INVESTMENT MANAGER AGREEMENT
by and between
Motors Mechanical Reinsurance Company, Limited
and
BlackRock International, Ltd.
INVESTMENT MANAGER AGREEMENT
THIS AGREEMENT, made as of the 8th day of February, 2000, by and between
Motors Mechanical Reinsurance Company, Limited (hereinafter called the
"Company") and BlackRock International, Ltd. (hereinafter called the "Manager").
WITNESSETH:
WHEREAS, the Company has all requisite authority to appoint one or more
investment managers to supervise and direct the investment and reinvestment of a
portion of all of the assets of the Company;
THEREFORE, for and in consideration of the premises and of the mutual
covenants herein contained, the parties hereby agree as follows:
1. Appointment and Status as Investment Manager; Delegation of Duties. The
Company hereby appoints the Manager as an "Investment Manager." The Manager does
hereby accept said appointment by its execution of this Agreement. The Manager
does also acknowledge that it is a fiduciary with respect to the assets under
management and assumes the duties, responsibilities and obligations of a
fiduciary. The Company acknowledges that some or all of the Manager's rights and
obligations under this Agreement, including its appointment as investment
manager to the Company, may be delegated by the Manager to BlackRock Financial
Management, Inc.
2. Representations by Company. The Company represents and warrants that (a) it
has all requisite authority to appoint the Manager hereunder, (b) the terms of
the Agreement do not conflict with any obligation by which the Company is bound,
whether arising by contract, operation of law or otherwise and (c) this
Agreement has been duly authorized by appropriate corporate action.
3. Management Services. The Manager shall be responsible for the investment and
reinvestment of those assets designated by the Company as subject to the
Manager's management (which assets, together with all additions, substitutions
and alterations thereto are hereinafter called the "Account"). The Account may
include all securities and instruments described in Exhibit A or appropriate to
effect the strategies described therein. The Company does hereby delegate to the
Manager all of its powers, duties and responsibilities with regard to such
investment and reinvestment and hereby appoints the Manager as its agent in fact
with full authority to buy, sell or otherwise effect investment transactions
involving the assets in its name and for the Account. Said powers, duties and
responsibilities shall be exercised exclusively by the Manager pursuant to and
in accordance with its fiduciary responsibilities and the provisions of this
Agreement. In deciding on a proper investment of the Account, the Manager shall
consider the following factors as communicated in writing to the Manager by the
Company from time to time: a) the Company's financial needs such as liquidity,
b) applicable laws, and c) the Account's Investment Guidelines attached as
Exhibit A. In addition, in accordance with the Manager's guidelines in effect
from time to time, the Manager or its agent is authorized, but shall not be
required, to vote, tender or convert any securities in the Account; to execute
waivers, consents and other instruments with respect to such securities; to
endorse, transfer or deliver such securities or to consent to any class action,
plan of reorganization, merger, combination, consolidation, liquidation or
similar plan with reference to such securities; and the Manager shall not incur
any liability to the Company
by reason of any exercise of, or failure to exercise, any such discretion in the
absence of gross negligence or bad faith.
4. Accounting and Reports. The Manager shall furnish the Company with monthly
appraisals of the Account, performance tabulations, a summary of purchases and
sales and such other reports as shall be agreed upon from time to time. The
Manager shall also reconcile accounting, transaction and asset-summary data with
custodian reports in accordance with the Manager's standard procedures. In
addition, the Manager shall communicate and resolve any significant
discrepancies with the custodian.
5. Other Services. The Manager shall, on invitation, attend meetings with
representatives of the Company to discuss the position of the Account and the
immediate investment outlook, or shall submit its views in writing as the
Company shall suggest from time to time.
6. Compensation. For services hereunder, the Manager shall be compensated in
accordance with Exhibit B, attached hereto. If the management of the Account
commences or ends at any time other than the beginning or end of a calendar
quarter, the quarterly fee shall be prorated based on the portion of such
calendar quarter during which this Agreement was in force.
7. Custodian. The securities in the Account shall be held by a custodian duly
appointed by the Company and the Manager is authorized to give instructions to
the custodian with respect to all investment decisions regarding the Account.
Except as provided in Paragraph 3 above, nothing contained herein shall be
deemed to authorize the Manager to take or receive physical possession of any of
the assets for the Account, it being intended that sole responsibility for
safekeeping thereof (in such investments as the Manager may direct) and the
consummation of all purchases, sales, deliveries and investments made pursuant
to the Manager's direction shall rest upon the custodian.
8. Brokerage. The Company hereby delegates to the Manager sole and exclusive
authority to designate the brokers or dealers through whom all purchases and
sales on behalf of the Account will be made. The Manager will determine the rate
or rates, if any, to be paid for brokerage services provided to the Account. The
Manager agrees that securities are to be purchased through such brokers as, in
the Manager's best judgment, shall offer the best combination of price and
execution. The Manager, in seeking to obtain best execution of portfolio
transactions for the Account, may consider the quality and reliability of
brokerage services, as well as research and investment information and other
services provided by brokers or dealers. Accordingly, the Manager's selection of
a broker or dealer for transactions for the Account may take into account such
relevant factors as (i) price, (ii) the broker's or dealer's facilities,
reliability and financial responsibility, (iii) when relevant, the ability of
the broker to effect securities transactions, particularly with regard to such
aspects as timing, order size and execution of the order, (iv) the broker's or
dealer's recordkeeping capabilities and (v) the research and other services
provided by such broker or dealer to the Manager which are expected to enhance
its general portfolio management capabilities (collectively, "Research"),
notwithstanding that the Account may not be the exclusive beneficiary of such
Research.
9. Confidential Information. All information regarding operations and
investments of the Company shall be regarded as confidential by the Manager.
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10. Directions to the Manager. All directions by or on behalf of the Company to
the Manager shall be in writing signed by any two of the following:
Name Title
---- -----
Ronald W. Jones Vice President, Finance
Michael R. Boyce Secretary
Peter R.P. Evelyn Director
The Manager shall be fully protected in relying upon any direction in
accordance with the previous paragraph with respect to any instruction,
direction or approval of the Company, and shall be so protected also in relying
upon a certification duly executed on behalf of the Company as to the names of
persons authorized to act for it and in continuing to rely upon such
certification until notified by the Company to the contrary.
The Manager shall be fully protected in acting upon any instrument,
certificate or paper believed by it to be genuine and to be signed or presented
by the proper persons or to any statement reasonably contained in any such
writing and may accept the same as conclusive evidence of the truth and accuracy
of the statements therein contained.
11. Liabilities of the Manager and the Company. The Company acting in good faith
shall not be liable for any act or omission of the Manager in connection with
the Manager's discharge of its duties; provided, however, this limitation shall
not act to relieve the Company from any responsibility or liability for any
fiduciary responsibility, obligation or duty. The Manager, its officers,
directors and employees, acting in good faith shall not be liable, and shall be
indemnified by the Company against any and all losses, damages, costs, expenses
(including reasonable attorneys' fees), liabilities, claims and demands, for any
action, omission, information or recommendation in connection with this
Agreement, except in the case of the Manager's or such officer's, director's or
employee's actual misconduct, gross negligence, willful violation of any
applicable statute or reckless disregard for its duties; provided, however, this
limitation shall not act to relieve the Manager, its officers, directors and
employees from any responsibility or liability for any responsibility,
obligation or duty which the Manager or such officer, director or employee may
have under any applicable securities act.
12. Non-Exclusive Management. The Company understands that the Manager will
continue to furnish investment management and advisory services to others, and
that the Manager shall be at all times free, in its discretion, to make
recommendations to others which may be the same as, or may be different from
those made to the Account. The Company further understands that the Manager, its
affiliates, and any officer, director, stockholder, employee or any member of
their families may or may not have an interest in the securities whose purchase
and sale the Manager may recommend. Actions with respect to securities of the
same kind may be the same as or different from the action which the Manager, or
any of its affiliates, or any officer, director, stockholder, employee or any
member of their families, or other investors may take with respect thereto.
13. Aggregation and Allocation of Orders. The Company acknowledges that
circumstances may arise under which the Manager determines that, while it would
be both desirable and suitable that a particular security or other investment be
purchased or sold for the account of
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more than one of the Manager's clients' accounts, there is a limited supply or
demand for the security or other investment. Under such circumstances, the
Company acknowledges that, while the Manager will seek to allocate the
opportunity to purchase or sell that security or other investment among those
accounts on an equitable basis, the Manager shall not be required to assure
equality of treatment among all of its clients (including that the opportunity
to purchase or sell that security or other investment will be proportionally
allocated among those clients according to any particular or predetermined
standards or criteria). Where, because of prevailing market conditions, it is
not possible to obtain the same price or time of execution for all of the
securities or other investments purchased or sold for the Account, the Manager
may average the various prices and charge or credit the Account with the average
price.
14. Conflict of Interest. The Company agrees that the Manager may refrain from
rendering any advice or services concerning securities of companies of which any
of the Manager's, or affiliates of the Manager's officers, directors, or
employees are directors or officers, or companies as to which the Manager or any
of the Manager's affiliates or the officers, directors and employees of any of
them has any substantial economic interest or possesses material non-public
information, unless the Manager either determines in good faith that it may
appropriately do so without disclosing such conflict to the Company or discloses
such conflict to the Company prior to rendering such advice or services with
respect to the Account.
From time to time, when determined by the Manager in its capacity of a
fiduciary to be in the best interest of the Company, the Account may purchase
securities from or sell securities to another account managed by the Manager at
prevailing market levels in accordance with the procedures under Rule 17a-7(b)
of the Investment Company Act of 1940 and other applicable law.
15. Effective Period of Agreement and Amendments. This Agreement shall become
effective on the date hereof. Any amendment to this Agreement shall be written
and signed by both parties to the Agreement.
16. Resignation or Removal of the Manager. The Manager may be removed by the
Company or may resign upon 30 days' notice in writing. On the effective date of
the removal or resignation of the Manager or as close to such date as is
reasonably possible, the Manager shall provide the Company with a final report
containing the same information as required by paragraph 4 above.
17. Assignment. Except as otherwise specifically set forth in this Agreement, no
assignment of this Agreement by the Manager may be made without the consent of
the Company, and any such assignment made without such consent shall be null and
void for all purposes. Subject to the foregoing, this Agreement shall inure to
the benefit of and be binding upon the parties hereto, their successors and
permitted assigns.
18. Severable. Any term or provision of this Agreement which is invalid or
unenforceable in any applicable jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of the
Agreement in any jurisdiction.
19. Applicable Law. This Agreement shall be construed pursuant to, and shall be
governed by, the laws of Scotland.
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20. Web-site. The Manager, at the Company's request, will provide access to its
account information electronically, via the world wide web, based upon the
Company's use of a BlackRock issued user id and password. The Company
acknowledges and agrees the world wide web is a continually growing medium and
the Manager does not make any warranty regarding the security related to the
world wide web. The Company must be aware there is no absolute guaranteed system
or technique to fully secure information made available over the web. The
Company agrees that it will not share its user id, password and access to
information provided electronically with any third party.
21. Notices. All notices required or permitted to be sent under this Agreement
shall be sent, if to the Manager:
BlackRock International, Ltd.
7 Castle Street
Edinburgh EH2 3AM Scotland
United Kingdom
Attn: Gordon Anderson, Portfolio Manager
With a copy to:
BlackRock Financial Management, Inc.
345 Park Avenue, 30th Floor
New York, NY 10154
Attention: Robert Connolly, General Counsel
or by facsimile to (212) 409-3744
if to the Company:
One Financial Place
Collymore Rock
St. Michael, Barbados W.I.
or such other name or address as may be given in writing to the other party. All
notices hereunder shall be sufficient if delivered by facsimile, telex, or
overnight mail. Any notices shall be deemed given only upon actual receipt.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
MOTORS MECHANICAL REINSURANCE COMPANY, LIMITED
By: s/Ronald W. Jones
---------------------------------
Name: Ronald W. Jones
Title: Vice President, Finance
BLACKROCK INTERNATIONAL, LTD.
By: s/Laurence D. Fink
---------------------------------
Name: Laurence D. Fink
Title: Chairman
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Motors Mechanical Reinsurance Company
Investment Guidelines (Exhibit A)
- --------------------------------------------------------------------------------
The Portfolio.......The Motors Mechanical Reinsurance Company Portfolio (the
Portfolio) is a separate account managed by BlackRock
International, Ltd. for the benefit of Motors Mechanical
Reinsurance Company, Limited (the Company).
Investment
Objective...........The Portfolio's investment objective is to provide a total
return that exceeds the total return of the Lehman
Intermediate Aggregate Index (the Index).
Duration
Guidelines..........The Portfolio will be managed to have a targeted duration
within a band of+/-20% around the duration of the Index.
Asset Guidelines....Following are the eligible investments:
(i) U.S. Treasury and agency securities;
(ii) Agency and non-agency mortgage-backed securities backed
by loans secured by residential, multifamily and
commercial properties including, but not limited to
pass-throughs, CMOs, REMICs, SMBS, project loans,
construction loans, and adjustable rate
(iii) obligations of domestic and foreign corporations and
banks, including Yankees and eurobonds;
(iv) asset-backed securities;
(v) taxable municipal securities
(vi) money market instruments
The Portfolio may use futures and/or options for purposes of
yield curve management, maintaining the duration within the
target range and as a substitute for Treasuries.
The Portfolio may purchase private placement or Rule 144A
securities.
Asset Allocation....Except for Treasury or Agency debentures, pass-throughs or
REMICs, no more than 5% of the Portfolio's assets may be
invested in securities of a single issuer.
Credit Criteria.....Securities must be rated investment grade or better by a
nationally recognized credit rating agency at the time of
purchase. Split rated credits will be considered to have the
higher credit rating.
Securities rated BBB or equivalent are limited to 10% of
portfolio net assets.
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In the event that a Portfolio investment is downgraded below
these credit quality guidelines, the Investment Manager
shall notify the Company and provide an evaluation and a
recommended course of action.
Money market instruments must be rated A-1 or P-1 or better
at the time of purchase.
Tax Consideration...The Portfolio's assets will not be invested in any
securities or sweep funds that to the knowledge of the
Manager at the time of purchase or investment, are subject
to U.S. withholding tax.
Other Investment
Practices...........Temporary cash balances may be invested by BlackRock in a
money market instrument (A1/P1 or better, less than 390
days) or in a client approved sweep vehicle not subject to
U.S. withholding tax.
The Portfolio may purchase securities on a when-issued basis
or for forward delivery.
The Portfolio may enter into repurchase agreements
collateralized 102% with U.S. Government securities or
mortgage securities as defined above. The maximum term of
these agreements will be 90 days, and the collateral must be
marked-to-market daily.
The Portfolio may enter into covered dollar rolls on
mortgage securities. Covered agreements will be defined as
having similar maturities.
Reinvestment
of Income...........All investment income of the Portfolio and capital gains, if
any, will be added to the assets of the Portfolio, unless
otherwise directed by the Company.
Custodian...........Comerica Bank
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Exhibit B
As compensation for rendering services under the Investment Manager Agreement,
the Manager shall be paid a quarterly Management Fee in arrears according to the
Fee Schedule provided below. All assets managed by the Manager for the companies
General Mechanical Reinsurance Company, Limited, Motors Mechanical Reinsurance
Company, Limited and any other related entities, except if otherwise agreed to,
will be consolidated under this Fee Schedule. The Management Fee will be based
on the net asset value of the combined portfolios at the end of each calendar
quarter.
Fee Schedule:
Aggregate Portfolio Net Assets Fee (bps)
- ------------------------------ ---------
First $50 million 25
Assets over $50 million 6.5
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