SEPARATE ACCOUNT TEN
of
INTEGRITY LIFE INSURANCE COMPANY
MANAGEMENT AGREEMENT
Agreement, made this ___ day of _________, 1998 between Separate Account
Ten (the SEPARATE ACCOUNT) of Integrity Life Insurance Company, an Ohio
corporation, and Integrity Capital Advisors, Inc., a Delaware corporation (the
ADVISER).
W I T N E S S E T H
WHEREAS, the Separate Account is a managed separate account registered
under the Investment Company Act of 1940, as amended (the 1940 ACT); and
WHEREAS, the units of beneficial interest of the Separate Account are
divided into separate divisions or portfolios (each, a DIVISION), each of which
is established pursuant to a resolution of the Board of Managers of the Separate
Account, and the Board of Managers may from time to time terminate such
Divisions or establish and terminate additional Divisions; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the ADVISERS ACT); and
WHEREAS, the Separate Account desires to retain the Adviser to render or
contract to obtain as hereinafter provided investment advisory and supervisory
services to the Separate Account and the Separate Account also desires to avail
itself of the facilities available from the Adviser with respect to the
administration of the Separate Account's day to day business affairs, and the
Adviser is willing to render or contract for such investment advisory,
supervisory and administrative services;
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF ADVISER. The Separate Account hereby appoints the Adviser to
act as manager of the Separate Account and administrator of its business
affairs for the period and on the terms set forth in this Agreement. The
Adviser accepts such appointment and agrees to render the services herein
described, for the compensation herein provided. The Adviser is authorized
to enter into one or more sub-advisory agreements (each, a SUB-ADVISORY
AGREEMENT) with a registered investment adviser (each, a SUB-ADVISER)
pursuant to which the Adviser delegates to the Sub-Adviser its obligations
for providing investment advisory and certain other services in connection
with one or more of the Divisions; provided, that the Adviser, and not the
Separate Account, shall be responsible for any compensation payable under
any Sub-Advisory Agreement. Any such Sub-Advisory Agreement may be entered
into by the Adviser on such terms and in such manner as may be permitted by
the 1940 Act and the rules thereunder. For each Division for which the
Adviser has entered into a Sub-Advisory
Agreement, the Sub-Adviser shall have the primary responsibility for
providing investment advisory services as set forth in Section 2 and shall
be responsible for broker-dealer selection as set forth in Section 3 and
maintaining books and records as set forth in Section 4, and the Adviser
will have supervisory responsibility for investment advisory services
furnished by the Sub-Adviser pursuant to the Sub-Advisory Agreement. The
Adviser will review the performance of the Sub-Adviser and make
recommendations to the Board of Managers of the Separate Account with
respect to the retention and renewal of the Sub-Advisory Agreement.
2. INVESTMENT ADVISORY SERVICES. Subject to the supervision of the Separate
Account's Board of Managers, and in compliance with each Division's
investment objectives and policies, the Adviser will provide an investment
program for each Division and determine the composition of the assets of
each Division, including determination of the purchase, retention or sale
of the securities, cash, and other investments contained in such Division's
holdings. The Adviser is hereby authorized to execute and perform such
services, or to arrange for execution and performance of such services, on
behalf of each Division. To the extent, if any, permitted by the investment
policies of a Division, the Adviser shall make determinations as to and
execute and perform futures contracts and options on behalf of such
Division. The Adviser will provide the services under this Agreement in
accordance with each Division's investment objective or objectives,
policies, procedures and restrictions as stated in the Separate Account's
Registration Statement, as amended from time to time (the REGISTRATION
STATEMENT), filed with the Securities and Exchange Commission (the SEC) and
any other documents that set forth investment policies, procedures or
restrictions governing the Division.
The Adviser further agrees as follows:
(a) The Adviser will manage each Division so as to ensure compliance
by such Division with the diversification requirements of Section
817(h) of the Internal Revenue Code of 1986 and regulations
issued thereunder. In managing the Division in accordance with
these requirements, the Adviser shall be entitled to receive and
act upon advice of counsel.
(b) In undertaking its duties under this Agreement, the Adviser will
comply with the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the
Separate Account's Board of Managers of which it has notice and
the provisions of the Registration Statement.
(c) On occasions when the Adviser deems the purchase or sale of a
security to be in the best interest of a Division as well as of
the Adviser's or the Adviser's affiliates' other investment
advisory clients, the Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be so sold or purchased with those of
its other
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clients where such aggregation is not inconsistent with the
policies set forth in the Registration Statement. In such event,
the Adviser will allocate the securities so purchased or sold, as
well as the expenses incurred in the transaction, in a manner
that is fair and equitable in the Adviser's judgment in the
exercise of the Adviser's fiduciary obligations to the Separate
Account and to such other clients.
(d) In connection with the purchase and sale of securities for each
Division, the Adviser will arrange for the transmission to the
custodian, transfer agent, dividend disbursing agent and
recordkeeping agent for the Separate Account (such custodian and
agent or agents hereinafter collectively referred to as the
AGENT), on a daily basis, such confirmations, trade tickets
(which shall state industry classifications unless the Adviser
has previously furnished a list of classifications for portfolio
securities), and other documents and information, including, but
not limited to, Cusip or other numbers that identify securities
to be purchased or sold on behalf of each Division as may be
reasonably necessary to enable the Agent to perform their
administrative and recordkeeping responsibilities with respect to
such Division. With respect to portfolio securities to be
purchased or sold through the Depository Trust Company, the
Adviser will arrange for the automatic transmission of the
confirmation of such trades to the Separate Account's Agent.
(e) The Adviser will monitor on a daily basis, by review of daily
pricing reports provided by the Agent to the Adviser, the
determination by the Agent for the Separate Account of the
valuation of portfolio securities and other investments of each
Division. The Adviser shall not be obligated to independently
verify the Agent's pricing determinations, and the Agent's
responsibility for accurate pricing determinations of the value
of the Division's securities shall not be reduced by the
Adviser's duty to monitor such determinations. The Adviser will
assist the Agent in determining or confirming, consistent with
the procedures and policies stated in the Registration Statement,
the value of any portfolio securities or other assets of each
Division for which the Agent seeks assistance from or identifies
for review by the Adviser.
(f) The Adviser will make available to the Separate Account, promptly
upon request, all of each Division's investment records and
ledgers maintained by the Adviser as are necessary to assist the
Separate Account to comply with requirements of the 1940 Act and
the Advisers Act, as well as other applicable laws. The Adviser
will furnish to regulatory authorities having the requisite
authority any information or reports in connection with its
services which may be requested in order to ascertain whether the
operations of the Separate
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Account are being conducted in a manner consistent with
applicable laws and regulations.
(g) The Adviser will provide reports, which may be prepared by the
Agent, to the Separate Account's Board of Managers for
consideration at meetings of the Board on the investment program
for each Division and the issuers and securities represented in
each Division's securities holdings, including a schedule of the
investments and other assets held in such Division and a
statement of all purchases and sales for each Division since the
last such statement, and will furnish the Separate Account's
Board of Managers with periodic and special reports with respect
to each Division as the Managers may reasonably request,
including statistical information with respect to the Division's
securities.
3. BROKER-DEALER SELECTION. The Adviser is responsible for decisions to buy or
sell securities and other investments for each Division, broker-dealer and
futures commission merchants' selection, and negotiation of brokerage
commission and futures commission merchants' rates. As a general matter, in
executing portfolio transactions, the Adviser may employ or deal with such
broker-dealers or futures commission merchants as may, in the Adviser's
best judgment, provide prompt and reliable execution of the transactions at
favorable prices and reasonable commission rates. In selecting such
broker-dealers or futures commission merchants, the Adviser shall consider
all relevant factors, including price (including the applicable brokerage
commission, dealer spread or futures commission merchant rate), the size of
the order, the nature of the market for the security or other investment,
the timing of the transaction, the reputation, experience and financial
stability of the broker-dealer or futures commission merchant involved, the
quality of the service, the difficulty of execution, and the execution
capabilities and operational facilities of the firm involved, and, in the
case of securities, the firm's risk in positioning a block of securities.
Subject to such policies as the Board of Managers may determine and
consistent with Section 28(e) of the Securities Exchange Act of 1934, as
amended (the 1934 ACT), the Adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of the Adviser's having caused a Division to pay
a member of an exchange, broker or dealer an amount of commission for
effecting a securities transaction in excess of the amount of commission
another member of an exchange, broker or dealer would have charged for
effecting that transaction, if the Adviser determines in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member of an exchange,
broker or dealer viewed in terms of either that particular transaction or
the Adviser's overall responsibilities with respect to such Division and to
the other clients as to which the Adviser exercises investment discretion.
In accordance with Section 11(a) of the 1934 Act and Rule lla2-2('I')
thereunder, and subject to any other applicable laws and regulations
including Section 17(e) of the 1940 Act and Rule 17e-1 thereunder, the
Adviser may engage its affiliates, or any Sub-Adviser to the Separate
Account
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and its respective affiliates, as broker-dealers or futures commission
merchants to effect portfolio transactions in securities and other
investments for a Division.
4. BOOKS AND RECORDS. The Adviser shall keep the Separate Account's books and
records required to be maintained by it pursuant to this Agreement, the
1940 Act or otherwise. The Adviser agrees that all records which it
maintains for the Separate Account are the property of the Separate Account
and it will surrender promptly to the Separate Account any such records
upon the Separate Account's request, provided however that the Adviser may
retain a copy of such records. The Adviser further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act any such records as
are required to be maintained by the Adviser hereunder.
5. ADMINISTRATIVE AND SUPERVISORY SERVICES.
(a) The Adviser will coordinate all matters relating to the functions of
the Divisions' Sub-Adviser, if any, Agent, accountants, attorneys, and
other parties performing services or operational functions for the
Divisions.
(b) The Adviser will furnish without cost to the Separate Account, or pay
the cost of, such office space, office equipment and office facilities
as are adequate for the Separate Account's needs.
(c) The Adviser will provide, without remuneration from or other cost to
the Separate Account, the services of a sufficient number of
individuals competent to perform all of the Separate Account's
executive, administrative and clerical functions as are necessary to
ensure compliance with federal securities laws as well as other
applicable laws and to provide effective supervision and
administration of the Divisions and which are not performed by
employees or other agents engaged by the Separate Account or by the
Adviser acting in some other capacity pursuant to a separate agreement
or arrangement with the Separate Account. The Adviser shall authorize
and permit any of its directors, officers and employees who may be
elected as a member of the Board of Managers or officers of the
Separate Account to serve in the capacities in which they are elected
without any remuneration from the Separate Account.
(d) The Adviser will assist in the preparation of all periodic reports to
the unitholders of the Separate Account and all reports and filings
required to maintain the registration and qualification of the
Separate Account's units, or to meet other regulatory or tax
requirements applicable to the Separate Account, under federal and
state securities and tax laws.
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(e) The Adviser shall assist in the preparation of and, after approval by
the Separate Account, file and arrange for the distribution of proxy
materials to Separate Account unitholders as required by applicable
law.
(f) The Adviser shall prepare, or cause the preparation of, and, after
approval by the Separate Account, arrange for the filing of such
registration statements and other documents with the SEC and other
federal and state regulatory authorities as may be required by
applicable law.
(g) The Adviser shall take such other action with respect to the
Divisions, after approval by the Separate Account, as may be required
by applicable law, including without limitation the rules and
regulations of the SEC and of state securities or insurance
commissions and other regulatory agencies.
(h) The Adviser shall make its officers and employees available to the
Board of Managers and officers of the Separate Account and Sub-Adviser
for consultation and discussions regarding the supervision and
administration of the Divisions.
6. EXPENSES.
(a) During the term of this Agreement, the Adviser shall pay, or cause a
Sub-Adviser to pay, the following expenses:
(i) The salaries and expenses of all personnel of the Separate
Account and the Adviser except the fees and expenses of members
of the Board of Managers who are not "interested persons"
(within the meaning of the 0000 Xxx) of the Separate Account,
the Adviser, National Integrity Life Insurance Company
("National Integrity"), or any Sub-Adviser;
(ii) All expenses reasonably incurred by the Adviser in connection
with providing the services described above, including the
provision of office space, office equipment, office facilities,
and executive, administrative and clerical personnel in
accordance with paragraph 2(i) hereof, but excluding the
expenses described below to be assumed by the Separate Account;
(iii) The fees of any Sub-Adviser pursuant to a Sub-Advisory
Agreement; and
(iv) The costs and expenses payable by any Sub-Adviser pursuant to a
Sub-Advisory Agreement.
(b) Each Division is responsible for and bears all expenses incurred in
its operation that are not specifically assumed by the Adviser or ARM
Securities Corp., the Separate Account's distributor, pursuant to the
Distribution Agreement with the Separate
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Account. General expenses of the Separate Account not readily
identifiable as belonging to one of the Divisions will be allocated
among the Divisions by or under the direction of the Separate
Account's Board of Managers in such manner as the Board shall
determine to be fair and equitable. Expenses borne by each Division
include, but are not limited to, the following (or the Division's
allocated share of the following):
(i) The cost (including brokerage commissions, if any) of
securities purchased or sold by the Division and any losses
incurred in connection therewith;
(ii) Investment management fees due hereunder (but not sub-advisory
fees, which are payable by the Adviser);
(iii) Organizational expenses;
(iv) Filing fees and expenses relating to the registration and
qualification of the Separate Account or the units of a
Division under federal or state securities laws and maintenance
of such registrations and qualifications;
(v) Fees and expenses payable to the members of the Board of
Managers who are not "interested persons" of the Separate
Account or the Adviser, National Integrity or any Sub-Adviser;
(vi) Taxes (including any income or franchise taxes) and
governmental fees;
(vii) Costs of any liability, directors' and officers', uncollectible
items of deposit and other insurance and fidelity bonds;
(viii) Legal, accounting and auditing expense;
(ix) Charges of custodians, transfer agents and other agents;
(x) Expenses of setting in type and providing a camera-ready copy
of prospectuses and supplements thereto, expenses of setting in
type and printing or otherwise reproducing statements of
additional information and supplements thereto and reports and
proxy materials for existing unitholders;
(xi) Any extraordinary expenses (including fees and disbursements of
counsel) incurred by the Separate Account or Division;
(xii) Fees, voluntary assessments and other expenses incurred in
connection with membership in investment company organizations;
and
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(xiii) Costs of meetings of unitholders.
7. COMPENSATION. For the services provided and the expenses assumed pursuant
to this Agreement, each Division will pay to the Adviser as full
compensation therefor a fee at an annual rate of .50% of the average daily
net assets of each Division. This fee will be deducted from the assets of
each respective Division and paid to the Adviser monthly, but will be
accrued daily for purposes of determining the value of each Division on
each day the New York Stock Exchange is open for trading.
8. LIABILITY. Except as may otherwise be required by the 1940 Act and the
rules and regulations thereunder, the Adviser, any of its affiliated
persons and each person, if any, who, within the meaning of Section 15 of
the Securities Act of 1933, as amended, controls the Adviser, shall not be
liable for, or subject to any damages, expenses, or losses in connection
with, any act or omission connected with or arising out of any services
rendered under this Agreement, except by reason of willful misfeasance, bad
faith or gross negligence on the part of the Adviser in the performance of
its duties or from reckless disregard of its duties and obligations under
this Agreement.
9. TERM. Unless sooner terminated, this Agreement shall continue in effect for
two years and thereafter for successive one year periods, provided that
such continuance is specifically approved at least annually in conformity
with the requirements of the 1940 Act; provided, however, that this
Agreement may be terminated by the Separate Account or any Division thereof
(with respect to such Division) at any time, without the payment of any
penalty, by the Board of Managers of the Separate Account or by vote of a
majority of the outstanding voting securities (as defined in the 0000 Xxx)
of a Division, or by the Adviser at any time, without the payment of any
penalty, upon not less than 60 days' prior written notice to the other
party. This Agreement shall terminate automatically in the event of its
assignment (as defined in the 1940 Act).
10. NON-EXCLUSIVITY. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Adviser who may also be a
member of the Board of Managers, officer or employee of the Separate
Account to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any business,
whether of a similar or dissimilar nature, nor limit or restrict the right
of the Adviser to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.
11. AMENDMENTS. This Agreement may be amended by mutual consent in writing, but
the consent of the Separate Account must be obtained in conformity with the
requirements of the 1940 Act.
12. NOTICES. Any notice or other communication required to be given pursuant to
this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to
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the Adviser at 000 Xxxx Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxx
00000, Attention: President; or (2) to the Separate Account at 000 Xxxx
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President.
13. CHOICE OF LAW. Except insofar as the 1940 Act or other federal laws and
regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State
of Ohio.
14. SEPARATE ACCOUNT. The Separate Account was established under Section
1701.54 of the Ohio General Corporation Law as of February 4, 1998. The
Separate Account may establish separate Divisions, and all debts,
liabilities, obligations and expenses of a particular Division shall be
enforceable only against the assets of that Division and not against the
assets of any other Division or of the Separate Account as a whole.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with respect to the
subject matter hereof whether oral or written.
16. COUNTERPARTS. This Agreement may be executed in counterparts, and each
counterpart shall for all purposes be deemed an original, and all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
SEPARATE ACCOUNT TEN OF
INTEGRITY LIFE INSURANCE
COMPANY
By
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INTEGRITY CAPITAL ADVISORS, INC.
By
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