Exhibit (d)(7)(i)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated as of May 1, 2000 by and between The Equitable Life
Assurance Society of the United States, Inc., a New York stock life insurance
corporation ("Equitable" or the "Manager"), and Fund 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, Equitable 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 Equitable 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, Equitable 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.
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 By-Laws;
(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.R 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 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 or about the fifth 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.
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 services providers to 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, 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 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 commencement of operations
of the Portfolio. This Agreement will continue in effect for a period more than
one year 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 CERTATN 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 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.
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. X'Xxxx, 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers as or the date first
mentioned above.
THE EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
By:
-------------------------------------------
Name: Xxxxx X. X'Xxxx
Title: Executive Vice President
FUND ASSET MANAGEMENT, L.P.
by Princeton Services, Inc. its General Partner
By:
-------------------------------------------
Name:
Title:
APPENDIX A
Portfolio Advisory Fee
--------- ------------
Mercury 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.
Mercury 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 May 1, 2000
