SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and among AETNA LIFE INSURANCE AND ANNUITY COMPANY, a
Connecticut corporation (the "Adviser"), AETNA VARIABLE PORTFOLIOS, INC., a
Maryland Corporation, (the "Fund"), on behalf of its AETNA VARIABLE CAPITAL
APPRECIATION PORTFOLIO (the "Portfolio") and AELTUS INVESTMENT MANAGEMENT, 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 otherwise expressly
authorized, it has no authority to act for or represent the Portfolio in any
way.
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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 cash, securities and instruments or other
property 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, place trades 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. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy
generally, the Portfolio, securities held by or under
consideration for the Portfolio, or the issuers of those
securities;
4. provide economic research and securities analyses as
requested by the Adviser from time to time, or as the
Adviser considers necessary or advisable in connection with
the Subadviser's performance of its duties hereunder; and
5. give instructions to the custodian and/or sub-custodian of the
Portfolio appointed by the Board, 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;
and
6. provide such financial support, administrative and other
services, such as preparation of financial data, determination
of the Portfolio's net asset value, preparation of financial
and performance reports, as the Adviser from time to time,
deems necessary and appropriate and which the Subadviser is
willing and able to provide.
B. Duties of the Adviser
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The Adviser shall retain responsibility for oversight of all activities of
the Subadviser and for monitoring its activities on behalf of 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");
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. file all periodic reports required to be filed by the
Portfolio with the applicable regulatory authorities;
4. review and deliver to the Board all financial, performance
and other reports prepared by the Subadviser under the
provisions of this Agreement or as requested by the Adviser;
5. establish and maintain regular communications with the
Subadviser to share information it obtains concerning the
effect of developments and data on the investment program
maintained by the Subadviser;
6. maintain contact with and enter into arrangements with the
custodian, transfer agent, auditors, outside counsel, and
other third parties providing services to the Portfolio;
7. 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, and is
registered or licensed as an investment adviser under all of
the laws of all jurisdictions in which its activities require
it to be so registered or licensed. The Subadviser shall
maintain such registration or license 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.
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2. Registration. The Adviser is registered as an investment
adviser with the Commission under the Advisers Act, and is
registered or licensed as an investment adviser under all of
the laws of all jurisdictions in which its activities require
it to be so registered or licensed. 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
Portfolio immediately if any such order is issued or if any
proceeding is commenced that could result in such an order.
4. Authority. The Adviser is authorized to enter into this
Agreement and carry out the terms hereunder.
5. 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 Portfolio and the Fund
The Fund, on behalf of the Portfolio, 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
Portfolio 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
A. Portfolio Trades
The Subadviser shall place all orders for the purchase and sale of
portfolio securities for the Portfolio with brokers or dealers selected by
the Subadviser, which may include brokers or dealers affiliated with the
Subadviser. The Subadviser shall use its best efforts to seek to execute
portfolio transactions at prices that are advantageous to the Portfolio
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giving consideration to the services and research provided 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 Portfolio and/or the other accounts over
which the Subadviser or its affiliates exercise investment discretion. The
Subadviser may also select brokers or dealers to effect transactions for
the Portfolio who provide payment for expenses of the Portfolio. The
Subadviser is authorized to pay a broker or dealer who provides such
brokerage and research services or expenses, a commission for executing a
portfolio transaction for the Portfolio 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,
research and other 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 Subadviser
and its affiliates have with respect to accounts over which they exercise
investment discretion. The Board shall periodically review the commissions
paid by the Portfolio 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 TRUSTEES
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.
VI. 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;
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
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5. any other applicable provisions of state or federal law.
VII. COMPENSATION
A. Payment Schedule
The Adviser shall pay the Subadviser, as compensation for services
rendered hereunder, from its own assets, an annual fee of up to .375% of
the average daily net assets in the Portfolio, 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
Subadvisory fee of up to .375% 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.
B. Reduction
Payment of the Subadviser's compensation for the preceding month shall be
made as promptly as possible, except as provided below. The Subadviser
acknowledges that, pursuant to the Investment Advisory Agreement, the
Adviser has agreed to reduce its fee or reimburse the Portfolio if the
expenses borne by the Portfolio exceed the expense limitations applicable
to the Portfolio imposed by the securities laws or regulations of any
jurisdiction in which the Portfolio shares are qualified for sale.
Accordingly, the Subadviser agrees that, if, for any fiscal year, the
total of all ordinary business expenses of the Portfolio, including all
investment advisory fees but excluding brokerage commissions, distribution
fees, taxes, interest, extraordinary expenses and certain other excludable
expenses, would exceed the most restrictive expense limits imposed by any
statute or regulatory authority of any jurisdiction in which shares of the
Portfolio are offered for sale (unless a waiver is obtained), the
Subadviser shall reduce its advisory fee to the extent necessary to meet
such expense limit, but will not be required to reimburse the Portfolio
for any ordinary business expenses which exceed the amount of its advisory
fee for the fiscal year. The Subadviser shall contribute to the amount of
such reduction by reimbursing the Adviser in proportion to the amounts
which the Adviser and Subadviser would have been entitled to receive for
such year. For the purposes of this paragraph, the term "fiscal year"
shall exclude the portion of the current fiscal year which elapsed prior
to the effective date of this Agreement, but shall include the portion of
the then current fiscal year has elapsed at the date of termination of
this Agreement.
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
Portfolio hereunder, including, but not
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limited to, office space, office equipment, telephone and postage costs. In the
event the Subadviser incurs any expense that is the obligation of the Adviser as
set out in this Agreement, the Adviser shall reimburse the Subadviser for such
expense on presentation of a statement indicating the expenses incurred and the
amount paid by the Subadviser.
IX. 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. It is understood and
agreed that officers or directors of the Subadviser may serve as officers or
directors of the Adviser or officers or directors of the Fund; that officers or
directors of the Adviser or officers or directors of the Fund may serve as
officers or directors of the Subadviser to the extent permitted by law; and that
the officers and 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 September 12,
1996, and shall remain in force and effect through December 31, 1997, 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
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.
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 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
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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 Portfolio and the Adviser 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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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 Portfolio or the Adviser:
000 Xxxxxxxxxx Xxxxxx, XX0X
Xxxxxxxx, Xxxxxxxxxxx 00000
Fax number: 860/000-0000
Attn: Secretary
if to the Subadviser:
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Fax number: 860/000-0000
Attention: President
XIV. 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.
XV. SERVICE XXXX
The service xxxx of the Fund and the Portfolio and the name "Aetna" have been
adopted by the Fund with the permission of Aetna Life and Casualty Company and
their continued use is subject to the right of Aetna Life and Casualty Company
to withdraw this permission in the event the Subadviser or another subsidiary or
affiliated corporation of Aetna Life and Casualty Company should not be the
investment adviser of the Portfolio.
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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 13th day of September, 1996.
Aetna Life Insurance and Annuity Company
Attest: By: /s/Xxxxx X. Xxxxxxx
-------------------
Name:Xxxxx X. Xxxxxxx
-------------------
Title:Vice President
-------------------
/s/XxXxx X. Xxxxxxxxx
---------------------
Assistant Secretary
Aeltus Investment Management, Inc.
Attest: By:/s/Xxxx X. Xxx
-------------------
Name:Xxxx X. Xxx
-------------------
Title:President
-------------------
/s/Xxxxx Xxxxx
--------------
Assistant Secretary
Aetna Variable Portfolios, Inc.
on behalf of its
Aetna Variable Capital Appreciation
Portfolio
Attest: By:/s/Xxxxx X. Xxxxxxx
-------------------
Name:Xxxxx X. Xxxxxxx
-------------------
Title:President
-------------------
/s/Xxxxx X. Xxxxxx
------------------
Secretary
Subadvisory Agreement
Schedule Pursuant to Rule 483(d)(2) under the Securities Act of 1933
Subadvisory Agreements have been entered into by Aetna Variable Portfolios, Inc.
on behalf of the following portfolios in substantially the same form and type as
exhibit 24(b)(5)(b) - Subadvisory Agreement between Aetna Life Insurance and
Annuity Company and Aeltus Investment Management, Inc., included herewith.
Date Portfolio Difference - Compensation
---- --------- -------------------------
9/13/96 Aetna Variable Growth Portfolio .375% of the average daily net assets in
the Portfolio
9/13/96 Aetna Small Company Portfolio .45% of the average daily net assets in
the Portfolio
9/13/96 Aetna Variable Index Plus Portfolio .25% of the average daily net assets in
the Portfolio
