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
Emerging Equities Portfolio, MFS Research Growth Portfolio, MFS Value Equity
Portfolio, and Xxxxxxx International Growth Portfolio, 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.
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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 and the shareholders of the
Series, the Adviser may enter into a Subadvisory Agreement to engage
one or more subadvisers (the "Subadviser") to the Adviser with respect
to the 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
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In the event the Adviser delegates certain responsibilities hereunder
to a Subadviser, the Adviser shall, among other things:
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, as filed with the Commission under the
1933 Act and the 1940 Act ("Registration Statement");
2. 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;
3. establish and maintain regular communications with
the Subadviser to share information it obtains with
the Subadviser concerning the effect of developments
and data on the investment program maintained by the
Subadviser; and
4. 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 and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Series 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
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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:
Rate Assets
---- ------
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
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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 the Subadviser, as compensation for acting as Subadviser to the Series,
the fees specified in the 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;
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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,
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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 ,
1997, and shall remain in force and effect through , 1998, 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:
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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 ___________, 1997.
Aetna Life Insurance and Annuity Company
By:
----------------------------------
Attest: Name:
------------------------------ ----------------------------------
Assistant Corporate Secretary
Title:
----------------------------------
Portfolio Partners, Inc.
on behalf of its series,
MFS Emerging Equities Portfolio,
MFS Research Growth Portfolio,
MFS Value Equity Portfolio,
Xxxxxxx International Growth Portfolio
X. Xxxx Price Growth Equity Portfolio
By:
Attest: --------------------------
------------------------------ Name:
Secretary --------------------------
Title:
--------------------------
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