EXHIBIT 10.43
Asset Management Agreement
This ASSET MANAGEMENT AGREEMENT (the "Agreement"), dated October 20, 2003
by and between Investors Life Insurance Company of North America, a company
domiciled in the State of Washington, (the "Company") and Conning Asset
Management Company, a Missouri Corporation ("Conning").
WHEREAS, the Company is engaged in the business of providing life insurance
and annuity products and services; and
WHEREAS, Conning has expertise and experience in providing investment
advice, portfolio management, and investment accounting and reporting services
and the Company wishes to engage Conning to provide such services as specified
in this Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and covenants contained in this Agreement, the receipt and
sufficiency of which are acknowledged, the Company and Conning hereby agree as
follows:
1. APPOINTMENT. Effective October 20, 2003 (the "Effective Date"), the
Company appoints Conning as the Company's investment manager to invest
and reinvest the Assets (as defined in Paragraph 2) of the Investment
Account(s) (as defined in Paragraph 2) and to perform investment
advisory and portfolio management services in accordance with the
investment guidelines set forth in Schedule 1 (the "Investment
Guidelines"). Without limiting the generality of the foregoing, the
Company authorizes Conning to purchase, sell, exchange, convert,
surrender for redemption, and otherwise trade securities (including
swaps, options, futures contracts and other financial instruments) in
the Company's name and, in connection therewith, to sign any
subscription agreements, stock and note purchase agreements, financial
instruments, or other documents and vote any proxies on behalf of the
Company and to issue instructions to the Custodians (as defined in
Paragraph 3). The Investment Guidelines may be modified from time to
time in accordance with Paragraph 16 (Amendment) of this Agreement;
provided that, any such modification shall be effective no earlier
than fifteen (15) days after the Company receives a written
acknowledgement from Conning confirming Conning's receipt of the
modified Investment Guidelines.
2. INVESTMENT ACCOUNT(S). The "Investment Accounts" shall mean one or
more segregated accounts established by the Company with the
Custodian(s) to hold all Assets that from time to time are placed in
such account(s) for management by Conning, including all changes in
such account(s) that result from purchases, sales, and other
transactions effected by Conning in accordance with this Agreement.
"Assets" shall mean all cash, cash equivalents, securities,
investments, and other property, as well as accretions of any sort,
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including dividends, interest, sinking fund payments, accrued income,
stock splits, and realized capital appreciation. The Company may
withdraw any or all of the Assets in the Investment Account(s) at any
time. The Company shall make best efforts to notify Conning in advance
of any additions or withdrawals from the Investment Account(s) but, in
any event, the Company agrees to notify Conning within five "Business
Days" (as defined herein) after any such additions to or withdrawals
from the Investment Account(s). The term "Business Day" shall mean any
day on which the national securities exchanges are open for business.
The Company shall be responsible for all fees and other costs
associated with the establishment and maintenance of the Investment
Account(s).
3. CUSTODY OF ASSETS. The Company will select and engage at the Company's
expense an independent bank, trust company or other person (each a
"Custodian") to serve as Custodian of each Investment Account. The
Company shall provide Conning, in writing, the identity of each
Custodian, any change in a Custodian and all other information
regarding the Custodian(s) required for Conning to carry out its
duties under this Agreement. The Company shall notify each Custodian
of the appointment of Conning and of the authority of Conning to
effect investments with respect to the Assets of the Investment
Account(s). All transactions authorized by this Agreement shall be
made by payment to or delivery by the Custodian(s). Conning shall not
act as Custodian or at any time have actual possession of any Assets
in the Investment Account(s). The Company authorizes Conning to enter
into an agreement with each Custodian to use the Depository Trust
Company's Institutional Delivery System for trade confirmation and
settlement.
4. DUTIES OF CONNING AND THE COMPANY.
a) Conning shall manage the Investment Account(s) in accordance with
the Investment Guidelines and shall perform and provide such
other investment advisory and investment accounting and reporting
services to the Company as may be reasonably requested by the
Company and agreed to by Conning.
b) Conning shall provide, or cause to be provided, to the Company
the reports set forth on Schedule 2.
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c) Conning shall execute and issue to brokers of its choice
instructions or authorizations to purchase, sell, exchange,
convert, surrender for redemption, or otherwise trade in and deal
with securities of the Investment Account(s). Conning may place
brokerage with broker-dealers that provide services beneficial to
the Investment Account(s) or to other accounts managed by Conning
and whose commissions include a reasonable charge for such
services. Conning shall confirm or cause to be confirmed in
writing to the Company each security transaction executed for the
Investment Account(s).
d) The Company shall own, have custody of and maintain its general
corporate accounts and records. At reasonable times and upon
reasonable notice, the Company shall provide Conning, and shall
cause each Custodian to provide Conning, with access to all
books, records, accounts, facilities, and personnel necessary or
appropriate for the performance of Conning's obligations under
this Agreement.
e) At reasonable times and upon reasonable notice, Conning shall
provide access to all books, records, accounts, facilities, and
personnel that relate specifically to the performance of its
obligations to the Company under this Agreement and to the
internal and independent auditors and regulators of the Company.
f) Nothing in this Agreement shall be deemed to impose on Conning
responsibility for the preparation of Company's financial
statements or the Company's other financial and regulatory filing
and reporting obligations.
g) The Company shall promptly notify Conning, in writing, of any
change in the Investment Guidelines that is necessary for any
reason, including but not limited to a change by the Company or
in any applicable law or regulation.
5. FEES
a) The Company shall pay Conning an annual fee, as provided in
Schedule 3, on the Assets for which Conning is providing
investment management and accounting services. The fees payable
to Conning shall be calculated commencing the Effective Date
based on the Average Monthly Market Value (as defined herein) of
the Assets in the Investment Account(s) for each calendar
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quarter, as determined by Conning but subject to an audit by the
Company. All fees will be payable quarterly in arrears within
thirty (30) days after the date of Conning's invoice. Any fee
payable for less than a full calendar quarter shall be pro-rated.
Upon any termination of this Agreement other than at the end of a
calendar quarter, the fee shall be calculated as of the
termination date.
b) The "Average Monthly Market Value" of the Assets in the
Investment Accounts shall be determined by adding together the
market value of all Assets (including cash or its equivalent) in
the Investment Accounts as determined as of the last Business Day
in the month which immediately precedes the first day of the
calendar quarter for which the calculation is being made and as
of the last Business Day of each month which is included in such
calendar quarter, then dividing such sum by four (4). In
computing the market value of any Assets in the Investment
Account(s) for the purpose of this Agreement, each security
listed on any national securities exchange shall be valued at the
last sale price on the consolidated tape on the valuation date.
Listed stocks that are not traded on such date and any unlisted
stock regularly traded in the over-the-counter market shall be
valued at the latest available bid price quotation furnished to
Conning by such sources as it may deem appropriate. Fixed income
securities, including those listed on a securities exchange, will
be valued by an independent securities pricing service selected
by Conning unless Conning, in its reasonable discretion,
determines that another valuation is appropriate. Short-term
money market instruments are valued at amortized cost. Any other
security or asset shall be valued in a manner determined in good
faith by Conning to reflect its fair market value.
c) The Company is responsible for out-of-pocket expenses directly
related to the provision of services by Conning under this
Agreement, including, without limitation, any custodial expenses,
brokerage fees and commissions, interest on borrowings, if any,
taxes, and fees which are directly related to the NAIC asset
valuation system ("SVO") and annual licensing fee. Any such
reimbursable expenses shall be included in the quarterly or final
invoice prepared by Conning and shall be payable within thirty
(30) days after the date of such invoice
d) Unless specifically provided for in this Agreement, neither
Conning nor any of its officers, affiliates, or employees shall
act as principal, broker/dealer or receive any compensation from
the Company in connection with the purchase or sale of
investments for the Investment Account(s).
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6. REPRESENTATIONS, WARRANTIES, AND COVENANTS.
a) The Company represents, warrants, and covenants to Conning that,
as of the Effective Date and throughout the term of this
Agreement:
i) The appointment of Conning as the Company's investment
manager has been duly and properly authorized by the Company
in accordance with its charter, by-laws and other applicable
documents ("Corporate Documents") and the Investment
Guidelines are in compliance with such Corporate Documents
and with all legal and regulatory restrictions applicable to
the Company and the Investment Account(s);
ii) this Agreement constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance
with its terms, except to the extent such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, or similar laws affecting the rights of
creditors generally and by general equity principles;
iii) the Company has legal title to the Assets in the Investment
Account(s) and no restrictions exist as to the ownership or
transfer of such Assets unless specifically set forth in
this Agreement;
iv) the Company is, and will remain during the term of this
Agreement, engaged primarily in the insurance business; and
v) the Assets are not subject to regulation under the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), nor do any Assets constitute "plan assets" as
defined under ERISA.
b) Conning represents, warrants, and covenants to the Company that:
i) It is, and will remain during the term of this Agreement, a
registered investment adviser under the Investment Advisers
Act of 1940, as amended (the "Advisers Act");
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ii) this Agreement constitutes a valid and binding obligation of
Conning, enforceable against Conning in accordance with its
terms, except to the extent such enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, or similar laws affecting the rights of
creditors generally and by general equity principles; and
iii) it currently has, and agrees that it will maintain, the
skilled personnel, computer hardware and software, and other
facilities necessary to prepare the reports and perform the
services required by this Agreement.
7. TERM AND TERMINATION.
a) This Agreement shall commence as of the Effective Date as set
forth in Paragraph 1 and shall continue in force until terminated
by Conning or the Company upon no less than thirty (30) days
prior written notice to the other party.
b) In the event of termination of this Agreement, this Agreement,
except for Paragraph 5 (Fees), Paragraph 9 (Confidentiality),
Paragraph 11 (Limitation of Liability), Paragraph 12
(Indemnification), Paragraph 13 (Arbitration), and this Paragraph
7 (Term and Termination), shall immediately become void and have
no further force or effect. Paragraph 9 (Confidentiality) shall
survive for a one year period following termination date.
c) Upon termination of this Agreement and upon specific written
request, Conning shall within twenty (20) Business Days return to
the Company all books and records of the Company, and all other
information relating to the Investment Account(s) then in the
possession of Conning, except for any software or other
intellectual property that is proprietary to, or owned or
licensed by, Conning or any of its affiliates, which shall remain
the property of Conning.
8. NON-EXCLUSIVITY; POTENTIAL CONFLICTS OF INTEREST.
a) Conning and its officers and employees may act and continue to
act as investment managers for others. As such, the Company
understands that Conning will not devote its full time to the
management of any one account. Nothing in this Agreement shall in
any way be deemed to restrict Conning's right to perform
investment management or other services for any other person or
entity, and the performance of any such services shall not be
deemed to violate or give rise to any duty or obligation to the
Company not specifically undertaken by Conning under this
Agreement.
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b) The Company recognizes that there are certain inherent and
potential conflicts of interest that may arise in Conning's
management of the Investment Account(s) and its investment
advisory activities on behalf of other clients with the same or
different investment objectives (some of which are affiliates of
Conning), including the allocation of investment opportunities
among accounts and the acquisition and disposition of a
particular investment on behalf of different accounts.
9. CONFIDENTIALITY. From time to time in the course of the performance of
this Agreement, the Company and Conning will be providing each other
with certain financial, strategic and other information. Except as
required by law and except as otherwise permitted by this Agreement,
all such information of a non-public nature that is obtained by one
party pursuant to this Agreement shall be held in confidence by such
party and may not be disclosed to any other person without the prior
written consent of the other party; provided, that Conning may
disclose information it receives from or on behalf of the Company to
officers and employees of Conning in the course of providing the
investment management and accounting services to the Company under
this Agreement, and Conning may publicly disclose the fact that the
Company is a client of Conning.
10. RELIANCE ON INFORMATION. Conning shall be entitled to rely, without
independent verification, on the accuracy and completeness of all
information obtained by Conning from the Company and from third
parties reasonably believed by Conning to be reliable.
11. LIMITATION OF LIABILITY.
a) Conning shall be liable to and indemnify the Company to the
extent any loss, liability, or damage results from the negligence
or bad faith of Conning, or the reckless disregard by Conning of
its obligations and duties under this Agreement.
b) Absent any fault on its part, as described in sub-paragraph (a),
Conning shall not be liable for any loss, liability, or damage
incurred by the Company as a result of any investment decision,
recommendation, or other action taken or omitted in what Conning,
in good faith, believes to be the proper performance of its
duties under this Agreement. Conning does not guarantee the
future performance of the Investment Accounts or any specific
level of performance, the success of any investment decision or
strategy that Conning may use, or the success of Conning's
overall management of the Assets. The Company understands that
investment decisions made for the Investment Accounts by Conning
are subject to various market, currency, economic, political and
business risks, and that those investment decisions will not
always be profitable.
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c) Additionally, Conning shall not be liable for any liability,
loss, or damage resulting from: (i) the willful misconduct,
negligence, or bad faith of any independent representative,
consultant, independent contractor, broker, agent, or other
person who is selected, engaged or retained by Conning on behalf
of the Company in connection with the performance of services
under this Agreement, unless such person was selected, engaged,
or retained by Conning on account of bad faith in a negligent
manner; (ii) any act or failure to act by any Custodian; (iii)
any investment made by Conning consistent with the Investment
Guidelines; or (iv) the reliance by Conning on information as
provided in Paragraph 10 (Reliance on Information).
d) The federal and state securities laws impose liabilities under
certain circumstances on persons who act in good faith, and
therefore nothing in this Agreement will waive or limit any
rights that the Company may have under those laws.
12. INDEMNIFICATION. In the event the Company seeks indemnification for a
claim alleged by a person who is not a party to this Agreement (a
"Third Party Claim"), the Company shall, as a condition to receiving
any indemnification pursuant to Paragraph 11 (a), give prompt written
notice of such Third Party Claim to Conning. Conning shall have the
right to elect to investigate, negotiate, settle, and defend such
third party claim and, if such election is made, the Company shall
have the right, at its own expense, to participate in the defense of
such Third Party Claim through counsel of its own choosing. Conning
shall not be required to indemnify the Company with respect to any
settlement of a Third Party Claim that Conning has not approved in
writing in advance.
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13. ARBITRATION. In the event of any dispute, controversy or claim which
relates to, arises out of, or is connected with this Agreement
(including, without limitation, the creation, validity,
interpretation, breach or termination of this Agreement), each party
shall designate an officer whose task it will be to meet and in good
faith resolve the matter amicably. Any such matter which has not been
mutually resolved by the parties shall, on the written demand by
either party to the other party, be determined and settled in
Hartford, Connecticut by a panel of three arbitrators in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association. The award entered by the arbitrators shall be final and
binding on both parties. Such award shall specify the factual and
legal basis for the award, shall not include any multiple, punitive or
exemplary damages, and shall remain confidential. The cost of the
arbitration shall be borne equally by the Company and Conning; each
party shall bear its own expenses (including counsel fees) incurred in
connection with the arbitration.
14. INDEPENDENT CONTRACTOR. The relation of Conning to the Company is, and
shall remain during the term of this Agreement, that of an Independent
Contractor. Conning and the Company are not partners or joint
venturers with each other under this Agreement, and nothing in this
Agreement shall be construed so as to make them partners or joint
venturers, or to impose any liability as such on either of them.
15. NOTICES. All notices and other communications required or permitted to
be given pursuant to this Agreement shall be in writing and shall be
considered as properly given or made if (i) sent by overnight delivery
by a nationally recognized air courier service, or (ii) mailed by
registered or certified mail, return receipt requested, and if
addressed to the respective address listed below:
A. If to the Company, to: Investors Life Insurance Company
of North America
0000 Xxxxx Xxxxx Xxxxxxxxx
Xxxxxxxx Xxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, III
Chief Financial Officer
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B. If to Conning, to: Conning Asset Management Company
City Place II, 000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Vice President and General Counsel
All notices will be deemed effective upon receipt. Any party may
change its address for the receipt of notices by providing notice, in
the manner provided in this Paragraph 15, to each other party.
16. AMENDMENT. No amendment will be effective unless first reviewed by
Conning' legal department and in writing and signed by each of the
parties and no waiver of compliance with any provision or condition,
and no consent provided for in this Agreement, shall be effective
unless in a writing duly executed by the party sought to be charged
with such waiver or consent.
17. ASSIGNMENT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto, and their respective successors and
permitted assigns. Neither party hereto shall assign (as that term is
defined under the Adviser's Act) its rights or obligations under this
Agreement without the prior written consent of the other party.
18. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of New York, without reference
to the choice of law rules thereof.
19. SEVERABILITY. In the event that any provision or condition in this
Agreement shall be invalid, illegal, or unenforceable under applicable
law of mandatory application, the validity, legality, and
enforceability of that provision or condition in other instances and
of the remaining provisions and conditions shall not in any way be
affected thereby.
20. HEADINGS. Section headings are for convenience of reference only and
shall not affect the construction of this Agreement.
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21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which when executed shall be deemed to be an
original and all of which together shall be deemed to be one and the
same instrument.
22. FORCE MAJEURE. Conning shall not be considered to be in default in the
performance of its obligations under this Agreement, to the extent
that the performance of any such obligations is prevented or delayed
by any cause which is beyond the reasonable control of Conning.
23. PRIOR AGREEMENTS. This Agreement constitutes the entire understanding
and Agreement, and supersedes any and all other proposals,
understandings, and agreements between the Company and Conning with
respect to the subject matter hereof.
24. ACKNOWLEDGMENT OF DISCLOSURE. The Company acknowledges receipt of
Conning's Form ADV, Part II at least 48 hours prior to signing this
Agreement
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This Agreement contains a Binding Arbitration Provision which may be enforced by
the Parties.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement by their duly authorized officers effective as of the date first above
written.
Investors Life Insurance Company of North America
By ______/s/ Xxxxxx X. Xxxx, III____________
Name: Xxxxxx X. Xxxx, III
Title: Chief Financial Officer
Conning Asset Management Company
By _____/s/ Xxxxxxxxx Correnti______________
Name: Xxxxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer
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