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:
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ARTICLE I.
Distribution Responsibility for the Variable Contracts
ss.1.1 Equitable and Equitable Variable authorize Equico to act, and
Equico agrees to serve, as broker-dealer in connection with the distribution of
their respective Variable Contracts to the extent provided in this 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.
ss.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:
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(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
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.
ss.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
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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.
ss.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 by Equitable Variable.
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ss.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 its sole judgment, that such status is not required for the
purpose of properly discharging its responsibility under Section 1.4 of this
Agreement, Equitable may terminate its status as a registered broker-dealer
without notice to the other parties hereto.
ss.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.
ss.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
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required under applicable NASD regulations and federal and applicable state
securities laws requirements.
ss.1.8 Equico, Equitable and Equitable Variable shall each submit to all
regulators and administrative bodies having jurisdiction over the sales of the
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 SEC in accordance with Section 17(a) of the 1934 Act.
ss.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 sale 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
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termination of this Agreement, all such material shall be returned to the
applicable party.
ss.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 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
ss.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
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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 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.
ss.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 Securities and Exchange Commission ("SEC") or in such
materials as may be authorized by Equitable or by Equitable Variable.
ss.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
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to acceptance or rejection by Equitable or by Equitable Variable at their
respective discretion.
ss.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 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.
ss.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.
ss.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
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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 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.
ss.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.
ss.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
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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
between Equitable and any person selling the Variable Contracts specifically
provides otherwise.
ss.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 Contacts 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.
ss.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.
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ARTICLE III.
Services and Personnel Provided by Equitable
ss.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.
ARTICLE IV.
Compensation and Expenses
ss.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.
ss.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
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Department Regulation No. 33. The charge to Equico for such apportioned expenses
shall be at cost as described in this Section 4.2.
ss.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.
ss.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
ss.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.
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ss.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 that 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.
ss.5.3 Upon termination of this Agreement, all authorizations, rights,
and obligations shall cease except the obligations to settle accounts hereunder,
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
ss.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.
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ss.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.
ss.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.
ss.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.
ss.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.
ss.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.
ss.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
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Xxxxxx X. Xxxxxx
Chairman and
Chief Executive Officer
EQUITABLE VARIABLE LIFE
INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
Senior Vice President
EQUICO SECURITIES, INC.
By: /s/ Xxxxxxx X. Silver
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Xxxxxxx X. Silver
President and
Chief Operating Officer
