INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AETNA LIFE INSURANCE AND ANNUITY COMPANY,
a Connecticut corporation (the "Adviser") and PORTFOLIO PARTNERS, INC., a
Maryland corporation (the "Company"), on behalf of each of its Series, MFS
Capital Opportunities Portfolio (formerly MFS Value Equity Portfolio), MFS
Emerging Equities Portfolio, MFS Research Growth Portfolio, Xxxxxxx
International Growth Portfolio and X. Xxxx Price Growth Equity Portfolio (the
"Series"), as of the date set forth below the parties' signatures.
W I T N E S S E T H
WHEREAS, the Company is registered with the Securities and Exchange Commission
(the "Commission") as an open-end, diversified, management investment company
under the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Company has established the Series; and
WHEREAS, the Adviser is registered with the Commission as an investment adviser
under the Investment Advisers Act of 1940 (the "Advisers Act"), and is in the
business of acting as an investment adviser; and
WHEREAS, the Company, on behalf of the Series, and the Adviser desire to enter
into an agreement to provide for investment advisory and management services
for the Company on the terms and conditions hereinafter set forth;
NOW THEREFORE, the parties agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER
Subject to the terms and conditions of this Agreement and the policies and
control of the Company's Board of Directors (the "Board"), the Company, on
behalf of the Series, hereby appoints the Adviser to serve as its investment
adviser, to provide the investment advisory services set forth below in Section
II. The Adviser agrees that, except as required to carry out its duties under
this Agreement or otherwise expressly authorized, it is acting as an
independent contractor and not as an agent of the Company and has no authority
to act for or represent the Company in any way.
II. DUTIES OF THE ADVISER
In carrying out the terms of this Agreement, the Adviser shall do the
following:
1. supervise all aspects of the operations of the Company;
2. select the securities to be purchased, sold or exchanged by the
Series or otherwise represented in the Series' investment
portfolio, place trades for all such securities and regularly
report thereon to the Board;
3. formulate and implement continuing programs for the purchase
and sale of securities and regularly report thereon to the
Board;
4. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy
generally, the Series, securities held by or under
consideration for the Series, or the issuers of those
securities;
5. provide economic research and securities analyses as the
Adviser considers necessary or advisable in connection with the
Adviser's performance of its duties hereunder;
6. obtain the services of, contract with, and provide instructions
to custodians and/or subcustodians of the Series' securities,
transfer agents, dividend paying agents, pricing services and
other service providers as are necessary to carry out the terms
of this Agreement;
7. prepare financial and performance reports, calculate and report
daily net asset values, and prepare any other financial data or
reports, as the Adviser from time to time, deems necessary or
as are requested by the Board; and
8. take any other actions which appear to the Adviser and the
Board necessary to carry into effect the purposes of this
Agreement.
III. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of the Adviser
Adviser hereby represents and warrants to the Company as follows:
1. DUE INCORPORATION AND ORGANIZATION. The Adviser is duly
organized and is in good standing under the laws of the
State of Connecticut and is fully authorized to enter
into this Agreement and carry out its duties and
obligations hereunder.
2. REGISTRATION. The Adviser is registered as an
investment adviser with the Commission under the
Advisers Act. The Adviser shall maintain such
registration in effect at all times during the term of
this Agreement.
3. BEST EFFORTS. The Adviser at all times shall provide
its best judgment and effort to the Series in carrying
out its obligations hereunder.
B. Representations and Warranties of the Company
The Company, on behalf of the Series, hereby represents and warrants to
the Adviser as follows:
1. DUE INCORPORATION AND ORGANIZATION. The Company has
been duly incorporated under the laws of the State of
Maryland and it is authorized to enter into this
Agreement and carry out its obligations hereunder.
2. REGISTRATION. The Company is registered as an
investment company with the Commission under the 1940
Act and shares of the Series are registered or
qualified for offer and sale to the public under the
Securities Act of 1933 (the "1933 Act") and all
applicable state securities laws. Such registrations or
qualifications will be kept in effect during the term
of this Agreement.
IV. DELEGATION OF RESPONSIBILITIES
A. Appointment of Subadviser(s)
Subject to the approval of the Board, the Adviser may enter into a
Subadvisory Agreement to engage one or more Subadvisers (the
"Sub-adviser") to the Adviser with respect to each Series.
B. Duties of Subadviser
Under a Subadvisory Agreement, the Subadviser may be delegated some or
all of the following duties of the Adviser:
1. determine which securities from which issuers shall be
purchased, sold or exchanged by the Series or otherwise
represented in the Series' investment portfolio, place
trades for all such securities, select brokers or
dealers for the execution thereof, and regularly report
thereon to the Board;
2. formulate and implement continuing programs for the
purchase and sale of the securities of such issuers and
regularly report thereon to the Board;
3. obtain and evaluate pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally, the Series, securities
held by or under consideration for the Series, or the
issuers of those securities;
4. provide economic research and securities analyses as
the Adviser considers necessary or advisable in
connection with the Adviser's performance of its duties
hereunder;
5. give instructions to the custodian and/or sub-custodian
of the Series appointed by the Board, as to deliveries
of securities, transfers of currencies and payments of
cash for the Series as required to carry out the
investment activities of the Series, in relation to the
matters contemplated by this Agreement; and
6. provide such financial support, administrative services
and other duties as the Adviser deems necessary and
appropriate.
C. Duties of the Adviser
In the event the Adviser delegates certain responsibilities hereunder
to one or more Subadvisers, the Adviser shall, among other things:
1. monitor the investment program maintained by the
Subadvisers for the Series and the Subadvisers'
compliance program to ensure that the Series' assets
are invested in compliance with the Subadvisory
Agreement and the Series' investment objectives and
policies as adopted by the Board and described in the
most current effective amendment of the registration
statement, as filed with the Commission under the 1933
Act and the 1940 Act ("Registration Statement");
2. allocate series' assets among such Subadvisers;
3. review all data and financial reports prepared by the
Subadviser to assure that they are in compliance with
applicable requirements and meet the provisions of
applicable laws and regulations;
4. establish and maintain regular communications with the
Subadvisers to share information it obtains with the
Subadvisers concerning the effect of developments and
data on the investment program maintained by the
Subadvisers; and
5. oversee all matters relating to the offer and sale of
the Series' shares, the Company's corporate governance,
reports to the Board, contracts with all third parties
on behalf of the Company for services to the Series,
reports to regulatory authorities and compliance with
all applicable rules and regulations affecting the
Company's operations.
V. BROKER-DEALER RELATIONSHIPS
A. Portfolio Trades
The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities with brokers or dealers
selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser. The Adviser shall use its best efforts to
seek to execute portfolio transactions at prices that are advantageous
to the Series and at commission rates that are reasonable in relation
to the benefits received.
B. Selection of Broker-Dealers
In selecting broker-dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage or research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Adviser and/or the
other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser may also select brokers or dealers
to effect transactions for the Series who provide payment for expenses
of the Series. The Adviser is authorized to pay a broker or dealer who
provides such brokerage and research services or expenses, and that
have provided assistance in the distribution of shares of the Series to
the extent permitted by law, a commission for executing a portfolio
transaction for the Series that is in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer and
is paid in compliance with Section 28(e) or other rules and regulations
of the Commission. This determination may be viewed in terms of either
that particular transaction or the overall responsibilities that the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Board shall periodically
review the commissions paid by the Series to determine if the
commissions paid over representative periods of time were reasonable in
relation to the benefits received.
Any delegation to a Subadviser (as authorized in Section IV above) of
the selection of broker-dealers to execute portfolio transactions will
include instructions consistent with the parameters outlined in this
Section.
VI. CONTROL BY THE BOARD
Any investment program undertaken by the Adviser pursuant to this Agreement, as
well as any other activities undertaken by the Adviser on behalf of the Series
pursuant thereto, shall at all times be subject to any directives of the Board.
VII. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Adviser shall at all
times conform to:
1. all applicable provisions of the 1940 Act;
2. the provisions of the current Registration Statement of the
Company;
3. the provisions of the Fund's Articles of Incorporation, as
amended;
4. the provisions of the Bylaws of the Fund, as amended; and
5. any other applicable provisions of state or federal law.
VIII. COMPENSATION
For the services to be rendered, the facilities furnished and the expenses
assumed by the Adviser, the Company, on behalf of the Series, shall pay to the
Adviser an annual fee, payable monthly, based upon the following average daily
net assets of the Series:
PORTFOLIO FEE
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MFS Capital Opportunities 0.65% of average daily net assets
Portfolio (formerly Value
Equity Portfolio)
MFS Emerging Equities 0.70% of the first $500 million of
Portfolio average daily net assets;
0.65% on assets over $500 million
MFS Research Growth 0.70% on the first $500 million of
Portfolio average daily net assets;
0.65% on assets over $500 million
Xxxxxxx International Growth 0.80% on average daily net assets
Portfolio
X. Xxxx Price Growth Equity 0.60% of average daily net assets
Portfolio
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily at the rate of 1/365 of the annual advisory fee
applied to the daily net assets of the Series. If this Agreement becomes
effective subsequent to the first day of a month or terminates before the last
day of a month, compensation for that part of the month this Agreement is in
effect shall be prorated in a manner consistent with the calculation of the
fees set forth above. Subject to the provisions of Section X hereof, payment of
the Adviser's compensation for the preceding month shall be made as promptly as
possible. For so long as a Subadvisory Agreement is in effect, the Company
acknowledges on behalf of the Series that the Adviser will pay to each
Subadviser, as compensation for acting as a Subadviser to the Series, the fees
specified in the particular Subadvisory Agreement.
IX. EXPENSES
The expenses in connection with the management of the Company shall be
allocated between the Series and the Adviser as follows:
A. Expenses of the Adviser
The Adviser shall pay:
1. the salaries, employment benefits and other related
costs and expenses of those of its personnel engaged in
providing investment advice to the Series, including
without limitation, office space, office equipment,
telephone and postage costs;
2. all fees and expenses of all directors, officers and
employees, if any, of the Company who are employees of
the Adviser or an affiliated entity, including any
salaries and employment benefits payable to those
persons;
B. Expenses of the Series
The Series shall pay:
1. investment advisory fees pursuant to this Agreement;
2. brokers' commissions, issue and transfer taxes or other
transaction fees payable in connection with any
transactions in the securities in the Series'
investment portfolio or other investment transactions
incurred in managing the Series' assets, including
portions of commissions that may be paid to reflect
brokerage research services provided to the Adviser;
3. fees and expenses of the Company's independent
accountants and legal counsel and the independent
Directors' legal counsel;
4. fees and expenses of any administrator, transfer agent,
custodian, dividend, accounting, pricing or disbursing
agent of the Series;
5. interest and taxes;
6. fees and expenses of any membership in the Investment
Company Institute or any similar organization in which
the Board deems it advisable for the Company to
maintain membership;
7. insurance premiums on property or personnel (including
officers and directors) of the Company which benefit
the Series;
8. all fees and expenses of the Company's directors, who
are not "interested persons" (as defined in the 0000
Xxx) of the Company or the Adviser;
9. expenses of preparing, printing and distributing
proxies, proxy statements, prospectuses and reports to
shareholders of the Series, except for those expenses
paid by third parties in connection with the
distribution of Series shares and all costs and
expenses of shareholders' meetings;
10. all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in
shares of the Series or in cash;
11. costs and expenses (other than those detailed in
paragraph 9 above) of promoting the sale of shares
issued by the Series, provided that nothing in this
Agreement shall prevent the charging of such costs to
third parties involved in the distribution of shares
issued by the Series;
12. fees payable by the Series to the Commission or to any
state securities regulator or other regulatory
authority for the registration of shares of the Series
in any state or territory of the United States or of
the District of Columbia;
13. all costs attributable to investor services,
administering shareholder accounts and handling
shareholder relations (including, without limitation,
telephone and personnel expenses), which costs may also
be charged to third parties by the Adviser; and
14. any other ordinary, routine expenses incurred in the
management of the Series' assets, and any nonrecurring
or extraordinary expenses, including organizational
expenses, litigation affecting the Series and any
indemnification by the Company of its officers,
directors or agents.
X. NONEXCLUSIVITY
The services of the Adviser to the Company are not to be deemed to be
exclusive, and the Adviser shall be free to render investment advisory or other
services to others (including other investment companies) and to engage in
other activities, so long as its services under this Agreement are not impaired
thereby. It is understood and agreed that officers and directors of the Adviser
may serve as officers or directors of the Company, and that officers or
directors of the Company may serve as officers or directors of the Adviser to
the extent permitted by law; and that the officers and directors of the Adviser
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 or trustees of any other firm or trust, including other investment
companies.
XI. TERM
This Agreement shall become effective at the close of business on December [ ],
2000, and shall remain in force and effect through December [ ], 2001, unless
earlier terminated under the provisions of Article XIII.
XII. RENEWAL
Following the expiration of its initial term, the Agreement shall continue in
force and effect from year to year, provided that such continuance is
specifically approved at least annually:
1. a. by the Board, or
b. by the vote of a majority of the Series' outstanding
voting securities (as defined in Section 2(a)(42) of
the 1940 Act), and
2. by the affirmative vote of a majority of the directors who are
not parties to this Agreement or interested persons of a party
to this Agreement (other than as a director of the Company), by
votes cast in person at a meeting specifically called for such
purpose.
XIII. TERMINATION
This Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of the Series'
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act),
or by the Adviser, on sixty (60) days' written notice to the other party. The
notice provided for herein may be waived by the party required to be notified.
This Agreement shall automatically terminate in the event of its "assignment,"
as that term is defined in Section 2(a)(4) of the 1940 Act.
XIV. LIABILITY
The Adviser shall be liable to the Company and shall indemnify the Company for
any losses incurred by the Company, whether in the purchase, holding or sale of
any security or otherwise, to the extent that such losses resulted from an act
or omission on the part of the Adviser or its officers, directors or employees,
that is found to involve willful misfeasance, bad faith or negligence, or
reckless disregard by the Adviser of its duties under this Agreement, in
connection with the services rendered by the Adviser hereunder.
XV. NOTICES
Any notices under this Agreement shall be in writing, addressed and delivered,
mailed postage paid, or sent by other delivery service, or by facsimile
transmission to each party at such address as each party may designate for the
receipt of notice. Until further notice, such addresses shall be:
IF TO THE COMPANY, THE SERIES OR THE ADVISER:
Xxxxxx X. Xxxxxx
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, Xxxxxxxxxxx 00000
Fax number: 860/000-0000
XVI. QUESTIONS OF INTERPRETATION
This Agreement shall be governed by the laws of the State of Connecticut. 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 Commission issued pursuant to the 1940 Act. In addition, where the effect
of a requirement of the 1940 Act reflected in the provisions of this Agreement
is revised by rule, release or order of the Commission, such provisions shall
be deemed to incorporate the effect of such rule, release or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on December [ ], 2000.
Aetna Life Insurance and Annuity
Company
By: /s/ Xxxxx X. Xxxxxxx
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Attest: /s/ Xxxx X. Kabbitt Name: Xxxxx X. Xxxxxxx
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Title: Senior Vice President
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Portfolio Partners, Inc. on behalf of its series:
MFS Capital Opportunities Portfolio
(formerly MFS Value Equity Portfolio)
MFS Emerging Equities Portfolio
MFS Research Growth Portfolio
Xxxxxxx International Growth Portfolio
X. Xxxx Price Growth Equity Portfolio
By: /s/ Xxxxxx X. Xxxxxxxxxxx
Attest: /s/ J. Xxxx XxXxxxxx Name: Xxxxxx X. Xxxxxxxxxxx
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Title: President
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