EX-10.C 7 assetmanagree.txt ASSET MANAGEMENT AGREEMENT BTWN GALIC & ING INVESTMENT MANAGEMENT LLC ASSET MANAGEMENT AGREEMENT THIS ASSET MANAGEMENT AGREEMENT (the "Agreement"), dated January 20, 1998, and effective as of the date specified in Section 17 hereof, is by and between GOLDEN AMERICAN LIFE INSURANCE COMPANY, a Delaware 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 are specified in EXHIBIT "A" attached hereto and incorporated herein by reference. SECTION 2. RECOMMENDATIONS - INVESTMENTS - ING-IM shall make recommendations to the Client relating to the direction and management of 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. 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 to 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" and incorporated herein by reference. 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 for in EXHIBIT "C" attached hereto and incorporated herein by reference, 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. The Client shall establish a procedure for transmitting approvals, directives and authorizations from the Client to ING-IM. Such procedures, once established, shall continue until modified, in whole or in part, by the Client. The Client retains the full right and authority to modify, amend, alter and repeal all such procedures in its sole discretion. 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" attached hereto and incorporated herein by reference. SECTION 8. 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 9. 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 10. 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 11. REPRESENTATIONS BY CLIENT - The Client hereby represents and warrants in favor of ING-IM as follows: (a) The Client has the power and authority (i) to enter into and execute this Agreement and (ii) to do all acts and things as are required or contemplated hereunder to be done, observed and performed by it; (b) This Agreement has been duly authorized, validly executed and delivered by one or more authorized signatories of the Client, and this Agreement constitutes a legal, valid and binding obligation of the Client, enforceable against the Client in accordance with its terms; and (c) The execution and delivery of this Agreement and the Client's performance hereunder do not and will not be in contravention of or in conflict with the Client's charter documents or the provisions of any statute, judgment, order, indenture, instrument, agreement or undertaking to which the Client is a party or by which the Client's assets or properties are or may become bound. The Client has obtained all necessary consents and approvals of all regulatory and governmental authorities and agencies have jurisdiction over the Client for the Client to execute and deliver this Agreement and to perform hereunder. SECTION 12. 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. Upon Client's written or oral request, ING-IM shall provide to Client a copy of any future Form ADV Part II. SECTION 13. TERMINATION - This Agreement may be terminated by either party on the month-end next following receipt of written notice of termination. SECTION 14. 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 5780 Powers Ferry Road, NW Suite 300 Atlanta, GA 30327-4349 To Client: GOLDEN AMERICAN LIFE INSURANCE COMPANY 1001 Jefferson Street Suite 400 Wilmington, DE 19801 SECTION 15. 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 Georgia. SECTION 16. 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 is 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 17. 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: GOLDEN AMERICAN LIFE INSURANCE COMPANY By/s/ David L. Jacobson _________________________________ Title: Senior Vice President ________________________________ ING-IM: ING INVESTMENT MANAGEMENT LLC By/s/ Thomas J. Balachowski _________________________________ Title: President and CEO ________________________________ EXHIBIT "A" Asset Management Services _________________________ 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 transactions, 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 or 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 MANAGEMENT FEE SCHEDULE AS OF JANUARY 1, 1998 ING-IM will receive an annual fee (payable quarterly) from the Client calculated as follows: 0.25% of the value of the Managed Assets as of the preceding month end. "Managed Assets" shall mean the investment assets of the Client's general account, and certain assets in a non-unitized separate account established and maintained by Client to support certain annuity contracts, excluding policy loans of Client. Value of the Managed Assets for purposes of this Agreement shall be determined by the application of generally accepted accounting principles as applied as of the end of each quarter. EXHIBIT "D" Authorized Representatives of Client ____________________________________ Until otherwise notified in writing by Client, ING-IM shall be authorized to rely upon instruction received from the following name representatives of the Client: [Client to specify]