EXHIBIT 5(b)
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 X. Xxxx Price Associates, Inc., a Maryland 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 Trustees of the Trust and EQ Financial desire
to retain the Adviser to render investment advisory services to the portfolio
specified in Appendix A hereto ("Portfolio") in the manner and on the terms
hereinafter set forth.
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 Portfolio and to manage the investment and reinvestment of the assets
of the Portfolio, 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 the Portfolio and determine the composition of the assets of the
Portfolio, subject always to the direction and control of the Trustees of the
Trust and the Manager and in accordance with the provisions of 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 the
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
currently effective Prospectus and Statement of Additional
Information ("SAI") as amended from time to time, and (b) in
compliance with the requirements applicable to both regulated
investment companies and segregated asset accounts under Subchapters
M and Section 817(h) of the Internal Revenue Code of 1986, as
amended, and any rules, regulations, written interpretations or other
written guidance promulgated thereunder;
(iii) take whatever steps are 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
currently effective Prospectus and SAI, 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, including attendance at Board
of Trustees Meetings, as reasonably requested, to present such
information and reports to the Board;
(v) provide limited pricing assistance regarding the fair
value of certain portfolio securities for which market quotations are
not readily available; and
(vi) establish appropriate interfaces with the Trust's
administrator and Manager as shall be mutually agreeable in order to
provide such administrator and Manager with all necessary information
reasonably requested by the administrator and Manager.
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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 necessary for the
efficient conduct of the investment affairs of the Portfolio (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 Trust's currently effective Prospectus and
SAI, as amended from time to time. In placing orders for the purchase or sale
of investments for the Portfolio, in the name of the Portfolio or its
nominees, the Adviser shall use its best efforts to obtain for the Portfolio
the 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 the Portfolio to pay a broker or
dealer that provides brokerage or research services to the Manager and the
Adviser 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 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, 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 the Portfolio and to its other clients.
E. The Adviser will maintain all accounts, books and records with
respect to the
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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.
3. COMPENSATION OF ADVISER
The Manager will pay the Adviser, with respect to the 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 the Portfolio's assets and accrued
on a daily basis.
4. LIABILITY OF ADVISER
Neither the Adviser nor any of its directors, officers, or employees
shall be liable to the Manager for any loss suffered by the Manager resulting
from its acts or omissions as Adviser to the Portfolio, except for losses 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 or employees. The
Adviser, its directors, officers or employees shall not be liable to the
Manager or the Trust for any loss 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 the 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 so long as the services provided hereunder
by the Adviser are not impaired. 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.
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.
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7. REGULATION
The Adviser shall submit to all regulatory and administrative bodies
having jurisdiction over the services provided pursuant to this Agreement any
information, reports, or other material which any such body by reason of this
Agreement may request or require pursuant to applicable laws and regulations.
8. RECORDS
The records relating to the services provided under this Agreement
shall be the property of the Trust and shall be under its control; however,
the Trust shall furnish to the Adviser such records and permit it 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 obtained in connection with its duties
hereunder and 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 the 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.
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
the 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
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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 chief executive officer or controlling stockholder of the
Adviser or the portfolio manager of the Portfolio changes or there is
otherwise an actual change in control or management of the Adviser.
12. PROVISION OF CERTAIN INFORMATION BY MANAGER
The Manager will promptly provide to the Adviser a copy of the
Trust's Agreement and Declaration of Trust and By-Laws, the Portfolio's
currently effective Prospectus and Statement of Additional Information, and
any written policies and procedures approved by the Board of Trustees that
apply to the Portfolio, as well as any amendments to any of the foregoing.
13. USE OF ADVISER'S NAME
It is understood that the name "X. Xxxx Price Associates, Inc." and
"Xxxx Xxxxx-Xxxxxxx International, Inc." or any derivative thereof or logo
associated with such names is the valuable property of the Adviser and its
affiliates and that the Trust and/or the Portfolio have the right to use such
name (or derivative or logo) in offering materials of the Trust with the
approval of the Adviser and for so long as the Adviser is a portfolio manager
to the Trust and/or the Portfolio. Upon termination of this Agreement, the
Trust shall forthwith cease to use such name (or derivative or logo).
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14. 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 Securities and Exchange Commission ("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 the
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 the Portfolio if a majority of the
outstanding voting securities of the 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.
15. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to the Portfolio listed in Appendix A.
16. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
17. 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.
18. 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.
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19. 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
X. XXXX PRICE ASSOCIATES, INC.
By: /s/
---------------------------------
Name:
Title:
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APPENDIX A
The Manager shall pay the Adviser, at the end of each calendar month,
compensation computed daily at an annual rate equal to the following:
Portfolio Advisory Fee
--------- ------------
X. Xxxx Price Equity Income Portfolio .40% of the Portfolio's average
daily net assets.
Dated: April __, 1997
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