EXHIBIT (b)(8)(c)
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 service describe
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 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
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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
in
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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 ideas. 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.
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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
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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 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 Managers affiliates may have
investment banking relationships with publicly traded companies and that
employees of the Manager's affiliates may act
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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.
5. Choice of Law
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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
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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.
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The Manager will not be responsible for making any tax credit or
similar clam 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 ends 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 an 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: January 24, 1991
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XXXXXXX XXXXX ASSET MANAGEMENT, INC.
By: /s/ N. XXXX XXXXXX
---------------------------------------
N. Xxxx Xxxxxx
Senior Vice President
Date of Execution: January 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 residual CMO
tranches shall conform to a size limit per issuer of $10 million 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-issuer maximums shall conform to those in place
for investment grade securities.
H. Investment grade corporate bond size limits per issuer are as follows:
Rating Maximum per Issuer
______ ------------------
AAA $ 30 Million
AA $ 20 Million
A $ 15 Million
BAA $ 10 Million
Subject to overall holdings company limitations.
I. Non-investment grade bond size limits are as follows:
Rating Maximum per Issuer
______ ------------------
BB $ 5 Million
B and lower $ 3 Million
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
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direction require notification to the Investment Committee.
O. Notwithstanding the above guidelines, all investments will comply with
the appropriate 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 guideline 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 no later than the next business day
following the 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 advisor 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. All portfolio will be managed with the objective of maintaining
asset/liability duration within previously agreed upon bounds.
CREDIT GUIDELINES
-----------------
MLAM shall provide:
For the Investment Committee
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A. Quarterly Portfolio Status Update
Four conferences per year will be held to review portfolio structure
(interest rate risk, sector
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diversification etc.), investment strategy, transaction 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
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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
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The following section shall be added immediately following Section 8
of the Agreement:
"9. Arbitration
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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
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its Main Office within five (5) days after the Manager has sent the
Client its notification requesting the Client to make such election.
The 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
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(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.
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Any and all notices, requests, certificates and other instruments
executed and delivered after the execution an 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.
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Except as expressly amended by this Amendment and the documents
delivered pursuant hereto, the Management Agreement shall not be
modified or otherwise affected
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in any manner, and shall continue in full force and effect.
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
-----------------------------------
Xxxxx X. Xxxxxxx
Senior Vice President
Date of Execution: January 28, 1992
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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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