INVESTMENT ADVISORY AGREEMENT
BETWEEN
MUTUAL FUND VARIABLE ANNUITY TRUST
AND
THE CHASE MANHATTAN BANK, N.A.
AND ITS SUCCESSOR
AGREEMENT made as of the 6th day of May, 1996, by and between Mutual
Fund Variable Annuity Trust, a Massachusetts business trust which may issue one
or more series of shares (hereinafter the "Trust"), and The Chase Manhattan
Bank, N.A., a national banking association, and its successor, The Chase
Manhattan Bank, a New York state chartered bank (hereinafter the "Adviser").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act")
and serves as the underlying investment for certain variable annuity contracts
issued by insurance company separate accounts; and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services in connection with the series of the Trust listed on Schedule
A (each, a "Portfolio" and collectively, the "Portfolios"), and the Adviser
represents that it is willing and possesses legal authority to so furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Structure of Agreement. The Trust is entering into this Agreement on behalf
of the Portfolios severally and not jointly. The responsibilities and benefits
set forth in this Agreement shall refer to each Portfolio severally and not
jointly. No individual Portfolio shall have any responsibility for any
obligation with respect to any other Portfolio arising out of this Agreement.
Without otherwise limiting the generality of the foregoing,
(a) any breach of any term of this Agreement regarding the Trust
with respect to any one Portfolio shall not create a right or
obligation with respect to any other Portfolio;
(b) under no circumstances shall the Adviser have the right to set
off claims relating to a Portfolio by applying property of any
other Portfolio; and
(c) the business and contractual relationships created by this
Agreement, the consideration for entering into this Agreement,
and the consequences of such relationships and consideration
relate solely to the Trust and the particular Portfolio to
which such relationship and consideration applies.
2. Delivery of Documents. The Trust has delivered to the Adviser copies
of each of the following documents and will deliver to it all future amendments
and supplements thereto, if any:
(a) The Trust's Declaration of Trust;
(b) The By-Laws of the Trust;
(c) Resolutions of the Board of Trustees of the Trust authorizing
the execution and delivery of this Agreement;
(d) The most recent Registration Statement under the Securities
Act of 1933, as amended (the "1933 Act"), and the Investment
Company Act of 1940, as amended (the "1940 Act"), on Form N-1A
as filed with the Securities and Exchange Commission (the
"Commission") (the "Registration Statement");
(e) Notification of Registration of the Trust under the 1940 Act
on Form N-8A as filed with the Commission; and
(f) Prospectuses and Statements of Additional Information of the
Portfolios (collectively, the "Prospectuses").
3. Appointment.
(a) General. The Trust hereby appoints the Adviser to act as
investment adviser to the Portfolios for the period and on the
terms set forth in this Agreement. The Adviser accepts such
appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
(b) Employees of Affiliates. The Adviser may, in its discretion,
provide such services through its own employees or the
employees of one or more affiliated companies that are
qualified to act as an investment adviser to the Trust under
applicable laws and are under the control of The Chase
Manhattan Corporation, the parent of the Adviser; provided
that (i) all persons, when providing services hereunder, are
functioning as part of an organized group of persons, and (ii)
such organized group of persons is managed at all times by
authorized officers of the Adviser.
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(c) Sub-Advisers. It is understood and agreed that the Adviser may
from time to time employ or associate with such other entities
or persons as the Adviser believes appropriate to assist in
the performance of this Agreement with respect to a particular
Portfolio or Portfolios (each a "Sub-Adviser"), and that any
such Sub- Adviser shall have all of the rights and powers of
the Adviser set forth in this Agreement; provided that a
Portfolio shall not pay any additional compensation for any
Sub-Adviser and the Adviser shall be as fully responsible to
the Trust for the acts and omissions of the Sub-Adviser as it
is for its own acts and omissions; and provided further that
the retention of any Sub-Adviser shall be approved in advance
by (i) the Board of Trustees of the Trust and (ii) the
shareholders of the relevant Portfolio if required under any
applicable provisions of the 1940 Act. The Adviser will
review, monitor and report to the Trust's Board of Trustees
regarding the performance and investment procedures of any
Sub-Adviser. In the event that the services of any Sub-Adviser
are terminated, the Adviser may provide investment advisory
services pursuant to this Agreement to the Portfolio without a
Sub-Adviser and without further shareholder approval, to the
extent consistent with the 1940 Act. A Sub-Adviser may be an
affiliate of the Adviser.
4. Investment Advisory Services.
(a) Management of the Portfolios. The Adviser hereby undertakes to
act as investment adviser to the Portfolios. The Adviser shall
regularly provide investment advice to the Portfolios and
continuously supervise the investment and reinvestment of
cash, securities and other property composing the assets of
the Portfolios and, in furtherance thereof, shall:
(i) supervise all aspects of the operations of the Trust
and each Portfolio;
(ii) obtain and evaluate pertinent economic, statistical
and financial data, as well as other significant
events and developments, which affect the economy
generally, the Portfolios' investment programs, and
the issuers of securities included in the Portfolios'
portfolios and the industries in which they engage,
or which may relate to securities or other
investments which the Adviser may deem desirable for
inclusion in a Portfolio's portfolio;
(iii) determine which issuers and securities shall be
included in the portfolio of each Portfolio;
(iv) furnish a continuous investment program for each
Portfolio;
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(v) in its discretion and without prior consultation with
the Trust, buy, sell, lend and otherwise trade any
stocks, bonds and other securities and investment
instruments on behalf of each Portfolio; and
(vi) take, on behalf of each Portfolio, all actions the
Adviser may deem necessary in order to carry into
effect such investment program and the Adviser's
functions as provided above, including the making of
appropriate periodic reports to the Trust's Board of
Trustees.
(b) Covenants. The Adviser shall carry out its investment advisory
and supervisory responsibilities in a manner consistent with
the investment objectives, policies, and restrictions provided
in: (i) each Portfolio's Prospectus and Statement of
Additional Information as revised and in effect from time to
time; (ii) the Trust's Declaration of Trust, By-Laws or other
governing instruments, as amended from time to time; (iii) the
1940 Act; (iv) the provisions of the Internal Revenue Code of
1986, as amended, including Subchapters L and M, relating to
Variable Contracts and regulated investment companies,
respectively, (v) other applicable laws; and (vi) such other
investment policies, procedures and/or limitations as may be
adopted by the Trust with respect to a Portfolio and provided
to the Adviser in writing. The management of the Portfolios by
the Adviser shall at all times be subject to the review of the
Trust's Board of Trustees.
(c) Books and Records. The Adviser shall keep each Portfolio's
books and records required by applicable law to be maintained
by the Portfolios with respect to advisory services. The
Adviser agrees that all records which it maintains for a
Portfolio are the property of the Portfolio and it will
promptly surrender any of such records to the Portfolio upon
the Portfolio's request. The Adviser further agrees to
preserve for the periods prescribed by the 1940 Act any such
records of the Portfolio required to be preserved by such
Rule.
(d) Reports, Evaluations and other services. The Adviser shall
furnish reports, evaluations, information or analyses to the
Trust with respect to the Portfolios and in connection with
the Adviser's services hereunder as the Trust's Board of
Trustees may request from time to time or as the Adviser may
otherwise deem to be desirable. The Adviser shall make
recommendations to the Trust's Board of Trustees with respect
to Trust policies, and shall carry out such policies as are
adopted by the Board of Trustees. The Adviser shall, subject
to review by the Board of Trustees, furnish such other
services as the Adviser shall from time to time determine to
be necessary or useful to perform its obligations under this
Agreement.
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(e) Purchase and Sale of Securities. The Adviser shall place all
orders for the purchase and sale of portfolio securities for
each Portfolio with brokers or dealers selected by the
Adviser, which may include brokers or dealers affiliated with
the Adviser to the extent permitted by the 1940 Act and the
Trust's policies and procedures applicable to the Portfolios.
The Adviser shall execute portfolio transactions for the
Portfolios in such a manner that the Portfolio's total cost or
proceeds in each transaction is the most favorable to the
Portfolio under the circumstances. The Trust understands that
a substantial majority of each Portfolio's portfolio
transactions will be transacted with primary market makers
acting as principal on a net basis, with no brokerage
commissions being paid by the Portfolio. Such principal
transactions may, however, result in a profit to the market
makers. In certain instances the Adviser may make purchases of
underwritten issues at prices which include underwriting fees.
In assessing the best overall terms available for any
transaction, the Adviser shall consider all factors it deems
relevant, including the breadth of the market in the security,
the price of the security, the financial condition and
execution capability of the broker or dealer, research
services provided to the Adviser, and the reasonableness of
the commission, if any, both for the specific transaction and
on a continuing basis. In no event shall the Adviser be under
any duty to obtain the lowest commission or the best net price
for any Portfolio on any particular transaction, nor shall the
Adviser be under any duty to execute any order in a fashion
either preferential to any Portfolio relative to other
accounts managed by the Adviser or otherwise materially
adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or
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 Adviser, the
Portfolios and/or the other accounts over which the Adviser
exercises investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio
transaction for a Portfolio which is 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 the total commission is reasonable in relation to
the value of the brokerage and research services provided by
such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the
Adviser with respect to accounts over which it exercises
investment discretion. The Adviser shall report to the Board
of Trustees of the Trust regarding overall commissions paid by
the Portfolios and their reasonableness in relation to the
benefits to the Portfolios.
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(g) Aggregation of Securities Transactions. In executing portfolio
transactions for a Portfolio, the Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased
with those of other Portfolios or its other clients if, in the
Adviser's reasonable judgment, such aggregation (i) will
result in an overall economic benefit to the Portfolio, taking
into consideration the advantageous selling or purchase price,
brokerage commission and other expenses, and trading
requirements, and (ii) is not inconsistent with the policies
set forth in the Trust's registration statement and the
Portfolio's Prospectus and Statement of Additional
Information. In such event, the Adviser will allocate the
securities so purchased or sold, and the expenses incurred in
the transaction, in an equitable manner, consistent with its
fiduciary obligations to the Portfolio and such other clients.
5. Expenses. (a) The Adviser shall, at its expense, provide the
Portfolios with office space, furnishings and equipment and personnel required
by it to perform the services to be provided by the Adviser pursuant to this
Agreement. The Adviser also hereby agrees that it will supply to any sub-adviser
or administrator (the "Administrator") of a Portfolio all necessary financial
information in connection with the Administrator's duties under any Agreement
between the Administrator and the Trust.
(b) Except as provided in subparagraph (a), the Trust shall be
responsible for all of the Portfolios' expenses and liabilities, including, but
not limited to, taxes; interest; fees (including fees paid to its trustees who
are not affiliated with the Adviser or any of its affiliates); fees payable to
the Securities and Exchange Commission; state securities qualification fees;
association membership dues; costs of preparing and printing Prospectuses for
regulatory purposes and for distribution to existing shareholders; advisory and
administration fees; charges of the custodian and transfer agent; insurance
premiums; auditing and legal expenses; costs of shareholders' reports and
shareholders' meetings; any extraordinary expenses; and brokerage fees and
commissions, if any, in connection with the purchase or sale of portfolio
securities.
6. Compensation. (a) In consideration of the services to be rendered by
the Adviser under this Agreement, the Trust shall pay the Adviser monthly fees
on the first Business Day (as defined in the Prospectuses) of each month based
upon the average daily net assets of each Portfolio during the preceding month
(as determined on the days and at the time set forth in the Prospectuses for
determining net asset value per share) at the annual rate set forth opposite the
Portfolio's name on Schedule A attached hereto. If the fees payable to the
Adviser pursuant to this paragraph begin to accrue before the end of any month
or if this Agreement terminates before the end of any month, the fees for the
period from such date to the end of such month or from the beginning of such
month to the date of termination, as the case may be, shall be prorated
according to the proportion which such period bears to the full month in which
such effectiveness or termination occurs. For purposes of calculating each such
monthly fee, the value of the Portfolios' net assets shall be computed in the
manner specified in the Prospectuses and the
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Articles for the computation of the value of the Portfolios' net assets in
connection with the determination of the net asset value of shares of the
Portfolios' capital stock.
(b) If the aggregate expenses incurred by, or allocated to, each
Portfolio in any fiscal year shall exceed the lowest expense limitation, if
applicable to such Portfolio, imposed by state securities laws or regulations
thereunder, as such limitations may be raised or lowered from time to time, the
Adviser shall reduce its investment advisory fee, but not below zero, to the
extent of its share of such excess expenses; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (including but not limited to legal
claims and liabilities and litigation costs and any indemnification related
thereto) paid or payable by the Portfolio. Such reduction, if any, shall be
computed and accrued daily, shall be settled on a monthly basis and shall be
based upon the expense limitation applicable to the Portfolio as at the end of
the last business day of the month. Should two or more of such expense
limitations be applicable at the end of the last business day of the month, that
expense limitation which results in the largest reduction in the Adviser's fee
shall be applicable. For the purposes of this paragraph, the Adviser's share of
any excess expenses shall be computed by multiplying such excess expenses by a
fraction, the numerator of which is the amount of the investment advisory fee
which would otherwise be payable to the Adviser for such fiscal year were it not
for this subsection 6(b) and the denominator of which is the sum of all
investment advisory and administrative fees which would otherwise be payable by
the Portfolio were it not for the expense limitation provisions of any
investment advisory or administrative agreement to which the Portfolio is a
party.
(c) In consideration of the Adviser's undertaking to render the
services described in this Agreement, the Trust agrees that the Adviser shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any act or omission or loss suffered by the Trust in connection with the
performance of this Agreement, provided that nothing in this Agreement shall be
deemed to protect or purport to protect the Investment Adviser against any
liability to the Trust or its stockholders to which the Adviser would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of the Adviser's duties under this Agreement or by reason of the
Adviser's reckless disregard of its obligations and duties hereunder or breach
of fiduciary duty with respect to receipt of compensation.
7. Non-Exclusive Services. Except to the extent necessary to perform
the Investment Adviser's obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the right of the Adviser, or any affiliate of the
Adviser, including any employee of the Adviser, to engage in any other business
or to devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.
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8. Effective Date; Modifications; Termination. This Agreement shall
become effective on the date hereof (the "Effective Date"), provided that it
shall have been approved by a majority of the outstanding voting securities of
each Portfolio, in accordance with the requirements of the 1940 Act, or such
later date as may be agreed by the parties following such shareholder approval.
(a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph, this Agreement shall continue in force for two years from the
Effective Date and shall continue in effect from year to year thereafter, but
only so long as the continuance after such date shall be specifically approved
at least annually by vote of the Trustees of the Trust or by vote of a majority
of the outstanding voting securities of each Portfolio.
(b) This Agreement may be modified by mutual consent, such consent on
the part of the Trust to be authorized by vote of a majority of the outstanding
voting securities of each Portfolio.
(c) In addition to the requirements of sub-paragraphs (a) and (b) of
this paragraph, the terms of any continuance or modification of this Agreement
must have been approved by the vote of a majority of those Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days prior
written notice to the other, terminate this Agreement, without payment of any
penalty, by action of its Trustees or Board of Trustees, as the case may be, or
by action of its authorized officers or, with respect to a Portfolio, by vote of
a majority of the outstanding voting securities of that Portfolio. This
Agreement may remain in effect with respect to a Portfolio even if it has been
terminated in accordance with this paragraph with respect to the other
Portfolios. This Agreement shall terminate automatically in the event of its
assignment as that term is defined under the 1940 Act.
9. Board of Trustees Meetings. The Trust agrees that notice of each
meeting of the Board of Trustees of the Trust will be sent to the Adviser and
that the Trust will make appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the Adviser may designate.
10. Governing Law. This Agreement shall be governed by the laws of the
State of New York.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date written above.
THE CHASE MANHATTAN BANK, N.A. MUTUAL FUND VARIABLE
ANNUITY TRUST
By: _________________________ By:_______________________
Name: Name:
Title: Title:
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Schedule A
Portfolio: Fee:
International Equity Portfolio 0.80%
Capital Growth Portfolio 0.60
Growth and Income Portfolio 0.60
Asset Allocation Portfolio 0.55
U.S. Treasury Income Portfolio 0.50
Money Market Portfolio 0.25
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