EXHIBIT 10 (i)
ASSET MANAGEMENT AGREEMENT
THIS ASSET MANAGEMENT AGREEMENT (the "Agreement"), dated March 30, 1998, and
effective as of the date specified in Section 18 hereof, is by and between
FIRST GOLDEN AMERICAN LIFE INSURANCE COMPANY OF NEW YORK, a New York
corporation (the "Client"), and ING INVESTMENT MANAGEMENT LLC, a Delaware
limited liability company ("ING-IM").
SECTION 1. APPOINTMENT OF ING-IM - The Client hereby appoints ING-IM to
provide asset management services for the Client's general account (the
"Account") under the terms and conditions set forth in this Agreement.
ING-IM hereby accepts such appointment and agrees to provide such asset
management services as specified in EXHIBIT "A" attached hereto and
incorporated herein by reference.
All investments made by ING-IM on behalf of Client shall be approved by an
officer of Client, which has been duly authorized by the Board of Directors
of Client to approve investments, and shall be in accordance with investment
policies and objectives, rules and regulations established periodically by
the Board of Directors of Client or by a committee of the Board charged with
the supervision thereof. ING-IM shall acquire or dispose of any specific
investment if so directed by the Board or duly authorized committee.
SECTION 2. INVESTMENTS - ING-IM shall provide direction to the Client
regarding the investment and reinvestment of assets in the Account and any
additions thereto. No cash or securities due to or held for the Account
shall be paid or delivered to ING-IM except in payment of the fee payable to
ING-IM under this Agreement. Client and/or the Custodian shall hold and
maintain all assets in the Account in the State of New York.
SECTION 3. DISCRETIONARY AUTHORITY - BROKERAGE - ING-IM shall have full and
complete discretion to establish brokerage accounts in the name of the Client
and execute transactions in securities markets in the name of the Client,
pursuant to proper authorization from the Client, through one or more
securities broker/dealer firms as ING-IM may select, including those which
from time to time may furnish ING-IM statistical and investment research
information and other services. The Client accepts the Statement of Policy
on Brokerage Practices which is attached to this Agreement as EXHIBIT "B".
This policy may be modified by ING-IM in consultation with the Client.
SECTION 4. INVESTMENT OBJECTIVES - The investment objectives and guidelines
for the Account will be communicated in writing by the Client from time to
time. ING-IM will utilize these objectives in managing the Account.
SECTION 5. ADMINISTRATIVE SERVICES - ING-IM will provide the Client with the
following administrative services: preparation of Schedules B and D to the
Client's annual statement; pricing of portfolios on a periodic basis as
mutually agreed; mortgage loan servicing for both direct and mortgage banker-
serviced loans; private placement securities servicing; coordination of
purchases and sales at custodian bank; and coordination of securities lending
by agent banks.
SECTION 6. FEES - The Client will pay to ING-IM as full compensation for
services rendered a quarterly fee based on the quarterly fees set forth in
EXHIBIT "C", as it may be amended in writing.
If ING-IM shall serve for less than the whole of any quarterly period, its
compensation determined as provided above shall be calculated and shall be
payable on a pro rata basis for the period of the calendar quarter for which
it has served as an adviser hereunder.
SECTION 7. PROCEDURES - All transactions will be consummated by payment to,
or delivery by, the Client, or such other party as the Client may designate
in writing (the "Custodian") of all cash and/or securities due to or from the
Account. ING-IM shall not act as custodian for the Account. ING-IM shall
instruct all brokers or dealers executing orders on behalf of the Account to
forward to the Client and/or the Custodian copies of all brokerage
confirmations promptly after execution of transactions. The Client will
instruct the Custodian, if any, to provide ING-IM with such periodic reports
concerning the status of the Account as ING-IM may reasonably request. Unless
otherwise notified in writing by Client, ING-IM shall be authorized to rely
upon instruction received from the named Client representatives set forth in
EXHIBIT "D".
SECTION 8. BOOK AND RECORDS - ING-IM shall keep proper books and records
wherein shall be recorded the business transacted by it on behalf of Client
and shall forward to Client's New York office, on a monthly basis, copies of
such books and records in printed form, on a computer diskette, or as
otherwise agreed by ING-IM and Client. All books, records and files
established by ING-IM by reason of its performance under this Agreement shall
be deemed the property of Client and shall be subject to examination at any
time by Client or persons authorized by Client, or any governmental agency
having jurisdiction over Client. ING-IM agrees to provide to Client such
records, statements, and reports as Client shall reasonably request in a
timely and diligent manner.
SECTION 9. PROXIES - ING-IM shall vote securities held in the Account in
response to proxies solicited by the issuers of such securities in accordance
with guidelines established by Client. ING-IM will provide such information
with respect to such voting as the Client may reasonably request.
SECTION 10. SERVICE TO OTHER CLIENTS - It is understood that ING-IM provides
asset management services for other clients. It is further understood that
ING-IM may take management action on behalf of such other clients which
differs from management action taken on behalf of the Account. If the
purchase or sale of securities for the Account and for one or more such other
clients is considered at or about the same time, the transactions in such
securities will be allocated among the several clients in a manner deemed
equitable by ING-IM.
SECTION 11. LIABILITY OF ING-IM - In rendering services under this
Agreement, ING-IM will not be subject to any liability to the Client to any
other party for any act or omission of ING-IM except as the result of ING-
IM's gross negligence or willful misconduct. Nothing herein shall in any way
constitute a waiver or limitation of any right of any person under applicable
Federal or State law.
SECTION 12. REPRESENTATIONS BY CLIENT - By execution of this Agreement, the
Client represents that the terms hereof do not violate any obligation by
which the Client is bound, whether arising by contract, operation of law or
otherwise and that this Agreement has been duly authorized.
SECTION 13. FORM ADV PART II - The parties hereto acknowledge that,
concurrently with the execution of this Agreement, ING-IM is furnishing to
Client, for Client's review and inspection, a copy of Form ADV Part II most
recently filed by ING-IM with the Securities and Exchange Commission, and a
copy of such Form ADV Part II is attached here as EXHIBIT "E". Upon Client's
written or oral request, ING-IM shall provide to Client a copy of any future
Form ADV Part II.
SECTION 14. TERMINATION - This Agreement may be terminated by either party
on the month-end next following receipt of written notice of termination.
SECTION 15. NOTICE - Any notice, advice or report to be given pursuant to
this Agreement shall be delivered or mailed:
To ING-IM: ING INVESTMENT MANAGEMENT LLC
0000 Xxxxxx Xxxxx Xxxx, XX
Xxxxx 000
Xxxxxxx, XX 00000-0000
To Client: FIRST GOLDEN AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxx Xxxxxxxxx, Senior V.P.
SECTION 16. CONSTRUCTION OF AGREEMENT - This Agreement shall be construed
and the rights and obligations of the parties hereunder enforced in
accordance with the laws of the State of New York.
SECTION 17. ASSIGNMENT - This Agreement shall bind and inure to the benefit
of and be enforceable by the parties hereto and their permitted successors
and assigns hereunder; provided, however, that ING-IM may not assign its
rights and obligations under this Agreement unless and until it shall have
first received the prior written consent of the Client. The above consent
may be withheld for any reason, but if such consent if given, ING-IM's
assignee shall be required to assume and agree to perform all the obligations
of ING-IM hereunder and ING-IM shall remain fully liable for the full and
faithful performance of all obligations arising prior to any such assignment.
SECTION 18. EFFECTIVE DATE - Notwithstanding the date set forth in the first
paragraph hereof, this Agreement shall be effective as of January 1, 1998.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
it to be executed by their duly authorized officers, all as of the day and
year first above.
CLIENT: FIRST GOLDEN AMERICAN LIFE INSURANCE
COMPANY OF NEW YORK
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Senior Vice President
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ING-IM: ING INVESTMENT MANAGEMENT LLC
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Title: President and CEO
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EXHIBIT "A"
Asset Management Services
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To the extent permitted by applicable law, ING-IM shall provide all asset
management services for Client's Account, including the following:
Private placement bonds and preferred stocks in an amount not to exceed
the maximum established from time to time by Client's Investment
Committee and communicated to ING-IM.
Public Market Corporate and Government Bonds.
Public Market Preferred Stocks.
Common Stocks.
Participating and Non-participating Mortgage Loans.
Equity Real Estate.
Mortgage Backed Securities and Collateralized Mortgage Obligations and
derivatives thereof.
Cash Management services, as required, in conjunction with Mortgage
Loans, Equity Real Estate, and/or the servicing of same.
Swap Transactions.
"Cap", "Floors", "Puts", "Calls" and similar derivative transactions.
EXHIBIT "B"
STATEMENT OF POLICY ON BROKERAGE PRACTICES
As of May 1, 1975, all national securities exchanges were prohibited from
requiring their members to charge fixed rates of commissions on the execution
of transactions. This prohibition resulted from the adoption by the
Securities and Exchange Commission of Rule 19b-3 under the Securities and
Exchange Act of 1934 and the subsequent passage by Congress of the Securities
Acts Amendments to include Section 28(e) relating to the payment of brokerage
commissions on specific securities transactions in excess of the commission
which might be charged by another broker for the same transaction. The
provisions of Section 28(e) are specifically incorporated herein by
reference.
In recognition of the regulatory changes, ING-IM has adopted this statement
of policy with respect to commissions paid on portfolio transactions executed
on behalf of our clients. It is the responsibility of individuals trading on
behalf of our clients to carry out this statement of policy, including the
fiduciary responsibility of negotiating for each agency transaction the
amount of the brokerage commission.
Essentially, this policy reaffirms the principle of seeking "best available
price and most favorable execution" with respect to all portfolio
transactions. This principle recognized that commissions on portfolio
transactions must be negotiated and utilized for the ultimate benefit of our
clients.
Our brokerage commission policy is as follows:
1. We will continue to use our best efforts to obtain the best
available price and most favorable execution with respect to all
portfolio transactions executed on behalf of our clients.
2. "Best available price and most favorable execution" is defined to
mean the execution of a particular investment decision at the
price and commission which provides the most favorable total cost
or proceeds reasonably obtainable under the circumstances.
3. In selecting a broker for each specific transaction, we will use
our best judgment to choose the broker most capable of providing
the brokerage services necessary to obtain best available price
and most favorable execution. The full range and quality of
brokerage services available will be considered in making these
determinations. For example, brokers may be selected on the basis
of the quality of such "brokerage services" related to the
requirements of the specific transaction as the following:
capable floor brokers and traders, competent block trading
coverage, good communications, ability to position, retail
distribution and underwriting, use of automation, research
contacts, arbitrage skills, administrative ability, or provision
of market information relating to the security. We will continue
to make periodic evaluations of the quality of these brokerage
services against our own standards of execution. Brokerage
services will be obtained only from those firms which meet our
standards, maintain a reasonable capital position, and can be
expected to reliably and continuously supply these services. We
will continue our endeavor to develop and maintain brokerage
contacts and relationships in the interest of providing our
clients with maximum liquidity.
4. We are not obliged to choose the broker offering the lowest
available commission rate if, in our best judgment, there is a
material risk that the total cost or proceeds from the transaction
might be less favorable than obtainable elsewhere. We will make
every effort to keep informed of rate structures offered by the
brokerage community. In the selection of brokers, we will not
solicit competitive bids or "shop" the order for a lower rate if
this would, in our best judgment, be harmful to the execution
process and not in the best interests of our clients.
5. In those instances where it is reasonably determined that more
than one broker can offer the brokerage services needed to obtain
the best available price and most favorable execution,
consideration will be given to those brokers which supply research
and other services in addition to execution services. Such
services may include factual and statistical information or other
items of supplementary research assistance. The individuals
trading on behalf of our clients will be informed as to the
broker/dealers who supply specific or general research assistance.
However, we will not select an executing broker on the basis of
research or other services unless such selection is otherwise
consistent with best available price and most favorable execution.
6. In no event will we enter into agreements, expressed or implied,
with broker/dealer wherein we would select a firm for execution as
a means of remuneration for recommending us as an asset manager
for prospective or present clients. However, portfolio
transactions may be executed through broker/dealers who have made
such a recommendation, if otherwise consistent with best price and
most favorable execution.
7. In those instances where a client has expressed a preference for a
particular broker, that broker will be selected only when the
broker is reasonably determined in our best judgment, to be
capable of providing the best available and most favorable
execution. With the exception of clients subject to the
provisions of The Employee Retirement Income Security Act of 1974
("ERISA"), a client may direct us in writing to execute
transactions with one or more specific brokers at such commission
rate or rates as may be agreed to by the client and such brokers.
With respect to clients subject to ERISA, we may accept clients'
direction to execute transactions with one or more specific
brokers upon written direction of the clients. Such written
notice shall specify the services provided by the broker(s) to the
clients, the amount of rate of commissions to be paid and the
determination by the clients that such direction is consistent
with the provisions of ERISA.
EXHIBIT "C"
ING INVESTMENT MANAGEMENT
ADVISORY FEE SCHEDULE
AS OF JANUARY 1, 1998
ANNUAL ASSET MANAGEMENT FEES (based on assets under management):
ASSET CLASS BASIS POINT FEE
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- public bonds, MBS, CMO-A, preferred
stock, insured residential mortgages
and short term investments 20.0
- private placements (investment grade) 20.0
- below investment grade 25.0
- derivatives 50.0
- CMO-B 50.0
- actively managed common stock and
other high yield stock programs 50.0
- indexed common stocks 10.0
- commercial mortgages 20.0
- real estate, foreclosed mortgages,
and problem commercial loans 72.7
- portfolio management and
investment services (applied to 1.8 b.p for first
all assets under management per $1.0 billion and
portfolio) 0.8 b.p for the excess
- separate accounts, segregated 5.0 b.p. in addition to
funds, and pension trusts the asset class charge
PRODUCTION FEE (one-time fee assessed at close of transaction):
(excludes Equitable of Iowa)
ASSET CLASS BASIS POINT FEE
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- private placements (investment grade) 20.7
- private placements (international -
investment grade) 30.0
- private placements (BIG) 40.0
- commercial mortgages 16.7
EXHIBIT "D"
AUTHORIZED REPRESENTATIVES OF CLIENT
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Until otherwise notified in writing by Client, ING-IM shall be authorized to
rely upon instruction received from the following named representatives of the
Client:
Xxxxxx X. Xxxxxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxx
Xxxx X. Xxxxx
Xxxxxxx X. Xxxxxxx
Xxxx Xxx Xxxxxxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx
EXHIBIT "E"
Part II of Form ADV of ING Investment Management LLC reference is made to Form
ADV of ING Investment Management LLC, Securities and Exchange Commission File
No. 801-15160, which is incorporated herein by reference.
