EXHIBIT 5(h)
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 Xxxxxxx Xxxxx Asset Management, L.P., a Delaware limited partnership (the
"Adviser").
WHEREAS, EQ Advisors Trust (the "Trust") is registered as an open-end
management 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 each portfolio
specified in Schedule A hereto (each "Portfolio") in the manner and on the
terms hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and covenants
hereinafter contained, EQ Financial and Adviser agree as follows:
1. APPOINTMENT OF ADVISER
The Manager hereby appoints the Adviser to act as investment adviser
to the Portfolio and to furnish the investment advisory services described
below, 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) furnish investment research and advice and formulate and
implement a continuous investment program for each Portfolio (a)
consistent with the investment objectives, policies and restrictions
of each 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 provided to
the Adviser pursuant to Section 2.B of this Agreement, and (b) in
compliance with the 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;
(ii) take whatever steps are necessary to implement the
investment program for each Portfolio by the purchase, sale and
exchange of securities and other investments, including cash,
authorized under the Trust's Agreement and Declaration of Trust,
By-Laws, and such Portfolio's currently effective Prospectus and SAI
and provided to the Adviser pursuant to Section 2.B of this
Agreement, including the placing of orders for such purchases, sales
and exchanges for the account of the Trust on behalf of each
Portfolio with such brokers and dealers as the Manager or the Adviser
shall have selected; to this end, the Adviser is expressly authorized
as the agent of the Trust on behalf of each Portfolio to give
instructions to the Custodian of the Trust as to deliveries of
securities and payments of cash for the account of the Trust on
behalf of such Portfolio;
(iii) regularly report to the Trustees of the Trust and the
Manager with respect to the implementation of the investment program
and, in addition, will provide such statistical information and
special reports concerning each Portfolio and/or important
developments materially affecting the investments held, or
contemplated to be purchased, by each Portfolio, as may reasonably be
requested by the Manager or the Trustees of the Trust, and will
attend Board of Trustees' Meetings, as reasonably requested, to
present such information and reports to the Board;
(iv) provide determinations of the fair value of certain
portfolio securities when market quotations are not readily available
for the purpose of calculating the Portfolio's net asset value in
accordance with procedures and methods established by the Trustees of
the Trust; and
(v) establish appropriate interfaces with the Trust's
administrator and Manager in order to provide such administrator and
Manager with all information reasonably requested by the
administrator and Manager necessary to the provision of the Adviser's
services hereunder to the Portfolio.
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B. To facilitate the Adviser's fulfillment of its obligations under
this Agreement, the Manager will undertake the following:
(i) the Manager agrees promptly to provide the Adviser with
all amendments or supplements to each Portfolio's Prospectus, SAI,
the Trust's registration statement on Form N-1A ("Registration
Statement"), the Trust's Agreement and Declaration of Trust, and
ByLaws;
(ii) the Manager agrees, on an ongoing basis, to notify the
Adviser expressly in writing of each change in the fundamental and
nonfundamental investment policies of each Portfolio;
(iii) the Manager agrees to provide or cause to be provided
to the Adviser with such assistance as may be reasonably requested by
the Adviser in connection with its activities pertaining to each
Portfolio under this Agreement, including, without limitation,
information as to the general condition of the Portfolio's affairs;
and
(iv) the Manager will promptly provide the Adviser with any
guidelines and procedures applicable to the Adviser or each Portfolio
adopted from time to time by the Board of Trustees of the Trust and
agrees to promptly provide the Adviser copies of all amendments
thereto.
C. The Adviser, at its expense, will furnish: all necessary
investment and management facilities, overhead expenses and investment
personnel, including salaries, expenses and fees of any personnel required for
it to faithfully perform its duties under this Agreement.
D. 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. The Adviser
is directed at all times to seek to execute brokerage transactions for each
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 and provided to the Adviser
pursuant to Section 2.B of this Agreement, including in particular policies
and procedures in accordance with Section 17(e) and Rule 17e-1 under the
Investment Company Act. In placing orders for the purchase or sale of
investments for each Portfolio, in the name of the Trust on behalf of the
Portfolio or its nominees, the Adviser shall use its best efforts to obtain
for the Portfolio the most favorable net 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 and Exchange Act of 1934, cause each 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 is reasonable in
relationship to the value of such brokerage or research services provided
viewed in
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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 net 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.
E. 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.
F. The Adviser will maintain all accounts, books and records
generated by it with respect to the 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.
G. The Adviser will, unless and until otherwise directed by the
Manager or the Board of Trustees, vote proxies with respect to each
Portfolio's securities, and exercise rights in corporate actions or otherwise.
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 for the preceding month or
portion thereof; however, this advisory fee will be calculated on the average
daily value of each Portfolio's assets, as calculated in accordance with the
computation of net asset value included in the Trust's Registration Statement,
and accrued on a daily basis. In the event the calculation of any Portfolio's
net asset value is suspended, the net asset value used for any day will be
that for the last business day prior to such suspension until net asset value
calculations are resumed.
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4. LIABILITY OF ADVISER
Neither the Adviser nor any of its directors, officers, or employees
shall be liable to the Manager or the Trust for any loss suffered by the
Manager or the Trust resulting from its acts or omissions as Adviser to a
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 hereunder 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, unless
such action or inaction of such other service providers to the Trust is 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, its
directors, officers or employees under this Agreement.
5. INDEMNIFICATIONS
A. The Manager shall indemnify the Adviser and its controlling
persons, officers, directors, employees, agents, legal representatives and
persons controlled by it (which shall not include the Trust or any Portfolio)
(collectively, "Adviser Related Persons") to the fullest extent permitted by
law against any and all loss, damage, judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees (collectively
"Losses"), incurred by the Adviser or Adviser Related Persons arising from or
in connection with this Agreement or the performance by the Adviser or Adviser
Related Persons of its or their duties hereunder so long as such Losses arise
out of the Manager's gross negligence, willful misconduct or bad faith, in
performing its responsibilities hereunder or under its agreements with the
Trust or the gross negligence, willful misconduct or bad faith of any
companies affiliated with the Manager that provide services to the Trust,
including, without limitation, such Losses arising under any applicable law or
that may be based upon any untrue statement of a material fact contained in
the Trust's Registration Statement, or any amendment thereof or any supplement
thereto, or the omission to state therein a material fact known or which
should have been known and was required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reasonable reliance upon written information furnished to the
Manager or the Trust by the Adviser or an Adviser Related Person specifically
for inclusion in the Registration Statement or any amendment or supplement
thereto, except to the extent any such Losses referred to in this paragraph
(i.e., paragraph A.) result from willful misfeasance, bad faith, gross
negligence or reckless disregard on the part of the Adviser or an Adviser
Related Person in the performance of any of its duties under, or in connection
with, this Agreement.
B. The Adviser shall indemnify the Manager and its controlling
persons, officers, directors, employees, agents, legal representatives and
persons controlled by it (which shall not include the Trust or any Portfolio)
(collectively, "Manager Related Persons") to the fullest extent permitted by
law against any and all Losses incurred by the Manager or Manager Related
Persons arising from or in connection with this Agreement or the performance
by the Manager or Manager Related Persons of its or their duties hereunder so
long as such Losses arise out of the Adviser's gross negligence, willful
misconduct or bad faith in performing its responsibilities hereunder,
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including, without limitation, such Losses arising under any applicable law or
that may be based upon any untrue statement of a material fact contained in
the Trust's Registration Statement, or any amendment thereof or any supplement
thereto or the omission to state therein a material fact known or which should
have been known and was required to be stated therein or necessary to make the
statements therein not misleading, in any case only to the extent that such
statement or omission was made in reasonable reliance upon written information
furnished by the Adviser or Adviser Related Person to the Manager or the Trust
specifically for inclusion in the Registration Statement or any amendment or
supplement thereto, except to the extent any such Losses referred to in this
paragraph (i.e., paragraph B.) result from willful misfeasance, bad faith,
gross negligence or reckless disregard on the part of the Manager or a Manager
Related Person in the performance of any of its duties under, or in connection
with, this Agreement.
C. The indemnifications provided in this Section 10 shall survive the
termination of this Agreement.
6. 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. 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.
7. 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. As used in this Agreement, any reference to the "Adviser" refers
also to such affiliate.
8. 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.
9. RECORDS
The records relating to the services provided under this Agreement
shall be the property of
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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.
10. 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 first set forth above only so long as
such continuance is specifically approved at least annually by the Board of
Trustees or majority of outstanding voting securities, 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.
11. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time, without the payment of
any penalty, by the Manager at the direction of 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 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.
12. 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;
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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 Adviser as they
relate to the Adviser's responsibilities under this Agreement; and/or
C. the portfolio manager or managers of either Portfolio change or
there occurs any actual change in control or management of the Adviser. In
addition, the Adviser is a limited partnership whose general partner is
Princeton Services, Inc. and whose limited partner is Xxxxxxx Xxxxx & Co.,
Inc. The Adviser will notify the Manager and the Trust of any change in the
membership of the partnership within a reasonable time after such change.
13. USE OF ADVISER'S NAME
The Manager will not use the Adviser's name (or that of any
affiliate) in Trust literature without prior review and approval by the
Adviser, which may not be unreasonably withheld or delayed.
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 or the Trust has
obtained an exemption from the voting requirements of Section 15) 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.
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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 with respect to the Adviser shall be Xxxxxx X.
Xxxxxxxx, Esq., General Counsel, and with respect to the Manager shall be
Xxxxx X. Xxxxx, unless another person is 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.
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.
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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/
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
XXXXXXX XXXXX ASSET MANAGEMENT, L.P.
By: /s/
-----------------------------------
Name:
Title:
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APPENDIX A
Portfolio Advisory Fee
--------- ------------
Xxxxxxx Xxxxx Basic Value Equity Portfolio .40% of the Portfolio's average daily net assets
up to and including $100 million; .375% of the
Portfolio's average daily net assets over $100
million and up to and including $300 million;
and .35% of the Portfolio's average daily net
assets in excess of $300 million.
Xxxxxxx Xxxxx World Strategy Portfolio .50% of the Portfolio's average daily net assets
up to and including $100 million; .45% of the
Portfolio's average daily net assets over $100
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
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