INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated as of December 9, 1997, by and between EQ Financial
Consultants, Inc., a Delaware corporation ("EQ Financial" or the "Manager"),
and Lazard Freres & Co., LLC, a New York limited liability company ("Lazard").
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, Lazard is registered as an investment adviser under the
Advisers Act;
WHEREAS, Lazard Asset Management is the division of Lazard which
provides investment advisory services (Lazard, acting through Lazard Asset
Management, being hereinafter referred to as the "Adviser");
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 portfolios
to be known as Lazard Large Cap Value Portfolio and Lazard Small Cap Value
Portfolio (each a "Portfolio" and collectively, the "Portfolios") in the manner
and on the terms hereinafter set forth, which Portfolios are more particularly
described in Post-Effective Amendment No. 2 to the Registration Statement on
Form N-1A for the Trust filed with the Securities and Exchange Commission on
October 15, 1997;
NOW, THEREFORE, EQ Financial and Lazard agree as follows:
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1. APPOINTMENT OF ADVISER
The Manager hereby appoints the Adviser to act as investment adviser
for each Portfolio and to manage the investment and reinvestment of the assets
of each 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.
2. SERVICES TO BE RENDERED BY THE ADVISER TO THE TRUST
A. The Adviser will manage the investment and reinvestment of the
assets of each Portfolio and determine the composition of the assets of each
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 each
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
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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) 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;
(vi) provide any and all information, records and supporting
documentation about accounts the Adviser manages that have investment
objectives, policies, and strategies substantially similar to those
employed by the Adviser in 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 prior
performance in the Prospectus and the SAI of the Portfolio and any
permissible reports and materials prepared by the Portfolio or its
agent; 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 each 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 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 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. In placing orders for the purchase or sale of investments
for each 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.
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
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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 each 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 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.
D. On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of the Portfolios 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 each
Portfolio and to its other clients.
E. The Adviser will maintain all accounts, books and records with
respect to the Portfolios 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 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; however, this advisory fee will
be calculated on the daily average value of each 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 its acts or omissions as Adviser to the Portfolios, 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 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. Notwithstanding the foregoing, nothing herein
shall be deemed to waive any rights against the Adviser under federal or state
securities laws.
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5. NON-EXCLUSIVITY
The services of the Adviser to the Portfolios 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 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.
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
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.
9. DURATION OF AGREEMENT
This Agreement shall become effective with respect to each 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 each Portfolio 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
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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 any 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 such 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 or (b) all the portfolios of the Trust.
If the shareholders of either Portfolio fail to approve the Agreement
or any continuance of the Agreement as to such Portfolio, the Adviser will
continue to act as investment adviser with respect to such 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
such Portfolio during the period will be in compliance with Rule 15a-4 under
the Investment Company Act.
10. TERMINATION OF AGREEMENT
This Agreement may be terminated as to any individual Portfolio 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 such 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.
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:
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 Trust; and/or
C. the chief executive officer or controlling stockholder of the
Adviser or the portfolio manager of either 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. 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 affected
Portfolio or Portfolios (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 a Portfolio if a majority of the
outstanding voting securities of such 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 or all the portfolios
of the Trust.
14. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to the Portfolios.
15. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
16. 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
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to the other party. Notice shall be deemed given on the date delivered or
mailed in accordance with this paragraph.
17. 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.
18. 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 of the date first
mentioned above.
EQ FINANCIAL CONSULTANTS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
Chairman of the Board and Chief
Executive Officer
LAZARD FRERES & CO., LLC
By: /s/ Xxxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxxx
Managing Director
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APPENDIX A
TO
ADVISORY AGREEMENT
WITH
LAZARD FRERES & CO., LLC
Portfolio Advisory Fee
--------- ------------
Lazard Large Cap Value 0.425% of the Portfolio's average daily net assets up
to and including $50,000,000
0.40% of the Portfolio's average daily net assets in
excess of $50,000,000 up to and including $250,000,000
0.375% of the Portfolio's average daily net assets in
excess of $250,000,000 up to and including $400,000,000
0.35% of the Portfolio's average daily net assets in
excess of $400,000,000
Lazard Small Cap Value 0.65% of the Portfolio's average daily net assets up to
and including $250,000,000
0.55% of the Portfolio's average daily net assets in
excess of $250,000,000 up to and including $500,000,000
0.50% of the Portfolio's average daily net assets in
excess of $500,000,000
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