SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and among AETNA LIFE INSURANCE AND ANNUITY COMPANY, a
Connecticut corporation (the "Adviser"), AETNA SERIES FUND, INC., a Maryland
Corporation, (the "Fund"), on behalf of its series, AETNA INDEX PLUS FUND (the
"Series") 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 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
otherwise expressly authorized, it has no authority to act for or represent the
Series in any way.
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 cash, securities and instruments or
other property 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, 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 Series, 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
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 Series appointed by the Board, 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;
and
6. provide such financial support, administrative and other
services, such as preparation of financial data,
determination of the Series' 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
The Adviser shall retain responsibility for oversight of all activities
of the Subadviser and for monitoring its activities on behalf of 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. 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 Series
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 Series;
7. 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.
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 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, 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 Series 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 Series in carrying out its
obligations hereunder.
C. Representations and Warranties of the Series and the Fund
The Fund, on behalf of the Series, 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 Series 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 Series 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
Series 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 Series 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 Series who provide payment for
expenses of the Series. 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 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, 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 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 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 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 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 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
A. Payment Schedule
The Adviser shall pay the Subadviser, as compensation for services
rendered hereunder, from its own assets, an annual fee, payable
monthly, based on the average daily net assets in the Series as
follows:
Rate Assets
---- ------
0.35% On first $250 MM
0.345% On next $250 MM
0.3275% On next $250 MM
0.31% On next $250 MM
0.30% On next $1 B
0.2775% Over $2 B
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 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.
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
Series if the expenses borne by the Series exceed the expense
limitations applicable to the Series imposed by the securities laws or
regulations of any jurisdiction in which the Series shares are
qualified for sale. Accordingly, the Subadviser agrees that, if, for
any fiscal year, the total of all ordinary business expenses of the
Series, 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 Series 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 Series 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
Series hereunder, including, but not 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 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 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 24,
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
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.
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 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 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.
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:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax number: 860/▇▇▇-▇▇▇▇
Attn: Secretary
If to the Subadviser:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Fax number: 860/▇▇▇-▇▇▇▇
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 ▇▇▇▇
The service ▇▇▇▇ of the Fund and the Series 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 Series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers as of the 25th day of September, 1996.
Aetna Life Insurance and Annuity Company
Attest:
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Title: Corporate Secretary
---------------------------------
Assistant Secretary
Aeltus Investment Management, Inc.
Attest:
By:/s/▇▇▇▇ ▇. ▇▇▇
---------------------------------
/s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Name:▇▇▇▇ ▇. ▇▇▇
--------------------------------- Title:President
Vice President
Aetna Series Fund, Inc.
on behalf of its series,
Aetna Index Plus Fund
Attest:
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name:▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------- Title:President
Secretary