EXHIBIT (a)(6)
AMENDED AND RESTATED
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
AMENDED AND RESTATED
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
THIS AGREEMENT, dated as of January 1, 1999 (this "Agreement"), is made by
and between Alliance Capital Management L.P. (together with any affiliated
successor to its business, "Alliance"), Alliance Corporate Finance Group
Incorporated ("Corporate Finance"), an indirect wholly owned subsidiary of
Alliance, and The Equitable Life Assurance Society of the United States
("Client").
WITNESSETH:
WHEREAS, Client desires to avail itself of the experience, analysis and
advice of Alliance and Corporate Finance and to have them provide the services
hereinafter set forth upon the terms and conditions contained in this
Agreement;
WHEREAS, Client is an investment manager as that term is used in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), for the
various pension plans which participate in certain separate accounts of Client
and, in meeting its responsibilities as investment manager to such accounts,
Client desires to avail itself of the experience, advice, assistance and
facilities of Alliance and Corporate Finance and to have them undertake the
duties and responsibilities set forth in this Agreement upon the following
terms and conditions;
WHEREAS, Alliance and Corporate Finance are willing to perform such
services and undertake such duties and responsibilities upon such terms and
conditions;
WHEREAS, Alliance, Corporate Finance and Client previously entered into an
Investment Advisory and Management Agreement, dated as of July 22, 1993, as
amended (the "Initial Advisory Agreement"), and a related Accounting,
Valuation, Reporting and Treasury Services Agreement, dated as of July 22,
1993, as amended (the "Initial Accounting Agreement"); and
WHEREAS, Alliance, Corporate Finance and Client desire to amend the
Initial Advisory Agreement and the Initial Accounting Agreement with respect to
the General Accounts (as hereinafter defined) but not with respect to any of
the Separate Accounts (as hereinafter defined) as of the date hereof and
thereafter to continue the arrangements and understandings set forth in such
agreements, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereby amend and restate the Initial Advisory
Agreement as follows:
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SECTION 1. Investment Advisory Services. As referred to in this Agreement,
the term "Adviser" refers to each of Alliance and Corporate Finance. On and
after the date hereof, Adviser will act as investment adviser with respect to
those certain assets which Client designates Adviser to manage and which are
held in (i) segments of its general account and its Separate Accounts 43, 46
and 48 that are evidenced by securities or interests in joint ventures other
than asset classes or portfolios listed in Schedule 1 attached to and made a
part of this Agreement (the "General Accounts") and (ii) Separate Accounts
other than Separate Accounts 43, 46 and 48 and the separate accounts described
in Schedule 2 attached to and made a part of this Agreement (the included
Separate Accounts being referred to herein as the "Separate Accounts") (the
General Accounts and the Separate Accounts being collectively referred to as
the "Accounts"). Alliance and Client have agreed to a list specifying the asset
categories in the General Accounts and the Separate Accounts with respect to
which any of Alliance or Corporate Finance may provide advisory services in
accordance with the terms of this Agreement. As regards such asset categories
and Separate Accounts and such services, and related matters including
recommendations and communications hereunder, references to Adviser shall be to
the company so specified.
In deciding on the manner in which to recommend the assets be invested,
Adviser will act in accordance with the investment policy statements or other
similar guidelines which are furnished in writing by Client (the "Investment
Guidelines"). Adviser will make recommendations with respect to the investment
of the Accounts. Recommendations will be communicated to an appropriate
investment officer of Client and Client will make investment decisions which
will be communicated in writing or orally (in which case, they shall be
promptly confirmed in writing) to Adviser.
Where Client has instructed Adviser that it wishes to vote the proxies for
any shares of stock or other voting securities held in the Accounts, Adviser
may make recommendations to Client on the voting of such proxies.
Adviser shall use its best efforts to ensure that recommendations made
pursuant to this Agreement comply with all applicable provisions of the New
York Insurance Law of which it has been advised by Client or of which it is
otherwise aware; provided, however, that ultimate responsibility for compliance
shall remain with Client.
Nothing herein shall be deemed to preclude Client from arranging to
receive investment advisory services from other investment advisers respecting
any Client assets, including any assets in the Accounts.
SECTION 2. Investment Management Services. Adviser is hereby granted the
following power and authority with respect to the Accounts:
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Adviser is authorized to place orders for the execution of securities
transactions for the Accounts as may be recommended to and accepted by Client
with or through such brokers, dealers or issuers as Adviser may select in
accordance with Section 5 below. Adviser recognizes that it will be a fiduciary
under ERISA with respect to the Separate Accounts. Subject to those obligations
and its policy to allocate investment opportunities among clients and among the
Accounts over a period of time on a fair and equitable basis, transactions in
securities may be effected on behalf of clients of Adviser other than Client
from whom Adviser has discretionary trading or investment authority prior to
the time that recommendations for transactions in the same securities may be
communicated to Client (or executed by or on behalf of Client), and at
different prices.
Securities held in the Accounts may be loaned by Adviser to appropriate
institutions in accordance with the prior written consent of Client as set
forth in this Section 2.
In connection with its management authority over the assets of the
Accounts, Adviser will vote the proxies for all shares of stock or other voting
securities held in the Accounts, unless otherwise instructed in writing by
Client as set forth in Section 1.
Adviser shall use its best efforts to ensure that investments undertaken
pursuant to this Agreement comply with all applicable provisions of the New
York Insurance Law of which it has been advised by Client or of which it is
otherwise aware; provided, however, that ultimate responsibility for compliance
shall remain with Client.
SECTION 3. Custody and Reports to Client Records. Client will either
maintain custody itself or establish and maintain for the term of this
Agreement a custody account or accounts with The Chase Manhattan Bank, N.A. or
with another New York bank or banks mutually satisfactory to Client and Adviser
(the "Custodian") for all assets of the Accounts. All such assets shall be and
remain the property of and shall remain under the ultimate control of Client.
Client will itself and will cause the Custodian to inform Adviser promptly of
all assets placed in the Accounts and will establish reporting and accounting
arrangements such that Adviser will be fully informed at all times as to the
assets in the Accounts. Adviser shall be fully protected and indemnified by
Client in relying on such reporting and accounting arrangements. Adviser will
furnish to Client such reports as Client and Adviser may agree to in writing
from time to time. Adviser shall meet with designated representatives of Client
once each calendar quarter to review the investment performance of the Accounts
and such other matters as Client may reasonably request.
Client shall have the right to review the books, records and accounts of
Adviser relating to the assets from time to time in the Accounts upon giving
reasonable notice of
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its intent to conduct such a review. In the event of such review, Adviser shall
give to Client reasonable cooperation and access to all books, records and
accounts necessary to such review. Each party shall be and remain sole owner of
its own records, including but not limited to business and corporate records,
regardless of the use or possession by either party of the other party's
records. All records relating to the Accounts (or copies thereof) shall be
turned over to Client, or as it may direct, upon termination of this Agreement.
SECTION 4. Fee for Services. Client will pay Adviser fees for services
performed by Adviser under this Agreement in accordance with Appendix I and
Appendix II annexed to and made a part of this Agreement. The fees may be as
mutually adjusted by Client and Adviser; provided, however, that the fees for
investments receiving performance fee treatment shall continue unchanged so
long as such investments are subject to this Agreement; and provided, further,
that prior to December 31, 2003, there shall be no change in the asset-based
annual fee rates set forth in Appendix I in respect of the following General
Account asset classes: Core Public Bonds, Core Private Placements, Public High
Yield Bonds, Emerging Markets and Limited Partnerships/Enhanced Return Funds
other than those assets in such classes specifically agreed to by Client or
Adviser (together the "General Account Classes").
The total annual fees paid to Adviser pursuant to this Section 4 for
services in respect of assets in the General Account Classes plus the total
annual fees paid to Adviser with respect to the corresponding general account
asset classes managed by Adviser pursuant to the Investment Advisory Agreement,
dated as of July 22, 1993, between the Adviser and The Equitable of Colorado,
Inc., as amended, plus the annual asset-based consulting fees set forth in
Appendix I with respect to services for the DLJ Bridge facility, the DLJ Senior
Debt facility, and the alternative investments recommended by Gregoire Advisory
Services, Inc. or any successor thereto for each calendar year beginning
January 1, 1999, to and including the year beginning January 1, 2003, shall not
be less than $38 million (the "Fixed General Account Aggregate Fee Amount"),
provided that for each year the Fixed General Account Aggregate Fee Amount
shall be decreased in an amount which shall be equal to the reduction in the
aggregate amount of fees actually earned in respect of any of the General
Account Classes for the relevant year, as calculated in accordance with
Appendix I, to the extent such reduction in fees is due to:
(a) the disposition, by sale or reinsurance, by Client of a book of
insurance, such that Client ceases to own some or all of the assets in a
General Account Class;
(b) the net reduction in General Account assets resulting from the
movement of policyholder assets from the General Accounts to separate accounts
with respect to which Adviser provides advisory services;
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(c) the investment by Client of General Account Class assets in any of the
investment vehicles as are agreed to by Client and Adviser and listed on
Schedule 3 hereto, as such schedule is amended from time to time, net of
amounts of uninvested capital returned from such investment vehicles; or
(d) any reduction in value of assets in General Account Classes resulting
from the writing down to fair value of the original cost of any security held
in a General Account pursuant to FASB 115 (accounting for certain investments
in debt and equity securities).
Solely in the case of an event described in (c) above, the asset-based
consulting fee rate specified in Appendix I shall not be included in the fee
rate used to calculate the applicable reduction amount.
SECTION 5. Brokerage. Adviser, in its sole discretion, will seek to obtain
the best prices and execution for all orders placed for the Accounts,
considering all circumstances. Adviser may, in the allocation of business,
consider the statistical data, research and other services furnished to Adviser
by brokers and dealers which, to the extent permitted by ERISA only in the case
of the Separate Accounts, may include affiliates of Client without having to
demonstrate that such services are of a direct benefit to the Accounts. Such
services may be used by Adviser in connection with its other advisory
activities or investment operations. The costs of using such brokers and
dealers may be somewhat higher than the costs of brokers or dealers who do not
provide such services. Transactions for the Accounts may be executed as part of
concurrent authorizations to purchase or sell the same security for other
accounts served by Adviser. When these concurrent transactions occur, Adviser's
objective will be to allocate the executions so as not to discriminate among
accounts. From time to time certain affiliates of Adviser which are
broker-dealers may effect transactions on behalf of the Separate Accounts but
only if Adviser complies with the provisions of Prohibited Transaction
Exemption 86- 128 issued by the U.S. Department of Labor under ERISA or any
amendment or successor to such Exemption. Client acknowledges that from time to
time certain affiliates of Adviser which are members of a national securities
exchange may effect transactions on behalf of the Accounts on such exchange
pursuant to Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder. Such affiliates may receive compensation in connection
with such transaction. Client consents to such affiliates retaining such
compensation pursuant to Section 11(a) of the Securities Exchange Act and Rule
11a2-2(T) thereunder.
SECTION 6. Representations, Warranties and Responsibilities of Adviser.
Adviser represents and warrants that each of Alliance, Corporate Finance and
any
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subadviser appointed pursuant to Section 16 is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"). If either of Alliance or Corporate Finance should, at any time, cease to
be so registered, such entity will promptly notify Client. Adviser makes no
representation or warranty as to the investment performance or profitability of
the Accounts.
SECTION 7. Client Representations and Warranties. Client represents and
warrants that this Agreement has been duly authorized by all necessary action,
corporate and other, that it constitutes the legal, valid and binding
obligation of Client, and that the terms of this Agreement do not conflict with
any material obligation by which it is bound, whether arising by contract,
operation of law or otherwise.
SECTION 8. Other Activities of Adviser. It is understood that Adviser and
any of its affiliates may engage in any other business and furnish investment
management and advisory services to others who may have investment policies
similar to those followed by Adviser with respect to the Accounts. Adviser will
be free, in its discretion, to make recommendations to others, or effect
transactions on behalf of itself or for others which may be the same as or
different from those effected on behalf of the Accounts. Subject in the case of
the Separate Accounts to the requirements of ERISA, (i) nothing contained in
this Agreement shall prevent Adviser or any of its affiliates, acting either as
principal or agent on behalf of others, from buying or selling, or from
recommending to or directing any other account to buy or sell, at any time,
securities of the same kind or class directed by Adviser to be purchased or
sold for the Accounts; and (ii) it is understood that Adviser, its affiliates,
and any officer, director, stockholder, employee or any member of their
families may have an interest in a particular transaction or in securities of
the same kind or class as those whose purchase or sale Adviser may recommend or
effect on behalf of the Accounts.
Subject in the case of the Separate Accounts to its obligations as a
fiduciary under ERISA, Adviser shall not be obligated to utilize for the
Accounts any particular investment opportunity which comes to it. Unless
Adviser determines in its sole discretion that it may appropriately do so,
Adviser may refrain from purchasing on behalf of the Accounts or rendering any
advice or services concerning securities of (i) companies of which Adviser, its
affiliates, or any of its or their officers, directors, or employees are
directors or officers, (ii) companies for which Adviser or its affiliates act
as financial adviser or underwriter, or (iii) companies about which Adviser or
any of its affiliates have information which Adviser deems confidential or
non-public.
SECTION 9. Liabilities of Adviser. Adviser shall discharge its duties with
respect to the Separate Accounts hereunder solely in the interest of the
participants in the plans participating in the Accounts and their beneficiaries
with the care, skill, prudence, and
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diligence under the circumstances then prevailing that a prudent man acting in
a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. To the extent permitted by
law including in the case of the Separate Accounts the applicable provisions of
ERISA, Adviser, its affiliates, directors, officers, or employees will not be
liable for any action, omission, information or recommendation in connection
with this Agreement or investment of the Accounts, except in the case of their
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties and obligations hereunder.
SECTION 10. Assignment. No assignment, within the meaning of such term
under the Advisers Act and the rules thereunder, of this Agreement shall be
made by Adviser or Client. Alliance agrees to notify Client of any changes in
the membership of the general partner or partners of the Alliance within a
reasonable time after such change.
SECTION 11. Termination of Agreement. This Agreement will continue through
December 31, 1999. After such date this Agreement shall be effective for
successive 12- month periods unless either Client or Alliance notifies the
other in writing not later than the first day of any such 12-month period that
this Agreement shall not be renewed at the end of such period. Nonrenewal of
this Agreement by Client shall constitute a termination of this Agreement,
which termination may either be for Cause (as defined below) or not for Cause.
Notwithstanding the foregoing, after the end of the initial 12- month period,
Client may terminate this Agreement upon 90 days written notice to Alliance and
Alliance may terminate this Agreement upon 120 days written notice to Client,
and Client may terminate this Agreement at any time for Cause (as defined
below). Pursuant to various agreements with Client and its life insurance
subsidiary, The Equitable of Colorado, Inc., Alliance and Corporate Finance are
providing investment advisory services and Alliance is providing accounting,
valuation, reporting and treasury services to Client and such subsidiaries.
Client and Adviser agree that it would not be appropriate for Client or Adviser
to be able to terminate this Agreement without terminating concurrently all
such agreements. Therefore, Client and Adviser agree that a notice of
termination under this Agreement shall be deemed to be a notice of termination
under each such other agreement effective on the termination of this Agreement
and that neither Client nor Adviser shall give a termination or nonrenewal
notice under any other such agreement between Client and Adviser other than a
deemed notice of termination as a result of the giving of a notice of
termination under this Agreement. Upon termination of this Agreement, Adviser
will furnish to Client a report containing, among other things, a statement of
investments of the Accounts as of the date of termination and Client will pay
to Adviser all fees accrued and unpaid to the date of termination in accordance
with Appendix I.
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If Client or Alliance gives notice of termination of this Agreement,
Client and Adviser will take all necessary steps, including, without
limitation, Adviser providing Client with access to and the opportunity to
consult with Adviser's employees, in order to facilitate a smooth transition of
the records and responsibilities so as to avoid a disruption of services to
Client. Any such transition shall begin on the giving of such termination
notice, and the parties shall use their best efforts to complete such
transition by the termination date. If such transition is not completed by the
termination date and if Adviser continues to provide services or undertake
duties and responsibilities under this Agreement, this Agreement, including
without limitation the fee provisions, shall be deemed to continue in effect
with respect to the services so provided or duties and responsibilities so
undertaken.
Client anticipates that if notice of termination of this Agreement is
given, Client for itself and its subsidiaries and its and their servicers may
wish to purchase at fair value from Adviser a perpetual, royalty-free
non-exclusive license or licenses to all or part of the application, operating
and reporting software and systems used by Adviser in the performance of its
accounting, valuation, reporting and treasury services for Client and its life
insurance subsidiaries under this Agreement and the other agreements referred
to above. If notice of termination of this Agreement is given and if Client
wishes to pur chase such a license or licenses, it shall give notice in writing
to Adviser promptly after the giving of the termination notice, and Adviser
agrees to negotiate in good faith with Client the terms and conditions of such
a license or licenses. Any such license or licenses would be subject to
obtaining required approvals, if any, from third parties and to the payment of
any licensing fees to third parties.
Notwithstanding anything to the contrary herein contained, if this
Agreement is terminated when any outstanding investment is receiving D-Fund,
Side-by-Side or other performance fee treatment as provided in Appendix I, then
as to any such investment Adviser shall continue to provide investment advice
to Client and continue to receive D-Fund, Side-by-Side or other performance fee
payments, as the case may be, until such investment is disposed of by Client to
an unrelated third-party purchaser.
If Adviser terminates this Agreement for any reason, then Adviser shall
not be entitled, with respect to any period after the effective date of
termination, to any fees of any kind, including, without limitation, any fees
contemplated by Section 4. Notwithstanding anything to the contrary herein
contained, Adviser may terminate this Agreement if Client fails to pay any fees
due and owing under this Agreement and such failure remains uncured for a
period of 90 days after receipt by Client of written notice of such breach
during which period Client and Adviser shall work together to resolve any
disagreement concerning the calculation of such fees; provided, however, that
if the disagreement concerns fees for investments receiving performance fee
treatment as
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provided in Appendix I, and Client has paid the undisputed amount of all such
fees for investments receiving such treatment as to which there is no
disagreement, termination pursuant to this provision by reason thereof shall
not become effective until completion of any arbitration under Section 14 of
this Agreement with respect to the calculation of such fees unless otherwise
provided in the arbitration proceedings, and provided further that if Client
has paid to Adviser for any year the Fixed General Account Aggregate Fee
Amount, as adjusted, pursuant to the second paragraph of Section 4, then
failure by Client to pay any amount of fees in excess of such Fixed General
Account Aggregate Fee Amount, as adjusted, after the notice and cure provisions
specified above have been fulfilled, shall entitle the Adviser to terminate
this Agreement, except that such a termination shall be deemed to be a
termination by Client for Cause.
For purposes of this Agreement, "Cause" shall mean willful misfeasance,
gross negligence or reckless disregard of the duties and obligations hereunder
on the part of Alliance or Corporate Finance, the material breach by Adviser of
any provision hereof, any determination by the U.S. Securities and Exchange
Commission (the "SEC"), other regulatory body or court of competent
jurisdiction materially barring or restricting Alliance and Corporate Finance,
taken as a whole, from acting as an investment adviser, or the imposition by
the SEC, other regulatory body or court of competent jurisdiction of material
limitations on the ability of Alliance and Corporate Finance, taken as a whole,
to provide services under this Agreement.
SECTION 12. Change or Modification of Agreement. This Agreement may not be
amended, changed or modified except by an instrument in writing signed by
Client and Alliance. Any such amendment, change or modification shall comply
with all applicable requirements of the New York Insurance Law.
SECTION 13. Entire Agreement Severability. This Agreement constitutes the
entire understanding and agreement between Client and Adviser relating to the
services provided for in this Agreement and supersedes all other prior
agreements and under standings, whether written or oral, between Client and
Adviser concerning this subject matter. If any term or provision of this
Agreement shall be held to be invalid or unenforceable it shall not render
invalid or unenforceable the remaining terms or provisions of this Agreement or
affect the validity or enforceability of any of the terms or provisions of this
Agreement.
SECTION 14. Arbitration. Should an irreconcilable difference of opinion
between Adviser and Client arise 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 both parties.
Such arbitration shall be in accordance with the rules of the American
Arbitration Association, the arbitrators shall have extensive
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experience in the insurance and/or investment advisory industries, and the
arbitration shall take place in New York, New York.
SECTION 15. Directions to Adviser and Notices. All Investment Guidelines
or general directions by Client to Adviser shall be in writing signed by the
chief investment officer of Client or his or her designee. Adviser may accept
the same as conclusive evidence of the truth and accuracy of the statements
therein contained and shall be fully protected and indemnified by Client in
relying thereon. Any Investment Guideline, direction, notice, report, or other
communication required or permitted to be furnished or given hereunder will be
furnished or given in writing and received by Client or Adviser, as the case
may be, at the following addresses:
If to Client:
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
addressed to the attention of the person or persons designated by Client to
receive the direction, notice, report or other communication or, in the absence
of such designation, the Secretary.
If to Alliance:
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
If to Corporate Finance:
Alliance Corporate Finance Group Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Secretary
SECTION 16. Subadvisers. Adviser may contract with one or more direct or
indirect subsidiaries of Alliance or Albion Alliance LLC for the performance of
its obligations hereunder as an entirety or with respect to specified asset
classes or portfolios; provided, however, that the terms and conditions of such
contracts shall not be inconsistent herewith and that Adviser shall not be
relieved of its duties and obligations to Client hereunder. Adviser shall be
solely liable for all fees owed by it under any such contract, irrespective of
whether Adviser's compensation pursuant hereto is sufficient to pay such fees.
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SECTION 17. Governing Law. The provisions of this Agreement will be
construed and interpreted in accordance with the laws of the State of New York
as at the time in effect, without giving effect to the conflicts of laws
principles thereof.
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IN WITNESS WHEREOF, Adviser and Client have caused this Agreement to be
executed by their representatives as of the date and year first written above.
ALLIANCE CAPITAL MANAGEMENT L.P., or
any affiliated successor to its business
By: ALLIANCE CAPITAL MANAGEMENT
CORPORATION, its General Partner
By: /s/ Xxxxx X. Xxxxxx, Xx.
-------------------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
Title: Senior Vice President and General
Counsel
ALLIANCE CORPORATE FINANCE GROUP
INCORPORATED
By: /s/ Xxxxxx X. XxXxxxx
-------------------------------------------
Name: Xxxxxx X. XxXxxxx
Title: Vice President and General Counsel
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By: /s/ Xxxxx X. Xxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President and Treasurer
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Schedule 1 to Amended and Restated Investment Advisory and Management
Agreement, dated as of January 1, 1999, between Alliance Capital
Management L.P., Alliance Corporate Finance Group Incorporated and
The Equitable Life Assurance Society of the United States.
Excluded Asset Classes and Investment Products
The asset classes and investment products set forth below held or to be
held in Client's General Account are not included in the Accounts for which
Adviser is to act as investment adviser under the Amended and Restated
Investment Advisory and Management Agreement, dated as of January 1, 1999 (the
"Agreement"), notwithstanding that they are evidenced by securities or
interests in joint ventures. These excluded asset classes and investment
products are not subject to any provisions of the Agreement, including, without
limitation, Section 4 thereof.
Real Estate Assets
- Mortgage loans
- Real estate joint ventures
- Specific real-estate related securities designated by Client
- Real estate owned by Client
Assets Managed by Client's Treasurer
- Short-term investments designated by Client
Assets Managed by Client's Corporate Operations
- Securities issued by Client's affiliates, including any intercompany
notes evidencing borrowings
- Investments made pursuant to funds and programs managed or advised by
DLJ
Other Assets
- Equitable Deal Flow Fund L.P.
- Securities issued by collateralized bond obligation vehicles for
which Adviser or its affiliates act as investment adviser
- Investments made pursuant to the Community Investment Program
- Derivative Transactions with respect to assets that are in the
Accounts
S-1-1
- Limited Partnership/Enhanced Return Funds listed below
- Equitable Diversified Holdings I
- Equitable Diversified Holdings II
- Albion Alliance Mezzanine Fund, L.P.
- The Czech Direct Equity Fund I, L.P.
- The Mercosul Equity Fund, L.P.
- Alliance Capital Funding, LLC
- Alliance Investment Opportunity Fund (U.S.), LLP
- Alliance Alpha I Partners, L.P.*
- Alliance Scan East Fund, L.P.*
- APA Excelsior III, L.P.*
- The US Promotional Fund, L.L.C.*
- Alliance Collateralized Holdings Series 1997-1: Class C Notes
- Alliance Investments, Limited: Class D Notes
- Alliance Holdings International II, Ltd.: Subordinated Notes
- Alliance DHO Limited Subordinated Notes*
- Alliance Global Diversified Holdings, Ltd.: Subordinated Notes
- Alliance Holdings International, Limited: Subordinated Notes*
- Global Diversified CBO, Limited: Subordinated Notes*
- Pegasus Xxxxx Limited: Floating Rate Secured Class A2 Notes
Floating Rate Secured
Class A3 Notes
- Pegasus One Limited: Floating Rate Secured Notes
Class B Certificate
* Excluded as regards Investment Management and Performance-Based Fees but not
as regards Asset-Based Consulting Fees
S-1-2
Schedule 2 to Amended and Restated Investment Advisory and Management
Agreement, dated as of January 1, 1999, between Alliance Capital
Management L.P., Alliance Corporate Finance Group Incorporated and
The Equitable Life Assurance Society of the United States.
Excluded Separate Accounts
The Separate Accounts of Client described below are not included in the
Accounts for which Adviser is to act as investment adviser under this
Agreement.
Pooled Separate Accounts and Single Client Separate Accounts for
which Client as investment manager has designated or hereafter
designates Lend Lease Real Estate Investments, Inc. as its investment
adviser.
Pooled Separate Accounts Nos. 20 (Quantitative International
Portfolio), 21 (The Pacific Basin Portfolio) and 22 (Fundamental
International Portfolio) for which Client as investment manager has
designated third parties as its investment advisers.
Pooled Separate Accounts Nos. 20 and Single Client Separate Accounts
for which Client as investment manager has designated or hereafter
designates third parties as its investment advisers with respect to
such accounts.
S-2-1
Schedule 3 to Amended and Restated Investment Advisory and Management
Agreement, dated as of January 1, 1999, between Alliance Capital
Management L.P., Alliance Corporate Finance Group Incorporated and
The Equitable Life Assurance Society of the United States.
Investment of General Account Classes in Investment Vehicles
This Schedule 3 is to be amended from time to time pursuant to Section
4(c) of the Agreement
S-3-1
Appendix I to Amended and Restated Investment Advisory and Management
Agreement, dated as of January 1, 1999, between Alliance Capital
Management L.P., Alliance Corporate Finance Group Incorporated and
The Equitable Life Assurance Society of the United States.
Fees for Services
Adviser will receive from Client fees according to this Appendix.
Asset-based fees are based on the carrying value determined in accordance with
generally accepted accounting principles ("GAAP") of assets held pursuant to
this Agreement or, in the case of derivatives of assets not otherwise in the
Accounts on the related notional values, as of the beginning of the billing
period; except that (i) all fixed maturities are to be valued at amortized cost
determined in accordance with GAAP and (ii) asset-based fees for Side- by-Side
Investments are based on the Book Value (under Statutory Accounting) of such
investments at the beginning of the billing period. Asset-based fees will be
billed quarterly in advance of service at 1/4 the annual rate stated on the
attached schedule. Performance fees will be calculated and billed as provided
herein. All such bills shall be due and payable within 30 days of the date of
the respective invoice.
Overdue bills will accrue interest on the unpaid balance at a compounded
interest rate which is the equivalent of the prime rate announced from time to
time by The Chase Manhattan Bank, N.A. if not paid by the due date. Such
interest shall not accrue on any billed amounts which are the subject of a good
faith dispute the parties agree to use their best efforts to resolve.
Fees applicable to periods shorter than a calendar month or, in the case
of those billed quarterly, a calendar quarter due to circumstances such as
either the effective date of this Agreement or termination of this Agreement
will be prorated either from the effective date or to the termination date,
whichever is appropriate, and will be based on the value of investments held
under this Agreement as of either the end of the short period or the
termination date, whichever is appropriate.
In computing the market value of any investment held under this Agreement,
each security listed on a national securities exchange shall be valued at the
last quoted sale price on the valuation date on the principal exchange on which
such security is traded, if such is available; however, if no such price shall
be available and in the case of any other security or asset such securities or
assets shall be valued in a manner determined in good faith by Adviser to
reflect its fair market value.
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Fee computations at the end of each relevant period shall be adjusted to
correct for any accounting errors or omissions made during that or any prior
period and not otherwise corrected and adjusted for in a prior fee computation.
A. Schedule of Asset-Based Fees
Asset Class Annual Fee
----------- ----------
Core Public Bonds 8 Basis Points
Publicly Traded Securities and Preferred Stock
(including securities received in exchange for Rule 144A
securities) and the cash and cash-equivalent proceeds
thereof not withdrawn by Client
Core Private Placements 16.5 Basis Points
-----------------------
Privately Placed Securities and Preferred Stock
Common Stock 20 Basis Points
------------
Convertible Bonds 35 Basis Points
-----------------
Limited Partnerships/Enhanced Return Funds 30 Basis Points
------------------------------------------
Enhanced Private Placements 35 Basis Points
---------------------------
Direct enhanced return investments designated as such
by Client after January 1, 1995
Investments prior to January 1, 1995 in bank participations
and assignments and in privately placed NAIC Grade 3 securities
Public High Yield Bond Portfolio 45 Basis Points for
-------------------------------- first $500 million,
This portfolio is comprised of assets and investments 40 Basis Points for
designated by Client as part of this portfolio, primarily excess
investments in publicly traded below investment grade
securities and secondarily in privately placed below
investment grade securities, of the non-cash proceeds
from the disposition of any of such securities such as
convertible and equity securities, and of cash proceeds
thereof not withdrawn by Client. The investments made
for this portfolio shall not be subject to any other asset-
based fees contained in this Agreement.
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Emerging Markets 50 Basis Points
----------------
Sovereign and Corporate Emerging Market Debt
B. Derivatives Fees
----------------
Derivatives Transactions with respect to assets not 8 Basis Points per
otherwise in the Accounts annum for the first
year and 2 Basis
Points per annum for
each succeeding year
C. Asset-Based Consulting Fees
---------------------------
Consulting for portfolio strategies and on tax and 2 Basis Points per
regulatory issues, working with Client on cash flow annum on the total
management, and reviewing with and reporting to Client value of assets
except more frequently than monthly swaps using the asset
bases used for each
fee category
D. Special Portfolios
------------------
1. Side-by-Side Investments
Investments, together with any investments received as a result of
restructuring of such investments, designated for purposes of the Equitable
Capital Agreement (as defined below) as Side-by-Side Investments ("Side-by-Side
Investments") shall accrue a fee for the life of such investments comprised of
an Asset-Based Fee and a Performance-Based Fee, each described below. The total
of the pro rata interests of each investment segment of Client in Side-by-Side
Investments made in any calendar year and any investments received as a result
of restructuring such investments, is herein denominated a "Side-by-Side
Calendar Year Portfolio." The Side-by-Side Calendar Year Portfolios shall be
considered as discrete pools for the purposes of the Asset-Based Fee and
Performance-Based Fee calculations stated below. Such fee calculations shall
not be applicable to any other such pool or any other investments nor shall any
other fees provided in this Agreement, other than Service Based Fees, be
applicable to the Side-by-Side Calendar Year Portfolios.
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Transaction Fees. Client will be paid its pro rata share of 80% of any
transaction or other third party fees paid to Adviser in connection with
Side-by-Side Investments. Adviser will retain 20% of such fees.
Asset-Based Fee. Each Side-by-Side Calendar Year Portfolio shall incur an
Asset-Based Fee at an annual rate of 10 Basis Points of the Book Value (under
Statutory Accounting) of the Side-by-Side Investments (payable quarterly, as
provided above), provided that:
a) Write-downs reflecting a significant deterioration in
creditworthiness as reflected on the statutory accounting records of
Client will be reflected in the valuation.
b) Written down instruments, including those written down before the
date of this agreement, may be subsequently written up as reflected
on the statutory accounting records of Client by an amount not to
exceed the amount of the original write-downs.
Performance-Based Fee. The Performance-Based Fee shall be computed and
paid at the end of each calendar year and shall not be computed on a cumulative
basis. It will be computed separately on each Side-by-Side Calendar Year
Portfolio as follows:
1. The "Portfolio Gain (Loss)" and the "Hurdle Amount" will be
calculated as defined below.
2. If the Portfolio Gain (Loss) minus the Hurdle Amount minus any
"Performance Credits" (as defined below) is positive it will be
termed the "Net Performance Gain." If the Portfolio Gain (Loss) minus
the Hurdle Amount minus any "Performance Credits" is negative, it
will be termed the "Net Performance Loss."
3. If a "Net Performance Gain" occurs, the Performance-Based Fee will be
equal to 20% of the Net Performance Gain.
4. If a "Net Performance Loss" occurs, no Performance-Based Fee will be
earned on the this Side-by-Side Calendar Year Portfolio for the
current calendar year. Instead, the Net Performance Loss will be
applied to future Performance-Based Fee calculations in the same
Side-by-Side Calendar Year Portfolio as follows:
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a) A "Performance Credit" will be computed equal to one seventh of
the "Net Performance Loss."
b) This "Performance Credit" will be subtracted from the annual
calculation of Net Performance Gain (Loss) (as described in #2
above) in the same Side-by-Side Calendar Year Portfolio in which
the Performance Credit was generated (as described in #2 above)
in each of the next seven years or until all securities in the
same Side-by-Side Calendar Year Portfolio are liquidated,
whichever occurs first.
Performance Credits shall be deemed to include outstanding performance
credits, if any, for purposes of performance fee calculations under the
investment advisory and management agreement between Client and Equitable
Capital Management Corporation (the "Equitable Capital Agreement") which this
agreement replaces.
For Side-by-Side Calendar Year Portfolios established through 1989, a Net
Performance Gain can occur (and a Performance-Based Fee would be earned) in the
event of a Portfolio Loss if the Hurdle Amount is negative by an amount greater
than the Portfolio Loss and any applicable Performance Credits are less than
the amount of such difference.
Portfolio Gain (Loss) means for each Side-by-Side Calendar Year Portfolio
during the computation period, the sum of any realized gains, earned or accrued
interest and dividends, interest accrued on original issue discount
instruments, any write-ups as provided in b) of the definition of "Asset-Based
Fee" above minus any realized losses and any write-downs as provided in a) of
such definition.
For Side-by-Side Calendar Year Portfolios established through 1989, the
term "Hurdle Amount" means the sum of interest earned or accrued and any deemed
realized gains minus any deemed realized losses during each computation period
on the Client's pro rata share of a notional portfolio of U.S. Treasury
securities ("Treasury Securities") selected by Adviser from those currently
issued at the time a Side-by-Side Investment is committed with maturity and
payment characteristics most closely matching each Side- by-Side Investment and
in equivalent amount. The initial notional portfolio shall be carried over from
the Equitable Capital Agreement. With respect to equity investments, the
notional investments will be seven-year zero coupon Treasury Securities of
equivalent amount. If at the end of such seven year period, such equity
investment is still held in the Side-by-Side Calendar Year Portfolio, the
hypothetical proceeds of the maturing zero coupon Treasury Security will be
deemed reinvested in another seven-year zero coupon Treasury Security currently
issued at such time. If and when a security is written down or sold from the
Side-by-Side Calendar Year Portfolio, the corresponding notional Treasury
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Security or Securities shall be deemed to have been sold at its market value at
such time. The Hurdle Amount may be positive or negative.
For Side-by-Side Calendar Year Portfolios established in 1990 and years
following, the term "Hurdle Amount" means the interest that would have been
earned or accrued during the computation period on seven-year Treasury
Securities selected by Adviser from those currently issued at the time each
investment for the Side-by-Side Calendar Year Portfolio is committed in an
equivalent amount. Such interest is deemed to be earned as long as the
corresponding actual investment is held in the Side-by-Side Calendar Year
Portfolio.
A separate Hurdle Amount will be computed for each Side-by-Side Calendar
Year Portfolio.
Notwithstanding anything to the contrary in this Section D.2. Side-by-Side
Investments, if (i) a Side-by-Side Calendar Year Portfolio established through
1989 (the "Portfolio") has a Net Performance Gain for a calendar year or has a
Net Performance Loss for such year but would have a Net Performance Gain for
such year after giving effect to this paragraph, (ii) a debt security
(including for this purpose a redeemable preferred stock treated as debt under
generally accepted account principles ("GAAP")) (the "Debt Security") was sold
from the Portfolio during such year, (iii) a deemed gain was realized on the
deemed sale of the notional Treasury Security or Securities corresponding to
the Debt Security, (iv) such deemed gain exceeded the gain, if any, on the sale
of the Debt Security (such excess being referred to herein as the "Notional
Performance Loss"), and (v) gains in excess of the Notional Performance Loss
are reasonably expected by the Adviser in its sole discretion to be realized by
the Portfolio on future sales of equity securities (common stock, warrants and
preferred stock not treated as debt under GAAP) then included in the Portfolio
and part of or derived from the investment which included the Debt Security
sold (the "Equity Securities") in calendar years in which the Portfolio has Net
Performance Gains, then the Notional Performance Loss will be excluded in
computing the Net Performance Gain (Loss) for such Portfolio for such calendar
year and subtracted only in computing Net Performance Gain (Loss) in one or
more future calendar years. The Notional Performance Loss so deferred will be
subtracted in computing the annual Net Performance Gain (Loss) for the
Portfolio in the future calendar year or years in which the Portfolio disposes
of the Equity Securities. The percentage of the deferred Notional Performance
Loss to be subtracted in any such calendar year will be equal to the percentage
of the Equity Securities disposed of in such year; provided that if the Equity
Securities are written down to zero in such calendar year 100% of the remaining
deferred Notional Performance Loss will be subtracted in such calendar year. If
the Equity Securities are comprised of more than one type of security, the
percentage disposed of in any calendar year will be determined by converting at
the
A-I-6
applicable time or times the types of securities other than common stock into
an equivalent number of shares of common stock.
2. Mezzanine Private Placement Portfolio
Client will, from time to time, designate assets as part of the Mezzanine
Private Placement Portfolio (the "Mezzanine Portfolio"). Investments made in
any calendar year as part of the Mezzanine Portfolio, together with any
investments derived therefrom, (a "Mezzanine Calendar Year Portfolio") shall be
considered as one discrete pool for the purposes of the Mezzanine Portfolio
Asset-Based Fee, the Mezzanine Portfolio Net Income Performance-Based Fee and
the Mezzanine Portfolio Net Gain Performance- Based Fee, each described below.
Notwithstanding the foregoing, the 1995 Mezzanine Calendar Year Portfolio shall
include certain investments designated by Client that were made in 1994. Such
Mezzanine Portfolio fees shall not affect any other investments. The
investments made for the Mezzanine Portfolio shall not be subject to any other
asset-based or performance-based fees contained in this Agreement
notwithstanding the applicability of such fees to the same or similar type
investments as those made for the Mezzanine Portfolio. The Performance-Based
Fees cannot be negative.
Mezzanine Portfolio Asset-Based Fee. The Mezzanine Portfolio will incur an
Asset-Based Fee for the life of such investments of 35 Basis Points per annum
on the value of the Mezzanine Portfolio determined in the manner set forth in
the first paragraph of this Appendix I.
Mezzanine Portfolio Net Income Performance-Based Fee. The Mezzanine
Portfolio will incur a Net Income Performance-Based Fee for the life of such
investments. For each calendar year, the Net Income Performance-Based Fee for
any Mezzanine Calendar Year Portfolio shall be 20% of the excess, if any, of
the Net Income of such Portfolio over the Notional Income of such Portfolio.
Income for any period means the sum of accrued interest income
adjusted for amortization of premium and accrual of discount,
dividend income, and transaction and other third party fees earned
during the period in accordance with generally accepted accounting
principles.
Notional Income for any period means the interest that would have
been earned during the period in accordance with generally accepted
accounting principles on a notional portfolio of U.S. Treasury
securities if the yield on such securities were the Yield on such
securities plus 200 basis points. The notional portfolio shall
include for each investment in a Mezzanine Calendar Year Portfolio a
seven-year Treasury security selected by Adviser from those currently
issued at
A-I-7
the time such investment is committed in an initial equivalent amount
and having payment characteristics most closely matching at such time
an equivalent investment by Client in Treasury securities in
accordance with the Investment Guidelines. If an investment in the
Mezzanine Calendar Year Portfolio, and any securities derived from
such investment,
(i) is paid or sold in whole or in part or written down to zero,
the matching Treasury security or a proportionate part thereof, as
the case may be, shall be removed from the notional portfolio, or
(ii) is written down but not to zero, the matching Treasury
security shall not be deemed to be written down but shall be deemed
to continue to be outstanding without reduction in principal amount
because of such writedown and to have the same maturity and payment
characteristics.
If the Treasury security matching an investment in a Mezzanine Calendar
Year Portfolio matures before such investment is paid or sold in its entirety,
such Treasury security shall be replaced by a new seven-year Treasury security
selected by Adviser in an initial amount equivalent to and having payment
characteristics most closely matching the Treasury security being replaced.
Yield for any Treasury security included in the notional portfolio means
the yield on such security at the time the related investment is committed for
inclusion in a Mezzanine Calendar Year Portfolio or, if the Treasury security
replaces a Treasury security included in the notional portfolio, at the time
the Treasury security being replaced matures.
The Net Income Performance-Based Fee for each calendar year shall be
calculated at the end of each calendar quarter based on results through that
quarter and billed quarterly. If the cumulative annual fee for a Mezzanine
Calendar Year Portfolio at the end of any quarter after the first is less than
the fees paid for the prior quarters in such year, Client may offset the excess
paid against any other fees otherwise payable to Adviser whether or not in
connection with such Portfolio.
Net Gain Performance-Based Fee. The Mezzanine Portfolio shall incur a Net
Gain Performance-Based Fee for the life of such investments. For each calendar
year, the Net Gain Performance-Based Fee for any Mezzanine Calendar Year
Portfolio shall be 10% of (i) the Cumulative Net Gains, if any, of such
Portfolio as of the end of such year in excess of the Asset Incentive Reserve
for such Portfolio as of the end of such year, minus (ii) that part, if any, of
such Cumulative Net Gains with respect to which Net Gain Performance-Based Fees
were incurred by such Portfolio for prior years.
A-I-8
Cumulative Net Gains (Losses) of a Mezzanine Calendar Year Portfolio
means realized gains on cash sales of investments net of realized
losses and writedowns determined in accordance with generally
accepted accounting principles on a cumulative basis from the
inception of the Portfolio, except that any losses realized on cash
sales of bonds not initiated by Adviser's recommendation will be
excluded.
Asset Incentive Reserve for a Mezzanine Calendar Year Portfolio means
a reserve for future Cumulative Net Losses, if any, to which
Cumulative Net Gains (Losses) of such Portfolio shall be credited or
charged, as the case may be, subject to a maximum equal at the end of
any calendar year to a percentage of the value of such Portfolio as
of the end of such year determined in the manner set forth in the
first paragraph of this Appendix I which percentage shall be 10%
until the value of such Portfolio is less than 50% of its value as of
the end of the calendar year in which it was established (e.g.,
December 31, 1995 for the 1995 Mezzanine Calendar Year Portfolio)
determined in such manner and thereafter shall be 20%. If a Mezzanine
Calendar Year Portfolio has Cumulative Net Losses at the time all of
the investments and any securities derived from such investments, in
such Portfolio have been paid, sold or written off in their entirety,
such Cumulative Net Losses shall be charged in chronological order
against Asset Incentive Reserves established for other Mezzanine
Calendar Year Portfolios.
E. Schedule for Service-Based Fees
Services Annual Fee
-------- ----------
Non-Equitable legal and Costs incurred will be passed
consulting services required for through directly to the
private placement workouts Client*
(Client to be notified of these costs
as they are incurred)
--------
* At the request of Client, Adviser will (i) review with Client specified legal
bills (both non-Equitable and Law Department) to assist Client in determining
the appropriateness of those bills, and (ii) together with representatives of
outside counsel or the Law Department assist Client in estimating future legal
expenses to be incurred in connection with specified transactions.
A-I-9
Equitable Law Department Costs incurred will be passed
services for insurance company through directly to the Client.
regulation compliance and review
DLJ Bridge Fund Services for 2 Basis Points per annum on
administration and tracking, the total value of assets in the
prepare statutory reports and fund determined in the
handle the settlement of all bridge manner set forth in the first
transactions paragraph of this Appendix I,
billable and payable in the
same manner as asset-based
fees
A-I-10
Appendix II to Amended and Restated Investment Advisory and
Management Agreement, dated as of January 1, 1999, between Alliance
Capital Management L.P., Alliance Corporate Finance Group
Incorporated and The Equitable Life Assurance Society of the United
States.
Fees due to Adviser for
Managing Separate Accounts for Client
Adviser will receive from Client fees according to this schedule. Unless
otherwise indicated, fees are based on the market value of assets held pursuant
to this Agreement as of the end of the calendar month and are calculated at
1/12 of the annual rates stated in this schedule. Such fees are billed monthly
by Adviser within 30 days of the end of the month. All such bills shall be due
and payable within 30 days of the date of the respective invoice.
Overdue bills will accrue interest on the unpaid balance at a compounded
interest rate which is the equivalent of the prime rate announced from time to
time by The Chase Manhattan Bank, N.A. if not paid by the due date. Such
interest shall not accrue on any billed amounts which are the subject of a good
faith dispute the parties agree to use their best efforts to resolve.
Fees applicable to periods shorter than a calendar month due to
circumstances such as either the effective date of this Agreement or
termination of this Agreement will be prorated either from the effective date
or to the termination date, whichever is appropriate, and will be based on the
value of investments held under this Agreement as of either the end of the
short period or the termination date, whichever is appropriate.
In computing the market value of any investment held under this Agreement,
each security listed on a national securities exchange shall be valued at the
last quoted sale price on the valuation date on the principal exchange on which
such security is traded, if such is available; however, if no such price shall
be available and in the case of any other security or asset such securities or
assets shall be valued in a manner determined in good faith by Adviser to
reflect its fair market value.
Fee computations at the end of each relevant period shall be adjusted to
correct for any accounting errors or omissions made during that or any prior
period and not otherwise corrected and adjusted for in a prior fee computation.
The Adviser is due a fee for managing the Separate Accounts for which
Adviser acts as investment adviser under this Agreement which is equal to 100%
of the fees
A-II-1
payable to Client by participants in such Separate Accounts pursuant to their
contracts with Client, subject to the following exceptions:
1. Retirement Investment Account and EQUI-PEN-PLUS products
The fee for assets invested in Pooled Separate Accounts 3 (Aggressive
Stock), 4 (Growth Stock), 10 (Strategic Balanced) and 13 (Intermediate Duration
Bond) by Client with respect to its Retirement Investment and EQUI-PEN-PLUS
products shall be calculated by applying the following rate schedule to the
combined market value of all assets so invested.
Rate Schedule
First $2,000,000/85 basis points
Next 3,000,000/60 basis points
Next 5,000,000/40 basis points
Next 15,000,000/30 basis points
Next 75,000,000/25 basis points
Over 100,000,000/20 basis points
A 00 Xxxxx Xxxxx surcharge shall be applied to assets invested in Separate
Account 3.
2. Association Plans
(a) For each Single Client Separate Account for an Association Plan
client, whether established before or after the date of this
Agreement, the fee shall be negotiated by Client and Adviser.
(b) The fee for assets invested in Pooled Separate Accounts 3 (Aggressive
Stock), 4 (Growth Stock) and 10 (Strategic Balanced) made by Client
with respect to its Association Plans shall be calculated by applying
the rate schedule set forth in Paragraph 1 above to the combined
market value of all assets so invested on the prior month end.
A-II-2
3. International Fund
The fee otherwise payable with respect to Separate Account 24
(International) shall be reduced by the fees payable to third parties acting as
investment advisers with respect to Separate Accounts 20 (Quantitative
International Portfolio), 21 (The Pacific Basin Portfolio) and 22 (Fundamental
International Portfolio).
4. Short Term Fund (Lend Lease)
That portion of the assets in the Pooled Separate Accounts and Single
Client Separate Accounts as to which Lend Lease Real Estate Investments, Inc.
("Lend Lease") has been designated by Client as its investment adviser that
consists of cash or cash equivalents is invested in Separate Account 2A as to
which Adviser is the investment adviser and provides securities accounting
services under this Agreement. The fee payable to Adviser with respect to
assets in Separate Account 2A which derive from Separate Accounts managed by
Lend Lease shall be calculated on average daily net asset value at the annual
rate of 8.5 Basis Points up to $200 million and of 5 Basis Points on the excess
over $200 million and shall be billed to Lend Lease and paid by it out of the
advisory fees Lend Lease receives from Client with respect to the Separate
Accounts managed by it.
6. Annuity Separate Accounts
For purposes of this Agreement, Annuity Separate Accounts include assets
invested in Single Client Separate Accounts 137 (Equitable Retirement), 146F
(Colgate Palmolive), 148 (New Yorker Magazine), 159 (Xxxxxx Xxxxxxx), 185
(Equitable Retirement) and 192 (Major League Baseball) and assets invested by
Client in Pooled Separate Accounts pursuant to contracts with Client
established to support annuity commitments made by the contractholders. On the
date of this Agreement, Client has such contracts with Ethyl, Batus, Xxxxxxxx
Xxxxx, Quaker State and Rockefeller Group. The fees for assets invested in
Annuity Separate Accounts shall be calculated in the same manner as the fees
for such assets payable to Equitable Capital Investment Corporation ("ECMC")
were calculated under the investment advisory agreement dated January 2, 1987
between Client and ECMC as amended by letter agreements dated July 6, 1988 and
July 1, 1991 that this Agreement replaces and as modified with respect to
Single Client Separate Account 146F (Colgate Palmolive) as described in a
memorandum dated March 6, 1992 from ECMC to Client.
A-II-3
