EXHIBIT 10.16
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Investment Management Agreement
This Investment Management Agreement (the "Agreement") between Scottish
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Annuity and Life Holdings, Ltd. (the "Client") and The Prudential Investment
Corporation, a New Jersey corporation (the "Investment Manager") is dated as of
October 22, 1998.
WHEREAS, the Client desires to appoint the Investment Manager to manage
certain of its assets in account(s) established by the Client ("Investment
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Manager Accounts"); and
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WHEREAS, the Investment Manager is willing to accept the duties and
responsibilities of an investment manager with respect to the Investment Manager
Accounts;
NOW, THEREFORE, in consideration of the promises and mutual considerations
provided herein, and intending to be legally bound hereby, the Client and the
Investment Manager agree as follows:
1. Appointment. The Investment Manager will act as an investment manager
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with respect to the Investment Manager Accounts.
2. Fees. The Client will pay the Investment Manager, as compensation for
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its services under this Agreement, a fee determined in accordance with
Schedule A to this Agreement. Such fee may be changed by the Investment Manager
upon 45 days' written notice to the client.
3. Authority of Investment Manager. Subject to Section 4 of this
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Agreement the Investment Manager shall have the discretionary authority to
manage and control assets of the Client that are segregated in an Investment
Manager Account, including the power to acquire and dispose of assets in each
Investment Manager Account. In exercise of that power, the Investment Manager
may invest and reinvest the assets, without distinction between principal and
income, in investments described by the Client's investment management
guidelines, consisting of Schedule B to this Agreement.
When exercising its authority under this Section 3, the Investment Manager
shall be under no obligation to consult with or obtain the consent of the
Client.
The assets initially segregated into each Investment Manager Account shall
be cash. Assets other than cash may be segregated into an Investment Manager
Account with the consent of the Investment Manager. The Client may remove assets
from any Investment Manager Account at any time without the consent of the
Investment Manger.
Upon segregating assets of the Client into an Investment Manager Account,
the Client shall promptly inform the Investment Manager of all assets segregated
into the Investment Manager Account. The Client shall also establish reporting
and accounting arrangements so that the Investment Manager will be fully
informed at all times as to the assets segregated into any Investment Manager
Account.
4. Investment Limitations and Guidelines. The client may, from time to
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time, communicated in writing general investment guidelines to the Investment
Manager. Such communication shall be effective no more than five days
subsequent to its receipt by Investment Manager. Until contrary guidelines are
communicated from the Client to the Investment Manager, each Investment
Management Account shall be managed in accordance with the guidelines contained
in Schedule B.
5. Brokerage. Subject to any guidelines annexed hereto, the Investment
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Manager shall use its best efforts to obtain best execution of orders at the
most favorable prices reasonably obtainable. When determining the most favorable
prices reasonably obtainable, the Investment Manager may consider, in accordance
with section 28(e) of the Securities Exchange Act of 1934, the value of the
receipt by the Investment Manager of services that affect securities
transactions and incidental functions, such as clearance and settlement
services, and advice as to the value of securities, the advisability of
investing in securities, the availability of securities or purchasers or buyers
of securities and analyses and reports concerning issues; industries,
securities, economic factors, trends, portfolio strategy and the performance of
accounts. Commissions charged by brokers who provide these services may be
somewhat higher than the commissions charged by brokers who do not provide these
services.
With respect to the Investment Manager Accounts, the Investment Manager may
cause securities transactions to be executed concurrently with authorizations to
purchase or sell the same securities for other accounts managed by the
Investment Manager, including proprietary accounts or accounts of affiliates. In
these instances, the executions of purchases or sales, where possible, shall be
allocated equitably among the various accounts (including the Investment Manager
Accounts).
6. Other Activities of the Investment Manager. In addition to the
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investment management services performed under this Agreement, the Investment
Manager or any of its affiliates may engage in any other business and may
render investment advisory services to any other person. The Investment Manager
or any of its affiliates may render investment advisory services to any other
person, even if the Investment Manager, its affiliates, or other person has
investment policies similar to those followed by the Investment Manager for the
Investment Manager Accounts. The Investment Manager may, at any time, buy or
sell, or may direct or recommend that another person buy or sell, securities of
the same kind or class that are purchased or sold for any Investment Manager
Account, at a price which may or may not differ from the price of the
securities purchased or sold for the Investment Manager Account.
7. Reports. The Investment Manager shall provide to the Client such
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reports and information that the client may reasonably request.
8. Investment Manager Covenant. The Investment Manager convenants that it
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is a registered investment adviser under the Investment Advisers Act of 1940, as
amended (the "Adviser Act"). The Investment Manager shall immediately notify the
Client of any change in its status as such.
9. Proxies. The Investment Manager will not be required to take any action
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or render any advice with respect to the voting of proxies for securities held
in any Investment Manager Account, nor will it be obligated to render advice or
take any action on behalf of the Client with respect to securities presently or
formerly held in any Investment Manager Account which became the subject of any
legal proceedings, including bankruptcies.]
10. Termination. The Investment Manager may terminate this Agreement on 45
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days' written notice to the Client. The Client may terminate the Investment
Manager's appointment as an investment manager without advance notice. Upon
termination of this agreement, The Investment Manager shall be under no
obligation to recommend any action with regard to, or liquidate the securities
or other investments in, the Investment Manager Accounts; provided, however,
that upon such termination, the Client may direct the Investment Manager to
remove assets from the Investment Manager Accounts in accordance with Section 3.
11. No Assignment. Neither party may assign this Agreement without the
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prior written consent of the other.
12. Change in Control of Investment Manager. The Investment Manager shall
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immediately notify the Client of any material change in the control or ownership
of the Investment Manager.
13. Communication. To the extent reasonable and practical, communications
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from the Client to the Investment Manager, or vice versa, shall be made in
writing or in another reasonable manner and be promptly confirmed in writing.
Notice shall be deemed effective if made to the parties as follows:
If to the Client: If to the Investment Manager:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
President and CEO Vice President
Scottish Annuity and Life Prudential Investment Corporation
Holdings, Ltd. Two Gateway Center, 6/th/ Floor
▇▇▇▇▇▇ House, ▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, Grand Cayman
Cayman Islands, BWI
14. Disclosure Statement. The Client hereby acknowledges that not less
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than 48 hours before the date it has executed this Agreement it received from
the Investment Manager a copy of the disclosure statement required by Rule
204 - (3) of the Advisers Act.
15. Liability. The Investment Manager undertakes to manage the Investment
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Manager Accounts in accordance with the guidelines set forth herein and in a
professional and responsible manner. The Investment Manager will not be liable
for any loss or liability incurred by reason of any investment decision made or
other action taken or omitted in what the Investment Manager believes in good
faith to be the proper performance of its duties hereunder, and the Investment
Manager shall not, in any event, be liable for any loss or liability incurred by
any reason as a result of any willful or negligent failure to act on the part of
any broker or custodian, with respect to the Investment Manager Accounts;
provided, however, that this provision shall not constitute a waiver of any
right the Client may have under federal securities law.
16. Confidential Relationship. Each party shall use its best efforts to
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treat all information and advice furnished by the other party to it as
confidential and to avoid disclosing same to third parties (other than
associates of the Investment Manager) except as otherwise agreed to in writing
by both parties as required by law.
17. Entire Agreement; Amendments; Severability. This Agreement constitutes
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the entire agreement between the parties with respect to the Investment Manager
Accounts, and supersedes any prior oral or written agreements with respect to
the Investment Manager Accounts. This Agreement may not be amended except in
writing signed by both parties. If any provision of this agreement shall be held
or made invalid by a statute, rule, regulation, decision of a tribunal or
otherwise, the remainder of this Agreement shall not be affected thereby.
18. GOVERNING LAWS. This Agreement shall be construed in accordance with
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the laws of the State of New Jersey (without regard to the legislative or
judicial conflict of laws or rules of any state), except to the extent
superseded by federal law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date set forth above.
Scottish Annuity and Life Holdings, Ltd.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title CEO
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The Prudential Investment Corporation
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title V.P.
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APPENDIX A - FEES
The fees of the Investment Manager shall be as follows:
.20 of 1% of the first $US 50,000,000, plus
.15 of 1% of any amount in excess of $US 50,000,000
The fee is billed quarterly, in arrears, and is based upon the average
market value of funds managed during the calendar quarter.
APPENDIX B - PORTFOLIO GUIDELINES
I. The benchmark for the account will be the ▇▇▇▇▇▇ Brothers Aggregate
Bond Index. The duration of the portfolio will be maintained within
+/- 50% of that of the index.
II. Approved Investments Types and Limitations:
1) Dollar-denominated investment-grade debt - No Limitation
2) Dollar-denominated non-investment-grade debt - 10% of Assets
III. Sector Diversification:
1) U.S. Treasury and Agency debt - No Limitation
(including pass-through and CMO issues)
2) Industrials - 50%
3) Utilities - 50%
4) Finance - 50%
5) Other - 25%
IV. Issuer Limits:
1) U.S Government and Agencies - No Limitation
2) A or better - 10%
3) BBB+ to BBB- - 5%
4) Below BBB- - 2%
V. Other:
1) 144a securities are permitted, subject to sector diversification
limits.
2) Futures and options are permitted, for hedging only; initial margin
for futures, and premiums paid for options, combined, will be
limited to 5% of the value of the portfolio.
