SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and among AELTUS INVESTMENT MANAGEMENT, INC., a
Connecticut corporation (the "Adviser"), AETNA VARIABLE PORTFOLIOS, INC., a
Maryland Corporation (the "Fund"), on behalf of its AETNA TECHNOLOGY VP (the
"Series") and Xxxxxx Asset Management, LLC, a Delaware limited liability company
(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 Series 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 Series (the "Investment Advisory Agreement"), which
appoints the Adviser as the investment adviser for the Series; and
WHEREAS, 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 SUBADVISER
Subject to the terms and conditions of this Agreement, the Adviser and the Fund,
on behalf of the Series, hereby appoint the Subadviser to manage the assets of
the Series 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
Series, the Fund or the Adviser in any way. The Subadviser agrees that the
Adviser shall have the right at all times upon reasonable notice 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 Series and shall continuously supervise the
investment and reinvestment of securities, instruments or other property
(excluding cash and cash instruments) comprising the assets of the Series.
In carrying out these duties, the Subadviser shall:
1. select the securities (other than cash instruments) to be
purchased, sold or exchanged by the Series or otherwise
represented in the Series' investment portfolio and regularly
report thereon to the Adviser and, at the request of the Adviser,
to the Board;
2. place trade orders with broker-dealers, which may include brokers
or dealers affiliated with the Subadviser or the Adviser. The
Subadviser shall use its best efforts to seek to execute portfolio
transactions at prices that are advantageous to the Series giving
consideration to the services and research provided and at
commission rates that are reasonable in relation to the benefits
received;
3. formulate and implement continuing programs for the purchase and
sale of securities (other than cash instruments) and regularly
report thereon to the Adviser and, at the request of the Adviser
or the Series, to the Board;
4. inform the Adviser on a daily basis of the amount of Series assets
that will need to be invested or reinvested in cash and cash
instruments; and
5. 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 Series 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 Series.
The Adviser also is responsible for the investment and reinvestment of
cash and cash instruments maintained by the Series. 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 Series and the Subadviser's 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 for the Fund, as filed
with the Commission under the Securities Act of 1933, as amended
(the "1933 Act"), and the 1940 Act ("Registration Statement");
2. formulate and implement continuing programs for the purchase and
sale of cash and cash instruments;
3. file all periodic reports pertaining to the Series required to be
filed with the applicable regulatory authorities;
4. 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;
5. maintain contact with and enter into arrangements with the
custodian, transfer agent, auditors, outside counsel, and other
third parties providing services to the Series; and
2
6. give instructions to the custodian and/or sub-custodian of the
Series, concerning deliveries of securities and payments of cash
for the Series, as required to carry out the investment activities
of the Series as contemplated by this Agreement.
To the extent that the Series incurs a loss as a result of the Adviser's
failure to adequately fulfill its duties hereunder, and not as a result of
the Subadviser's negligence, the Adviser agrees that it shall be solely
responsible to make the Series whole.
III. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of the Subadviser
The Subadviser hereby represents and warrants to the Fund and Adviser as
follows:
1. DUE ORGANIZATION AND AUTHORIZATION. The Subadviser is duly
organized and is in good standing under the laws of the State of
Delaware 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 Series 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 Series follow these
procedures.
B. Representations and Warranties of the Adviser
The Adviser hereby represents and warrants to the Subadviser as follows:
1. DUE ORGANIZATION AND AUTHORIZATION. 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.
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 Series immediately if any such
order is issued or if any proceeding is commenced that could
result in such an order.
3
4. COMPLIANCE. The Adviser 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 Series follow these
procedures.
C. Representations and Warranties of the Fund
The Fund hereby represents and warrants to the Adviser and Subadviser as
follows:
1. DUE ORGANIZATION AND AUTHORIZATION. 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. BROKER-DEALER RELATIONSHIPS
In selecting broker-dealers qualified to execute a particular equity
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 Subadviser and/or the other accounts over which the
Subadviser or its affiliates exercise investment discretion. The Subadviser is
authorized to pay a broker or dealer that provides such brokerage or research
services 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 Subadviser determines in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage or research services provided by such broker or dealer and is paid
in compliance with Section 28(e). This determination may be viewed in terms of
either that particular transaction or the overall responsibilities that the
Subadviser and its affiliates have with respect to accounts over which they
exercise investment discretion. The Subadviser may consider the sale of shares
of the Series and of other investment companies advised by the Adviser as a
factor in the selection of brokers or dealers to effect transactions for the
Series, subject to the Subadviser's duty to seek best execution. The Subadviser
may also select brokers or dealers to effect transactions for the Series that
provide payment for expenses of the Series. 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.
V. 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 Series, shall at all times be subject to any
directives of the Board.
VI. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Adviser and 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;
4
2. all policies and procedures of the Series 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.
VII. COMPENSATION
The Adviser shall pay the Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee equal to 0.50% of the average
daily net assets in the Series. 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 (1/366 in the event of a leap year) of the
annual fee applied to the daily net assets of the Series. If this Agreement
becomes effective subsequent to the first day of a month or shall terminate
prior to 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.
VIII. 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
Series hereunder, including, but not limited to, office space, office equipment,
telephone and postage costs. The Subadviser shall not be responsible for any
other expenses related to the operation of the Fund.
IX. NONEXCLUSIVITY
The services of the Subadviser with respect to the Series 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. It is understood that officers or
directors 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 or trustees of any other firm or trust,
including other investment advisory companies.
X. 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, 2001, unless
earlier terminated under the provisions of Article XI. 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 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 Fund), by votes cast in
person at a meeting specifically called for such purpose.
5
XI. 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
Series; or
2. by the Subadviser on sixty (60) days' written notice to both the
Adviser and the Fund, unless written notice is waived by the
party(ies) required to be notified; or
3. automatically in the event there is an "assignment" of this Agreement,
as defined in Section 2(a)(4) of the 1940 Act.
XII. LIABILITY
The Subadviser shall be liable to the Series and the Adviser and shall indemnify
the Series and the Adviser for any losses incurred by the Series 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.
The Adviser shall be liable to the Series and the Subadviser and shall indemnify
the Series and the Subadviser for any losses incurred by the Series or the
Subadviser 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.
Nothing herein shall relieve the Adviser of its responsibilities to the Fund, as
set forth in the Investment Advisory Agreement.
XIII. 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 SERIES OR THE ADVISER:
00 Xxxxx Xxxxx Xxxxxx, XX00
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Fax number: 860/000-0000
Attn: Secretary
IF TO THE SUBADVISER:
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax number: 415/000-0000
Attention: Chief Executive Officer
6
XIV. QUESTIONS OF INTERPRETATION
This Agreement shall be governed by the laws of the State of Connecticut. Either
party shall have the right to require that any dispute arising under the
Agreement be submitted to binding arbitration at the American Arbitration
Association ("AAA") located in New York, New York, in accordance with the AAA's
applicable rules and procedures for dispute resolution.
XV. 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 Series shares or that include the name of the
Series or the Adviser without obtaining the Adviser's prior written approval.
Notwithstanding the foregoing, nothing herein shall prohibit the Subadviser or
any of its principals from using the name of the Fund, the Series or the Adviser
in a biographical description of the Subadviser or its principals or prohibit
the use of the performance of the Fund or the Series (to the extent permissible
under the U.S. federal and state securities laws) in sales literature,
advertising material or other communications of the Subadviser that describes
the composite performance record of the Subadviser or its principals.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the 13th day of December 2000.
Aeltus Investment Management, Inc.
Attest:
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxx Xxxxxx
------------------------- ----------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxx Xxxxxx
--------------------- --------------------------
Title: Secretary Title: Managing Director
---------------------- ---------------------------
Xxxxxx Asset Management, LLC
Attest:
By: /s/ Xxxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx
------------------------- ----------------------------
Name: Xxxxxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxx
--------------------- --------------------------
Title: President Title: CEO
---------------------- ---------------------------
Aetna Variable Portfolios, Inc.
on behalf of Aetna Technology VP
Attest:
By: /s/ Xxxxxx X. Xxxxxx By: /s/ J. Xxxxx Xxx
------------------------- -----------------------------
Name: Xxxxxx X. Xxxxxx Name: J. Xxxxx Xxx
--------------------- --------------------------
Title: Secretary Title: President
---------------------- ---------------------------
7
