INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated as of December 9, by and between EQ Financial
Consultants, Inc., a Delaware corporation ("EQ Financial" or the "Manager"),
and X.X. Xxxxxx Investment Management Inc., a Delaware corporation (the
"Adviser").
WHEREAS, EQ Advisors Trust (the "Trust") is registered as an
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act");
WHEREAS, the Trust's shareholders are and will be separate accounts
maintained by insurance companies for variable life insurance policies and
variable annuity contracts (the "Policies") under which income, gains, and
losses, whether or not realized, from assets allocated to such accounts are, in
accordance with the Policies, credited to or charged against such accounts
without regard to other income, gains, or losses of such insurance companies;
WHEREAS, the Trust is and will continue to be a series fund having two
or more investment portfolios, each with its own investment objectives,
policies and restrictions;
WHEREAS, EQ Financial is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act") and is the
investment manager to the Trust;
WHEREAS, the Adviser is registered as an investment adviser under the
Advisers Act;
WHEREAS, the Investment Company Act prohibits any person from acting
as an investment adviser to a registered investment company except pursuant to
a written contract (the "Agreement"); and
WHEREAS, the Board of Directors of the Trust and EQ Financial desire
to retain the Adviser to render investment advisory services to the portfolio
specified in Schedule 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.
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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 L of the Internal Revenue Code of 1986, as amended;
(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) assist as required by the Manager or the Board
of Trustees of the Trust in the determination 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;
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(vi) provide composite private account performance
information for accounts the Adviser manages that have
investment objectives, policies, and strategies substantially
similar to those employed by the Adviser in managing the
Portfolio and such supporting documentation as may be
reasonably necessary, under applicable laws, to allow the
Portfolio or its agent to present information concerning the
Adviser's prior performance in the Prospectus and the SAI of
the Portfolio and any sales materials prepared by the
Portfolio or its agent, as permitted under any applicable law
and approved by the Adviser; and
(vii) establish appropriate interfaces with the
Trust's administrator and Manager in order to provide such
administrator and Manager with all necessary information
requested by the administrator and Manager.
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 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, in assessing the best execution available for
any transaction, will consider factors it deems relevant, including without
limitation, the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In selecting brokers or dealers to
execute a particular transaction, and in evaluating the best execution
available, the Adviser is authorized to consider the brokerage and research
services (within the meaning of Section 28(e) of the Securities Exchange Act of
1934, as amended) provided to the Portfolio and/or other accounts over which
the Adviser or its affiliates exercise investment discretion. Moreover, the
Adviser may, to the extent authorized by Section 28(e) of the Securities and
Exchange Act of 1934, as amended, cause the Portfolio to pay a broker or dealer
that provides brokerage or research services to the Manager, the Adviser, and
the Portfolio an
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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 provided the Adviser determines, in good faith, that such
amount of commission is reasonable in relationship to the value of such
brokerage or research services 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 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. The Manager recognizes that, in some cases,
this procedure may limit the size of the position that may be acquired or sold
for the Portfolio.
E. 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.
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 the Adviser's 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
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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. 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, 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 agreement 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 that may be based upon any untrue statement of 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, including, without
limitation, such Losses 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.,
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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 5 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.
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 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.
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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 meeting of the
shareholders of the Portfolio, which for this purpose may be the sole initial
shareholder of the Portfolio, at which meeting the Agreement is approved by the
vote of a majority of the outstanding voting securities (as defined in the
Investment Company Act) 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 either by
the Board of Trustees or by a majority of the outstanding voting securities of
the Portfolio, provided that in either 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. The required shareholder approval of the Agreement
or of any continuance of the Agreement shall be effective with respect to the
Portfolio if a majority of the outstanding voting securities of the series (as
defined in Rule 18f-2(h) under the Investment Company Act) of shares of the
Portfolio votes to approve the Agreement or its continuance, notwithstanding
that the Agreement or its continuance may not have been approved by a majority
of the outstanding voting securities of (a) any other portfolio affected by the
Agreement or (b) all the portfolios of the Trust.
If the shareholders of the Portfolio fail to approve the Agreement or
any continuance of the Agreement, the Adviser will continue to act as
investment adviser with respect to the Portfolio pending the required approval
of the Agreement or its continuance or of any contract with the Adviser or a
different adviser or subadviser or other definitive action; provided, that the
compensation received by the Adviser in respect of the Portfolio during the
period will be in compliance with Rule 15a-4 under the Investment Company Act.
11. 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 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.
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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;
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.
13. USE OF ADVISER'S NAME
The Manager will not use the Adviser's name (or that of any affiliate)
in Trust advertisements, sales literature or promotional materials without
prior review and approval by the Adviser, which may not be unreasonably
withheld or delayed. The Manager will be permitted to use the Adviser's name
(or that of any affiliate) in required regulatory filings or in updates of its
Prospectus or SAI.
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.
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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.
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/ Xxxxx X. Xxxxx
---------------------------------
Xxxxx X. Xxxxx
Executive Vice President
X.X. Xxxxxx Investment Management Inc.
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
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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
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JPM Core Bond Portfolio .30 % the Portfolio's average daily net assets
up to and including $125 million; .25% of the
Portfolio's average daily net assets up to and
including $200 million; .22% of the Portfolio's
average daily net assets up to and including
$350 million; and .15% of the
Portfolio's average daily net assets in
excess of $350 million.
Dated: December 9, 1997
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