DISTRIBUTION AND SERVICING AGREEMENT
This DISTRIBUTION AND SERVICING AGREEMENT, dated as of May 1, 1994, is
made by and among Equico Securities, Inc. ("Equico"), The Equitable Life
Assurance Society of the United States ("Equitable") and Equitable Variable
Life Insurance Company ("Equitable Variable"), as follows:
WHEREAS, pursuant to a Distribution Agreement, dated as of May 1,
1994, Equico is the principal underwriter of The Xxxxxx River Trust ("Trust"),
a series mutual fund registered under the Investment Company Act of 1940 ("1940
Act") whose shareholders are separate accounts of Equitable and Equitable
Variable and of other insurance companies;
WHEREAS, both Equitable and Equitable Variable issue variable
insurance contracts ("Variable Contracts") whose net premiums or considerations
are allocated in whole or in part to the respective separate accounts of
Equitable and Equitable Variable for investment in the Trust, for direct
investment or for investment in other funding media ("Separate Accounts");
WHEREAS, units of interest in the Separate Accounts are registered
under the Securities Act of 1933 ("1933 Act") to the extent such registration
is required;
WHEREAS, Equitable and Equitable Variable are each broker-dealers
registered under the Securities Exchange Act of 1934, as amended ("1934 Act"),
and each is a member of the National Association of Securities Dealers, Inc.
("NASD");
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WHEREAS, the Variable Contracts (including all Variable Contracts
issued by Equitable Variable) are offered and sold by members of Equitable's
agency force, or by insurance brokers under contract with Equitable, who are
also registered representatives of Equico and of Equitable ("Agents");
WHEREAS, Equitable and Equitable Variable each desire to engage
Equico, a wholly-owned subsidiary of Equitable which is a registered
broker-dealer under the 1934 Act and a member of the NASD, to assume the
responsibilities set forth in this Agreement with respect to the distribution
of the Variable Contracts, including in particular the responsibility for
compliance with broker-dealer requirements under federal and any applicable
state or foreign securities laws and the NASD Rules of Fair Practice ("NASD
Rules") with respect to the offering of the Variable Contracts, and Equico
desires to assume such responsibilities;
WHEREAS, Equico desires to utilize Equitable's services and personnel
in carrying out certain of its responsibilities under this Agreement, and
Equitable is willing to furnish the same on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Distribution Responsibility for the Variable Contracts
Sec. 1.1 Equitable and Equitable Variable authorize Equico to act, and
Equico agrees to serve Equitable, as broker-dealer in connection with the
distribution of their respective Variable Contracts to the extent provided in
this
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Agreement. Equico shall be fully responsible for carrying out all compliance
and supervisory obligations in connection with the distribution of the Variable
Contracts, as required by the NASD Rules and by federal and any applicable
state or foreign securities laws. Equitable shall be fully responsible for
compensating the Agents for their sales of Variable Contracts, as provided in
Section 1.4.
Sec. 1.2 Without limiting the generality of Section 1.1, Equico agrees
that it shall be fully responsible for:
(A) Requiring that each person who is authorized to offer and
sell the Variable Contracts is duly registered as a representative of Equico
and is appropriately licensed, registered or otherwise qualified to offer and
sell the Variable Contracts under the federal securities laws and any
applicable securities laws of each state or other jurisdiction in which the
Variable Contracts offered by such person may be lawfully sold;
(B) Training, supervising and directing the Agents for
purposes of complying on a continuous basis with the NASD Rules and with
federal and state securities laws applicable in connection with the offer and
sale of the Variable Contracts. In this connection, Equico shall:
(i) Establish and implement reasonable written
procedures which provide for diligent supervision of sales practices of the
Agents;
(ii) Require that Agents shall recommend the
purchase of Variable Contracts only upon reasonable grounds to believe that the
purchase is
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suitable for each prospective purchaser, and verify their compliance with such
requirement;
(iii) Provide a sufficient number of registered
principals and an adequate compliance staff to carry out the responsibilities
set forth herein; and
(iv) Impose disciplinary measures on the Agents.
(C) Oversight of the securities activities of all persons
engaged directly or indirectly in operations of Equico, Equitable and Equitable
Variable related to the offer or sale of the Variable Products, each of whom
shall be considered a "person associated" with Equico, as defined in Section
3(a)(18) of the 1934 Act. Equico shall have full responsibility for each such
person with regard to his or her training, supervision and control, as
contemplated by Section 15 of the 1934 Act, and, in that connection, shall have
the authority to require that disciplinary action be taken with respect to such
persons.
Sec. 1.3 Equico represents that it is a broker-dealer duly registered
under the 1934 Act and is a member in good standing of the NASD and, to the
extent necessary to perform the activities contemplated hereunder, is duly
registered, or otherwise qualified, under the securities laws of every state or
other jurisdiction in which the Variable Contracts are available for sale, and
Equico agrees to maintain such status. Consistent with its designation as
distributor of the Variable Contracts, as provided in Section 1.1 of this
Agreement, Equico acknowledges that it may be deemed to be an "underwriter" or
a "principal underwriter" of the Separate Accounts under the federal securities
laws.
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Sec. 1.4 Equitable shall have exclusive responsibility for the payment
of commissions or other fees in accordance with the applicable agreements
between each Agent and Equitable relating to the Variable Contracts. All
compensation paid by Equitable to the Agents with respect to sales of the
Variable Contracts shall be paid by Equitable on its own behalf or on behalf of
Equitable Variable (with respect to sales of Variable Contracts issued by
Equitable Variable), and shall be reflected on the books and records of
Equitable and, to the extent related to Variable Contracts issued by Equitable
Variable, on the books and records of Equitable Variable. The responsibility of
Equitable shall include the performance of all activities necessary in order
that the payment of compensation hereunder complies with all applicable federal
securities laws and state securities and insurance laws. Equitable and
Equitable Variable retain the ultimate right to determine the rates of
commission and other fees to be paid to the Agents in connection with their
respective Variable Contracts. Nothing contained in this Agreement shall
obligate Equico to pay any commissions or other fees to Agents or to reimburse
any Agents for expenses incurred by them, nor shall Equico have any
responsibility for the adequacy or accuracy of any amount paid to an Agent in
connection with the sale of the Variable Contracts. Equico shall have no right
or interest whatsoever in any commissions or other fees payable to Agents by
Equitable or by Equitable Variable.
Sec. 1.5 Equitable represents that it is a broker-dealer duly
registered under the 1934 Act and is a member in good standing of the NASD. If
Equitable shall determine, in sole judgment, that such status is not required
for the purpose of properly discharging its responsibility under Section 1.4 of
this Agreement,
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Equitable may terminate its status as a registered broker-dealer without notice
to the other parties hereto.
Sec. 1.6 Equitable Variable agrees to cooperate fully with Equico and
with Equitable in the proper discharge of the responsibilities allocated to
them under this Article I. While undertaking to provide such cooperation and to
perform various activities on its own behalf hereunder, Equitable Variable
assumes no duties or responsibilities under this Agreement in its capacity as a
registered broker-dealer and, accordingly, shall be under no obligation to
maintain such status.
Sec. 1.7 Equico, Equitable and Equitable Variable shall each cause to
be maintained and preserved such accounts, books and other documents as are
required by the 1934 Act and 1940 Act and any other applicable laws and
regulations. In particular, without limiting the foregoing, Equico shall cause
all the books and records in connection with the offer and sale of the Variable
Contracts to be maintained and preserved in conformity with the requirements of
Rules 17a-3 and 17a-4 under the 1934 Act, to the extent that such requirements
are applicable to the Variable Contracts. The payment of premiums, purchase
payments, commissions and other fees and payments in connection with the
Variable Contracts shall be reflected on the books and records of Equitable and
of Equitable Variable, as provided in Section 1.4 hereof and as may otherwise
be required under applicable NASD regulations and federal and applicable state
securities laws requirements.
Sec. 1.8 Equico, Equitable and Equitable Variable shall each submit to
all regulators and administrative bodies having jurisdiction over the sales of
the
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Variable Contracts, present or future, any information, reports, or other
material that any such body by reason of this Agreement may request or require
pursuant to applicable laws or regulations. In particular, without limiting the
foregoing, Equitable and Equitable Variable agree that any books and records
which they maintain pursuant to Section 1.5 of this Agreement which are
required to be maintained under Rule 17a-3 or 17a-4 of the 1934 Act shall be
subject to inspection by the Securities and Exchange commission ("SEC") in
accordance with Section 17(a) of the 1934 Act.
Sec. 1.9 Equico and Equitable each agree and understand that all
documents, reports, records, books, files and other materials required under
applicable NASD regulations and federal and state securities laws relative to
the sales of Variable Contracts shall be the property of Equico, with the
exception of those books and records maintained by Equitable pursuant to
Section 1.4 which relate to sales compensation and shall be the joint property
of Equitable and Equico. If, however, such documents, reports, records, books,
files and other materials which are the property of Equico are required by
applicable regulation or law to be maintained also by Equitable or by Equitable
Variable, such material shall be the joint property of Equico, Equitable or
Equitable Variable. All other documents, reports, records, books, files and
other materials maintained relative to this Agreement shall be the property of
Equitable or of Equitable Variable, depending upon the identity of the issuer
of the Variable Contracts involved. Upon the termination of this Agreement, all
such material shall be returned to the applicable party.
Sec. 1.10 Equico, Equitable and Equitable Variable from time to time
during the term of this Agreement, shall allocate among themselves, subject to
a right of
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further delegation, the administrative responsibility for maintaining and
preserving the books, records and accounts kept in connection with the Variable
Contracts; provided, however, in the case of books, records and accounts kept
pursuant to a requirement of applicable law or regulation, the ultimate
responsibility for maintaining and preserving such books, records and accounts
shall be that of the party which is required to maintain or preserve such
books, records and accounts under the applicable law or regulation, and such
books, records and accounts shall be maintained and preserved under the
supervision of that party. Equico, Equitable and Equitable Variable shall cause
each other to be furnished with such reports as each may reasonably request for
the purpose of meeting its respective reporting and recordkeeping requirements
under such regulations and laws and under the insurance laws of the State of
New York and any other applicable states or jurisdictions.
ARTICLE II
Procedures for Sale of Variable Contracts
Sec. 2.1 Equitable and Equitable Variable each represent and warrant
that units of interest of their respective Separate Accounts offered under the
Variable Contracts are registered under the 1933 Act to the extent such
registration is required, that the Separate Accounts are registered under the
1940 Act unless exempt from such registration, and that the Variable Contracts
are qualified to be sold under the insurance laws and any applicable securities
laws of all states and other jurisdictions in which the Variable Contracts are
authorized for sale. Equitable and Equitable Variable each further represent
and warrant that each of them is a life insurance company duly organized under
the laws of the State of
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New York and in good standing and authorized to conduct business under the laws
of each state in which the Variable Contracts are offered and sold.
Sec. 2.2 Equico will require that the Agents use only the effective
prospectuses, statements of additional information ("SAIs") and other
authorized materials in soliciting and selling the Variable Contracts. Equico
is not authorized to give any information or to make any representations
concerning the Variable Contracts other than those contained in the current
prospectus or SAI therefor filed with the SEC or in such materials as may be
authorized by Equitable or by Equitable Variable.
Sec. 2.3 All applications for Variable Contracts shall be made on
application forms supplied by Equitable or by Equitable Variable, as
appropriate, and all payments collected by Equico shall be remitted by Equico
promptly in full, together with such application or enrollment forms and any
other required documentation, directly to Equitable or to Equitable Variable,
as appropriate, at the address indicated on such application or to such other
address as Equitable or Equitable Variable may, from time to time, designate in
writing. Equico shall review all such applications for suitability. Checks or
money orders in payment on any Variable Contract shall be drawn to the order of
"The Equitable Life Assurance Society of the United States" or "Equitable
Variable Life Insurance Company", as appropriate. All applications for Variable
Contracts shall be subject to acceptance or rejection by Equitable or by
Equitable Variable at their respective discretion.
Sec. 2.4 All money payable in connection with any of the Variable
Contracts, whether as premiums, purchase payments or otherwise, and whether paid
by, or on
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behalf of any applicant or contractowner, is the property of Equitable or of
Equitable Variable and shall be transmitted promptly in accordance with the
administrative procedures of Equitable and Equitable Variable without any
deduction or offset for any reason, including by example but not limitation,
any deduction or offset for compensation claimed by Equico or payable to the
Agents. No cash payments shall be accepted by Equico in connection with the
Variable Contracts.
Sec. 2.5 Equitable and Equitable Variable shall be responsible for
payment of the costs of printing the prospectuses, SAIs and sales material used
in connection with the solicitation of applications for the Variable Contracts
and to allocate such costs between themselves. Equitable and Equitable Variable
shall provide to Equico copies of such prospectuses, SAIs and sales material in
such number as Equico shall reasonably request. Equitable and Equitable
Variable shall make available to Equico copies of all financial statements and
other documents that Equico shall reasonably request for use in connection with
the distribution of the Variable Contracts.
Sec. 2.6 Notwithstanding anything in this Agreement to the contrary,
Equico may enter into sales agreements with independent broker-dealers for the
sale of the Variable Contracts, subject to the prior written approval of
Equitable and of Equitable Variable of each such sales agreement and the terms
thereof. All such sales agreements entered into by Equico shall provide that
each independent broker-dealer will assume full responsibility for continued
compliance by itself and its associated persons with the NASD Rules and
applicable federal and state securities and insurance laws. All associated
persons of such independent broker-dealer soliciting applications for the
Variable Contracts shall be duly and
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appropriately licensed or appointed for the sale of the Variable Contracts
under the NASD Rules and federal and state securities and insurance laws in
which such person shall offer or sell the Variable Contracts.
Sec. 2.7 Equitable shall apply for and maintain the proper insurance
licenses for each of the Agents selling the Variable Contracts in all states or
jurisdictions in which the Variable Contracts are offered for sale by such
Agent. Equitable and Equitable Variable reserve the right to refuse to appoint
any proposed agent, or independent broker-dealer, and to terminate an Agent or
independent broker-dealer once appointed. Equitable and Equitable Variable
shall promptly notify Equico of each such termination. Equitable agrees to be
responsible for all licensing or other fees required under pertinent state
insurance laws to properly authorize Agents for the sale of the Variable
Contracts; however, the foregoing shall not limit Equitable's right to collect
such amount from any person or entity other than Equico.
Sec. 2.8 The parties hereto recognize that any person selling the
Variable Contracts as contemplated by this Agreement shall be acting as an
insurance agent of Equitable or of Equitable Variable or as an insurance
broker, and that the rights of Equico to supervise such persons shall be
limited to the extent specifically described herein or required under
applicable federal or state securities laws or NASD regulations. Such persons
shall not be considered employees of Equico and shall be considered agents of
Equico only as and to the extent required by such laws and regulations.
Further, it is intended by the parties hereto that such persons are and shall
continue to be considered to have a common law independent contractor
relationship with Equitable and Equitable Variable and not to be common law
employees of Equitable or of Equitable Variable, unless any contract
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between Equitable and any person selling the Variable Contracts specifically
provides otherwise.
Sec. 2.9 Consistent with the responsibility of Equico to discharge all
compliance and supervisory obligations relating to the distribution of the
Variable Contracts as provided in this Agreement and consistent with the
authority given to Equico hereunder, Equitable and Equitable Variable shall
retain the ultimate right of control over, and responsibility for, the
issuance, servicing and marketing of their respective Variable Contracts. In
that connection, Equitable and Equitable Variable shall review and approve all
advertising concerning the Variable Contracts issued by each of them; however,
Equico shall be responsible for filing such materials, as required, with the
NASD and with state securities regulators and for obtaining such approvals as
may be necessary.
Sec. 2.10 Unless otherwise agreed in writing by Equitable or by
Equitable Variable, neither Equico nor any Agent nor any independent
broker-dealer shall have an interest in any surrender charges, deductions or
other fees payable to Equitable or to Equitable Variable.
ARTICLE III
Services and Personnel Provided by Equitable
Sec. 3.1 Equitable agrees to furnish compliance and related support
services, including personnel, to assist Equico in the performance of the
services which Equico is required to provide hereunder. In furnishing such
services, all personnel of Equitable shall be subject at all times to the
supervision and control of Equico.
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ARTICLE IV
Compensation and Expenses
Sec. 4.1 Equico shall be compensated, not less frequently than
quarterly, by Equitable and by Equitable Variable for its services under this
Agreement in an aggregate annual amount which shall be equal to the actual
expenses incurred by Equico to provide compliance and related support services,
plus a percentage of such expenses which shall approximate the annual rate of
profit earned by Equico from its performance of comparable services for
unaffiliated clients.
Sec. 4.2 Equico shall pay the costs and expenses, direct and indirect,
incurred by Equitable in furnishing services and personnel, pursuant to Article
III of this Agreement. In determining the basis for the apportionment of
expenses, specific identification or estimates based on time, company assets,
square footage or any other mutually agreeable method providing for a fair and
reasonable allocation of cost may be used, provided such method is in
conformity with the requirements of Section 1712 of the New York Insurance Law
and New York Insurance Department Regulation No. 33. The charge to Equico for
such apportioned expenses shall be at cost as described in this Section 4.2.
Sec. 4.3 Within 45 days after the end of each calendar quarter, and
more often if desired, Equitable shall submit to Equico a statement of
apportioned expenses showing the basis for such apportionment; and settlement
shall be made within 15 days thereafter. The statement of apportioned expenses
shall set forth in reasonable detail the nature of the expenses being
apportioned and other relevant information to support the charge.
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Sec. 4.4 To enable Equitable to compensate Agents for the sale of
Variable Contracts issued by Equitable Variable, Equitable Variable shall
furnish Equitable with a schedule of the commissions and other fees payable
with respect to each form of Variable Contract issued by it, together with a
list of rules and procedures applicable to the payment of such compensation.
Equitable Variable agrees to reimburse Equitable for commissions and service
fees (not in excess of the amounts specified by Equitable Variable) paid to the
Agents for the sale of its Variable Contracts pursuant to Section 1.4 of this
Agreement.
ARTICLE V
Term of Agreement
Sec. 5.1 Subject to termination as herein provided, this Agreement
shall remain in full force and effect for a two-year period commencing on the
date first above written, and this Agreement shall continue in full force and
effect from year-to-year thereafter, until terminated as herein provided.
Sec. 5.2 This Agreement may be terminated by any party hereto on not
less than 60 days' prior written notice to the other parties or by an agreement
in writing signed by all of the parties hereto, except that data processing
services may not be terminated on less than 180 days' prior written notice, if
requested by Equico in writing promptly following its receipt of written notice
of termination of this Agreement. This Agreement shall automatically be
terminated in the event of its assignment.
Sec. 5.3 Upon termination of this Agreement, all authorizations,
rights, and obligations shall cease except the obligations to settle accounts
hereunder,
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including the settlement of monies due in connection with Variable Contracts in
effect at the time of termination or issued pursuant to applications received
by Equitable or by Equitable Variable prior to termination.
ARTICLE VI
Miscellaneous
Sec. 6.1 Should an irreconcilable difference of opinion arise between
or among the parties to this Agreement as to the interpretation of any matter
respecting this Agreement, it is hereby mutually agreed that such differences
shall be submitted to arbitration as the sole remedy available to the parties.
Such arbitration shall be in accordance with the rules of the American
Arbitration Association, the arbitrators shall have extensive experience in the
insurance industry, and the arbitration shall take place in New York, New York.
Sec. 6.2 For purposes of this Agreement, the term "Variable Contracts"
shall not include any variable insurance contract issued by Equitable which is
not offered and sold by employees or agents of Equitable.
Sec. 6.3 This Agreement replaces the Sales Agreement, dated December
23, 1985, as amended, between Equitable Variable and Equitable, which shall
terminate on the effective date hereof.
Sec. 6.4 If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby.
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Sec. 6.5 This Agreement constitutes the entire agreement between the
parties hereto and may not be modified except in a written instrument executed
by all parties hereto.
Sec. 6.6 This Agreement shall be subject to the provisions of the 1934
Act and, to the extent applicable, the 1940 Act and the rules, regulations and
rulings thereunder and of the NASD, from time-to-time in effect, including such
exemptions from the 1940 Act as the SEC may grant, and the terms hereof shall
be interpreted and construed in accordance therewith.
Sec. 6.7 This Agreement shall be interpreted in accordance with the
laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officials thereunto duly authorized, as of the
day and year first above written.
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx
Chairman and
Chief Executive Officer
EQUITABLE VARIABLE LIFE
INSURANCE COMPANY
By: /s/Xxxxxx X. Xxxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxxx
Senior Vice President
EQUICO SECURITIES, INC.
By: /s/Xxxxxxx X. Silver
---------------------------------
Xxxxxxx X. Silver
President and
Chief Operating Officer
[5292/430_1]
23208/HWO_1
