INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
AETNA LIFE INSURANCE AND ANNUITY COMPANY
AND
XXXXXXX XXXXXX INVESTMENTS, 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 Xxxxxxx Xxxxxx Investments, Inc. ("Subadviser"), a corporation organized
and existing under the laws of Delaware.
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated as
of December 14th, 2000 ("Advisory Agreement") with Portfolio Partners, Inc.
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("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 Xxxxxxx International Growth 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
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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:
(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 the Subadviser or
its affiliate 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) provide any and all information, records and supporting
documentation about accounts the Subadviser manages that have
investment objectives, policies, and strategies substantially
similar to those employed by the Subadviser in managing the
Portfolio which may be reasonably necessary, under applicable
laws, to allow the Company or its agent to present historical
performance information concerning the Subadviser's similarly
managed accounts, for inclusion in the Company's Prospectus
and any other reports and materials prepared by the Company or
its agent, in accordance with regulatory requirements;
(iv) 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
(v) 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. ADVISER AND COMPANY UNDERTAKINGS. To facilitate the Subadviser's
fulfillment of its obligations under this Agreement, the Adviser and the
Company will undertake the following:
(i) the Adviser agrees promptly to provide the Subadviser with
all amendments or supplements to the Prospectus, the Company's
Articles of Incorporation, and By-Laws;
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(ii) the Company and the Adviser each agrees, on an ongoing basis,
to notify the Subadviser expressly in writing of each change
in the fundamental and nonfundamental investment policies of
the Portfolio;
(iii) the Adviser agrees to provide or cause to be provided to the
Subadviser with such assistance as may be reasonably
requested by the Subadviser in connection with its activities
pertaining to the Portfolio under this Agreement, including,
without limitation, information concerning the Portfolio, its
available funds, or funds that may reasonably become available
for investment, and information as to the general condition of
the Portfolio's affairs;
(iv) the Adviser agrees to provide or cause to be provided to the
Subadviser on an ongoing basis, such information as is
reasonably requested by the Subadviser for performance by the
Subadviser of its obligations under this Agreement, and the
Subadviser shall not be in breach of any term of this
Agreement or be deemed to have acted negligently if the
Adviser fails to provide or cause to be provided such
requested information and the Subadviser relies on the
information most recently furnished to the Subadviser; and
(v) the Adviser will promptly provide the Subadviser with any
guidelines and procedures applicable to the Subadviser or the
Portfolio adopted from time to time by the Board and agrees to
promptly provide the Subadviser copies of all amendments
thereto.
D. 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.
E. 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 most
favorable price and best execution available, considering all of the
circumstances, and shall maintain such records as are required of an
investment adviser under applicable law.
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 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.
F. 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
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permitted by applicable laws and regulations, and subject to the Adviser
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.
G. 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.
H. 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.
I. 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.
J. 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. Upon termination of this Agreement, the Adviser and the
Company shall immediately cease to use such name and trademarks, except
as necessary to comply with disclosure requirements under the federal
securities laws.
During the term of this Agreement, the Adviser shall furnish to the
Subadviser at its principal office all prospectuses, proxy statements,
reports to shareholders, sales literature, or other material prepared
for distribution to shareholders of the Company or the public, which
refer to the Subadviser or its clients in any way, prior to the use
thereof, and the Adviser shall not use any such materials if the
Subadviser reasonably objects within five business days (or such other
time as may be mutually agreed) after receipt thereof. The Adviser shall
ensure that materials prepared by employees or agents of the Adviser or
its affiliates that refer to the Subadviser or its clients in any way
are consistent with those materials previously approved by the
Subadviser. 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 business 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.
4. LIABILITY OF SUBADVISER. Neither the Subadviser nor any of its
directors, officers, employees or agents shall be liable to the Adviser or the
Company for any loss or expense suffered by the Adviser or the Company
resulting from its acts or omissions as Subadviser to the Portfolio, except for
losses or expenses to the Adviser or the Company 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 or the
Company for any loss or
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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. Furthermore, the Company and the Adviser recognize that
the Subadviser may give advice, and take action, with respect to its other
clients that may differ from the advice given, or the time or nature of action
taken, with respect to the Portfolio.
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 is effective with respect to the
Portfolio as of December 14th, 2000. This Agreement will remain in effect
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through December 31, 2002, unless earlier terminated under the provisions of
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Section 12. Following the expiration of its initial term, the Agreement shall
continue in effect from year to year 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; (iii) has met, and will 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.
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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 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 60 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 60 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 approved by vote of a majority of the Independent Directors
cast in person at a meeting called for the purpose of such approval.
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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 Secretary Title Vice President
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Title
Xxxxxxx Xxxxxx Investments, Inc.
By: /s/ Xxxxx X. Xxxxxxx
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Attest: /s/ Xxxxxxxx X. Xxxxxxxxx SVP
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VP Title Xxxxx X. Xxxxxxx
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Title
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APPENDIX A
FEE SCHEDULE
Xxxxxxx International Growth .75% on the first $20 million of average
daily net assets
.65% on the next $15 million
.50% on the next $65 million
.40% on the next $200 million
.30% on assets over $300 million
