GUARANTY AGREEMENT
FIFTH AMENDMENT, dated as of January 14, 2002 (the "Amendment"), to the
Financial Guaranty Agreement, dated as of August 16,1999, as amended as of
December 17, 1999, August 3, 2000, December 20, 2000 and July 2, 0000 (xxx
"Xxxxxxxxx"), xxxxx XXXX INSURANCE CORPORATION (the "Insurer"), AELTUS
INVESTMENT MANAGEMENT, INC. ("Aeltus") and AETNA SERIES FUND, INC. (the "Fund").
WITNESSETH:
WHEREAS, Aeltus and the Fund have requested, and, upon this Amendment
becoming effective, the Insurer has agreed, that certain provisions of the
Agreement be amended in the manner provided for in this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined terms. All capitalized terms defined in the Agreement
and used herein shall have the meanings given to them therein.
2. Amendments to Section 1.1. Section 1.1 of the Agreement is hereby
amended by (a) deleting therefrom the definitions of the following defined terms
in their respective entireties and substituting in lieu thereof the following
new definitions:
"'Asset Allocation Threshold' shall mean, with respect to any PPF,
on any Valuation Date, an amount equal to the Asset Allocation Test
Percentage on such Valuation Date of the sum of (i) the Present Value of
the Aggregate Guarantee Amount with respect to such PPF plus (ii) the
Present Value of Covered Expenses with respect to such PPF on such
Valuation Date; provided however, that if the Total Net Assets with
respect to such PPF on such Valuation Date is less than or equal to the
sum of (i) the Present Value of the Aggregate Guarantee Amount with
respect to such PPF plus (ii) the Present Value of Covered Expenses with
respect to such PPF, the Asset Allocation Threshold shall be an amount
equal to 100% of the sum of (i) the Present Value of Covered Expenses with
respect to such PPF on such Valuation Date.
`Covered Expense Ratio' shall mean, with respect to any PPF, on any
Valuation Date, the higher of (a) the expense ratio utilized by Aeltus in
its proprietary asset allocation computer model and (b) the Lower Covered
Expense Ratio with respect to such PPF; provided, however, that (i) if the
percentage of the Total Net Assets of such PPF on such date allocable to
Index Equities and Index Futures according to the Asset Allocation Test
would be greater than 20% and less than 30% using the Lower Covered
Expense Ratio in calculating the Present Value of Covered Expenses with
respect to such PPF on such Valuation Date, the Covered Expense Ratio will
equal the Interpolated Covered Expense Ration with respect to such PPF on
such Valuation Date or (ii) if the percentage of the Total Net Assets of
such PPF on such date allocable to Index Equities and Index
Futures according to the Asset Allocation Test would be 20% or less using
the Lower Covered Expense Ratio in calculating the Present Value of
Covered Expenses with respect to such PPF on such Valuation Date, the
Covered Expense Ratio will equal the Higher Covered Expense Ratio with
respect to such PPF; and provided, further that the Covered Expense Ratio
with respect to any PPF having an Aggregate Guarantee Amount on the
Inception Date with respect to such PPF of less than $25,000,000 will
equal the Higher Covered Expense Ration with respect to such PPF on any
Valuation Date."
and (b) adding the following new defined terms thereto in alphabetical order:
"'Asset Allocation Test Percentage' shall mean, with respect to any
PPF, on any Valuation Date, the greater of (a) 98% and (b) an amount equal
to 1.2 minus the product of (a) 0.2 and (b) the quotient of the Total Net
Assets with respect to such PPF on such Valuation Date divided by the sum
of (i) the Present Value of the Aggregate Guarantee Amount with respect to
such PPF plus (ii) the Present Value of Covered Expenses with respect to
such PPF on such Valuation Date.
`Covered Expense Differential' shall mean, with respect to any PPF,
an amount equal to the Higher Covered Expense Ratio with respect to such
PPF minus the Lower Covered Expense Ratio with respect to such PPF.
`Equity Percentage' shall mean, with respect to any PPF, on any
Valuation Date, the quotient of the sum of the aggregate Market Value of
the Index Equities and the aggregate Market Value of the Index Futures
held by such PPF on such Valuation Date divided by the Total Net Assets of
such PPF on such Valuation Date.
`Interpolated Covered Expense Ratio' shall mean, with respect to any
PPF, on any Valuation Date, an amount equal to the Higher Covered Expense
Ratio with respect to such PPF plus the product of (a) two times the
Covered Expense Differential with respect to such PPF minus (b) the
product of (x) the Equity Percentage with respect to such PPF on such
Valuation Date and (y) the quotient of the Covered Expense Differential
with respect to such PPF divided by 10%."
3. Conditions of Effectiveness. This Amendment shall become
effective on the date on which the Insurer, Aeltus and the Fund shall have
executed and delivered this Amendment.
4. No other Amendment; Confirmation. Except as expressly amended,
modifies and supplemented by this Amendment or by any prior amendment, the
provisions of the Agreement are and shall remain in full force and effect.
5. Governing Law. This Amendment and the rights and obligation of
the parties hereto shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York
6. Counterparts. This Amendment may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
IN WITNESS WHEREOF, each of the undersigned have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
MBIA INSURANCE CORPORATION
/s/ Xxxxx X. Xxxxx
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By: Xxxxx X. Xxxxx
Title: Managing Director
AELTUS INVESTMENT MANAGEMENT, INC.
/s/ Xxxx Xxx Xxxxxxxxx
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By: Xxxx Xxx Xxxxxxxxx
Title: Senior Vice President
AETNA SERIES FUND, INC.
/s/ Xxxxxxx Xxxxxxx
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By: Xxxxxxx Xxxxxxx
Title: Secretary
