Exhibit 10.5
December 5, 1997
Northwestern Mutual Investment
Services, Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
RE: INVESTMENT ADVISORY AND SERVICING AGREEMENT
Gentlemen:
The undersigned (each signatory to be referred to herein as "Client"
for its respective account) employ you ("Advisor") as investment advisor
and to perform investment accounting services, and Advisor agrees to serve
in said capacities, on the following terms and conditions:
1. Definitions
"Authorized Investments" - Equity Investments, Long Term Investments
and Short Term Investments.
"Equity Investments" - any common stock or other equity investments
that conform to the restrictions applicable to such investments in
the Guidelines.
"Investment Accounts" or "Accounts" - the separate accounts for each
Client which are each to be managed in accordance with paragraph 2(a)
hereof. The Accounts shall consist of those custody accounts held by
the Custodian (hereinafter defined) or any successor Custodian, for
which Client has directed the Custodian to follow instructions from
Advisor regarding the purchase and/or sale of assets therein.
"Long Term Investments" - any fixed-income investment with a maturity
remaining at the time of purchase of one year or more.
"Short Term Investments" - any fixed-income investment with a
maturity remaining at the time of purchase of less than one year,
made pending the availability and/or consummation of appropriate Long
Term or Equity Investments.
2. Authority
(a) Investment Accounts
Advisor shall have full power to supervise and direct Authorized
Investments in the Investment Accounts, making and implementing
investment decisions without prior consultation with Client, in
accordance with the objectives and limitations furnished to the
Advisor in writing by Client from time to time (such objectives
and limitations, as in effect from time to time, are hereafter
referred to as the "Guidelines"), and subject to the
authorization and limitations contained in Wisconsin Insurance
Code Chapter 620 and the Wisconsin Adm. Code Section Ins. 6.20.
The Guidelines in effect on the date hereof are attached hereto
as Exhibit A.
(b) Control
Notwithstanding the authority of Advisor under this Agreement,
Client shall retain ultimate control of the investment advisory
and accounting services being performed by Advisor, and Client
shall own and have custody of its general corporate accounts and
records. The authority of Advisor under this Agreement shall
not be limited by this subsection (b), unless, and except to the
extent that, Client has given specific directions in writing to
Advisor which refer to this sub-paragraph.
3. Custody
Client will appoint a custodian ("Custodian") to take and have
separate possession of the assets of each of the Accounts. Client
will bear responsibility for custodial charges. Advisor shall not be
the Custodian.
4. Brokerage; Transactions with Affiliates
Advisor may place orders for the execution of transactions with or
through such brokers, dealers or banks as Advisor may select and, in
compliance with Section 28(e) of the Securities Exchange Act of 1934,
may, from the appropriate Accounts' assets, pay a commission on
transactions whether or not in excess of the amount of the commission
another broker or dealer would have charged.
Without limiting the preceding sentence, but subject to the other
provisions of this paragraph and applicable law, Advisor may place
orders for the execution of transactions with or through Xxxxxx X.
Xxxxx & Co., Inc. ("Baird"), an "affiliate" of Advisor as defined in
Rule 144 of the Securities Act of 1933 that is approximately 92%
owned by Advisor's parent corporation, The Northwestern Mutual Life
Insurance Company.
5. Reports to Client
Advisor will send Client monthly reports of income, gains/losses and
transaction summaries for the Accounts and a quarterly report for the
Boards of Directors meetings described below. Advisor will instruct
the Custodian to make confirmations of transactions available to
Client electronically in accordance with past practices. Advisor
does not assume responsibility for the accuracy of information
furnished by Client or any other party. The monthly and quarterly
reports shall be in a form mutually agreed to by Client and Advisor
with such supplements as Advisor considers appropriate.
Advisor will also prepare reports for the Boards of Directors of
Client as Client may designate, and shall make one of its employees
available for Boards of Directors meetings and Securities Investment
Committee meetings of Client and annual rating agency meetings as may
be held from time to time to describe and answer questions concerning
its transactions and performance.
6. Investment Accounting
Advisor will perform investment accounting for the Investment
Accounts including, but not limited to monthly journal entries,
inventories, investments held, monthly details of acquisitions and
dispositions and annual Schedule D reporting and all related
recordkeeping functions relevant thereto.
7. Voting of Portfolio Securities
Decisions on voting of proxies for the Investment Accounts will be
made by Advisor unless Client otherwise specifically directs.
8. Confidential Relationship
All information and advice furnished by either party to the other
(other than, in the case of Client, regular monthly and quarterly
reports and transactional confirmations and other information about
Client's positions in the Accounts) shall be treated as confidential,
provided, however, that Advisor may furnish listings of Client's
positions to brokers to facilitate hedging, swaps, and offsetting
transactions. Such information and advice shall not be disclosed to
third parties except as required by law, or court order, or as may be
considered necessary by Client or Advisor in disclosures to its Board
of Directors, management personnel, independent accountants, rating
agencies, regulatory authorities, the National Association of
Insurance Commissioners, the Federal Home Loan Mortgage Corporation
and the Federal National Mortgage Association.
This paragraph 8 shall not apply to information which (a) becomes
generally available to the public other than by breach of the
foregoing confidentiality provisions, (b) was available to the party
making disclosure prior to a disclosure under this Agreement, or (c)
otherwise becomes available to the party making disclosure from a
person who, to the knowledge of the disclosing party, is not bound by
a confidentiality agreement with the other party.
9. Non-Exclusive Contract
Advisor acts as advisor to other clients and may give advice, and
take action, with respect to any of those clients which may differ
from the advice given, or the timing or nature of the action taken,
with respect to the Accounts. Advisor shall have no obligation to
purchase or sell for the Accounts, or to recommend for purchase or
sale by the Accounts, any security which Advisor, its principals,
affiliates or employees may purchase or sell for themselves or for
any other clients.
Client recognizes that transactions in a specific security may not be
accomplished for all client accounts or for all of Client's Accounts
at the same time or at the same price.
10. Agreement Not Assignable
No assignment (as that term is defined in the Investment Advisers Act
of 1940) of this Agreement may be made by Advisor without written
consent of Client.
11. Termination
This Agreement may be terminated at any time by any signatory to this
Agreement for its respective Account upon ninety (90) days' prior
written notice and by Advisor upon one hundred eighty (180) days'
prior written notice. Fees will be prorated to the date of
termination and any unearned portion of any prepaid fees will be
refunded.
12. Representations
Advisor represents that it is registered as an investment advisor
under the Investment Advisers Act of 1940 and that such registration
is currently effective.
Client represents that employment of Advisor, including the right to
make decisions with respect to the voting of proxies, if granted, is
authorized by, has been accomplished in accordance with, and does not
violate, the documents, if any, governing the Accounts. Client will
furnish Advisor with true copies of all governing documents.
13. Communications
Except as limited by paragraph 2 hereof, instructions may be given
orally by either party and, where deemed necessary, may be confirmed
in writing as soon as practicable. For purposes of instructions by
Client, and any other action taken by Client (other than termination
or amendment of this Agreement) such instructions given and action
taken by Mortgage Guaranty Insurance Corporation shall be effective
for all Clients, and Advisor may rely on same.
Notices and other communications required to be given in writing
under this Agreement shall be sent by fax and confirmed by certified
mail, and shall be deemed given when received at the addresses
specified below the parties' signatures, and, as to the Custodian, at
such address as it or Client may specify to Advisor in writing, or at
such other address as a party to receive notice may specify in a
notice given in accordance with this provision. Advisor may rely on
any notice from any person reasonably believed to be genuine and
authorized.
14. Fees
It is the intention of the parties that Advisor's compensation for
services shall be calculated and paid in accordance with the Schedule
of Fees attached hereto as Exhibit B, which the parties agree is fair
and reasonable. Client's execution of this Agreement is
certification that Client has secured all required State Insurance
Commissioner approvals.
15. Disclosure Statement
Client acknowledges receipt of Advisor's Disclosure Statement, as
required by Rule 204-3 under the Investment Advisers Act of 1940, not
less than 48 hours prior to the date of acceptance of this Agreement
shown below.
16. Access to Books and Records
Advisor shall provide Client, its independent accountants, counsel
and other representatives, access during reasonable hours at
Advisor's offices to Advisor's books and records as they relate to
the Accounts, and Advisor shall co-operate in providing information
in connection therewith.
17. Amendment and Restatement; Entire Agreement; Governing Law
This Agreement amends and restates that certain letter agreement
between the parties dated as of December 29, 1989 (as amended), and
constitutes the entire agreement of the parties with respect to
management and servicing of the Accounts. This Agreement can be
amended only by written document signed by the parties. This
Agreement shall not become effective unless and until approval (or
non-disapproval) thereof has been received by Client from the
Commissioner of Insurance of Wisconsin as may be required by
applicable law and regulation. It shall be governed by the laws of
the State of Wisconsin.
Approved by Mortgage Guaranty
Insurance Corporation
By: /s/ J. Xxxxxxx Xxxxx
Name: J. Xxxxxxx Xxxxx
Title: Chief Financial Officer
Approved by MGIC Mortgage Approved by MGIC Reinsurance
Insurance Corporation Corporation
By: /s/ J. Xxxxxxx Xxxxx By: /s/ J. Xxxxxxx Xxxxx
Name: J. Xxxxxxx Xxxxx Name: J. Xxxxxxx Xxxxx
Title: Chief Financial Officer Title: Chief Financial Officer
Agreed to and Accepted this
12th day of December, 1997.
Northwestern Mutual Investment Services, Inc.
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Senior Vice President
