ADMINISTRATION AND SERVICING AGREEMENT
AGREEMENT, made as of this 1st day of May, 1987, by and between THE
EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 ("Equitable"), and INTEGRITY LIFE INSURANCE COMPANY,
0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Integrity").
W I T N E S S E T H:
WHEREAS, Equitable is the issuer of certain deferred annuity products,
including individual retirement annuity certificates and tax-sheltered
annuity contracts (collectively, the "Contracts") providing for both fixed
accumulations through Equitable's general account and variable accumulations
through Separate Account No. 301 of The Equitable Life Assurance Society of
the United States (the "Separate Account"); and
WHEREAS, the Separate Account (i) is a separate account established under
the Insurance Law of the State of New York, (ii) is registered as an
investment company under the Investment Company Act of 1940 (the "1940 Act")
and (iii) is a unit investment trust with divisions invested solely in shares
of the corresponding portfolios of an underlying mutual fund (the "Fund");
and
WHEREAS, Equitable is the Depositor for the Separate Account under the
1940 Act; and
WHEREAS, Equitable has performed and now desires Integrity to perform
certain administrative and recordkeeping services for the Separate Account
and the Contracts; and
WHEREAS, Integrity is in the business of providing recordkeeping services
and administration to various clients and has the personnel, computer
programs and expertise necessary to provide administration and recordkeeping
services for the Separate Account and the Contracts; and
WHEREAS, the Contracts provide that Equitable may make certain charges to
cover the cost of administration against the assets of the Separate Account
and that the Separate Account may also pay certain expenses directly.
NOW, THEREFORE, Equitable and Integrity agree as follows:
1. Integrity shall provide all administration, recordkeeping, electronic
data processing and contractholder services normally required for the
Contracts and the Separate Account and previously provided by Equitable.
Without limiting the generality of the foregoing, Integrity will provide the
services summarized in Schedule A, attached hereto, and such modified or
additional services as may be agreed upon by the parties from time to time
and set forth in written memoranda attached hereto and incorporated into this
Agreement as if fully set forth herein.
2. Integrity warrants and represents that its services for the Separate
Account shall be equal to or better than those currently provided to other
Integrity clients and that it has the ability to enable compliance by the
Contracts with all Federal, State and local statutes, rules, regulations,
orders and decrees. Integrity further warrants and represents that it is
familiar with the data processing need associated with Internal Revenue
Service and New York Insurance Department requirements and Securities and
Exchange Commission ("SEC") regulated financial transactions and
recordkeeping requirements. Integrity also represents that it is competent in
the recordkeeping industry and in the area of financial transactions.
Integrity agrees to share its knowledge and use its best efforts to enable
the Separate Account to perform legal and business functions.
Integrity, as the administrator and recordkeeper, shall comply with all
applicable requirements of Federal securities laws, the Internal Revenue
Code, the Insurance Law of the State of New York and regulations thereunder
applicable to the Contracts and the Separate Account. Integrity warrants and
represents that it is familiar with relevant legal requirements and shall use
its best efforts to continue to keep abreast of relevant information
regarding applicable legal requirements.
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3. Integrity shall meet or exceed such performance standards as shall be
necessary to make it possible for the Separate Account to comply with Federal
securities laws applicable to the Contracts and, in addition, the performance
standards specified in Schedule B attached hereto. The standard of
performance shall be equal to or better than that currently provided by
Integrity for similar types of services.
4. At least once each quarter, Integrity shall furnish to Equitable an
operations report which shall be in a form mutually agreed upon by the
parties and which shall include the number of transactions and correspondence
items processed separated by category, a quantitative measure of response
time and performance, mean time to respond, and any other specific operating
or administrative data and information necessary to evaluate performance.
5. Integrity shall retain, in accessible form, tapes, reports and other
records and documents for such time periods and in such forms specified in
Schedule C attached hereto.
6. Integrity agrees that all records and other data pertaining to the
Contracts, including without limitation, files, input materials, reports and
forms that are received, computed, developed, used, and/or stored pursuant to
this Agreement are the exclusive property of Equitable and that all such
records and other data shall be furnished to Equitable by Integrity upon
termination of this Agreement for any reason whatsoever.
Furthermore, upon Equitable's request at any time or times while this
Agreement is in effect, Integrity shall promptly deliver to Equitable any or
all of the data and records held by Integrity pursuant to this Agreement.
Integrity shall not possess any interest in, title or other right to, or lien
upon any such data or records. This shall not preclude Integrity from keeping
copies of such data or records for its own files.
7. Subject to paragraph 6, individuals, duly authorized in writing, of
each of the parties hereto shall, upon reasonable prior written notice, have
access to the books and records of the other party during normal business
hours and subject to reasonable conditions, insofar as they pertain to the
Contracts and the services provided with respect thereto hereunder.
8. Integrity shall keep in a separate and safe place additional copies of
all records required to be maintained or additional tapes or disks necessary
to produce all such records. Integrity shall use reasonable care to minimize
the likelihood of any damage, loss of data, delays or errors resulting from
an uncontrollable event, and should such damage, loss of data, delay or
errors occur, Integrity shall use its best efforts to mitigate the effects of
such occurrence. Integrity shall follow the security procedures described in
Schedule D hereto with respect to data relating to the Contracts or the
Separate Account.
9. Integrity will use its best efforts to safeguard and protect the
confidentiality of all records and proprietary and other information with
respect to Equitable and Equitable's contractholders and Integrity on behalf
of itself and its employees shall keep confidential any proprietary
information received from Equitable and any personal information respecting
Equitable's Contractholders; provided, however, that if Integrity is required
to produce any such information by a final order of any government agency or
other regulatory body, it may, upon not less than ten (10) days written
notice to Equitable, release the required information unless compelled by
statute, regulatory requirement, or Court order to release the information
sooner, provided, however, that no such release shall be made in the event
that Equitable notifies Integrity that it intends to pursue an appeal of such
final order in the appropriate judicial forum.
10. (a) For the administrative services performed hereunder, Equitable
will pay to Integrity (i) the amounts collected under the charge for
administration at the effective annual rate of 0.25% of the value of the
assets of the Separate Account which is provided for in the Contracts (this
charge shall be reflected, in the manner stated in the Contracts, in the
computation of the unit values thereunder and shall be payable quarterly) and
(ii) an amount at the effective annual rate of .70% of the value of the
assets in the general account under the Contracts (this charge shall be
payable quarterly). In addition, Equitable will pay to Integrity the amounts
collected pursuant to the charge for administration which Equitable may
charge each Contractholder of up to $30 per year (a maximum of $7.50 per
quarter),
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which is reflected through a reduction of units credited to the
contractholder under a Contract with respect to amounts in the Separate
Account and through a reduction of dollars with respect to amounts allocated
to Equitable's general account.
(b) For its recordkeeping services for the Separate Account and the
contractholders performed hereunder, the initial charges set forth in
Schedule E hereto. It is the intention of Integrity and Equitable that
recordkeeping services be performed at cost and that the charges made by
Integrity should, subject to paragraph 11, be sufficient to reimburse
Integrity for its costs. Integrity and Equitable agree to review the charges
set forth in Schedule E from time to time and, if necessary, to adjust such
charges to reflect Integrity's costs.
11. If in any fiscal year the aggregate expenses of the Money Market,
Stock, Bond or Balanced Division of the Separate Account (including charges
made pursuant to this Agreement but excluding interest, taxes, brokerage
commissions or fees relating to securities transactions and certain state
approved extraordinary expenses) plus the aggregate expenses of the
corresponding portfolios of the Fund, exceed 1.0% for the Money Market
Division or 1.5% for the Stock, Bond or Balanced Divisions, Integrity will
reimburse the appropriate Division of the Separate Account for the excess.
The obligation to reimburse will be estimated, reconciled and paid on a
quarterly basis.
12. This Agreement will remain in effect until December 31, 1987 and
thereafter will continue in effect for successive annual periods unless
notice of termination is given by either of the parties. This Agreement may
be terminated without penalty at any time by Equitable or as of the end of a
calendar year by Integrity, in each case upon 60 days' written notice to the
other party. In the event this Agreement is terminated for any reason,
Integrity shall cooperate with Equitable to permit an orderly transfer of
recordkeeping and administrative functions and shall provide all necessary
staff, services and assistance required for an orderly transfer.
13. Integrity will indemnify and hold harmless the Trustees of the Fund
against any and all losses, claims, damages or liabilities (or actions in
respect thereof), to which the Trustees may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of the services provided pursuant to this Agreement and will reimburse
the Trustees for any legal or other expenses reasonably incurred by them in
connection with investigating or defending against such loss, claim, damage,
liability or action in respect thereof.
14. This Agreement may not be assigned by Integrity without the prior
written consent of Equitable.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers.
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
ATTEST /s/ XXXXX XXXXX By /s/ XXXXX X. XXXXX
--------------------- ---------------------------
Date May 1, 1987 Its Executive Vice President
--------------------- ---------------------------
INTEGRITY LIFE INSURANCE COMPANY
ATTEST /s/ XXXXX XXXXX By /s/ XXXXX X. XXXXXXXX
--------------------- ---------------------------
Date May 1, 1987 Its Vice President and Chief
--------------------- Financial Officer
---------------------------
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SCHEDULE A
SERVICES TO BE PROVIDED
ADMINISTRATIVE SERVICES
(a) Allocate amounts received under the Contracts in accordance with the
provisions thereof and make computations thereunder, including computations
of unit values, and make payments, in accordance with the provisions thereof;
(b) Maintain such books of account and other records of all transactions
relating to the Contracts and the Separate Account as may be necessary to
reflect clearly the assets and liabilities in respect of the Separate Account
and the General Account and to identify and distinguish the same at all times
from the assets and liabilities arising out of the other business of
Equitable;
(c) Prepare and submit to the appropriate regulatory authorities all
amendments to the registration statement, notices, proxies, proxy statements
and periodic reports that are required to be, or may be, transmitted to
persons having rights in respect of the Contracts or the Separate Account and
transmit the same to such persons.
Prepare and file all reports required by law to be filed with any State or
Federal regulatory authority;
(e) Except as hereinafter in this subparagraph and in paragraph 11 of this
Agreement provided, pay all costs and other expenses attributable to the
establishment, maintenance and operations of the Separate Account including
all salaries, rent, postage, telephone, travel, legal, actuarial and
accounting costs, office equipment, and stationery; provided that certain
expenses incurred in the establishment, maintenance and operation of the
Separate Account, subject to the limitations set forth in paragraph 11 of
this Agreement, may be charged against the Separate Account, including,
without limitation: SEC fees and State securities laws qualification fees;
insurance premiums; outside audit and legal expenses; costs of shareholder
reports and individual account maintenance; fees or compensation in the
performance of the functions of administration of the Separate Account such
as maintenance of individual participant records, or for maintenance or
operation of the Separate Account such as daily transaction processing; and
contractholder meetings; and provided further that all taxes attributable to
the maintenance or operation of the Separate Account will be charged against
the Separate Account in the manner stated in the Contracts; and
(f) Make the charges, and only the charges, in such amounts and manner and
for such expense or other purposes, as shall be stated in the Contracts or in
the registration statement of the Separate Account under the 1940 Act or the
Securities Act of 1933, in order (i) to provide funds for the purpose of
paying the costs and other expenses of administration in respect of the
Contracts and the Separate Account (including the costs and other expenses
referred to in subparagraph (e) above) and such other costs and expenses as
may be stated in the Contracts or in the registration statement for the
Separate Account, and (ii) to pay applicable premium taxes, if any.
RECORDKEEPING SERVICES
(a) New Accounts
Implement group and participant records via an on-line system based on
enrollment forms or applications received from client or participant.
Enrollments will be edited and screened for completeness. Each
participant's account will reflect the product and the sources of funds to
be maintained. Items not in good order will be pulled from work flow for
correction or return.
(b) Transactions
Receipt, edit, validation and entry of all written requests for
contributions, distributions and transfers between investment options via
an on-line system.
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(c) Payroll Deduction Processing
Receipt, editing and updating of single or multiple payroll deduction
contributions. Notification given to client of receipt, edit, and dollar
amount for each tape. Utilization of magnetic tape input is limited to the
physical tape constraints and format, as mutually agreed upon by Integrity
and the client. Supply the client with sufficient information on any
payroll deduction error processing (e.g., no enrollment for a particular
social security number) so that client may resolve any problems.
(d) Update Processing
Nightly updates of all data processed that day, once unit values have
been entered into the system.
(e) Confirmation Notices
Production and distribution of daily confirmation notices for all
financial transactions with respect to variable annuity contracts
(contribution, distribution, transfer) but not for payroll deduction
contributions. Distribution of confirmation notices will be either to the
participant or a group location based upon the group mailing preference.
(f) Periodic Statement
Production and distribution at the close of each quarter or other period
agreed upon between Integrity and the client of a statement of the
period-to-date transactions processed against each participant's account.
The statement will provide the following information by Fund and in total.
All items will be in dollars except the closing balance for each Fund
which will be displayed in dollars and units.
Detail Level Information
Confirmation of all transactions by date within Funds and
General Account options including dollar amount, daily unit
values and corresponding units.
Year-To-Date Information (In Dollars)
Opening Balance
Contributions by Source
Contributions for Prior Year (XXX only)
Rollovers
Withdrawals
Investment Income
Closing Balance
Other Information
Certain Fixed Messages
Certain Variable Messages
Distribution of quarterly statements will be either to the
participant or a group location based upon mailing preference
of client.
(g) Production and Mailing of All Distribution Checks to Participants
Requests for full or partial distributions may have to be cleared by the
group depending on the group's preference as indicated in the Employer's
administrative agreement. Pertinent information on distributions affected
will be reported to Integrity to receive the group's authorization for
distribution.
(h) Balancing of the Previous Day's Cash Receipts, Disbursements and
Transfers
All transactions will be reported on a daily basis to Equitable Capital
Management Corporation. In addition, cash deposits to The Chase Manhattan
Bank, N.A. or such other banks as may be utilized on behalf of the account
will be reported immediately to Equitable's treasury area.
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(i) Perform 1099R, 5498 and W2P or Other Required Tax Reporting on a
Timely Basis
This includes the mailing of the tax forms as required to the individual
participants.
(j) Commissions (Incentive Compensation)
Provide data to pay commissions and finders fees.
(k) Premium Taxes
Provide data by state to allow Equitable to account for premium taxes
due.
(l) Production of Company Level Reports
(m) Proxy Statements
Addressing, mailing, receipt of reply and summary of proxy statements.
(n) Perform corrections of transactions for all errors occurring in a
timely manner.
(o) Produce and distribute certificates to participants at time of first
contribution.
Distribution of the certificate will include mutually agreed upon inserts
as required.
(p) Unit values will be entered into the operations system via CRT on a
daily basis. Unit values on the system will be verified the following
morning to insure correctness.
(q) Integrity will move monies in the related checking accounts and will
transfer monies to the underlying funds.
(r) Reconciliation will be performed for the related checking account.
(s) Proving the value of the units in the operations system to the value
of the assets of the Funds.
(t) Necessary regulatory reports and filings, and year-end accountings
and/or filings.
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SCHEDULE B
PERFORMANCE STANDARDS
These guidelines are intended to be normal operating performance
standards. Cases involving unusually large volume received in bulk may
require more than one day to process. Other conditions not under Integrity's
control (i.e., power failures, major system crash, other uncontrolled
situations) may not allow for these standards to be met. Integrity will use
its best efforts to keep any delays in processing caused by these situations
to a minimum.
A. ESTABLISHMENT OF NEW ACCOUNTS
1. Group Account ........................................... 1 business day
2. Participant Account
a.With money attached .................................... 1 business day
b.Without money attached ................................. 1 business day
B. TRANSACTION PROCESSING (excluding Payroll Deduction)
1. Contributions ........................................... 1 business day
2. Transfers ............................................... 1 business day
3. Withdrawals (including check preparation and mailing)
a.premature partial withdrawal ........................... 5 business days
b.liquidation of account ................................. 5 business days
c.periodic payments
i.initial .............................................. 5 business days
ii.subsequent ........................................... 5 business days
4. Maintenance
a.correction of financial errors ......................... 1-2 business days
b.address changes ........................................ 3 business days
c.other participant changes .............................. 3 business days
x.xxxxx maintenance transactions ......................... 3 business days
e.termination of employment .............................. 3 business days
C. PAYROLL DEDUCTION PROCESSING
1. Tape edit and proof ..................................... 2 business days
2. Live update upon authorization .......................... 1 business day
D. UPDATE PROCESSING OF FINANCIAL TRANSACTIONS ............... 1 business day
E. CONFIRMATION NOTICE ....................................... 5 business days
F. QUARTERLY STATEMENT ....................................... 5 business days
after close of
quarter
H. BALANCING OF CASH RECEIPTS AND UNIT PURCHASES ............ 1 business day
I. PRODUCTION AND DISTRIBUTION OF 1099, 5898 and W2D ........ as required
by law
J. PREMIUM TAX REPORTING ..................................... as required
by tax accounting
K. CORPORATE REPORTS ......................................... as required
L. PROXY STATEMENTS .......................................... as required
M. ERROR CORRECTIONS
1. Financial transactions .................................. 1-2 business days
2. Non-financial transactions .............................. 2-3 business days
N. CERTIFICATE AND MUTUALLY AGREED UPON INSERTS .............. issued 5 business
days from first
contribution
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SCHEDULE C
RECORDS RETENTION
RETENTION PERIOD
-------------------------
ON SITE ARCHIVES
----------- ------------
DOCUMENT
Applications ............... 2 Years 5 Years
Purchases .................. 2 Years 5 Years
Correspondence ............. 2 Years 5 Years
Liquidation Requests ....... 2 Years 5 Years
Exchange Requests .......... 2 Years 5 Years
Maintenance Requests ....... 2 Years 5 Years
COMPUTER OUTPUT LISTINGS
Preliminary Cash ........... 1 Year 6 Years
Check Listing .............. 1 Year 6 Years
Purchase ................... 1 Year 6 Years
Redemptions ................ 1 Year 6 Years
TAPE RETENTION
*Daily Back-Up Tapes ....... 14 Days
------------
* Daily back-up tapes contain a history of all the transactions on the system.
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SCHEDULE D
SECURITY PROCEDURES
HARDWARE SECURITY
The computer room facility which houses the hardware for the "PAS" system
is kept locked. Each of the two entry doors has a combination lock. The
combinations are known to a limited number of people in the Operating Area
and Pension Systems, are controlled by the Computer Room Manager and are
changed periodically. The combinations are changed immediately if any person
who knows the combinations is transferred out of the area or his or her
employment is terminated. In addition, the computer room is equipped with a
Halon Fire Suppression System.
SOFTWARE SECURITY
Each person has a personal password that enables him or her to log onto
the system. In addition, the system is programmed to recognize which files
this person can access or update. This password is known only to the person
and the System Administrator. Passwords are changed periodically to maintain
the security of the system. Passwords are immediately deleted if a person
transfers out or has his or her employment terminated. In addition, a system
security manual has been developed which outlines authorization levels for
users and audit procedures.
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SCHEDULE E
RECORDKEEPING FEE SCHEDULE
1. $1.92 per participant per year.
-- A participant with both an XXX rollover account and an XXX contributory
account will receive one charge.
-- A participant with both a TSA basic account and a TSA supplemental
account will receive one charge.
2. $.08 per automated payroll transaction.
3. $.12 per quarterly statement issued to participants.
4. $.40 per daily confirmation notice issued to participants.
5. $5.00 per client.
-- Fee charged monthly per client to commence upon first enrollment.
6. $5.00 tape mounting fee.
-- Charge for each payroll tape submitted by a client in excess of one per
week. To be charged once 52 tapes per year have been received.
-- Billed amounts to be submitted monthly.
7. $600 per month per variable investment division of the Separate Account
and $200 per month Guaranteed Rate Account.
8. $1.50 per manual transaction.
-- Only transaction input by ELAS.
-- Charges will be listed by the following categories, with backup details
available on request for each client.
*Lump Sum Contribution--one charge per contribution received per
participant account.
*Transfers--one charge per request per participant account.
*Lump Sum Distributions--one charge per request for distribution
from each participant.
*First Periodic Payments--one charge for initial payment.
*Maintenance Transactions (changes to master file for non-monetary
changes)--one charge for each request for a change initiated by
the participant.
9. $.75 per subsequent periodic payment charge per monthly check per
participant.
10. $1.00 per manual payroll deduction contribution.
11. $6.00 per enrollment.
-- Charge for establishment of participant account, including certificate
issuance.
12. Out of pocket expenses.
-- Billed amounts will be itemized by category (forms, stationery, postage,
telephone, etc.). And where possible sub-categorized for charges
relating directly to:
* Postage for confirmation notices
* Postage for quarterly statements
* Travel--administration of installed clients
* Other categories as applicable. $100 or more in order to be itemized.
13. Computer Equipment at $9,000 per month.
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