INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated as of August 30, 1999, by and between EQ Financial
Consultants, Inc., a Delaware corporation ("Manager"), and Xxxxx Capital
Management, Inc., a Maryland corporation (the "Adviser").
WHEREAS, EQ Advisors Trust ("Trust") is registered as an investment
company under the Investment Company Act of 1940, as amended ("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 under which income, gains, and losses, whether or not
realized, from assets allocated to such accounts are, in accordance with such
policies and contracts, 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, the Manager 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; and
WHEREAS, the Board of Trustees of the Trust and the Manager desire that
the Manager retain the Adviser and Xxxxxxx Asset Management Company, Inc.
("Xxxxxxx") to render investment advisory services to the portfolio to be known
as the Xxxxxxx Socially Responsible Portfolio ("Portfolio") in the manner and on
the terms hereinafter set forth.
1. APPOINTMENT OF ADVISER
The Manager hereby appoints the Adviser to act as investment adviser
for the Portfolio, subject to the supervision and control of the Manager and the
Trustees of the Trust, and in accordance with 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 the Manager in any way or
otherwise be deemed an agent of the Trust or the Manager except as expressly
authorized in this Agreement or another writing by the Trust, the Manager and
the Adviser.
2. SERVICES TO BE RENDERED BY THE ADVISER TO THE TRUST
A. As investment adviser to the Portfolio, the Adviser, together with
Xxxxxxx, 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 supervision and control of the Manager and the Trustees of the
Trust. Without limiting the generality of the foregoing, Xxxxxxx shall allocate
responsibilities for specific tasks relating to the Portfolio between Xxxxxxx
and the Adviser. Xxxxxxx will provide the social screening services used in
selecting each investment for the Portfolio and has the authority to deny the
purchase by the Portfolio or cause divestiture of any investments of the
Portfolio if such investment, in the sole opinion of Xxxxxxx, fails to pass the
social screens established for the Portfolio.
B. As part of the services it will provide hereunder, 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;
(iii) take whatever steps are necessary to implement the
investment program for the Portfolio by the purchase and sale of
securities and other investments, including, as appropriate, the
placing of orders for such purchases and sales;
(iv) keep the Trustees of the Trust and the Manager fully
informed in writing on an ongoing basis of all material facts
concerning the investment and reinvestment of the assets in the
Portfolio, the Adviser and its personnel and operations, make regular
and special written reports of such additional information concerning
the same as may reasonably be requested from time to time by the
Manager or the Trustees of the Trust and attend meetings with the
Manager and/or the Trustees, as reasonably requested, to discuss the
foregoing,
(v) provide assistance in determining 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;
(vi) provide any and all information, records and supporting
documentation about accounts the Adviser and Xxxxxxx manage together or
individually, if appropriate, that have investment objectives,
policies, and strategies substantially similar to those employed by the
Adviser and Xxxxxxx in
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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 and Xxxxxxx'x prior performance in
the Trust's Prospectus and SAI (as hereinafter defined) and any
permissible reports and materials prepared by the Portfolio or its
agent; and
(vii) cooperate with and provide reasonable assistance to the
Manager, the Trust administrator, the Trust's custodian and foreign
custodians, the Trust's transfer agent and pricing agents and all other
agents and representatives of the Trust and the Manager, keep all such
persons fully informed as to such matters as they may reasonably deem
necessary to the performance of their obligations to the Trust and the
Manager, provide prompt responses to reasonable requests made by such
persons and establish appropriate interfaces with each so as to promote
the efficient exchange of information.
C. In furnishing services hereunder, the Adviser shall be subject to,
and shall perform in accordance with, the Trust's Agreement and Declaration of
Trust, as the same may be hereafter modified and/or amended from time to time
("Trust Declaration"), the By-Laws of the Trust , as the same may be hereafter
modified and/or amended from time to time ("By-Laws"), the currently effective
Prospectus and Statement of Additional Information of the Trust relating to the
Portfolio filed with the Securities and Exchange Commission ("SEC"), as the same
may be hereafter modified, amended and/or supplemented ("Prospectus and SAI"),
the Investment Company Act, 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, all other applicable state and
federal securities and other laws, all regulations with respect to the
foregoing, the policies and procedures adopted from time to time by the Board of
Trustees of the Trust and the written instructions of the Manager. The Manager
shall provide the Adviser with current copies of the Trust Declaration, By-Laws,
and Prospectus and SAI.
D. 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).
E. The Adviser, together with Xxxxxxx, will select brokers and dealers
to effect all portfolio transactions subject to the conditions set forth herein.
The Adviser, or Xxxxxxx, 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
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Prospectus and SAI. In placing any 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 most
favorable price and best execution available, considering all of the
circumstances, and shall maintain records adequate to demonstrate compliance
with this requirement.
F. 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, the Adviser,
Xxxxxxx 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 terms of that
particular transaction or the Adviser's or Xxxxxxx'x overall responsibilities to
the Portfolio or its or their other advisory clients. To the extent authorized
by 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 Manager or
the Adviser may also consider sales of shares of the Trust as a factor in the
selection of brokers and dealers.
G. 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.
H. The Adviser will maintain all accounts, books and records 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 and shall file with the SEC all forms
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, with
respect to the discretionary management of the assets of the Portfolio.
3. COMPENSATION OF ADVISER
The Manager will pay the Adviser for its services as specified in this
Agreement an advisory fee with respect to the Portfolio at the following annual
rate: 0.25% of the average daily net assets of the Portfolio up to and including
$150 million; 0.20% of the average daily net assets of the Portfolio in excess
of $150 million and up to and including
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$300 million; and 0.175% of the average daily net assets of the Portfolio in
excess of $150 million; provided, however, that no advisory fee will be payable
by the Manager to the Adviser until the sooner of either (i) the end of the
first year of operations of the Portfolio (following its public offering) or
(ii) the end of the business day (as defined in the Prospectus and SAI) during
which the average daily net assets of the Portfolio exceeds $20 million. The
advisory fee due and payable hereunder on account of any day shall be calculated
by multiplying the net asset value of the Portfolio at the close of the
immediately preceding business day (as defined in the Prospectus and SAI) by the
applicable annual rate specified above and dividing the result by the number of
days in the year. The advisory fee due and payable hereunder on account of the
days in any calendar month shall be due and payable within ten (10) business
days following the end of such calendar month.
4. LIABILITY AND INDEMNIFICATION
(a) Except as may otherwise be provided by the Investment Company Act
or any other federal securities law, the Adviser shall not be liable for any
losses, claims, damages, liabilities or litigation (including legal and other
expenses) incurred or suffered by the Manager or the Trust as a result of any
error of judgment or mistake of law by the Adviser with respect to the
Portfolio, except that nothing in this Agreement shall operate or purport to
operate in any way to exculpate, waive or limit the liability of the Adviser
for, and the Adviser shall indemnify and hold harmless the Trust, the Manager,
all affiliated persons thereof (within the meaning of Section 2(a)(3) of the
Investment Company Act) and all controlling persons (as described in Section 15
of the Securities Act of 1933 as amended ("1933 Act") (collectively, the
"Manager Indemnitees") against any and all losses, claims, damages, liabilities
or litigation (including reasonable legal and other expenses) to which any of
the Manager Indemnities may become subject under the 1933 Act, the Investment
Company Act, the Advisers Act, or under any other statute, at common law or
otherwise arising out of or based on (a) any willful misconduct, bad faith,
reckless disregard or gross negligence of the Adviser in the performance of any
if its duties or obligations hereunder or (b) any untrue statement of a material
fact contained in the Prospectus and SAI, proxy materials, reports,
advertisements, sales literature, or other materials pertaining to the Portfolio
or the omission to state therein a material fact known to the Adviser which was
required to be stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance upon information
furnished to the Manager or the Trust by an Adviser Indemnitee (as defined
below) for use therein.
(b) Except as may otherwise be provided by the Investment Company Act
or any other federal securities law, the Manager and the Trust shall not be
liable for any losses, claims, damages, liabilities or litigation (including
legal and other expenses) incurred or suffered by the Adviser as a result of any
error of judgment or mistake of law by the Manager with respect to the
Portfolio, except that nothing in this Agreement shall operate or purport to
operate in any way to exculpate, waive or limit the liability of the Manager
for, and the Manager shall indemnify and hold harmless the Adviser, all
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affiliated persons thereof (within the meaning of Section 2(a)(3) of the
Investment Company Act) and all controlling persons (as described in Section 15
of the 1933 Act) (collectively, the "Adviser Indemnitees") against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal
and other expenses) to which any of the Adviser Indemnities may become subject
under the 1933 Act, the Investment Company Act, the Advisers Act, or under any
other statute, at common law or otherwise arising out of or based on (a) any
willful misconduct, bad faith, reckless disregard or gross negligence of the
Manager in the performance of any if its duties or obligations hereunder or (b)
any untrue statement of a material fact contained in the Prospectus and SAI,
proxy materials, reports, advertisements, sales literature, or other materials
pertaining to the Portfolio or the omission to state therein a material fact
known to the Manager which was required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon information furnished to the Manager or the Trust by
an Adviser Indemnitee for use therein.
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. 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 from time to time employ or associate with itself any
person it believes to be particularly fitted to assist it in providing the
services to be performed by the Adviser hereunder, provided that no such person
shall perform any services with respect to the Portfolio which would constitute
an assignment or require a written advisory agreement pursuant the Investment
Company Act. Any compensation payable to such persons such be the sole
responsibility of the Adviser, and neither the Manager nor the Trust shall have
any obligations with respect thereto.
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
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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 Manager and 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 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) day's written notice to the Manager and the Adviser, or
by the Manager or Adviser on sixty (60) day's written notice to the Trust and
the other party. This Agreement will automatically terminate, without the
payment of any penalty, (i) in the event of its assignment (as defined in the
Investment Company Act) (iii) in the event the Investment Management Agreement
between the Manager and the Trust is assigned or terminates for any other
reason, or (iii) in the event that the Investment Advisory Agreement, dated as
of the date hereof, between the Manager and Xxxxxxx is terminated for any
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:
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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. 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.
13. YEAR 2000 PREPAREDNESS
The Adviser warrants and represents that the Adviser has adopted a
written plan for Year 2000 compliance for the correct operation of the Adviser's
computer systems because of the approaching millennium ("Plan"), that the Plan
provides for the identification, testing and, where appropriate, upgrading of
the Adviser's computer systems, in accordance with reasonable industry
standards, so that both the Adviser's computer systems and their interfaces with
third party computer systems will function accurately and without interruption
before, during and after December 31, 1999 and that the Adviser is actively in
the process of implementing the Plan and presently has no reason to believe that
the Adviser's computer systems and their interfaces with third party computer
systems will not be able to function accurately and without interruption before,
during and after such date. The Adviser will continue to implement the Plan and
take such other steps as may be necessary and appropriate to be Year 2000
compliant in a timely and efficient manner and will notify the Manager and the
Trust of any Year 2000 compliance problems and the nature thereof on or before
September 1, 1999 if the Adviser determines that it is not or is not likely to
be Year 2000 compliant in a timely and efficient manner. The failure of the
Adviser to be Year 2000 compliant shall not be deemed to be a force majeure
event or provide a defense to performance hereunder.
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 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
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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. ASSIGNMENT
No assignment (as that term is defined in the Investment Company Act)
shall be made by the Adviser without the prior written consent of the Trust and
the Manager. Notwithstanding the foregoing, no assignment shall be deemed to
result from any changes in the directors, officers or employees of the Adviser
except as may be provided to the contrary in the Investment Company Act. The
Adviser agrees that it will notify the Trust and the Manager of from any changes
in the directors, officers or employees of the Adviser within a reasonable time
thereafter.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to the Portfolio.
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.
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
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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.
21. INTERPRETATION
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 by their duly authorized officers as of the date first mentioned above.
EQ FINANCIAL CONSULTANTS, INC. XXXXX CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx Xxxxx X. Xxxxx
Executive Vice President President
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