Exhibit 99-B.5(b)
FORM OF
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by AELTUS INVESTMENT MANAGEMENT, INC., a Connecticut
corporation (the "Adviser"), AETNA VARIABLE PORTFOLIOS, INC., a Maryland
Corporation (the "Fund"), on behalf of its AETNA VALUE OPPORTUNITY VP (the
"Portfolio") and Xxxxxxx, Xxxxxx & Xxxxxxx, Inc., a Connecticut corporation (the
"Subadviser"), as of the date set forth below.
W I T N E S S E T H
WHEREAS, the Fund is registered with the Securities and Exchange Commission (the
"Commission") as an open-end, diversified, management investment company
consisting of multiple investment portfolios, under the Investment Company Act
of 1940, as amended (the "1940 Act"); and
WHEREAS, pursuant to authority granted by the Fund's Articles of Incorporation,
the Fund has established the Portfolio as a separate investment portfolio; and
WHEREAS, both the Adviser and the Subadviser are registered with the Commission
as investment advisers under the Investment Advisers Act of 1940, as amended
(the "Advisers Act") and both are in the business of acting as investment
advisers; and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement with the
Fund, on behalf of the Portfolio (the "Investment Advisory Agreement"), which
appoints the Adviser as the investment adviser for the Portfolio; and
WHEREAS, Article IV of the Investment Advisory Agreement authorizes the Adviser
to delegate all or a portion of its obligations under the Investment Advisory
Agreement to a subadviser;
NOW THEREFORE, the parties agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER
Subject to the terms and conditions of this Agreement, the Adviser and the Fund,
on behalf of the Portfolio, hereby appoint the Subadviser to manage the assets
of the Portfolio as set forth below in Section II, under the supervision of the
Adviser and subject to the approval and direction of the Fund's Board of
Directors (the "Board"). The Subadviser hereby accepts such appointment and
agrees that it shall, for all purposes herein, undertake such obligations as an
independent contractor and not as an agent of the Adviser. The Subadviser
agrees, that except as required to carry out its duties under this Agreement or
as otherwise expressly authorized, it has no authority to act for or represent
the Portfolio, the Fund or the Adviser in any way. The Subadviser agrees that
the Adviser shall have the right at all times to inspect the offices and the
records of the Subadviser that relate to the Subadviser's performance of this
Agreement.
II. DUTIES OF THE SUBADVISER AND THE ADVISER
A. Duties of the Subadviser
The Subadviser shall regularly provide investment advice with respect
to the assets held by the Portfolio and shall continuously supervise
the investment and reinvestment of securities, instruments or other
property (excluding cash and cash instruments) comprising the assets of
the Portfolio. In carrying out these duties, the Subadviser shall:
1. select the securities to be purchased, sold or exchanged by the
Portfolio or otherwise represented in the Portfolio's investment
portfolio, communicate trade orders to the Adviser for all such
securities, and regularly report thereon to the Adviser and, at
the request of the Adviser, to the Board;
2. formulate and implement continuing programs for the purchase and
sale of securities and regularly report thereon to the Adviser
and, at the request of the Adviser or the Portfolio, to the
Board;
3. inform the Adviser of the amount of Portfolio assets which will
need to be invested or reinvested in cash and cash instruments;
and
4. establish and maintain appropriate policies and procedures
including, but not limited to, a code of ethics, which are
designed to ensure that the management of the Portfolio is
implemented in compliance with the 1940 Act, the Advisers Act,
and the rules thereunder.
B. Duties of the Adviser
The Adviser shall retain responsibility for oversight of all activities
of the Subadviser and for monitoring its activities on behalf of the
Portfolio. The Adviser also is responsible for the investment and
reinvestment of cash and cash instruments maintained by the Portfolio.
In carrying out its obligations under this Agreement and the Investment
Advisory Agreement, the Adviser shall:
1. monitor the investment program maintained by the Subadviser for
the Portfolio and the Subadviser's compliance program to ensure
that the Portfolio's assets are invested in compliance with the
Subadvisory Agreement and the Portfolio's investment objectives
and policies as adopted by the Board and described in the most
current effective amendment of the registration statement for
the Portfolio, as filed with the Commission under the Securities
Act of 1933, as amended (the "1933 Act"), and the 1940 Act
("Registration Statement");
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2. place all trade orders communicated by the Subadviser with
brokers or dealers selected by the Adviser. The Adviser shall
use its best efforts to seek to execute portfolio transactions
at prices that are advantageous to the Portfolio giving
consideration to the services and research provided and at
commission rates that are reasonable in relation to the benefits
received;
3. review all 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. formulate and implement continuing programs for the purchase and
sale of cash and cash instruments and regularly report thereon,
at the request of the Portfolio to the Board;
5. file all periodic reports required to be filed by the Portfolio
with the applicable regulatory authorities;
6. review and deliver to the Board all financial, performance and
other reports prepared by the Subadviser and/or Adviser under
the provisions of this Agreement or as requested by the Board;
7. maintain contact with and enter into arrangements with the
custodian, transfer agent, auditors, outside counsel, and other
third parties providing services to the Portfolio;
8. give instructions to the custodian and/or sub-custodian of the
Portfolio, concerning deliveries of securities, transfers of
currencies and payments of cash for the Portfolio, as required
to carry out the investment activities of the Portfolio as
contemplated by this Agreement;
9. provide such administrative and other services, such as
preparation of financial data, determination of the Portfolio's
net asset value, and preparation of financial and performance
reports; and
10. oversee all matters relating to (i) the offer and sale of shares
of the Portfolio, including promotions, marketing materials,
preparation of prospectuses, filings with the Commission and
state securities regulators, and negotiations with
broker-dealers; (ii) shareholder services, including,
confirmations, correspondence and reporting to shareholders;
(iii) all corporate matters on behalf of the Portfolio,
including monitoring the corporate records of the Portfolio,
maintaining contact with the Board, preparing for, organizing
and attending meetings of the Board and the Portfolio's
shareholders; (iv) preparation of proxies when required; and (v)
any other matters not expressly delegated to the Subadviser by
this Agreement.
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III. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of the Subadviser
The Subadviser hereby represents and warrants to the Adviser as
follows:
1. Due Incorporation and Organization. The Subadviser 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 Subadviser is registered as an investment
adviser with the Commission under the Advisers Act. The
Subadviser shall maintain such registration in effect at all
times during the term of this Agreement.
3. Regulatory Orders. The Subadviser is not subject to any stop
orders, injunctions or other orders of any regulatory authority
affecting its ability to carry out the terms of this Agreement.
The Subadviser will notify the Adviser and the Portfolio
immediately if any such order is issued or if any proceeding is
commenced that could result in such an order.
4. Compliance. The Subadviser has in place compliance systems and
procedures designed to meet the requirements of the Advisers Act
and the 1940 Act and it shall at all times assure that its
activities in connection with managing the Portfolio follow
these procedures.
5. Authority. The Subadviser is authorized to enter into this
Agreement and carry out the terms hereunder.
6. Best Efforts. The Subadviser at all times shall provide its best
judgment and effort to the Portfolio in carrying out its
obligations hereunder.
B. Representations and Warranties of the Adviser
The Adviser hereby represents and warrants to the Subadviser 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 or license in effect at all times
during the term of this Agreement.
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3. Regulatory Orders. The Adviser is not subject to any stop
orders, injunctions or other orders of any regulatory authority
affecting its ability to carry out the terms of this Agreement.
The Adviser will notify the Subadviser and the Portfolio
immediately if any such order is issued or if any proceeding is
commenced that could result in such an order.
4. Compliance. The Adviser shall at all times assure that its
activities in connection with managing the Portfolio follow
these procedures.
5. Authority. The Adviser is authorized to enter into this
Agreement and carry out the terms hereunder.
6. Best Efforts. The Adviser at all times shall provide its best
judgment and effort to the Portfolio in carrying out its
obligations hereunder.
C. Representations and Warranties of the Fund
The Fund hereby represents and warrants to the Adviser as follows:
1. Due Incorporation and Organization. The Fund has been duly
incorporated as a Corporation 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 Fund is registered as an investment company
with the Commission under the 1940 Act and shares of the Fund
are registered or qualified for offer and sale to the public
under 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. CONTROL BY THE BOARD OF DIRECTORS
Any investment program undertaken by the Subadviser pursuant to this Agreement,
as well as any other activities undertaken by the Subadviser at the direction of
the Adviser on behalf of the Portfolio, shall at all times be subject to any
directives of the Board.
V. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Subadviser shall at
all times conform to:
1. all applicable provisions of the 1940 Act, the Advisers Act and
any rules and regulations adopted thereunder;
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2. all policies and procedures of the Portfolio as adopted by the
Board and as described in the Registration Statement;
3. the provisions of the Articles of Incorporation of the Fund, as
amended from time to time;
4. the provisions of the Bylaws of the Fund, as amended from time
to time; and
5. any other applicable provisions of state or federal law.
VI. COMPENSATION
The Adviser shall pay the Subadviser, as compensation for services
rendered hereunder, from its own assets, an annual fee based on the
average daily net assets in the Portfolio, according to the following
schedule:
Net Assets in Portfolio Annual Fee
$0 - $250 MM 0.15% of the Portfolio's average daily net assets
> $250 MM 0.10% of the Portfolio's average daily net assets
The fee shall be payable monthly. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued daily
at the rate of 1/365 of the annual fee applied to the daily net assets
of the Portfolio. If this Agreement becomes effective subsequent to the
first day of a month or shall terminate 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.
VII. ALLOCATION OF EXPENSES
The Subadviser shall pay the salaries, employment benefits and other related
costs of those of its personnel engaged in providing investment advice to the
Portfolio hereunder, including, but not limited to, office space, office
equipment, telephone and postage costs.
VIII. NONEXCLUSIVITY
The services of the Subadviser with respect to the Portfolio are not to be
deemed to be exclusive, and the Subadviser shall be free to render investment
advisory and administrative or other services to others (including other
investment companies) and to engage in other activities; provided, however, that
the Subadviser will not undertake to manage a registered investment company with
substantially similar objectives, policies and restrictions to those of the
Portfolio without obtaining the Adviser's prior written approval. It is
understood that officers or directors of the Subadviser
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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
advisory companies.
IX. TERM
This Agreement shall become effective at the close of business on the date
hereof and shall remain in force and effect through December 31, 1999, unless
earlier terminated under the provisions of Article X. Following the expiration
of its initial term, the Agreement shall continue in force and effect for one
year periods, provided such continuance is specifically approved at least
annually:
1. (a) by the Board or (b) by the vote of a majority of the
Portfolio's 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 Fund), by
votes cast in person at a meeting specifically called for such
purpose.
X. TERMINATION
This Agreement may be terminated:
1. at any time, without the payment of any penalty, by vote of the
Board or by vote of a majority of the outstanding voting
securities of the Portfolio; or
2. by the Adviser, the Fund, on behalf of the Portfolio, or the
Subadviser on sixty (60) days' written notice to the other
party, unless written notice is waived by the party required to
be notified; or
3. automatically in the event there is an "assignment" of this
Agreement, as defined in the 1940 Act.
XI. LIABILITY
The Subadviser shall be liable to the Portfolio and the Subadviser and shall
indemnify the Portfolio and the Adviser for any losses incurred by the Portfolio
or the Adviser 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 Subadviser or its officers, directors or employees, that is
found to involve willful misfeasance, bad faith or negligence, or reckless
disregard by the Subadviser of its duties under this Agreement, in connection
with the services rendered by the Subadviser hereunder.
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Nothing herein shall relieve the Adviser of its responsibilities to the Fund, as
set forth in the Investment Advisory Agreement.
XII. 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 address shall be:
if to the Fund, on behalf of the Portfolio or the Adviser:
000 Xxxxxxxx Xxxxxx XXX0
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Fax number: 860/000-0000
Attn: Secretary
if to the Subadviser:
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Fax number: 860/000-0000
Attention: President
XIII. 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, regulations 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 any provision of the Agreement is
revised by rule, regulation or order of the Commission, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
XIV. SALES PROMOTION
The Subadviser may not use any sales literature, advertising material
(including material disseminated through radio, television, or other electronic
media) or other communications concerning Portfolio shares or that include the
name of the Portfolio or the Adviser without obtaining the Adviser's prior
written approval.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate by their respective officers on the 30th day of
September, 1998.
Aeltus Investment Management, Inc.
Attest:
/s/ Xxxxxxxxx Xxxxx By /s/ Xxxxxxx X. Xxxxxxx
------------------------- -----------------------------
Name Xxxxxxxxx Xxxxx Name Xxxxxxx X. Xxxxxxx
Title Assistant Secretary Title Managing Director
Xxxxxxx, Xxxxxx & Xxxxxxx, Inc.
Attest:
/s/ Xxxxxx X. Xxxxxxxxx By /s/ X. X. Xxxxxxx
------------------------- -----------------------------
Name Xxxxxx X. Xxxxxxxxx Name Xxxxxx X. Xxxxxxx
Title Operations Officer Title President
Aetna Variable Portfolios, Inc.
on behalf of
Aetna Value Opportunity VP
Attest:
/s/ Xxx X. Doberman By /s/ Xxxxxxxxx X. XxXxxxx
------------------------- -----------------------------
Name Xxx X. Doberman Name Xxxxxxxxx X. XxXxxxx
Title Secretary Title Vice President
