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EXHIBIT 1.A.(8)(d)
MANAGEMENT AGREEMENT
AGREEMENT made as of this first day of October, 1990,
by and between ROYAL TANDEM LIFE INSURANCE COMPANY, a New York corporation
(hereinafter referred to as the "Client"), and XXXXXXX XXXXX ASSET MANAGEMENT,
INC. a Delaware corporation (hereinafter referred to as the "Manager").
W I T N E S S E T H
WHEREAS, the Client is engaged in business as an
insurance company subject to regulation under the laws of each state in which
it does business; and
WHEREAS, the Manager is engaged principally in
rendering management and investment advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940; and
WHEREAS, the Client desires to retain the Manager to
provide investment advisory services to the Client in the manner and on the
terms hereinafter set forth; and
WHEREAS, the Manager is willing to provide investment
advisory services to the Client on the terms and conditions hereinafter set
forth;
NOW THEREFORE, in consideration of the premises and
the covenants hereinafter contained, the Client and the Manager hereby agree as
follows:
1. APPOINTMENT AND DUTIES OF MANAGER
The Client hereby appoints the Manager as investment manager
of such portion of the Client's investment portfolio as is designated from time
to time by the Client to the Manager in writing (the "Portfolio") and to
furnish, or arrange for affiliates to furnish, the investment advisory services
described below, on the terms and conditions set forth in this Agreement. The
Manager hereby accepts such appointment and agrees during such period, at its
own expense, to render, or arrange for the rendering of, such services and to
assume the obligations herein set forth for the compensation provided for
herein. Except as limited below and in the Statement of Investment Policy and
Guidelines attached hereto, the Manager shall have full discretion, as the
Client's agent and attorney-in-fact, to make purchases and sales of
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investments on the Client's behalf and otherwise to act at the Manager's
discretion in the management of the Portfolio.
The manager shall provide (or arrange for affiliates to
provide) the Client with such investment research, advice and supervision and
written reports as the latter may from time to time (but no less frequently
than monthly) consider necessary for the proper supervision of the assets of
the Client, shall furnish continuously an investment program for the Client and
shall have full discretion as the Client's agent and attorney-in-fact, to
determine from time to time which securities shall be purchased, sold, modified
or exchanged and what portion of the assets of the Client shall be held in (i)
the various securities in which the Client invests, (ii) options, (iii)
futures, (iv) options on futures or (v) cash, subject only to the restrictions
of applicable law and the Client's investment objectives, investment policies
and investment restrictions as the same are in each case advised in writing by
the Client to the Manager. Without limiting the foregoing, the Manager shall
have authority to approve the restructuring of investments held in the
Portfolio, either through changes in the terms of the security (including
changes in voting rights, dividend rights, interest rates, maturity, conversion
rights or other rights or preferences relating to the security) or through the
substitution of new securities, having such terms and provisions as may be
deemed appropriate by the Manager in light of the prevailing circumstances, for
securities held in the Portfolio. The Manager shall make decisions for the
Client as to foreign currency matters and make determinations as to foreign
exchange contracts, foreign currency options, foreign currency futures and
related options on foreign currency futures. The Manager shall make decisions
for the Client as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Client's Portfolio
securities shall be exercised and shall have the authority, as the Client's
agent and attorney-in-fact, to exercise such rights on behalf of the Client.
The Manager may temporarily invest the Client's cash
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in a money market fund which employs the Manager or an affiliate as its
investment adviser.
2. PORTFOLIO TRANSACTIONS
The Client authorizes the Manager to establish accounts in the
Client's name with Brokerage Firms that are members of the National Association
of Security Dealers and/or members of the Regional or National Securities
Exchanges including the Manager's affiliate XXXXXXX LYNCH, PIERCE, XXXXXX &
XXXXX INCORPORATED (XXXXXXX XXXXX) and to buy, sell or otherwise effect
transactions in stocks, bonds and any other securities for the Client's
accounts and in the Client's name and the Client empowers such firms to follow
the Manager's instructions.
The Client agrees that, if Xxxxxxx Xxxxx effects investment
transactions for the Client, it may act as principal, or as agent for both
sides of a transaction, in accordance with applicable law. When Xxxxxxx Xxxxx
acts as agent for both sides of a transaction, it may be paid commissions from,
and has duties to, the opposing sides. If Xxxxxxx Xxxxx effects transactions
on the Client's behalf on a stock exchange, it may retain the compensation it
is paid for such services, in accordance with applicable law. The Manager is
required by Section 11(a) of the Securities Exchange Act of 1934 to include the
preceding sentence in this agreement for clients who are companies, governments
and other institutions.
Investment firms, including Xxxxxxx Xxxxx, may be compensated
from the Client's Portfolio at their standard rates for effecting investment
transactions on the Client's behalf.
3. ADMINISTRATION
The Manager is a registered investment adviser under the
Investment Advisers Act of 1940.
The Client acknowledges that it has received the Manager's
disclosure statement. The Client represents that the person entering this
agreement on
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the Client's behalf has full power and authority to do so and that it is
binding.
The Client agrees to notify the Manager prior to giving any
instruction to an investment firm or custodian regarding the commitment,
withdrawal or investment of the Portfolio. The Manager is under no duty to
enter into any transaction with respect to assets which are not readily
available for delivery.
The Client will instruct any investment firm or custodian to
transmit simultaneously to the Client and to the Manager all confirmations and
periodic statements.
The Manager will send the Client current valuations of the
Client's account at least four times annually.
Employees of the Manager's affiliates may receive credits or
compensation for transactions effected on the Client's behalf.
The Client acknowledges that the Manager's affiliates may have
investment banking relationships with publicly traded companies and that
employees of the manager's affiliates may act as directors of publicly traded
companies, which at times may preclude the Manager from effecting transactions
on the Client's behalf in securities of such companies.
4. LIMITATION OF LIABILITY
The Manager will not be liable for the consequences of any
investment decision or related activities made or omitted in accordance with
Section 1 hereof, except for loss incurred as a result of the Manager's gross
negligence or willful or reckless misconduct. The Manager will not be liable
for loss incurred by any other person or as a result of any person other than
the Manager, whether or not its affiliate. These limitations of liability also
apply to the Manager's directors, officers, employees and agents.
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5. CHOICE OF LAW
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT AS MAY BE PREEMPTED BY
FEDERAL LAW.
6. CUSTODY
The Chase Manhattan Bank, N.A. will act as custodian of the
Portfolio. The Manager will never receive or physically control the Portfolio.
The Client's money market fund shares may be recorded in the Client's name at a
transfer agent.
The Manager will not be responsible for making any tax credit
or similar claim or any legal filing on the Client's behalf.
7. FEES
In Compensation for the Manager's services hereunder, the
Client shall periodically pay to the Manager, upon demand of the Manager (but
no less frequently than annually), a fee equal to the sum of (i) the Manager's
costs, expenses and disbursements incurred during such period in connection
with its services hereunder and (ii) 10% of the amount calculated pursuant to
clause (i) hereof.
8. TERMINATION
This agreement shall remain in force until further notice.
The Client will be entitled to terminate this agreement at any time, effective
from the time the Manager receives written notification or such other time as
may be mutually agreed upon, subject to the settlement of transactions in
progress. There will be no penalty charge on termination. This agreement will
also be terminated on the fifth day after the Manager sends the Client notice
in writing of the Manager's intent to terminate this agreement or such other
time as may be mutually agreed upon, also subject to the settlement of
transactions in progress. The Manager may not assign this agreement without
the Client's prior consent.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
ROYAL TANDEM LIFE INSURANCE COMPANY
By /s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
Senior Vice President
Date of Execution: Jan. 24, 1991
XXXXXXX XXXXX ASSET MANAGEMENT, INC.
By /s/ N. XXXX XXXXXX
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N. Xxxx Xxxxxx
Senior Vice President
Date of Execution: Jan. 24, 1991
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STATEMENT OF
INVESTMENT POLICY AND GUIDELINES
FOR THE ROYAL TANDEM PORTFOLIOS
Xxxxxxx Xxxxx Insurance Group policy regarding investments supporting its
insurance in force is currently, and will remain, one of maximizing value for
its policyholders and equity owners, consistent with utmost concern for the
security over the long and short term. MLAM will pursue this objective by
investing in a diversified portfolio which conforms to the following
guidelines:
A. Securities issued by the United States Treasury or an agency
of the United States Government which are backed by the full
faith and credit of the United States Government in any amount
are authorized.
B. Mortgage-backed securities issued by the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage
Association or the Government National Mortgage Association in
any amount are authorized.
C. Mortgage-backed securities collateralized by single family
residential mortgage loans (i.e., collateralized mortgage
obligations, private participations) shall conform to the
following size limits per issuer as rated by either Moody's or
Standard and Poor's.
Rating Maximum per Issuer
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AAA $ 40 Million
AA $ 30 Million
A $ 20 Million
BAA $ 10 Million
D. Interest rate sensitive derivative mortgage-backed securities
such as Interest-Only and Principal-Only securities (IO/PO) or
Z-tranche CMOs shall conform to a size limit per issue of $10
million original face, and shall in no case exceed 10% of the
book value of the portfolio.
E. Z-type "accrual" bonds will conform to the limitations for the
general mortgage backed securities, except that they will not
exceed 30% of the book value of the portfolio.
F. Commercial mortgages may be included, not exceeding a total of
$30 million. No single mortgage shall exceed $5 million.
G. Securities collateralized by other assets (credit cards, auto
loans, mobile homes, and other loans or receivables) may be
purchased only if investment grade. Per-issue maximums shall
conform to those in place for investment grade corporate
securities.
H. Investment grade corporate bond size limits per issuer are as
follows:
Rating Maximum per Issuer
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AAA $ 30 Million
AA $ 30 Million
A $ 15 Million
BAA $ 10 Million
Subject to overall holdings company limitations.
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I. Non-investment grade bond size limits are as follows:
Rating Maximum per Issuer
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BB $ 5 Million
B and lower $ 3 Million
Subject to overall holding company limitations.
The percentage of bonds below investment grade should be
targeted to be maintained at a level below 10% of the book
value of the portfolio.
J. Private placements may be held. Investments shall be limited
to $10 million per issuer, subject to overall holding company
limitations.
K. Investments in convertible bonds are allowed provided the
securities are rated investment grade by either Standard &
Poor's or Xxxxx'x at time of purchase. Such acquisitions
shall be advised in writing to the Investment Committee. All
other forms of equity participation are allowed subject to the
prior approval of the Investment Committee.
L. Investments in International bonds, Currencies or Swaps are
allowed subject to the approval of the Investment Committee,
prior to acquisition.
M. Investments in Financial Futures, Options, Options on Futures,
are allowed for hedging purposes only, subject to guidelines
approved by the Investment Committee.
N. Investments with durations longer than 10 years, or those
whose durations change by more than 50% for 200 basis point
change in interest rates in either direction require
notification to the Investment Committee.
O. Notwithstanding the above guidelines, all investments will
comply with the appropriate Federal, State and other legal
regulations.
Operating Guidelines
In order to comply with the Portfolio Guidelines and to achieve efficiencies in
controlling the investment function, the following operating guidelines will
apply to all portfolio managers.
A. Available funds must be promptly invested. This normally
means two weeks, with the exceptions of situations where
securities are purchased with advance settlement dates.
B. Trades must be reported to MLIG the same day the trade is
made.
C. Mortgage security purchases shall in all aspects qualify as
"good delivery" under Public Security Association standards.
D. The investment adviser will notify MLIG of any changes in
grade by Moody's or Standard & Poor's on a monthly basis.
E. Quarterly review shall be conducted by MLAM investigating all
Watch List issues for continued credit worthiness. All other
credit positions shall be reviewed annually or as
circumstances dictate.
F. The portfolio will be managed with the objective of
maintaining asset/liability duration within previously agreed
upon bounds.
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CREDIT GUIDELINES
MLAM shall provide:
FOR THE INVESTMENT COMMITTEE
A. Quarterly Portfolio Status Update
Four conferences per year will be held to review portfolio
structure (interest rate risk, sector diversification etc.),
investment strategy, transactions and portfolio performance.
B. Quarterly Credit Status Update
Four conferences per year will be held to review performance
and credit analysis.
C. Other Reporting as Required
Brief summaries stating opinion about continued credit
worthiness and outlook for an issuer, whenever holding a
position in this company becomes questionable.
D. For the Asset Risk Management
On a quarterly basis, provide appropriate financial and
operating data on each Watch List issue.
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AMENDMENT TO MANAGEMENT AGREEMENT
This Amendment dated as of the 28th day of January, 1992 is by
and between ML LIFE INSURANCE COMPANY OF NEW YORK, formerly known as Royal
Tandem Life Insurance Company, a New York corporation (hereinafter referred to
as the "Client") and XXXXXXX XXXXX ASSET MANAGEMENT, INC., a Delaware
corporation (hereinafter referred to as the "Manager").
W I T N E S S E T H
WHEREAS, by a Management Agreement dated as of October 1, 1990
(the "Agreement") between the Client and the Manager, the Client retained the
Manager to provide investment advisory services to the Client on the terms and
conditions set forth therein; and
WHEREAS, the Client and the Manager desire to amend the
Agreement as hereinafter provided;
NOW THEREFORE, in consideration of the premises hereinafter
contained, the Client and the Manager hereby agree as follows:
1. AMENDMENT
The following section shall be added immediately
following Section 8 of the Agreement:
"9. ARBITRATION
The Client and the Manager agree that any
controversy which may arise between them concerning
this Agreement or any other transaction or other
agreement (whether entered into before, with or after
this Agreement) shall be determined by arbitration
conducted before and pursuant to the constitution and
rules of the Board of Directors of the New York Stock
Exchange, Inc., or before and pursuant to the Code of
Arbitration Procedure of the National Association of
Securities Dealers, Inc., as the Client may elect.
The Client authorizes the Manager to make such
election on behalf of the Client if the Client does
not notify the Manager by Certified Mail addressed to
the Manager at its Main Office within five (5) days
after the Manager has sent the Client its
notification requesting the Client to make such
election. The
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award of the arbitrator(s) shall be final and
judgement upon the award may be entered in any court,
state or federal, having jurisdiction. The Client
agrees to submit itself and its personal
representatives to the jurisdiction of any such court
for the purpose of such arbitration and the entering
of any such judgement.
2. MISCELLANEOUS
(a) BINDING EFFECT.
The Agreement, as amended hereby, shall be
binding upon and shall inure to the benefit of the
Client and the Manager and the successors and assigns
of the Client and the Manager.
(b) CONSTRUCTION.
This Amendment shall be construed in
connection with and as part of the Agreement, and all
terms conditions and covenants contained in the
Agreement except as herein modified, shall remain in
full force and effect.
(c) REFERENCE.
Any and all notices, requests, certificates
and other instruments executed and delivered after
the execution and delivery of this Amendment may
refer to "Management Agreement" or the "Management
Agreement, dated as of October 1, 1990" without
making specific reference to this Amendment, but
nevertheless all such references shall be deemed to
include this Amendment unless the context shall
otherwise require.
(d) NO OTHER AMENDMENTS.
Except as expressly amended by this Amendment
and the documents delivered pursuant hereto, the
Management Agreement shall not be modified or
otherwise affected in any manner, and shall continue
in full force and effect.
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IN WITNESS WHEREOF, the parties have caused this instrument to
be executed and delivered on the day and year first above written.
ML LIFE INSURANCE COMPANY OF NEW YORK
By: /s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
Senior Vice President
Date of Execution: January 28, 1992
XXXXXXX XXXXX ASSET MANAGEMENT, INC.
By: /s/ N. XXXX XXXXXX
---------------------------------
N. Xxxx Xxxxxx
Senior Vice President
Date of Execution: January 28, 1992
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