INVESTMENT ADVISORY AGREEMENT
AGREEMENT, dated as of December 31, 1998, by and between EQ Financial
Consultants, Inc., a Delaware corporation ("EQ Financial" or the "Manager"), and
Evergreen Asset Management Corp., a New York 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 portfolios to
be known as Evergreen Foundation Portfolio and Evergreen 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. 7 to the Registration Statement on Form N-1A for
the Trust filed with the Securities and Exchange Commission on October 15, 1998;
NOW, THEREFORE, EQ Financial and the Adviser agree as follows:
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.
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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 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 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
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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 and may enter into agreements with 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. During the term of this Agreement the Advisor
will, at its own cost and expense, retain Plexus Group, Inc. or another service
provider acceptable to the Manager and the Trust (as the case may be "Plexus")
to analyze the quality of all listed and over-the-counter portfolio transactions
effected by the Adviser or any affiliate thereof as a broker on behalf of the
Portfolios during each quarter and to evaluate the efficiency of the trading
strategies and trade executions of the Advisor and such affiliates in effecting
such transactions during each such quarter compared to trading strategies and
trade executions for similar transactions of similar difficulty effected by
brokers generally on behalf of unaffiliated institutional investors. The Advisor
will direct Plexus to deliver reports of its findings to the Manager and the
Trust on a quarterly basis. In addition the Advisor will, at least twenty (20)
days prior to each regularly scheduled quarterly meeting of the Board of
Trustees of the Trust deliver to the Manager and the Trust its own report on the
quality and efficiency of the portfolio transactions effected by the Adviser or
any affiliate thereof as a broker or a dealer during the immediately preceding
quarter, summarizing the conclusions of the Plexus report for such immediately
preceding quarter and providing such additional information with respect to
broker execution as the Advisor wishes to bring to the attention of the Manager
and the Trust.
D. 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 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
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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 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.
E. 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.
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.
F. The Adviser may from time to time delegate certain of the duties and
services to be provided by the Adviser hereunder to an affiliate of the Adviser,
provided that such delegation of such duties and services would not be
considered to be an assignment of the Agreement under the Investment Company Act
or the Advisers Act and the conditions of the Section 2.F are satisfied. Any
such delegation shall be at the Advisor's sole cost and expense. No such
delegation shall relieve the Adviser of any of its obligations hereunder, and
the Adviser shall continue to be fully liable to the Manager and the Trust for
the performance of its obligations hereunder in all respects as if no such
delegation had occurred. At least fifteen (15) days prior to any such
delegation, the Adviser shall give written notice to the Manager and the Trust,
describing in reasonable detail the affiliate in question, its relationship to
the Adviser, the nature of the duties and services to be delegated, and the fees
payable in connection therewith, together with the written opinion of
independent counsel reasonably satisfactory to the Manager that such delegation
of the Adviser's duties and services under this Agreement does not constitute an
assignment under the Investment Company Act or the Advisers Act. The Adviser
shall within fifteen (15) days following such proposed transfer deliver to the
Manager and the Trust original executed counterparts of the documents effecting
such delegation. The Adviser shall thereafter report to the Manager and the
Trust on a quarterly basis on the duties and services being performed by such
affiliate and the fees paid to such affiliate by the Adviser and shall certify
the delegation of the duties and services by the Adviser to the affiliate
continues to be in compliance with this paragraph 2.F.
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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.
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. Notwithstanding the foregoing, the Adviser shall not delegate to, or
enter into any arrangement with any person (other than persons to whom such
delegation would be permitted in accordance with paragraphs 2.F. and 10 hereof)
to provide investment adviser services to the Portfolios or to manage any of the
assets of the Portfolios.
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.
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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 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. ASSIGNMENT OF AGREEMENT
This Agreement nor any interest in this Agreement may be assigned.
Notwithstanding the foregoing, this Agreement and/or any interest in the
Agreement may be transferred or delegated to another entity, provided that (i)
the Adviser has provided not less than sixty (60) days prior written notice to
EQ Financial and the Trust of such intended action, (ii) such transfer to
another entity of the duties and services to be provided by the Adviser under
this Agreement does not constitute an assignment of the Agreement under the
Investment Company Act or Advisers Act, (iii) the Adviser shall within fifteen
(15) days following such proposed transfer deliver to the Manager and the Trust
original executed counterparts of the documents effecting such transfer or
delegation, as the case may be, and (iv) the written opinion of independent
counsel reasonably satisfactory to the Manager that such transfer of the
Adviser's duties and services under this Agreement does not constitute an
assignment under the Investment Company Act or the Advisers Act. In addition the
Adviser shall pay all costs and expenses of the Manager and the Trust of any
filings with regulatory authorities and communications with owners of variable
contracts or others holding interests in variable contracts supported by the
Trust, including without limitation printing and mailing costs, which may be
required as a result of such transfer or delegation. As used herein, transfer
shall include common law assignment.
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
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of the outstanding voting securities of such 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, in the event
of its assignment (as defined in the Investment Company Act) or in the event the
Investment Management Agreement between the Manager and the Trust is assigned or
terminates for any other reason. This Agreement will also terminate upon written
notice to the other party that the other party is in material breach of this
Agreement, unless the other party in material breach of this Agreement cures
such breach to the reasonable satisfaction of the party alleging the breach
within thirty (30) days after written notice.
12. PROVISION OF CERTAIN INFORMATION BY ADVISER
The Adviser will promptly notify the Manager in writing of the
occurrence of any of the following events:
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;
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
the chief executive officer or controlling stockholder of the Adviser or
the portfolio manager of any 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 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 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 affected by the
amendment or all the portfolios of the Trust.
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15. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to the Portfolios.
16. 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 (the "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 in a commercially reasonable manner 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.
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
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
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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 by their duly authorized officers as of the date first mentioned above.
EQ FINANCIAL CONSULTANTS, INC. EVERGREEN ASSET MANAGEMENT CORP.
By: By:
-------------------------------- --------------------------------
Name: Xxxxx X. Xxxxx Name:
Title: Executive Vice President Title:
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APPENDIX A
TO
ADVISORY AGREEMENT
WITH
EVERGREEN ASSET MANAGEMENT CORP.
Portfolio Advisory Fee
--------- ------------
Evergreen Foundation Portfolio .425% of the Portfolio's average daily net
assets
Evergreen Portfolio .55% of the Portfolio's average daily net
assets
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