EXHIBIT 5(e)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated as of April __, 1997, by and between EQ Financial
Consultants, Inc., a Delaware corporation ("EQ Financial" or the "Manager"),
and Massachusetts Financial Services Company, a Delaware corporation (the
"Adviser").
WHEREAS, EQ Advisors Trust (the "Trust") is registered as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act");
WHEREAS, the Trust's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies and
variable annuity contracts (the "Policies") under which income, gains, and
losses, whether or not realized, from assets allocated to such accounts are,
in accordance with the Policies, credited to or charged against such accounts
without regard to other income, gains, or losses of such insurance companies;
WHEREAS, the Trust is and will continue to be a series fund having
two or more investment portfolios, each with its own investment objectives,
policies and restrictions;
WHEREAS, EQ Financial is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended ("Advisers Act"), and is the
investment manager to the Trust;
WHEREAS, the Adviser is registered as an investment adviser under the
Advisers Act;
WHEREAS, the Investment Company Act prohibits any person from acting
as an investment adviser to a registered investment company except pursuant to
a written contract (the "Agreement"); and
WHEREAS, the Board of Directors of the Trust and EQ Financial desire
to retain the Adviser to render investment advisory services to the portfolios
specified from time to time in Appendix A hereto (each a "Portfolio" and
collectively the "Portfolios") in the manner and on the terms hereinafter set
forth (each reference to a Portfolio shall be deemed to be a reference to each
Portfolio).
NOW, THEREFORE, EQ Financial and Adviser agree as follows:
1. APPOINTMENT OF ADVISER
The Manager hereby appoints the Adviser to act as investment adviser
for the Portfolios and to manage the investment and reinvestment of the assets
of the Portfolios, subject to the supervision of the Trustees of the Trust and
the terms and conditions of this Agreement. The Adviser will be an independent
contractor and will have no authority to act for or represent the Trust or
Manager in any way or otherwise be deemed an agent of the Trust or Manager
except as expressly authorized in this Agreement or another writing by the
Trust, Manager and the Adviser.
2. SERVICES TO BE RENDERED BY THE ADVISER TO THE TRUST
A. The Adviser will manage the investment and reinvestment of the
assets of each Portfolio and determine the composition of the assets of each
Portfolio, subject always to the direction and control of the Trustees of the
Trust and the Manager and in accordance with the provisions of each
Portfolio's currently effective prospectus and statement of additional
information (collectively, "Prospectus") contained in the Trust's registration
statement, as amended from time to time. In fulfilling its obligations to
manage the investment and reinvestment of the assets of each Portfolio, the
Adviser will:
(i) obtain and evaluate pertinent economic, statistical,
financial, and other information affecting the economy generally and
individual companies or industries, the securities of which are
included in the Portfolio or are under consideration for inclusion in
the Portfolio;
(ii) formulate and implement a continuous investment program
for the Portfolio (a) consistent with the investment objectives,
policies and restrictions of the Portfolio as stated in the Trust's
Agreement and Declaration of Trust, By-Laws, and such Portfolio's
Prospectus as amended from time to time, and (b) in compliance with
the requirements applicable to registered investment companies under
applicable laws and those requirements applicable to both regulated
investment companies and segregated asset accounts under Subchapters
M and L of the Internal Revenue Code of 1986, as amended ("Code");
(iii) take whatever steps that are reasonably necessary to
implement the investment program for the Portfolio by the purchase
and sale of securities and other investments authorized under the
Trust's Agreement and Declaration of Trust, By-Laws, and such
Portfolio's Prospectus, including the placing of orders for such
purchases and sales;
(iv) regularly report to the Trustees of the Trust and the
Manager with respect to the implementation of the investment program
and, in addition, provide such statistical information and special
reports concerning the Portfolio and/or important developments
materially affecting the investments held, or contemplated to be
purchased, by the Portfolio, as may reasonably be requested by the
Manager or the Trustees of the Trust and agreed to by the Adviser,
including attendance at Board of Trustees Meetings, as reasonably
requested, to present such information and reports to the Board;
(v) provide reasonable assistance to the Portfolio's pricing
agent in the pricing of internally priced securities (i.e.,
securities for which market quotations are not readily available)
with respect to the Portfolio;
(vi) provide any and all information, records and supporting
documentation
2
about accounts the Adviser manages that have investment objectives,
policies, and strategies substantially similar to those employed by
the Adviser in managing the Portfolio which may be reasonably
necessary, under applicable laws, to allow the Portfolio or its agent
to present information concerning the Adviser's prior performance in
the Prospectus and the SAI of the Portfolio and any permissible
reports and materials prepared by the Portfolio or its agent;
(vii) establish appropriate interfaces with the Trust's
administrator and Manager in order to provide such administrator and
Manager with information as reasonably requested by the administrator
and Manager; and
(viii) execute account documentation, agreements, contracts
and other documents as the Adviser shall be requested by brokers,
dealers, counterparties and other persons to execute in connection
with its management of the assets of the Portfolio, provided that the
Adviser receives the express agreement and consent of the Manager
and/or the Trust's Board of Trustees to execute such documentation,
agreements, contracts and other documents. In such respect, and only
for this limited purpose, the Adviser shall act as the Manager's
and/or the Trust's agent and attorney-in-fact.
B. The Adviser, at its expense, will furnish: (i) all necessary
investment and management facilities and investment personnel, including
salaries, expenses and fees of any personnel required for it to faithfully
perform its duties under this Agreement; and (ii) administrative facilities,
including bookkeeping, clerical personnel and equipment required for it to
faithfully and fully perform its duties and obligations under this Agreement
(excluding that necessary for the determination of net asset value and
shareholder accounting services).
C. The Adviser will select brokers and dealers to effect all
portfolio transactions subject to the conditions set forth herein. The Adviser
will place all necessary orders with brokers, dealers, or issuers, and will
negotiate brokerage commissions if applicable. The Adviser is directed at all
times to seek to execute brokerage transactions for the Portfolio in
accordance with such policies or practices as may be established by the Board
of Trustees and described in the currently effective Prospectus as amended
from time to time. In placing orders for the purchase or sale of investments
for a Portfolio, in the name of the Portfolio or its nominees, the Adviser
shall use its best efforts to obtain for the Portfolio the most favorable
price and best execution available, considering all of the circumstances, and
shall maintain records adequate to demonstrate compliance with this
requirement.
Subject to the appropriate policies and procedures approved by the
Board of Trustees, the Adviser may, to the extent authorized by Section 28(e)
of the Securities Exchange Act of 1934, cause a Portfolio to pay a broker or
dealer that provides brokerage or research services to the Manager, the
Adviser, and the Portfolio an amount of commission for effecting a portfolio
transaction 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
3
is reasonable in relationship to the value of such brokerage or research
services provided viewed in terms of that particular transaction or the
Adviser's overall responsibilities to the Portfolio or its other advisory
clients. To the extent authorized by said Section 28(e) and the Trust's Board
of Trustees, the Adviser shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely by reason
of such action. In addition, subject to seeking the most favorable price and
best execution available and in compliance with the NASD's Conduct Rules, the
Adviser may also consider sales of shares of the Trust as a factor in the
selection of brokers and dealers.
D. On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other clients
of the Adviser, the Adviser to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate the
securities to be purchased or sold to attempt to obtain a more favorable price
or lower brokerage commissions and efficient execution. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Adviser in the manner the
Adviser considers to be the most equitable and consistent with its fiduciary
obligations to each Portfolio and to its other clients.
E. With respect to the provision of services by the Adviser
hereunder, the Adviser will maintain all accounts, books and records with
respect to each Portfolio as are required of an investment adviser of a
registered investment company pursuant to the Investment Company Act and
Advisers Act and the rules thereunder.
F. The Adviser and the Manager acknowledge that the Adviser is not
the compliance agent for each Portfolio or for the Manager, and does not have
access to all of each Portfolio's books and records necessary to perform
certain compliance testing. To the extent that the Adviser has agreed to
perform the services specified in this Section 2 in accordance with the
Trust's registration statement, the Trust's Agreement and Declaration of Trust
and By-Laws, the Portfolio's Prospectus and any policies adopted by the
Trust's Board of Trustees applicable to the Portfolio (collectively, the
"Charter Requirements"), and in accordance with applicable law (including
Sub-chapters M and L of the Code, the Investment Company Act and the Advisers
Act (Applicable Law")), the Adviser shall perform such services based upon its
books and records with respect to each Portfolio (as specified in Section 2.E.
hereof), which comprise a portion of each Portfolio's books and records, and
upon information and written instructions received from the Trust, the Manager
or the Trust's administrator, and shall not be held responsible under this
Agreement so long as it performs such services in accordance with this
Agreement, the Charter Requirements and Applicable Law based upon such books
and records and such information and instructions provided by the Trust, the
Manager or the Trust's administrator. The Manager shall promptly provide the
Adviser with copies of the Trust's registration statement, the Trust's
Agreement and Declaration of Trust and By-Laws, the Portfolio's currently
effective Prospectus and any written policies or procedures adopted by the
Trust's Board of Trustees applicable to the Portfolio and any amendments or
revisions thereto.
4
G. Unless the Manager gives the Adviser written instructions to the
contrary, the Adviser shall use its good faith judgment in a manner which it
reasonably believes best serves the interests of the Portfolio's shareholders
to vote or abstain from voting all proxies solicited by or with respect to the
issuers of securities in which assets of the Portfolio may be invested.
3. COMPENSATION OF ADVISER
The Manager will pay the Adviser, with respect to each Portfolio, the
compensation specified in Appendix A to this Agreement. Payments shall be made
to the Adviser on the first day of each month; however, this advisory fee will
be calculated on the daily average value of each Portfolio's assets and
accrued on a daily basis. Compensation for any partial period shall be pro
rated based on the services provided during such period.
4. LIABILITY OF ADVISER
Neither the Adviser nor any of its directors, officers, employees or
agents shall be liable to the Manager or the Trust for any loss or expense
suffered by the Manager or the Trust resulting from its acts or omissions as
Adviser to a Portfolio, except for losses or expenses to the Manager or the
Trust resulting from willful misconduct, bad faith, or gross negligence in the
performance of, or from reckless disregard of, the duties of the Adviser or
any of its directors, officers, employees or agents. The Adviser, its
directors, officers, employees or agents shall not be liable to the Manager or
the Trust for any loss or expense suffered as a consequence of any action or
inaction of other service providers to the Trust in failing to observe the
instructions of the Adviser, provided such action or inaction of such other
service providers to the Trust is not a result of the willful misconduct, bad
faith or gross negligence in the performance of, or from reckless disregard
of, the duties of the Adviser under this Agreement.
5. NON-EXCLUSIVITY
The services of the Adviser to each Portfolio and the Trust 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. It is understood and agreed that
the directors, officers, and employees of the Adviser 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, trustees, or
employees of any other firm or corporation, including other investment
companies.
5
6. SUPPLEMENTAL ARRANGEMENTS
The Adviser may enter into arrangements with other persons affiliated
with the Adviser for the provision of certain personnel and facilities to the
Adviser to better enable it to fulfill its duties and obligations under this
Agreement.
7. REGULATION
The Manager and Adviser shall cooperate with each other in providing
information, reports and other materials to regulatory and administrative
bodies having proper jurisdiction over the Portfolios, the Manager and the
Adviser in connection with the services provided pursuant to this Agreement;
provided, however, that this agreement to cooperate does not apply to the
provision of information, reports and other materials which either the Manager
or the Adviser reasonably believes the regulatory or administrative body does
not have the authority to request or is the privileged or confidential
information of the Manager or Adviser.
8. RECORDS
The records relating to the services provided under this Agreement
required to be established and maintained by an investment adviser under
applicable law or those required by the Manager or the Board of Trustees for
the Adviser to prepare and provide shall be the property of the Trust and
shall be under its control; however, the Trust shall permit the Adviser to
retain such records (either in original or in duplicate form) as it shall
reasonably require in order to carry out its duties. In the event of the
termination of this Agreement, such records shall promptly be returned to the
Trust by the Adviser free from any claim or retention of rights therein. The
Adviser shall keep confidential any information concerning the Manager or any
of its affiliates (and their officers, directors or employees) that it obtains
in connection with the Adviser's duties hereunder and shall disclose such
information only if the Trust has authorized such disclosure or if such
disclosure is expressly required or requested by applicable federal or state
regulatory authorities.
9. DURATION OF AGREEMENT
This Agreement shall become effective with respect to each Portfolio
on the later of the date of its execution or the date of the commencement of
operations of the Portfolio. This Agreement will continue in effect for a
period more than two years from the date of its execution only so long as such
continuance is specifically approved at least annually by the Board of
Trustees, provided that in such event such continuance shall also be approved
by the vote of a majority of the Trustees who are not "interested persons" (as
defined in the Investment Company Act) ("Independent Trustees") of any party
to this Agreement cast in person at a meeting called for the purpose of voting
on such approval.
6
10. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Trustees, including a majority of the Independent
Trustees, by the vote of a majority of the outstanding voting securities of a
Portfolio, on sixty (60) days' written notice to the Manager and the Adviser,
or by the Manager or Adviser on sixty (60) days' written notice to the Trust
and the other party. This Agreement will automatically terminate, without the
payment of any penalty, in the event of its assignment (as defined in the
Investment Company Act) or in the event the Investment Management Agreement
between the Manager and the Trust is assigned or terminates for any other
reason. This Agreement will also terminate upon written notice to the other
party that the other party is in material breach of this Agreement, unless the
other party in material breach of this Agreement cures such breach to the
reasonable satisfaction of the party alleging the breach within thirty (30)
days after written notice.
11. PROVISION OF CERTAIN INFORMATION BY ADVISER
The Adviser will promptly notify the Manager in writing of the
occurrence of any of the following events:
A. the Adviser fails to be registered as an investment adviser under
the Advisers Act or under the laws of any jurisdiction in which the Adviser is
required to be registered as an investment adviser in order to perform its
obligations under this Agreement;
B. the Adviser is served or otherwise receives notice of any action,
suit, proceeding, inquiry, or investigation, at law or in equity, before or by
any court, public board, or body, involving the affairs of the Trust; and/or
C. the controlling stockholder of the Adviser or the portfolio
manager of a Portfolio changes or there is otherwise an actual change in
control or management of the Adviser.
12. PROVISION OF CERTAIN INFORMATION BY THE MANAGER
The Manager will promptly notify the Adviser in writing of the
occurrence of any of the following events.
A. the Manager fails to be registered as an investment adviser under
the Advisers Act or under the laws of any jurisdiction in which the Manager is
required to be registered as an investment adviser in order to perform its
obligations under this Agreement;
7
B. the Manager is served or otherwise receives notice of any action,
suit, proceeding, inquiry, or investigation, at law or in equity, before or by
any court, public board, or body, involving the affairs of the Trust; and/or
C. the controlling stockholder of the Manager or there is otherwise
an actual change in control or management of the Manager.
13. REPRESENTATIONS AND WARRANTIES
A. Manager represents and warrants that:
(i) The Manager is registered as an investment adviser
under the Advisers Act;
(ii) The Manager is a corporation duly organized and
validly existing under the laws of the State of
Delaware with the power to own and possess its assets
and carry on its business as it is now being
conducted;
(iii) The execution, delivery and performance by the
Manager of this Agreement are within the Manager's
powers and have been duly authorized by all necessary
action on the part of its directors, and no action by
or in respect of, or filing with, any governmental
body, agency or official is required on the part of
the Manager for the execution, delivery and
performance of this Agreement by the parties hereto,
and the execution, delivery and performance of this
Agreement by the parties hereto does not contravene
or constitute a default under: (a) any provision of
applicable law, rule or regulation; (b) the Manager's
Articles of Incorporation or By-Laws; or (c) any
agreement, judgment, injunction, order, decree or
other instruments binding upon the Manager;
(iv) This Agreement is a valid and binding Agreement of
the Manager;
(v) The Manager has provided the Adviser with a copy of
its Form ADV as most recently filed with the
Securities and Exchange Commission ("SEC") and the
Manager further represents that it will, within a
reasonable time after filing any amendment to its
Form ADV with the SEC furnish a copy of such
amendments to the Adviser. The information contained
in the Manager's Form ADV is accurate and complete in
all material respects and does not omit to state any
material fact necessary in order to make the
statements made, in light of the circumstances under
this they were made, not misleading; and
(vi) The Manager acknowledges that it received a copy of
the Adviser's current
8
Form ADV, at least 48 hours prior to the execution
of this Agreement and has delivered a copy of the
same to the Trust.
B. Advisers represents and warrants that:
(i) The Adviser is registered as an investment adviser
under the Advisers Act;
(ii) The Adviser is a corporation duly organized and
validly existing under the laws of the State of
Delaware with the power to own and possess its assets
and carry on its business as it is now being
conducted;
(iii) The execution, delivery and performance by the
Adviser of this Agreement are within the Adviser's
powers and have been duly authorized by all necessary
action on the part of its directors, and no action by
or in respect of, or filing with, any governmental
body, agency or official is required on the part of
the Adviser for the execution, delivery and
performance of this Agreement by the parties hereto,
and the execution, delivery and performance of this
Agreement by the parties hereto does not contravene
or constitute a default under: (a) any provision of
applicable law, rule or regulation; (b) the Adviser's
Articles of Incorporation or By-Laws; or (c) any
agreement, judgment, injunction, order, decree or
other instruments binding upon the Adviser;
(iv) This Agreement is a valid and binding Agreement of
the Adviser;
(v) The Adviser has provided the Manager with a copy of
its Form ADV as most recently filed with the SEC and
will, promptly after filing any amendment to its Form
ADV with the SEC, furnish a copy of such amendments
to the Manager. The information contained in the
Adviser's Form ADV is accurate and complete in all
material respects and does not omit to state any
material fact necessary in order to make the
statements made, in light of the circumstances under
which they were made, not misleading; and
(vi) The Adviser acknowledges that it received a copy of
the Manager's current Form ADV, at least 48 hours
prior to the execution of this Agreement and has
delivered a copy of the same to the Trust.
14. USE OF ADVISER'S NAME
The Manager will not use, and will not permit the Trust to use, the
Adviser's name (or that of any affiliate) or any derivative thereof or logo
associated therewith in Trust literature without
9
prior review and approval by the Adviser.
15. AMENDMENTS TO THE AGREEMENT
Except to the extent permitted by the Investment Company Act or the
rules or regulations thereunder or pursuant to any exemptive relief granted by
the SEC, this Agreement may be amended by the parties only if such amendment,
if material, is specifically approved by the vote of a majority of the
outstanding voting securities of a Portfolio (unless such approval is not
required by Section 15 of the Investment Company Act as interpreted by the SEC
or its staff) and by the vote of a majority of the Independent Trustees cast
in person at a meeting called for the purpose of voting on such approval. The
required shareholder approval shall be effective with respect to a Portfolio
if a majority of the outstanding voting securities of each Portfolio vote to
approve the amendment, notwithstanding that the amendment may not have been
approved by a majority of the outstanding voting securities of any other
portfolio affected by the amendment or all the portfolios of the Trust.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to the Portfolio(s) listed in Appendix A.
17. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
18. NOTICES
All notices required to be given pursuant to this Agreement shall be
delivered or mailed to the last known business address of each applicable
party in person or by registered mail or a private mail or delivery service
providing the sender with notice of receipt. The specific person to whom
notice shall be provided for each party will be specified in writing to the
other party. Notice shall be deemed given on the date delivered or mailed in
accordance with this paragraph.
10
19. SEVERABILITY
Should any portion of this Agreement for any reason be held to be
void in law or in equity, the Agreement shall be construed, insofar as is
possible, as if such portion had never been contained herein.
20. GOVERNING LAW
The provisions of this Agreement shall be construed and interpreted
in accordance with the laws of the State of Delaware, or any of the applicable
provisions of the Investment Company Act. To the extent that the laws of the
State of Delaware, or any of the provisions in this Agreement, conflict with
applicable provisions of the Investment Company Act, the latter shall control.
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 Investment Company Act shall be resolved by reference to such
term or provision of the Investment Company 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
SEC validly issued pursuant to the Investment Company Act. Specifically, the
terms "vote of a majority of the outstanding voting securities," "interested
persons," "assignment," and "affiliated persons," as used herein shall have
the meanings assigned to them by Section 2(a) of the Investment Company Act.
In addition, where the effect of a requirement of the Investment Company Act
reflected in any provision of this Agreement is relaxed by a rule, regulation
or order of the SEC, whether of special or of general application, such
provision shall be deemed to incorporate the effect of such rule, regulation
or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their duly authorized officers as of the date first
mentioned above.
EQ FINANCIAL CONSULTANTS, INC.
By: /s/
-----------------------------------
Xxxxx X. Xxxxx
Executive Vice President
MASSACHUSETTS FINANCIAL SERVICE
COMPANY
By: /s/
-----------------------------------
Name:
Title:
11
APPENDIX A
Portfolio Advisory Fee
MFS Emerging Growth .40% of the Portfolio's average daily net assets
Companies Portfolio up to and including $150 million; .375% of the
Portfolio's average daily net assets over $150
million and up to and including $300 million;
and .35% of the Portfolio's average daily
net assets in excess of $300 million.
MFS Research Portfolio .40% of the Portfolio's average daily net assets up
to and including $150 million; .375% of the
Portfolio's average daily net assets over $150
million and up to and including $300 million; and
.35% of the Portfolio's average daily net assets
in excess of $300 million.
Dated: April __, 1997
12
