INVESTMENT ADVISOR AGREEMENT
This INVESTMENT ADVISOR AGREEMENT (the "Agreement") is effective as of
close of business June 13, 1997 (or such other date as is agreed in writing) by
and between STATE STREET BANK AND TRUST COMPANY, a trust company organized under
the laws of the Commonwealth of Massachusetts ("State Street") and BANKERS TRUST
COMPANY, a New York Banking Corporation (the "Advisor").
WHEREAS the American Bar Association Members Retirement Trust and the
American Bar Association Members Pooled Trust for Retirement Plans (collectively
referred to as the "Trusts"), for which State Street acts as trustee, are
maintained pursuant to agreements between the American Bar Retirement
Association ("ABRA") and State Street for the purpose of funding the American
Bar Association Members Retirement Plan, the American Bar Association Members
Defined Benefit Pension Plan (the "ABA Members Plans") and other employee
benefit plans, as adopted by eligible individuals, organizations, partnerships,
corporations or associations (each such individual employee benefit plan being
referred to as a "Plan" and collectively as the "Plans"), which Plans must meet
the requirements for qualification under Section 401 of the Internal Revenue
Code of 1986, as amended and in effect from time to time (the "Code");
WHEREAS, certain assets of the Trusts have previously been invested in a
Separate Account established by The Equitable Life Assurance Society of the
United States ("Equitable"), known as Separate Account Number 100 (the "Separate
Account"), pursuant to a group annuity contract between Equitable and the former
trustees of the Trusts;
WHEREAS, such assets have been withdrawn from the Separate Account and
have been deposited in a collective investment fund, known as the GROWTH EQUITY
FUND (the "Fund"), established under the American Bar Association Members/State
Street Collective Trust (the "ABA Members Collective Trust") established by
State Street, as trustee (the "Trustee"), pursuant to the Declaration of Trust
dated August 8, 1991, as amended and in effect from time to time (the
"Declaration of Trust");
WHEREAS, the Fund is established under a group trust maintained by the
Trustee and is exempt from tax pursuant to Revenue Ruling 81-100;
WHEREAS, the Trustee desires to retain the Advisor to act as its
investment advisor to assist the Trustee in managing such assets of the Fund as
the Trustee may designate from time to time in writing to the Advisor (the
"Subaccount") by making recommendations to the Trustee with respect to the
investment and reinvestment of the assets in the Subaccount; and
WHEREAS the parties desire to set forth, among other things, the duties,
terms and conditions under which the Advisor will carry out such advisory
functions and the Trustee will perform certain of its functions with respect to
managing and administering the Subaccount and the Fund;
NOW THEREFORE, in consideration of the promises and mutual covenants
contained in this Agreement, it is agreed as follows:
1. Appointment of the Advisor. The Advisor is hereby appointed and
employed as investment advisor to the Trustee to assist the Trustee in its
management of such assets of the Fund as are held in the Subaccount from time to
time. The Advisor shall provide investment advice and recommendations and shall
render certain other related services to or on behalf of the Trustee, all in
accordance with the terms and conditions of this Agreement.
2. Acceptance by the Advisor. The Advisor hereby accepts such appointment
and employment and acknowledges that, (a) with respect to the assets in the
Subaccount, it is a fiduciary, as defined in the Employee Retirement Income
Security Act of 1974, as amended and in effect from time to time ("ERISA"), with
respect to the Trusts and the Plans and (b) no person employed by, or associated
with the Advisor is a trustee or administrator of, or an employer of anyone
covered by, any Plan. The Advisor represents that it is registered, or exempt
from registration, under the Investment Advisers Act of 1940, as amended (the
"Advisers Act"), and that it is in the business of acting as a fiduciary with
respect to assets of various retirement plans and trusts. The Advisor agrees and
covenants that, to the extent permitted by the relevant governmental agency, it
will notify ABRA within ten (10) business days of: (V) any change in its
registration status under the Advisers Act; (W) the receipt of any formal notice
of the commencement of any proceeding by any governmental agency to take any
action which would change its registration status under the Advisers Act; (X)
formal notice by any governmental agency of the intent to place material
limitations on the activities of the Advisor's Global Investment Management unit
("GIM"); (y) formal notice by any governmental agency that it intends to begin
an investigation of GIM that is outside the scope of routine investigations that
such agency conducts from time to time of businesses engaged in the same or
similar activities as GIM; or (Z) formal notice by any governmental agency that
it has identified an area of material non-compliance or other concern of a
material nature in the course of any investigation of GIM, which area or concern
could reasonably be expected to result in a sanction or material limitation
being imposed on GIM. ABRA agrees to keep in strict confidence any information
provided by the Advisor pursuant to this Section 2, except to the extent such
information: is publicly available; is required to be disclosed by ABRA to
regulatory authorities or governmental agencies with jurisdiction over its
activities; or is required to be disclosed by court order or decree or
applicable law. The Advisor agrees and covenants that it will notify the Trustee
within ten (10) business days of (V) any change of its status under the Advisers
Act, (W) the receipt of formal notice of the commencement of any proceeding by
any governmental agency to take any action which would change its status under
the Advisers Act, (X) notice by any governmental agency of the intent to place
material limitations on the index equity management activities of the Advisor,
(to the extent such notice is permitted by such governmental agency), (Y) notice
by any governmental agency that it intends to begin an investigation of the
Advisor's index equity management activities that is outside of the scope of
routine investigations that such agency conducts from time to time of businesses
engaged in the same or similar activities as the Advisor, (to the extent such
notice is permitted by such governmental agency) or (Z) notice by any
governmental agency that it has identified an area of material non-compliance or
other concern of a material nature in the course of any investigation of the
Advisor's index equity
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management activities (to the extent such notice is permitted by such
governmental agency). Throughout this Agreement, the term "business day" shall
mean any day in which the New York Stock Exchange is open for trading and on
which the Trustee's principal office is open for business.
3. Definition of Subaccount. The Subaccount for which the Advisor has been
appointed to render investment advice and certain other services is designated
as Subaccount A and consists of the assets set forth in Appendix A. The Trustee
may change the composition of or the amount of assets included within the
Subaccount, by amending Appendix A, after written notice to the Advisor and
ABRA.
4. The Advisor's Services.
(a) Investment Process. The Advisor shall make timely
recommendations to the Trustee as to how the Trustee should invest and reinvest
the assets of the Subaccount and, in that connection, may recommend that the
Trustee purchase, sell or otherwise invest the assets of the Subaccount on the
terms and conditions recommended by the Advisor in a manner consistent with the
provisions of this Agreement. The manner and procedures for effecting any such
purchases, sales or investments are set forth in Subsection 4(c) below. From
time to time at the request of the Trustee, the Advisor shall consult with the
Trustee on a timely basis with respect to any recommendation made by the Advisor
or otherwise with respect to the investment of the assets of the Subaccount.
(b) Compliance With Policies and Other Requirements. In providing
its investment advice and other related services, the Advisor shall act in
accordance with the investment objectives and policies for the Fund as set forth
in the Fund Declaration pursuant to which the Fund is established and
maintained, as the same may be amended from time to time by the Trustee (the
"Fund Declaration"), a copy of which is attached hereto as Appendix B, and in
accordance with any additional investment objectives and policies that have been
established by the Trustee for the Subaccount as set forth in Appendix C, as the
same may be amended from time to time by the Trustee and provided to the
Advisor. In providing its investment advice and other related services under
this Agreement, the Advisor shall comply with all of the Trustee's reasonable
operating requirements as the same may be communicated in writing by the Trustee
to the Advisor from time to time. The Advisor shall comply with any changes to
such operating requirements that the Trustee may make from time to time within a
period of time reasonably specified by the Trustee (or if none is specified,
within a reasonable time period) after notice of such changes is communicated in
writing by the Trustee to the Advisor.
(c) Recommendation Procedures. The Advisor shall place orders or
otherwise give instructions with respect to the investment of the assets in the
Subaccount only after prior notification to and approval by the Trustee in
accordance with the provisions of this Subsection 3(c). Except in accordance
with the following provisions, the Advisor shall have no authority to place
orders for the execution of transactions involving assets of the Subaccount or
to give instructions to the Trustee with respect thereto:
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(i) Effecting Transactions.
(A) Broker List.On or prior to the first business day of each
month, the Trustee shall consider brokers recommended by the Advisor
and shall approve, to the extent deemed appropriate by the Trustee,
a list of not more than one hundred (100) brokers through whom
transactions with respect to the assets in the Subaccount may be
effected during the following month (the "Broker List"). From time
of time by means of Valid Notice (as defined below), the Advisor may
request an amendment (the "Advisor's Amendment") to the Broker List.
The Trustee shall exercise reasonable efforts to notify the Advisor
whether or not the Trustee authorizes the Advisor's Amendment to the
Broker List by means of Valid Notice within one (1) complete
business day (i.e., not later than the same time of day on the next
business day) following its receipt of the Advisor's Amendment and
if the Trustee does not so notify the Advisor, then the Advisor's
Amendment shall be deemed to be approved at the conclusion of such
one business day period. The Trustee may effect an amendment to the
Broker List at any time upon Valid Notice to the Advisor.
(B) Internal Trading. In lieu of effecting transactions
through brokers, the Advisor may effect transactions between the
Subaccount and (a) other passive or model-driven pooled funds or
accounts or (b) accounts for which the Advisor has been authorized
to restructure all or a portion of the portfolio into an indexed
account or with respect to which the Advisor has been authorized to
act as an advisor in connection with a specific liquidating or
restructuring program (such transactions hereinafter referred to as
'Cross-Trades"), provided that the Advisor shall seek the most
efficient execution with no market impact for each Cross-Trade at
the time such trade is made. Securities purchased or sold in
Cross-Trades shall be allocated on a pro-rata basis (in accordance
with aggregate account size across all accounts participating in
Cross-Trades with respect to such security on such date. Each
Cross-Trade shall be effected at a price determined pursuant to
guidelines established in accordance with requirements of the
Securities and Exchange Commission applicable to similar
transactions between registered investment companies and their
affiliates and the Advisor shall provide the Trustee with a copy of
such procedures employed by the Advisor (as in effect from time to
time), which the Trustee shall approve or disapprove by means of
Valid Notice. Notwithstanding the foregoing, the Advisor shall not
effect any Cross-Trade unless and until the Trustee has approved the
applicable procedures as contemplated in the foregoing sentence and
the Advisor shall effect any Cross-Trade if, and only if, such
Cross-Trade is eligible for, and satisfies all of the conditions (or
reasonably anticipated conditions) of, a prohibited transaction
exemption issued (or reasonable anticipated to be issued with
retroactive effect) to the Advisor by the U.S. Department of Labor
pursuant to Section 408(a) of ERISA (the "BT Cross-Trading
Exemption").
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(ii) Index Recommendations.
(A) Index Listing. Prior to execution of this Agreement, the
Advisor has provided to the Trustee a list of all of the securities
included in the index designated in the investment objectives and
policies for the Subaccount included in Appendix C, marked to
reflect the restrictions or limitations designated by the Trustee
(the "Index Listing"). The Index Listing shall contain the name of
the issuer of the security and a description of the security (e.g.
"common stock"). Upon any proposed change to the Index Listing, the
Advisor shall provide a revised Index Listing to the Trustee for
approval. The Trustee shall exercise reasonable efforts to notify
the Advisor whether or not the Trustee approves the revised Index
Listing by means of Valid Notice within one (1) complete business
day (i.e., not later than the same time of day of the next business
day) following its receipt of the revised Index Listing and if the
Trustee does not respond to the Advisor within such one business day
period, then the revised Index Listing shall be deemed to be
approved.
(B) Rebalancing Process. The Trustee has determined that the
portfolio of securities in the Subaccount should be rebalanced only
upon the occurrence of the following events (each, a "Rebalancing
Event"): (i) changes to the Index Listing, (ii) a net contribution
or withdrawal to the Subaccount with a value that equals or exceeds
one percent (1%) of the fair market value of the Subaccount, and
(iii) maintenance of cash in the Subaccount with a value that
exceeds one half of one percent (0.5%) of the fair market value of
the Subaccount. Upon the effectiveness of this Agreement and upon
the occurrence of any Rebalancing Event, the Advisor shall utilize
its proprietary technology to generate a recommendation for the
optimum portfolio holdings of the Subaccount, consistent with the
tracking error and other investment policies and objective of the
Subaccount, and shall generate a list of proposed purchase and sale
transactions (in percentages) to be effected on behalf of the
Subaccount to achieve such optimization, (together with lists of the
assets of the Subaccount (and relative percentages of total
holdings) prior to such proposed transactions and after such
transactions (assuming all proposed transactions were effected,
provided there is no obligation to effect all such transactions)
(collectively, the three lists referred to hereinafter as the
"Buy/Sell List"). The Advisor shall provide the Buy/Sell List to the
Trustee for approval. The Trustee shall exercise reasonable efforts
to notify the Advisor whether or not the Trustee approves the
Buy/Sell List by means of Valid Notice within one (1) hour following
its receipt of the revised Index Listing and if the Trustee does not
respond to the Advisor within such one-hour period and the Buy/Sell
List contains only securities that are already held in the
Subaccount, then the revised Index Listing shall be deemed to be
approved; provided, however, that if the Buy/Sell List is received
by the Trustee after 4:00 p.m. Eastern time on any business day,
then such one-hour period shall be extended so that is expires at
9:00 a.m. Eastern time on the next succeeding business day. If the
Buy/Sell List contains any security that is not already held in the
Subaccount, then such security shall be specifically identified by
the Adviser and
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such Buy/Sell List shall be submitted for approval in accordance
with the "real-time" recommendation procedures set forth in Section
4(c)(ii)(C) below. Notwithstanding the foregoing, with respect to
the first Buy/Sell List generated on or after the date of this
Agreement, the Trustee shall exercise reasonable efforts to notify
the Adviser whether or not the Trustee approves the Buy/Sell List by
means of Valid Notice delivered as soon as practicable and there
shall be no deemed approval with respect to such initial Buy/Sell
List.
(C) Additional Real-Time Recommendations. From time to time by
means of Valid Notice, the Advisor may also make recommendations as
to proposed transactions with respect to the assets in the
Subaccount, without regard to whether such recommendations are
consistent with the then effective Index Listing (the "Advisor's
Recommendation"). The Advisor's Recommendation shall (A) be directed
to the employee or employees of the Trustee designated for such
purpose by the Trustee from time to time by Valid Notice and (B)
describe the transaction being recommended by the Advisor in such
detail and specificity as the Trustee may reasonably require. For
this purpose, if the transaction is to be effected at the market
price on the applicable exchange of trading system, a statement to
such effect shall be sufficient to describe the proposed sale or
purchase price. The Trustee shall exercise reasonable efforts to
notify the Advisor by means of Valid Notice whether or not the
Trustee authorizes the transaction recommended in the Advisor's
Recommendation (the "Trustee's Response"). The Trustee shall
exercise reasonable efforts to deliver the Trustee's Response within
two (2) hours following its receipt of the Advisor's Recommendation
and if the Trustee does not deliver the Trustee's Response to the
Advisor within such two-hour period, then the transaction or
transactions recommended in the Advisor's Recommendation shall be
deemed to be approved; provided, however, that if the Advisor's
Recommendation is received by the Trustee after 4:00 p.m. Eastern
time on any business day, then such two-hour period shall be
extended so that it expires at 10:00 a.m. Eastern time on the next
succeeding business day.
(iii) Authorized Transactions. A transaction shall become an
"Authorized Transaction" when it is (A) included on a Buy/Sell List that
has been approved or deemed approved pursuant to Section 4(c)(ii)(B), or
(B) approved or deemed approved pursuant to Section 4(c)(ii)(C). The
designation of a transaction as an Authorized Transaction hereunder shall
be binding against the Trustee and the Authorized Transaction shall remain
validly approved and authorized until the earlier of (Y) the time that it
is expressly countermanded by Valid Notice from the Trustee to the Advisor
or (Z) at the end of the twentieth (20th) business day following its
designation as an Authorized Transaction.
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(iv) Investment Authority. With respect to any Authorized
Transaction, the Advisor may take any and all action necessary or
desirable to effect such Authorized Transaction, including but not limited
to (A) placing an order with a broker named in the Broker List for the
execution of the Authorized Transaction and (B) issuing to the Trustee
such instructions as may be appropriate in connection with the settlement
of such Authorized Transaction.
(v) Valid Notice. "Valid Notice" shall mean (A) written notice or
communication, which may be made by facsimile or by electronic
transmission in a format and method reasonably acceptable to the Trustee,
or (B) oral notice or communication that is recorded by the Trustee or the
Advisor and is available for subsequent verification.
(d) Custody of Assets and Confirmation of Transactions. To the
extent required by applicable law, the Advisor shall direct that all securities
purchased and the proceeds from the sale of securities for the Subaccount be
delivered to the Trustee, unless otherwise directed by the Trustee. The Advisor
shall direct any broker effecting a transaction with respect to the assets of
the Subaccount to send the Trustee a duplicate copy of any confirmation of any
such transaction, except that the Advisor may make other arrangements (which are
reasonably satisfactory to the Trustee) for the Trustee to receive such
duplicate confirmations or comparable information acceptable to the Trustee.
(e) Communications Regarding Investment Securities. The Trustee
shall send, or cause to be sent, on a timely basis, copies of all communications
(including but not limited to proxy statements, tender offers and class action
communications) from or relating to companies, the securities or other
instruments of which are held in the Subaccount, to the Advisor. The Advisor
shall be responsible for making a recommendation to the Trustee, in such detail
and specificity as the Trustee may reasonably require, as to the appropriate
response to such communications (the "Suggested Response"). Such Suggested
Response shall be made by the Advisor by Valid Notice, at least one (1) complete
business day (i.e., not later than the same time of day or the next business
day) prior to the deadline for such response. Such Suggested Response shall be
directed to the employee or employees of the Trustee designated for such purpose
by the Trustee from time to time by Valid Notice. If the Trustee decides not to
follow the Suggested Response, it shall so notify the Advisor by Valid Notice
("the Trustee's Rejection") not later than the earlier of one (1) complete
business day (i.e., not later than the same time of day or the next business
day) following its receipt of the Suggested Response or two (2) hours before the
response deadline. Failure by the Trustee to give the Trustee's Rejection to the
Advisor within such period shall constitute the Trustee's approval of the
Suggested Response, and shall constitute authorization to the Advisor to (i)
take such action as is appropriate to effect the Suggested Response and (ii)
issue to the Trustee such instructions as may be appropriate in connection with
effecting the Suggested Response.
(f) Advisor's Duty of Care. The Advisor shall discharge its duties
with respect to the Subaccount solely in the interests of the participants in
the Plans and their
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beneficiaries with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in like capacity and
familiar with such matters would use in the conduct of an enterprise of like
character and with like aims. The Advisor shall not be responsible for the
operation or administration of the Trusts or the Plans. The Advisor shall have
no investment advisory responsibilities with respect to the Subaccount other
than those expressly provided in this Agreement. The Advisor shall discharge its
duties in accordance with the requirements of ERISA, other applicable law and
this Agreement.
(g) Fidelity Bond and Insurance. The Advisor shall maintain for the
period of the Agreement a fidelity bond meeting the requirements of section 412
of ERISA (unless the Trustee acknowledges that the Advisor is exempt from such
requirements) and including its officers, directors and employees to the extent
so required. The Advisor will provide to ABRA and the Trustee within twenty (20)
business days of the effective date of this Agreement copies of all certificates
of insurance (including fiduciary, errors and omissions, and fidelity bonds)
that could cover or relate to the Subaccount, the Fund, the Trusts or the Plans.
On an annual basis, the Advisor will provide copies of updated insurance
certificates and the Advisor will notify ABRA and the Trustee of any material
changes in such policies.
(h) Brokerage Practices. In placing orders for the purchase and sale
of assets of the Subaccount in accordance with Subsection 4(c), the Advisor
shall act in accordance with the procedures with regard to brokerage practices
for the Subaccount, as described in Appendix D. The Advisor will make its
recommendations of brokers or dealers in accordance with its best judgment and
in a manner consistent with ERISA and other applicable law. The Advisor shall
recommend those brokers or dealers for inclusion on the Broker List using its
best judgment to choose the broker or dealer most capable of providing the
brokerage services necessary to obtain the "best available price and most
favorable execution." The Trustee recognizes that the Advisor may, in accordance
with Section 28(e) of the Securities Exchange Act of 1934, as amended, recommend
a broker or dealer who will charge a commission for effecting a securities
transaction that will exceed the amount of commission another broker or dealer
would have charged for effecting such transaction, where the Advisor has
determined in good faith that the amount of such commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer to, or for the benefit of, the Subaccount, viewed in terms of
either that particular transaction or such broker or dealer's overall
responsibilities with respect to the Subaccount.
(i) Nondisclosure of Information. Other than the extent necessary
for the execution of this Agreement or to satisfy the requirements for
disclosure to participants or to meet the requirements of Sections 8 and 9, the
Advisor shall keep in strict confidence all information about the financial
affairs of the Subaccount; provided, however, that (i) the Advisor may include
information about the Subaccount in aggregate information provided by the
Advisor as long as the information is not set out separately or in any other
manner which would enable a third party to determine the financial affairs of
the Subaccount; and (ii) the Advisor may disclose information to regulatory
authorities or governmental agencies with jurisdiction over the Advisor's
activities, or if required by court order or decree or applicable law.
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(j) Advisor's Potential Conflicts of Interest. The Advisor (and any
affiliate thereof) may engage in any other business or act as advisor to or
investment manager for any other person, even though it (or any affiliate
thereof) or such other person has, or may have, investment policies similar to
those followed by the Advisor with regard to the Subaccount. Nothing in this
Agreement shall prevent the Advisor (or any affiliate thereof) from buying or
selling, or from recommending or directing such other person to buy or sell, at
any time, securities of the same kind or class recommended by the Advisor to be
purchased or sold for the Subaccount. The Advisor shall be free from any
obligation to the Subaccount to recommend any particular investment opportunity
which comes to it. However, if the Advisor effects the purchase or sale of the
same securities for the Subaccount and other accounts at the same time that
orders are open for the Subaccount and the other accounts, the pricing of or
proceeds from such securities shall be allocated among the other accounts and
the Subaccount according to a process or procedure reasonably designed to
achieve a just and equitable allocation.
(k) Valuation. At the request of the Trustee from time to time, the
Advisor shall provide pricing and valuation information with respect to
particular securities it has recommended for the Subaccount if the Trustee has
determined that such pricing and valuation information is not otherwise
reasonably available to the Trustee through standard pricing services.
5. Representations by the Trustee.
The Trustee represents and warrants that (a) there are no restrictions or
limitations on the Subaccount's investments imposed by applicable law other than
(i) those set forth in the Declaration of Trust, the Fund Declaration, this
Agreement, and Appendix C, as any of the same may be amended from time to time
and communicated to the Advisor, (ii) those provided in ERISA, and (iii) any
other investment restriction or limitation imposed by law or regulation which in
the Trustee's judgment is applicable to the Subaccount and which is communicated
by the Trustee to the Advisor; and (b) disclosure to Plan participants contained
in the Registration Statement describing the Subaccount is accurate and prepared
in accordance with the requirements of Form S-1 under the Securities Act of
1933, as amended, except that the Trustee makes no representation or warranty
with respect to any disclosure relating to the Advisor or its services with
respect to the Subaccount which the Advisor has prepared, approved in writing or
has not disapproved within five (5) business days following confirmed
transmission by facsimile, acceptable electronic transmission or overnight mail
to a person designated by the Advisor to review such disclosure.
6. Liability of the Advisor; Indemnification.
(a) Limitation of Liability of the Advisor. The Advisor shall not be
liable for any act or omission of any other person or entity including any other
person or entity, exercising a fiduciary responsibility, if such fiduciary
responsibility has been allocated to such other person or entity in accordance
with this Agreement, the Declaration of Trust, the Fund Declaration, the Plans
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or the Trusts, except to the extent that the Advisor has itself violated its
fiduciary responsibility or its obligations under this Agreement, or except to
the extent that applicable law (including ERISA) may expressly provide
otherwise.
(b) Indemnification.
(i) Indemnification of Advisor. To the extent permitted by
applicable law, the Trustee agrees to indemnify and hold harmless the
Advisor for losses, damages or expenses resulting from (A) actions taken
by the Advisor in reliance on information provided by the Trustee to the
Advisor in accordance with this Agreement, including but not limited to
the Trustee's operating requirements and cash availability information,
(B) actions omitted to be taken by the Advisor pursuant to instructions or
directions provided by the Trustee, and/or (C) valuation of the assets
held in the Subaccount, computation of unit values for the Subaccount by
the Trustee, or performance data and other financial information provided
by the Trustee to Subaccount participants except to the extent that the
Advisor has incorrectly reported or failed to report securities
transactions in the Subaccount to the Trustee as provided in this
Agreement and to the extent that any error in such valuation or
computation is due to prices or other information provided by the Advisor.
(ii) Indemnification of the Trustee. To the extent permitted
by applicable law, the Advisor agrees to indemnify and hold harmless the
Trustee for any losses, damages or expenses resulting from (A) any
recommendation of the Advisor or based on information provided by the
Advisor, (B) the Advisor's failure to provide correct and timely
information or to make recommendations on a timely basis as provided in
the Agreement, and (C) any disclosure relating to the Advisor or the
services provided by the Advisor with respect to the Subaccount which the
Advisor has prepared, approved in writing or has not disapproved within
five (5) business days following transmission by facsimile, acceptable
electronic transmission or overnight mail to a person designated by the
Advisor to review such disclosure; provided, however, that the Advisor
shall not be required to indemnify and hold harmless the Trustee to the
extent that such losses, damages or expenses result from an act or
omission of the Advisor with respect to which the Advisor has used such
care, skill, prudence and diligence as a reasonably prudent person acting
in like capacity and familiar with such matters would use in the conduct
of an enterprise of like character and with like aims, and which act or
omission is not in violation of this Agreement, and (D) any failure by the
Advisor to obtain or comply fully with the BT Cross-Trading Exemption or
any Cross-Trade that is not covered by such exemption
(iii) Advisor and Trustee Indemnification Procedures. If the
party seeking indemnification is either the Advisor or the Trustee, such
party shall promptly notify the indemnifying party of any claim, action,
suit or proceeding, or threat thereof, which may result in a claim for
indemnification. Upon such notification, the indemnifying party may, at
its option, undertake the conduct and cost of defending any such claim,
action, suit or
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proceeding and in such case shall have full control of such defense,
including but not limited to selection of counsel (provided that such
counsel must be reasonably acceptable to the party being indemnified) and
entry into settlement agreements (provided that any such settlement
agreement shall require the consent of the party being indemnified, which
consent shall not be unreasonably delayed or withheld). The Trustee or the
Advisor, as the indemnifying party, shall not be liable for any legal or
other expenses incurred in connection with any such defense that were not
specifically authorized by it; provided, however, if such indemnifying
party fails to undertake and prosecute vigorously the defense of any such
claim, action, suit or proceeding, it shall be liable for reasonable legal
and other expenses incurred by the party being indemnified.
(c) Indemnification of ABRA.
(i) Indemnification. To the extent permitted by applicable
law, the Advisor agrees to defend, indemnify and hold harmless ABRA, its
then present and former officers, directors and advisory directors, the
ABA, and its then present and former officers and Board of Governors (the
"Indemnified Persons") against any and all expenses (including attorney's
fees, judgments, fines, penalties, including any civil penalties assessed
under Section 502(l) of ERISA) and amounts paid in settlement actually or
reasonably incurred in connection with any threatened, pending or current
action, suit, proceeding or claim, whether civil, criminal, administrative
or otherwise, and the amount of any adverse judgment entered against any
of them and any reasonable expenses attendant thereto resulting from any
of the Advisor's acts or omissions in connection with this Agreement. For
the above defense, indemnity and hold harmless provision to apply (i) the
Indemnified Persons (or ABRA) shall inform the Advisor promptly of any
claims threatened or made against any Indemnified Person, (ii) the
Indemnified Persons shall cooperate fully with the Advisor in responding
to such threatened or actual claims and (iii) any settlement agreement
entered into by the Indemnified Persons shall require the written approval
of the Advisor, which approval shall not be unreasonably withheld or
delayed, and any settlement agreement entered into by the Advisor shall
require written approval, within the time frame established by the
Advisor, of the Indemnified Persons, which approval shall not be
unreasonably withheld.
(ii) Right to Counsel. The Indemnified Persons shall have the
right to employ counsel in their, its, his or her sole discretion. Such
Indemnified Persons shall be responsible for the. expenses of such
separate counsel except as provided in Subsection 6(c)(iii). The Advisor
agrees to cooperate fully with the Indemnified Persons and their separate
counsel in responding to such threatened or actual claims.
(iii) Separate Counsel. With respect to any Claims described in
Section 6(c)(i), the Indemnified Persons shall have the right to
reasonable expenses of separate counsel paid by the Advisor provided that
the Advisor shall not be liable for any legal or other expenses incurred
in connection with any such threatened claim or defense that were not
specially authorized by the Advisor in writing and provided that the
Advisor shall have received a written opinion reasonably acceptable in
form and substance to the Advisor of counsel
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reasonably acceptable to the Advisor (and which counsel shall not
represent or otherwise be affiliated with any of the Indemnified Persons)
that there exists a material conflict of interest between one or more of
the Indemnified Persons and the Advisor in the conduct of the response to
a threatened claim or in the conduct of the defense of an actual claim, in
which event the Advisor shall be liable for the reasonable legal expenses
of each counsel whose appointment is necessary to resolve such conflict;
provided, however, the Advisor shall not be responsible for more than one
(1) counsel for all Indemnified Persons and selection of such counsel
shall be reasonably acceptable to the Advisor.
(iv) Payment of Expenses. Expenses (including counsel fees)
specifically authorized by the Advisor and actually and reasonably
incurred by the Indemnified Persons in defending against or responding to
such threatened or actual claims as provided in (i) and (iii) of this
Subsection shall be paid as they are incurred. If an Indemnified Person is
reasonably required to bring any action to enforce rights or collect
monies due under Subsection 6(c) and is successful in such action, the
Advisor shall reimburse such Indemnified Person or its subrogee for
reasonable fees and expenses incurred in bringing and pursuing such
action. Notwithstanding the foregoing, if there is a final determination
that any Claim for which the Advisor has paid amounts pursuant to this
Section 6(c)(iv) is not by reason of the Advisor's failure to use such
care, prudence and diligence as a reasonably prudent person acting in like
capacity and familiar with such matters would use in an enterprise of like
character and with like aims or the Advisor's breach of this Agreement,
then each Indemnified Person who received any such payment shall refund
the amount thereof to the Advisor; provided, however, that no such refund
shall be made in respect of any expense (other than expenses incurred
under Section 6(c)(iii)) incurred by the Advisor in connection with any
claim in which it is named as a party.
(v) Supplemental Rights. Indemnification pursuant to
Subsection 6(c) is intended to be supplemental to any other rights to
indemnification available to the Indemnified Persons. Nothing herein shall
be deemed to diminish or otherwise restrict the Indemnified Persons'
rights to indemnification under law.
(vi) Third Party Beneficiaries. The Advisor acknowledges
that the Indemnified Persons are intended to be third-party beneficiaries
of Subsection 6(c).
7. Transactions Prohibited with Respect to the Advisor. The Advisor, its
officers, partners, directors, and affiliates, and each of them, shall not, with
respect to the Subaccount, (a) as a principal, purchase assets from or sell
assets to the Fund, (b) receive any compensation or fees with respect to the
Fund, other than the fees provided for in Appendix E, (c) engage in or recommend
any transaction involving or affecting the Fund that such person knows or should
know is a prohibited transaction under ERISA unless such transaction is exempt
under the applicable provisions of
12
ERISA, or (d) direct delivery of securities or payment to itself or direct any
disposition of securities or cash from the Subaccount except to the Trusts.
8. Reports and Meetings.
(a) Monthly Reports. At least monthly the Advisor shall render to
the Trustee and ABRA, or their designee, reports concerning its services under
this Agreement and the status of the Subaccount, based on the reporting
procedures set forth in Appendix F, including statements of investments in the
Subaccount.
(b) Meetings. The Advisor will meet with the Trustee and ABRA and
with such other persons as the Trustee or ABRA may designate on reasonable
notice and at reasonable times and locations, to discuss general economic
conditions, Subaccount performance, investment strategy and other matters
relating to the Subaccount.
(c) Reports Prior to Termination. On each day during the period ten
(10) business days prior to the effective date of the Advisor's resignation or
its removal under this Agreement by the Trustee (the "Termination Date"), or on
each day of such shorter period after which the Advisor has received notice of
its removal, the Advisor shall render to the Trustee and ABRA, or their
designee, a report of the current status of the Subaccount based on the
procedures set forth in Appendix F, including a statement of investments in the
Subaccount and on the day immediately following the Termination Date, such
report shall be rendered in final form with respect to the status of the
Subaccount, including a statement of investments therein, as of the close of
business on the Termination Date.
(d) Additional Reports. The Advisor shall furnish to the Trustee and
ABRA such additional reports and information as may be reasonably requested by
the Trustee or ABRA.
9. Accounting. The Advisor shall keep accurate and detailed records
concerning its services under this Agreement, including records of all
transactions effected and recommendations made during its performance of this
Agreement, and all such records shall be open to inspection at all reasonable
times by the Trustee and ABRA, or their designee, and by duly authorized
representatives of the Secretary of Labor and the Secretary of the Treasury
acting pursuant to their authority under ERISA and the Code, respectively, and
other appropriate regulatory authorities.
10. Advisor's Compensation. The amount and manner of payment of fees
payable by the Trustee to the Advisor for the Advisor's services under this
Agreement are set forth in Appendix E. The Advisor agrees that if it enters into
a fee schedule with any new client, other than eleemosynary or governmental
clients whose portfolio is advised or managed under the same investment policies
and objectives as the Subaccount, and is similarly or smaller sized, for
services which are substantially the same as the services provided under this
Agreement and such fee schedule contains fees that are less than the fees set
forth in Appendix E, it will offer the same fee schedule to the
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Trustee which shall have the right to require the amendment to Appendix E to
reflect that lower fee schedule.
11. Removal and Resignation.
(a) Removal of the Advisor. Upon written notice to the Advisor, the
Advisor may be removed by the Trustee. Any transaction for the Subaccount
authorized by the Trustee prior to the receipt by the Advisor of the notice
shall be consummated and the Advisor shall not recommend any transaction for the
Subaccount subsequent to the receipt of the notice.
(b) Resignation of the Advisor. The Advisor may resign under this
Agreement upon sixty (60) days' prior written notice to the Trustee. The Advisor
shall concurrently advise ABRA in writing of such resignation and the effective
date thereof.
(c) Termination of Obligations. The respective obligations of the
Advisor and the Trustee under Section 6 of the Agreement shall survive any such
removal or resignation.
12. Termination, Amendment or Modification. The provisions of this
Agreement may not be terminated, changed, modified, altered, or amended in any
respect except in a writing signed by the parties.
13. Definitions. As used herein, the following terms shall have the
meanings ascribed to them in the following sections of this Agreement:
Term Defined Section
------------ -------
ABA Members Collective Trust Introduction
ABA Members Plans Introduction
ABRA Introduction
Advisers Act 2
Advisor Introduction
Advisor's Amendment 4 (c) (i)
Advisor's Recommendation 4 (c) (ii)
Agreement Introduction
Authorized Transaction 4 (c) (iii)
Broker List 4 (c) (i)
business day 2
Code Introduction
Declaration of Trust Introduction
Equitable Introduction
ERISA 2
Fund Introduction
Fund Declaration 4 (b)
Indemnified Persons 6 (c) (i)
14
Plans Introduction
Separate Account Introduction
State Street Introduction
Subaccount Introduction
Suggested Response 4 (e)
Termination Date 8 (c)
Trustee Introduction
Trustee's Response 4 (c) (ii)
Trustee's Rejection 4 (e)
Trusts Introduction
Valid Notice 4 (c) (v)
14. Governing Law. This Agreement shall be construed and enforced
according to the laws of The Commonwealth of Massachusetts and, to the extent of
any federal preemption, the laws of the United States of America.
15. Binding upon Successors. This Agreement shall be binding upon and
enforceable by the successors to the parties hereto.
16. Assignment. Neither party may assign this Agreement (including for
this purpose any assignment within the meaning of the Advisers Act), or any
rights or responsibilities hereby created, without the prior written consent of
the other party, which consent may be withheld by the other party in its sole
discretion.; however, the parties may amend this Agreement from time to time in
accordance with Section 12.
17. Notices. Written notices shall be deemed effective with respect to a
party upon delivery to such party at the address set forth below or to such
other address as may be provided in writing from time to time by such party.
To the Advisor:
Bankers Trust Company
One Bankers Trust Plaza, MS 2355
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Director, CIO Structured Equities
To the Trustee: State Street Bank and Trust Company
Batterymarch Park III
Three ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ABRA Division Head
15
If by mail, to: State Street Bank and Trust Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ABRA Division Head
18. Oral Communications. Oral communications between the parties to this
Agreement shall be effective hereunder only to the extent specifically
authorized herein. By its execution of this Agreement, each of the parties
hereto acknowledges that the other party may record any such oral communications
and consents to any such recording. All oral communications shall be confirmed
in writing, except that if an oral communication is recorded such recording
shall be controlling and no written confirmation shall be required.
19. Authority. The parties to this Agreement represent, respectively, that
they have duly authorized the execution, delivery and performance of this
Agreement and that neither such execution and delivery nor the performance of
their obligations hereunder conflict with or violate any provision of law, rule
or regulation, or any instrument to which either is a party or to which any of
their respective properties are subject and that this Agreement is a valid and
binding obligation.
20. Authorized Representatives. The Advisor from time to time shall by
written notice certify to the Trustee the name of the Advisor of the person or
persons authorized to act on behalf of the Advisor. Any person so certified
shall be deemed to be the authorized representative of the Advisor. The Advisor
shall give written notice to the Trustee when any person so certified ceases to
have the authority to act on behalf of the Advisor, but such revocation of
authority shall not be valid until the notice is received by the Trustee. The
Advisor will notify the Trustee in writing of any significant changes in the
officers of the Advisor and any changes in the personnel of the Advisor
responsible for providing investment advice with respect to the assets of the
Subaccount within twenty (20) business days after such change.
IN WITNESS WHEREOF, the parties have executed this Agreement on June 13,
1997 with an effective date as of the close of business on June 13, 1997 (unless
otherwise agreed).
STATE STREET BANK AND TRUST
COMPANY
Attest: By:
------------------------ -------------------------------
Title:
------------------------------
BANKERS TRUST COMPANY
Attest: By:
------------------------ -------------------------------
Title:
------------------------------
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