SUBADVISORY AGREEMENT
THIS AGREEMENT is made by AELTUS INVESTMENT MANAGEMENT, INC., a Connecticut
corporation (the "Adviser"), AETNA SERIES FUND, INC., a Maryland Corporation
(the "Fund"), on behalf of its AETNA VALUE OPPORTUNITY FUND (the "Series") 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
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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, 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 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 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 to be purchased, sold or
exchanged by the Series or otherwise represented in
the Series' 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 Series, to the Board;
3. inform the Adviser of the amount of Series 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 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 Series, as filed with the
Commission under the Securities Act of 1933, as
amended (the "1933 Act"), and the 1940 Act
("Registration Statement");
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
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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. 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
Series to the Board;
5. file all periodic reports required to be filed by the
Series 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 Series;
8. give instructions to the custodian and/or
sub-custodian of the Series, concerning deliveries of
securities, transfers of currencies and payments of
cash for the Series, as required to carry out the
investment activities of the Series as contemplated
by this Agreement;
9. provide such administrative and other services, such
as preparation of financial data, determination of
the Series' 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 Series, 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 Series,
including monitoring the corporate records of the
Series, maintaining contact with the Board, preparing
for, organizing and attending meetings of the Board
and the Series' 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 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.
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 Series 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 Series 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 Series
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 Series 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 Series, 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 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.
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 Series, according to the following
schedule:
Net Assets in Series Annual Fee
-------------------- ----------
$0 - $250 MM 0.15% of the Series' average daily net assets
+ $250 MM 0.10% of the Series' 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 Series. 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
Series 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 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; 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
Series without obtaining the Adviser's prior written approval. It is understood
that officers or directors of the Subadviser are
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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
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.
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 Series; or
2. by the Adviser, the Fund, on behalf of the Series, 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 Series and the Subadviser 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.
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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 Series 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 Series shares or that include the name of the
Series 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/ Xxxxxxx X. Xxxxxxx
By ------------------------------
/s/ Xxxxxxxxx Xxxxx Name Xxxxxxx X. Xxxxxxx
--------------------- Title Managing Director
Name Xxxxxxxxx Xxxxx
Title Assistant Secretary
Xxxxxxx, Xxxxxx & Xxxxxxx, Inc.
/s/ X. X. Xxxxxxx
Attest: By -------------------------------
Name Xxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx Title President
-----------------------
Name Xxxxxx X. Xxxxxxxxx Aetna Series Fund, Inc.
Title Operations Officer on behalf of
Aetna Value Opportunity Fund
/s/ Xxxxxxxxx X. XxXxxxx
Attest By -------------------------------
Name Xxxxxxxxx X. XxXxxxx
/s/ Xxx X. Doberman Title Vice President
--------------------
Name Xxx X. Doberman
Title Secretary
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