Exhibit 10.32

 

 

DATED MAY 24, 2004

 

 

 

INVESTMENT MANAGEMENT AGREEMENT

 

 

 

Between

 

FINANCIAL ASSURANCE COMPANY LIMITED

 

 

-and-

 

GE ASSET MANAGEMENT LIMITED

 

 

 

CONFIDENTIAL TREATMENT REQUESTED

 

CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED IS OMITTED AND IS NOTED WITH “**”. AN UNREDACTED VERSION OF
THIS DOCUMENT HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.

 

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This INVESTMENT MANAGEMENT AGREEMENT (this “Agreement”), made the 24th day of
May, 2004.

 

 

BETWEEN:

 

(1)           FINANCIAL ASSURANCE COMPANY LIMITED (Registered Number 1044679)
whose registered office is at Vantage West, Great West Road, Brentford,
Middlesex TW8 9AG (the “Customer”); and

 

 

(2)           GE ASSET MANAGEMENT LIMITED (Registered Number 3084561) whose
registered office is at 6 Agar Street, London, WC2N 4HR (the “Investment
Manager”).

 

 

WHEREAS:

 

(A)                              The Customer wishes the Investment Manager to
provide it with investment management services and the Investment Manager has
agreed to do so on the terms and subject to the conditions contained in this
Agreement.

 

(B)                                The Investment Manager is authorised and
regulated by the FSA (as defined below) and has the appropriate Part IV
permission under the FSMA (as defined below) to provide the Services (as defined
below) and nothing in this Agreement shall exclude any liability of the
Investment Manager to the Customer arising under the FSMA or the FSA Rules (as
defined below) as modified or re-enacted or both from time to time.

 

(C)                                The Investment Manager is registered as an
investment adviser under the Investment Advisers Act (as defined below).

 

(D)                               The Investment Manager is treating the
Customer as a Market Counterparty as defined in the FSA Rules.

 

IT IS AGREED:

 

ARTICLE I

DEFINITIONS AND USAGE

 

1.             Interpretation.

 

1.1                                 In this Agreement the following expressions
shall have the following meanings:

 

 “Account” shall have the meaning ascribed to it in clause 2.1.

 

“Account Assets” means the assets and any unrealized income, profit or gain (or
loss) from those assets in the Account from time to time.  Unless specifically
described otherwise, Account Assets shall be valued at market.

 

“Actual Costs” shall have the meaning ascribed to it in clause 4(b).

 

“Applicable Requirements” means all applicable laws and regulations (including
with respect to the Customer, the FSMA to the extent applicable to an insurance
company and, with respect to the Investment Manager, the Investment Advisers Act
and the FSMA to the extent applicable to an investment manager) and, if
applicable, the prevailing rules, regulations, requirements, determinations,
practice and guidelines of the Board of Inland Revenue of the United Kingdom, or
any other governmental, market or regulatory authority (including with respect
to the Customer, the FSA and with respect to the Investment Manager, the SEC (as
long as the

 

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Investment Manager is registered as an investment adviser with the SEC) and the
FSA), in each case for the time being in force.

 

“Associate” in this Agreement has the meaning ascribed to it in the FSA Rules.

 

“Board” means the board of directors from time to time of the Customer.

 

“Brokers” means dealers, brokers, agents or other similar persons selected by
the Investment Manager in its discretion through whom dealings for the Account
shall be effected.

 

“Budgeted Costs” shall have the meaning ascribed to it in clause 4(a).

 

“Control” means, as to any Person, the power to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.  The terms “Controlled”, “under
common Control with” and “Controlling” shall have correlative meanings.

 

“Control Event” means, with respect to either party, the occurrence of: (a) any
event which results in the Control of the party transferring from a Person that
was an Associate immediately prior to the occurrence of such event to a Person
that is not an Associate; (b) the sale or transfer of substantially all of a
party’s assets to a Person that is not an Associate; or (c) the merger or
consolidation of a party with or into another Person and the surviving Person is
not an Associate.

 

“CPR” shall have the meaning set forth in Section 9.3.

 

“CPR Arbitration Rules” shall have the meaning set forth in Section 9.4.

 

“Custodian” shall have the meaning ascribed to it in clause 2.5.

 

“Custody Agreement” shall have the meaning ascribed to it in clause 2.5.

 

“Directed Brokers” shall have the meaning ascribed to it in clause 2.4(c).

 

“Directed Trades” shall have the meaning ascribed to it in clause 2.4(c).

 

“Dispute” shall have the meaning set forth in Section 9.1(a).

 

“Effective Date” means the date of this Agreement.

 

“First Extension” shall have the meaning ascribed to it in clause 3(a).

 

“FSA” means the Financial Services Authority.

 

“FSA Rules” means the designated rules made, from time to time, by the FSA under
and in accordance with the FSMA, including under the FSA Handbook of Rules and
Guidance.

 

“FSA Termination” shall have the meaning ascribed to it in clause 3(e)(i).

 

“FSMA” means the Financial Services and Markets Act 2000, as amended.

 

“GAAP” means generally accepted accounting principles in effect, from time to
time, in the United States and/or in the United Kingdom as applicable, including
all applicable SEC requirements.

 

“GE” means General Electric Company, a New York corporation.

 

“GE Change” shall have the meaning ascribed to it in clause 3(e)(iii).

 

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“Initial Notice” shall have the meaning set forth in Section 9.2.

 

“Initial Termination Date” shall have the meaning ascribed to it in clause 3(a).

 

“Investment Advisers Act” means the United States Investment Advisers Act of
1940, as amended.

 

“Investment Committee” means a committee appointed by the Board to oversee the
Customer’s investment activities.

 

“Investment Guidelines” shall mean certain guidelines and procedures concerning
the investment and management of the Account Assets (and which may be specific
as to any particular Account) as may be adopted from time to time by the Board
or the Investment Committee and which shall in all respects and at all times be
compliant with all Applicable Requirements, a copy of which will be delivered to
Investment Manager upon execution of this Agreement and from time to time
thereafter as the same may be modified or amended by the Board or the Investment
Committee; provided that any such modification shall be provided by the Customer
to the Investment Manager in writing in advance.

 

“Investment Objectives” shall mean any investment objectives set forth in the
Investment Guidelines or otherwise communicated in writing from time to time by
the Customer to the Investment Manager.

 

“Investment Reports” means statements, reports, analyses, data, summaries,
calculations, formulas and the like concerning Account Assets, investment
strategy, security selection and performance results, whether in written, oral
or electronic form.

 

“Losses” shall have the meaning ascribed to it in clause 8.2(c).

 

“Management Percentage” shall have the meaning ascribed to it in clause 4(a).

 

“Person” means an individual, corporation, partnership, limited liability
company, association, trust or any other entity or organization, including
governmental or political subdivision or an agency or instrumentality thereof

 

“Proposal” shall have the meaning ascribed to it in clause 4(c).

 

“Records” shall have the meaning ascribed to it in clause 2.7(a).

 

“Regulatory Change” shall have the meaning ascribed to it in clause 3(e)(ii).

 

“Remaining Term” shall have the meaning ascribed to in clause 3(d).

 

“Representatives” means, as applicable, the Customer’s or the Investment
Manager’s directors, officers, employees, agents, auditors, delegates,
sub-contractors and legal and financial advisors.

 

“Response” shall have the meaning set forth in Section 9.2.

 

“SAP” means statutory accounting procedures and principles prescribed or
permitted by Applicable Requirements.

 

                “SEC” means the United States Securities and Exchange
Commission.

 

“Second Extension” shall have the meaning ascribed to it in clause 3(b).

 

“Securities Valuation Date” shall have the meaning ascribed to it in clause
2.9(b).

 

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“Services” shall have the meaning as described in clause 2.1.

 

“True-up” shall have the meaning ascribed to it in clause 4(b).

 

1.2                                 Headings.  The headings contained in this
Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.

 

1.3                                 Exhibits.  The Exhibits to this Agreement
shall be regarded as incorporated into, and forming part of, this Agreement.

 

 

ARTICLE II

SERVICES

 

2.1                 Appointment as Investment Manager.

 

The Customer appoints the Investment Manager and the Investment Manager accepts
appointment by the Customer as investment adviser for the Account with full
discretion subject to the terms of this Agreement; provided that, and without
limitation to any right or remedy of the Customer under this Agreement, the
ultimate control of the Customer’s accounts shall remain with the Board, and
nothing contained in this Agreement shall be deemed to transfer or delegate such
control to the Investment Manager.  The Investment Manager, acting in good faith
and with due diligence will provide continuous discretionary investment
management services (“Services”) to the Customer, which services may include
(but not limited to) the following:

 

(a)                                  Research and identify investment
opportunities;

 

(b)                                 Open (or direct the Custodian to open) and
maintain brokerage accounts for securities and other property for and in the
name of the Customer and execute for the Customer, as its agent and
attorney-in-fact, standard customer agreements;

 

(c)                                  Invest Account Assets in income earning
investments, such as bonds and cash equivalents, and such other investments as
are permitted by Applicable Requirements, subject to any restrictions or
limitations imposed by the Investment Guidelines, the Board or the Investment
Committee, in each case, as communicated to the Investment Manager in writing;

 

(d)                                 Exercise, on behalf of the Customer or
direct the exercise by the Custodian where appropriate, all rights and remedies
conferred by any investment including, without limitation, voting rights (as set
out in clause 2.6 below) with respect to the Account Assets;

 

(e)                                  Sell or dispose of investments as
appropriate, subject to any restrictions or limitations imposed by the
Investment Guidelines, the Board or the Investment Committee; provided, however,
that the proceeds from any such sales will be deposited in the relevant Account
on the date of receipt;

 

(f)                                    Assist in developing an overall
investment strategy for the Account Assets; provided that in all cases the
Customer shall have sole responsibility for approving and adopting any such
strategy;

 

(g)                                 As requested by the Customer, conduct
inspections, valuations, projections or other due diligence activities with
respect to investments;

 

(h)                                 Negotiate the terms and conditions of
investments and review and participate in the preparation of any documentation
relating to such investments and execute for the Customer, as its agent and
attorney-in-fact, such documentation;

 

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(i)                                     Keep the Account under review and confer
at regular intervals with the Customer regarding the investment and management
of the Account;

 

(j)                                     Prepare a summary of all purchases and
sales of investments with respect to the Account for approval and ratification
by the Board or the Investment Committee not less than quarterly and more
frequently if the Board or the Investment Committee so requests;

 

(k)                                  Assist with cash management and cash flow
forecasting;

 

(l)                                     Participate in meetings of the Board,
the Investment Committee and such other meetings with Customer Representatives
as the Customer may request from time to time;

 

(m)                               Provide the Customer, in a timely manner, with
such reports, documentation and information as the Customer may reasonably
request in connection with monthly, quarterly and annual closing activities;

 

(n)                                 Provide the Customer with such additional
investment management services relating to the Account as the Customer may
reasonably request from time to time; and

 

(o)                                 Provide other support and analysis
concerning investments, which, by way of example, may include due diligence in
connection with potential business acquisitions or dispositions by the Customer
and its Associates, reinsurance transactions and capital markets structures;
provided, however, such support and analysis shall be similar in scope to that
which Financial Insurance Group Services Limited had previously provided to the
Customer and shall be consistent with the range of Services provided in the
normal course by the Investment Manager under this Agreement.

 

2.2                                 Non-Exclusivity. The Investment Manager
shall perform the Services on a nonexclusive basis. The Customer shall be free
to retain at any time one or more additional investment advisers to perform
similar services in connection with any of its assets. The Investment Manager
may give advice and take action with respect to other customers that differs
from advice given or action taken with respect to the Account, so long as the
Investment Manager attempts in good faith to allocate investment opportunities
to the Customer and the Account over a period of time on a fair and equitable
basis compared to investment opportunities extended to other customers.  The
Investment Manager is not obligated to initiate the purchase or sale of any
security for the Customer or the Account that the Investment Manager, its
Associates or the respective Representatives of either of them may purchase or
sell for its or their own accounts or for the account of any other the customer
if, in the reasonable opinion of the Investment Manager, such transaction or
investment appears unsuitable or undesirable for the Customer or the Account.

 

2.3                                 Covenants of the Investment Manager.

 

                During the term of this Agreement:

 

(a)                                  The Investment Manager shall discharge its
duties with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person, acting in a like capacity and familiar with
such matters should use in the conduct of an enterprise of a like character and
with like aims.   Further, the Investment Manager shall use the same skill and
care in the management of the Account and other duties hereunder as it uses in
the administration of other similar accounts for which it has investment

 

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responsibility. The Investment Manager shall at all times comply with its
applicable duties under the FSA Rules.

 

(b)                                 The Investment Manager shall use its
commercially reasonable efforts to achieve the Investment Objectives. 
Notwithstanding the foregoing the, Customer understands that the Investment
Manager makes no representation regarding its ability to achieve any Investment
Objective and the Investment Manager shall have no liability hereunder for such
failure provided it has otherwise complied with the terms of this Agreement.

 

(c)                                  The Investment Manager shall notify the
Customer in writing within seven (7) business days of the Investment Manager
becoming aware of:  (i) the Investment Manager’s failure or inability to comply
with any material term or provision of this Agreement; (ii) any change in the
Investment Manager’s senior officers who exercise investment discretion in
respect of the Account; (iii) any change in the Investment Manager’s condition,
financial or otherwise or in its business or any other change which is
reasonably likely to be materially adverse to the Investment Manager, the
Account or the Account Assets; (iv) the occurrence of any happening or event
which is reasonably likely to cause or has caused any breach of any
representation or warranty made by the Investment Manager in Article VI and the
nature and scope of the breach; (v) any threatened or actual material adverse
change in the Account or nature of the Account Assets of which it is aware; (vi)
its inability to comply with any part of the Investment Guidelines including any
change resulting from an amendment to such Investment Guidelines or any
instruction or direction given by the Customer pursuant to this Agreement; (vii)
an instruction, direction or guideline given by the Customer that is:  (A) in
the Investment Manager’s opinion, inconsistent with the Investment Guidelines;
or (B) in the Investment Manager’s opinion, ambiguous or unclear in any respect,
and the instruction, direction or guideline must be clarified by the Customer;
(viii) a breach of any FSA Rule, which breach will or is expected to have a
material adverse effect on the Investment Manager’s ability to provide the
Services; or (ix) actual or potential non-routine investigation by the FSA or
any other regulator into the Investment Manager’s condition, financial or
otherwise or in its business or any actual or threatened withdrawal or
suspension of any of the Investment Manager’s authorisations, permission or
licences necessary to provide the Services.

 

(d)                                 In the performance of its duties and
obligations under this Agreement, the Investment Manager shall act in conformity
with the Investment Guidelines or other written instructions of the Board, the
Investment Committee or Representatives of the Customer, in each case as
supplied to the Investment Manager by the Customer, and all Applicable
Requirements.  At the Customer’s request, the Investment Manager shall provide
to the Customer certificates or other evidence of compliance relating to any
Applicable Requirements or other legal requirements, in each case in form and
substance satisfactory to the Customer.

 

(e)                                  The Investment Manager shall at all times
maintain sufficient and knowledgeable personnel to perform the Services.

 

(f)                                    The Investment Manager shall inform the
Customer of, and comply with, the Investment Manager’s policy regarding the
receipt by the Investment Manager of all services received in connection with
soft dollar commissions in relation to the investment or management of the
Account.

 

(g)                                 The Investment Manager shall account to the
Customer for any monetary benefits, fees or commissions received by the
Investment Manager or any Associate of the Investment Manager in relation to the
investment of the

 

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Account other than such monetary benefits or amounts permitted to be received in
accordance with Article IV.

 

(h)                                 The Investment Manager shall exercise due
diligence in selecting, appointing and reviewing the performance of any agent of
the Investment Manager in connection with the Account or any Brokers engaged by
the Investment Manager.

 

(i)                                     Except as otherwise disclosed in this
Agreement, the Investment Manager does not have and will not have any interest,
direct or indirect, which would conflict in any manner with its obligations
under this Agreement.

 

 

2.4           Transactions Involving Brokers.

 

(a)                                  In performing the Services, the Investment
Manager shall have full power, right, and authority to issue orders for the
purchase or sale of securities for the Account, directly to Brokers, as well as
to exercise or abstain from exercising any option, privilege or right held in
the Account.  In selecting a Broker with respect to effecting any securities
transaction on behalf of the Customer, the Investment Manager may take into
account such relevant factors as (i) total transaction price (including
commissions, as a component of price), (ii) the Broker’s facilities, reliability
and financial responsibility, (iii) the ability of the Broker to effect
securities transactions, particularly with regard to such aspects as timing,
size and execution of orders, and (iv) the research services provided by such
Broker to the Investment Manager (either directly or by arrangement with third
parties) which may enhance the Investment Manager’s general investment
decision-making process, notwithstanding that the Customer may not be the direct
or exclusive beneficiary of such services.  Specifically, the Investment Manager
may pay a Broker a commission in excess of the amount another broker would have
charged for effecting such transaction, so long as, subject to the overriding
principles of suitability and in the good faith judgment of the Investment
Manager, the amount of the commission is reasonable in relation to the value of
the brokerage and research services provided by such Broker, viewed in terms of
that particular transaction or the Investment Manager’s overall investment
management business.  The Investment Manager will make periodic disclosure to
the Customer regarding transactions subject to soft dollar arrangements as
required.

 

(b)                                 Subject to FSA Rules, the Investment Manager
may enter into arrangements with Brokers to open “average price” accounts
wherein orders during a trading day are placed on behalf of the Customer and
other customers of the Investment Manager and its Associates and of its
employees without prior reference to the Customer and will allocate such
transactions (along with an equivalent portion of the expense related thereto)
on a fair and reasonable basis using an average price.

 

(c)                                  The Customer may direct the Investment
Manager to effect securities transactions for the Account (“Directed Trades”)
through broker-dealer(s) identified by the Customer in writing (“Directed
Brokers”) in a separate agreement acceptable to the Investment Manager.  The
Customer acknowledges that: (i) Directed Trades may not enable the Customer to
obtain the cost and execution benefits, if any, of participating in aggregated
trades with other customers; and (ii) Directed Trades may be executed before or
after the Investment Manager effects the execution of transactions for other
accounts with the result that the Customer may pay or receive, as the case may
be, a different price for securities which were also the subject of trades by
the Investment Manager for its other customers.  The Customer

 

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represents that Directed Trades are not prohibited by Applicable Requirements or
the Customer’s governing documents.

 

(d)                                 The Investment Manager may provide typical
investment representations and warranties on behalf of the Customer, including
but not limited to those representations and warranties contained in clause 6.2
hereof, in connection with the purchase or sale of securities by the Customer.

 

2.5                                 Custody Arrangements.  The Customer has
established an agreement with JPMorgan Chase Bank (the “Custodian” and such
agreement, the “Custody Agreement”).  The Custodian shall be responsible for
arranging custody and safekeeping of the Account Assets, the collection of
income and other entitlements, the carrying out of any foreign exchange
transaction and all other administrative functions in relation to such Account
Assets.  All Account Assets will be held by the Custodian in accordance with the
provisions of the Custody Agreement.  The Customer, during the term of this
Agreement, shall promptly provide to the Investment Manager copies of any
amendments to the Custody Agreement that may affect the Investment Manager in
providing the Service and shall give to the Investment Manager notice of any
termination of the Custody Agreement.  The Customer shall be responsible for the
payment of all custodial fees to the Custodian.  The Investment Manager shall
have no responsibility including supervisory responsibility or liability with
respect to the acts, omissions or other conduct of the Custodian.

 

2.6                                 Exercise of Rights.  Subject to the
Investment Guidelines and any other written instructions of the Board, the
Investment Committee or Representatives of the Customer provided to the
Investment Manager, the Investment Manager shall use its best judgment to
exercise or instruct the Custodian to exercise, in a manner that the Investment
Manager deems to be in the best interests of the Customer, all voting rights,
consent rights, subscription rights, conversion rights or any other rights
arising in connection with any investment in the Account.  The Investment
Manager shall determine whether to consent to modifications of any documents
governing securities held in the Account.  Unless provided herein or requested
in writing by the Customer, the Investment Manager need not forward any proxy
material, consent solicitations or similar material to the Customer.

 

2.7           Record Keeping and Inspection.

 

(a)                                  The Investment Manager shall maintain all
books, accounts, vouchers, records, memoranda, instructions or authorizations
(collectively, “Records”) relating to the acquisition or disposition of
securities or other investments in the Account in accordance with FSA Rules. 
Such Records will at all times be the property of the Customer.  On a timely
basis, the Investment Manager shall make available to the Customer, at its
administrative offices or such other location as may be designated by the
Customer, copies or originals of such Records upon reasonable request.

 

(b)                                 All Records, both internal and external with
third parties, to the extent within the control of the Investment Manager, will
clearly specify the ownership interest of the Customer in the Account Assets.

 

(c)                                  Records relating solely to the Account
and/or the Account Assets that are not maintained physically on the Customer’s
premises or in the Customer’s care, custody and control shall be subject to
review and audit at any time by the Customer, its Representatives, the FSA and
any other governmental or regulatory authority, or any other entity designated
by the Customer, and the Investment Manager shall cooperate with and provide
reasonable assistance to any such Person, including any Representative appointed
by the Customer to conduct an audit of the Account.  The Investment Manager
shall notify the Customer prior to destruction of such Records (in order that
the Customer

 

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may request transfer of such Records to the Customer as an alternative to
destruction).

 

(d)                                 The Investment Manager shall provide to the
Customer such other documents and information pertaining to this Agreement, the
Account and/or Account Assets at such times as the Customer may reasonably
request including, but not limited to, information required to prepare reports
to the FSA or any other entity designated by the Customer or as may be required
in order for the Customer to comply with GAAP, SAP or Applicable Requirements.

 

(e)                                  The Investment Manager will cooperate fully
with the Customer with respect to unsettled or unreconciled transactions and
daily transmission of trading activity.

 

(f)                                    The Investment Manager shall permit
representatives of the FSA to have access, with or without notice, during
reasonable business hours to:

 

(i)                                     any of the Investment Manager’s business
premises;

(ii)                                  any records, files, tapes, computer
systems, computer data or other material within the Investment Manager’s
possession or control related to the provision of the Services; and

(iii)                               any facilities which the FSA representatives
may reasonably request, and at the Investment Manager’s reasonable expense to
make and remove copies of any such Records are referred to in (ii) above.

 

(g)                                 The Investment Manager shall make itself
readily available for meetings with FSA representatives as reasonably requested
and shall answer truthfully, fully and promptly all questions that are
reasonably put to them by FSA representatives.

 

(h)                                  The Investment Manager shall give the
Customer’s duly appointed auditors entitlement to such information and
explanations from its officers as they reasonably consider necessary for the
performance of their duties.

 

2.8           Information Furnished to the Investment Manager.

 

(a)                                  The Customer shall furnish to the
Investment Manager in a timely manner any information that the Investment
Manager may reasonably request with respect to the Services.  In determining the
requirements of Applicable Requirements, the Investment Manager may rely on an
interpretation of law by legal counsel to the Customer.

 

(b)                                 The Customer shall furnish to the Investment
Manager in a timely manner details of inflows of cash to the Account in the
first instance by e-mail followed by post in accordance with clause 8.3.  

 

(c)                                  The Investment Guidelines may be modified
or amended by the Board or the Investment Committee from time to time, provided
that any such modification or amendment shall be provided by the Customer to the
Investment Manager in writing in advance. The Investment Manager shall have a
reasonable amount of time to bring the Account into compliance with any
modification and amendment.

 

 

2.9           Reporting and valuation

 

(a)                                  The Investment Manager shall meet the
Customer at such frequency as the Customer may reasonably require to review the
performance of the Account and to discuss the Investment Guidelines.  The
Investment Manager shall

 

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(provided it receives no less than two weeks’ notice of the meeting) provide the
Customer not less than one week before each such meeting a written submission
reviewing developments since the last meeting and outlining the major topics on
which it proposes to comment at the forthcoming meeting.

 

(b)                                 The Investment Manager shall promptly
deliver to the Chief Financial Officer of the Customer monthly statements
showing all investments in each Account as of the close of business on the last
business day of each month (the “Securities Valuation Date”).  Said statements
shall be sent to the Customer promptly following the end of each month and shall
include:

 

(i)                                     a statement summarizing the transactions
subsequent to the immediately prior Securities Valuation Date; and

 

(ii)                                  a report, if any, assessing the negative
performance of the Custodian with respect to the custody of the Account Assets,
to the extent known by the Investment Manager.

 

(c)                                  The Investment Manager shall agree with the
Customer on any other statements to be provided and in the absence of such
agreement, shall have no obligation to provide any statements other than as
expressly provided herein.

 

(d)                                 For the purposes of these statements and any
other statements or reports requested by the Customer, unless otherwise agreed
upon in writing by the Customer and the Investment Manager, the basis for
valuing Account Assets shall be determined in good faith by the Investment
Manager.

 

(e)                                  The Customer shall provide the Investment
Manager with a certificate (substantially in the form set out in Exhibit A)
setting forth the names and specimen signatures of the individuals who are
authorized to act on behalf of the Customer.  The Customer may from time to time
amend or vary such certificate by written notice to the Investment Manager.

 

 

ARTICLE III

TERM AND TERMINATION

 

3.                                      Term and Termination.

 

 (a)                               This Agreement shall continue in effect for a
term beginning on the Effective Date and ending on the third anniversary of the
Effective Date (the “Initial Termination Date”).  Not less than one (1) year
prior to the Initial Termination Date, the Customer shall notify the Investment
Manager in writing of its intent to terminate this Agreement on the Initial
Termination Date or to extend this Agreement for an additional one (1) year term
(the “First Extension”).

 

(b)                                 If the Customer exercises the First
Extension, the Customer shall, no later than the Initial Termination Date,
notify the Investment Manager in writing of its intent to terminate this
Agreement at the end of the First Extension or to further extend this Agreement
for an additional one (1) year term (the “Second Extension”). 

 

(c)           This Agreement may only be terminated by the Customer:

 

(i)                                     for any reason (including, without any
limitation, if the GE Life Group decides to engage other investment managers to
provide substantially all advisory services to its fixed income assets) with six
(6) months prior notice (which notice shall specify the effective date

 

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of termination) to the Investment Manager, provided, that the Customer may
provide less than six (6) months notice subject to clause 3(d) below; or

 

(ii)                                  immediately (A) for cause  (“cause” being
understood as any fraud or wilful misconduct by the Investment Manager in
managing the Account, the Investment Manager’s material breach of this
Agreement, materially deficient investment performance with respect to the
Account or the Investment Manager’s material or repeated non-compliance in
managing the Account in accordance with the Investment Guidelines or Investment
Objectives; provided that, except with respect to Manager’s fraud or wilful
misconduct, the Investment Manager shall have thirty (30) days from notice of
such non-compliance or material breach to cure such non-compliance or material
breach to the reasonable satisfaction of the Customer in which case cause shall
not be deemed to have arisen); (B) upon a Control Event with respect to the
Customer or the Investment Manager; or (C) following the occurrence of a FSA
Termination or Regulatory Change (each as defined in clause 3(e) below) or the
occurrence of an event described in clause 3(e)(iii)(A) below.

   

(d)                                 If the Customer terminates this Agreement
with less than six (6) months prior notice and if such termination is not due to
the occurrence of any event set forth in clause 3(c)(ii) above, the Customer
will pay to the Investment Manager, in addition to all fees applicable for the
period from notice to termination, the lesser of (1) the unpaid balance of the
Budgeted Costs that have been applicable for providing the Services during the
period from the termination date through the date that is six (6) months from
the date that notice was received (the “Remaining Term”) or (2) the Actual Costs
incurred by the Investment Manager for providing the Services for the Remaining
Term (in each case as adjusted to reflect the pro-rata portion of the True-up
for the following year, or portion thereof, if applicable).  The Investment
Manager shall use reasonable efforts to mitigate the incurrence of such costs
and expenses.

 

(e)                                  This Agreement may be terminated by the
Investment Manager:

 

(i)                                     if the FSA suspends or withdraws the
Investment Manager’s investment adviser registration or permission to carry on
investment management activities  (“FSA Termination”);

(ii)                                  if a change in Applicable Requirements
occurs that would materially and adversely affect the Investment Manager’s
ability to provide the Services  (“Regulatory Change”); or

(iii)                               if (A) GE or an Associate thereof, as the
case may be, decides to dissolve the Investment Manager and commences
dissolution or other winding up proceedings; (B) a Control Event with respect to
the Investment Manager occurs; or (C) the GE Life Group decides to engage other
investment managers to provide substantially all advisory services to its fixed
income assets (each such event in (A), (B) or (C), a “GE Change”); provided that
the Investment Manager shall give prompt written notice of a GE Change to the
Customer and the date of termination shall occur on the later of the Initial
Termination Date or six (6) months from the giving of notice of the GE Change to
the Customer.

 

(f)                                    The Investment Manager shall provide
prompt written notice of a FSA Termination or Regulatory Change to the Customer
and the Investment Manager shall use best efforts to extend the termination date
of this Agreement to the maximum date consistent with the requirements of the
FSA

 

11

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or the date of implementation of the Regulatory Change, as applicable, and in a
manner consistent with regard to clause 3(k).

 

(g)                                 This Agreement also shall automatically
terminate in the event of its unauthorized assignment by either party.

 

(h)                                 Termination in any manner shall not affect
the rights of either party that accrued prior to termination.

 

(i)                                     The Customer acknowledges that the
Investment Manager has and will continue to expend substantial fixed costs in
providing the Services to the Customer and such costs would not have been
incurred but for the Investment Manager providing the Services.  Furthermore,
the Customer acknowledges that the Investment Manager has agreed to provide the
Services for the fees payable pursuant to Article IV in part because the
Customer has expressed a good faith intention to engage the Investment Manager
for not less than three (3) years following the Effective Date.  Therefore, the
Customer acknowledges that the management fees still to be paid to the
Investment Manager following a termination by the Customer of this Agreement for
reasons other than pursuant to clause 3(c)(ii) above and with less than six (6)
months prior notice should not be construed as a penalty but as a reasonable
approximation of the additional costs incurred by the Investment Manager due to
the failure of the Customer to meet the parties’ expectations.

 

(j)                                     Within sixty (60) days of the
termination of this Agreement, the Investment Manager shall transfer all Records
to the Customer or its designee provided that Investment Manager shall be
entitled to maintain a copy of such Records.  All reasonable costs (but not any
copying costs) to transfer such Records shall be paid by the Customer.

 

(k)                                  In the event of any termination of this
Agreement, the Customer may request that the Investment Manager continue to
serve as an investment manager hereunder (at the then-existing compensation
level) in order to assist the Customer in effecting a smooth and orderly
transfer of services and all Records to any successor Investment Manager (which
may be Customer); provided that such transition period shall not exceed 3 months
unless otherwise agreed to by the parties. The Investment Manager shall consent
to such request provided termination is not the result of a FSA Termination or
Regulatory Change.

 

 

ARTICLE IV

COMPENSATION

 

4.                                      Compensation.

 

(a)                                Subject to the provisions of this Article IV,
the Customer agrees to pay the Investment Manager a management fee on a
quarterly basis in arrears for the Services.   The management fee shall be equal
to ** basis points (**%) (the “Management Percentage”) multiplied by the value
of the Account Assets as of the end of the relevant calendar quarter, as
determined by the Custodian’s records, divided by four (4).   The Customer
agrees to pay an estimate (determined in good faith by the Investment Manager)
of this amount in monthly installments in advance with any difference between
the amount paid and the amount due being set against the actual quarterly fee.
The parties acknowledge that the initial Management Percentage has been, and the
Management Percentage applicable for each calendar year thereafter, will be
equal to 105% of the percentage resulting from dividing the

 

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Investment Manager’s budgeted direct and indirect costs and expenses for
providing the Services for such period (the “Budgeted Costs”) as adjusted by any
True-up for the prior year by the Customer’s estimated average Account Assets
for the next calendar year. 

 

 

(b)                                 The parties will reestablish the Management
Percentage for each calendar year in accordance with the following process.  By
each September 15, the Customer shall provide the Investment Manager with a
provisional forecast of the Customer’s Account Assets for the following calendar
year together with an outline of any significant changes that the Customer
proposes to implement to its investment strategy during the following calendar
year.  By each October 1, the Investment Manager shall provide the Customer with
a detailed budget setting forth the expected Budgeted Costs to be incurred by
the Investment Manager in order to provide the Services for the following
calendar year along with reasonable documentation in support of such budget
(collectively, the “Proposal”). The Customer shall promptly review the Proposal
and shall accept or reject the Proposal, in the Customer’s reasonable
discretion, by no later than November 1; provided, however, if the Customer
rejects the Proposal it shall provide the Investment Manager with a written
explanation for such rejection.  If the Customer rejects the Proposal, the
Customer and the Investment Manager will work in good faith to resolve all
issues so that the Proposal is acceptable to both parties no later than December
1.  As promptly as possible, but in no event later than January 15 of each year,
the Customer shall provide the Investment Manager its final forecast of Account
Assets for the calendar year and any significant changes to the Customer’s
investment strategy that the Customer proposes to implement during such calendar
year.  Within five (5) business days following receipt of such information, the
Investment Manager shall calculate the difference between the management fees
paid or payable by the Customer to the Investment Manager for the prior year
under this Agreement and the Investment Manager’s actual direct and indirect
costs and expenses of providing services (“Actual Costs”) during such period
(such difference is referred to as the “True-up”) and shall provide the True-up
and proposed Management Percentage to the Customer.  The calculation of any
True-up shall not give effect to fees received by the Investment Manager or
reductions in fees otherwise owed to the Investment Manager as a result of a
prior True-up.  The True-up shall be added to or subtracted from, as applicable,
the Budgeted Costs set forth in the approved Proposal and shall be reflected in
the Management Percentage established for the following calendar year.  If the
Investment Manager is entitled to the benefit of the True-up because Actual
Costs exceeded Budgeted Costs, the True-up added to Budgeted Costs for the
following calendar year shall be the lesser of the actual True-up or an amount
equal to 10% of Budgeted Costs for the prior calendar year; provided however,
that any Actual Costs that were not included in the approved Proposal for the
year but were previously approved in writing by the Customer in consultation
with the Investment Manager during such year shall not be included when applying
the 10% cap.  The Investment Manager shall provide the Customer with reasonable
back-up documentation supporting the Investment Manager’s calculation of the
True-up.  The Customer shall approve or reject the True-Up and the Management
Percentage not later than five (5) business days after receipt thereof from the
Investment Manager.  The Management Percentage shall be implemented as if it
were effective as of the prior January 1. If the parties are unable to agree on
a revised Proposal, the True-up or the Management Percentage, the then existing
Management Percentage shall remain in effect until the parties agree on a
revised Proposal and True-up.    If the parties are unable to agree on the
Proposal, the Management Percentage and the True-up by February 15, the Budgeted
Costs and Management Percentage (which shall reflect the True-up) shall be
established pursuant to the Arbitration process described in

 

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Article IX of this Agreement.  In accordance with the foregoing procedure, if
the GE Life Group decides to engage other investment managers to provide
substantially all advisory services to its fixed income assets, the Manager
agrees that Budgeted Costs (without giving effect to any True-up) for the
calendar year immediately following such change shall not increase by more than
5% unless mutually agreed by the parties. Both parties understand that time is
of the essence with respect to this clause 4(b).  For purposes of all dates set
forth in this clause, if such date is not a business day, then such date shall
be deemed to be the next calendar day that is a business day.

 

(c)                                  The Customer agrees to pay an estimate
(determined in good faith by the Investment Manager) of the quarterly charge
contemplated in clause 4(a) above in monthly installments in advance with any
difference between the amount paid and the amount due being set against the
actual quarterly fee.  The Investment Manager shall submit to the Customer at
the beginning of each month, a written statement of the amount owed by the
Customer for that month. The Customer shall pay the Investment Manager
undisputed amounts within twenty eight (28) days following receipt of such
statement. Fees to be paid in GBP.  VAT will be added and paid, where
applicable, by the Customer.  The Customer will inform the Investment Manager as
soon as possible when it is no longer within the GE Capital Bank Limited VAT
Group.

 

 

ARTICLE V

CONFIDENTIALITY

 

Subject to the duty of the Investment Manager or the Customer to comply with
Applicable Requirements, each party hereto shall treat as confidential all
information with respect to the other party received pursuant to this
Agreement.  No party shall use or disclose the other party’s confidential
information except as contemplated by this Agreement.

 

The Investment Manager shall establish and maintain reasonable procedures to
keep Investment Reports, the information supplied by the Customer to the
Investment Manager for the Investment Reports and other non-public information
provided hereunder confidential and to prevent disclosure or distribution to any
Person other than to the Customer’s Representatives or the Investment Manager’s
Representatives or their service providers who have a reasonable need to know or
have access to such information in connection with providing the Services;
provided that the Investment Manager may include information from such
Investment Reports when presenting the Investment Manager’s performance as long
as the Customer is not identified as the source of such information.  The
Investment Manager will be responsible for compliance with the terms of this
clause by its Representatives.

 

Investment Reports provided by the Investment Manager to the Customer are
privileged and may include proprietary information.  Investment Reports will be
used solely for the purpose of monitoring and evaluating the performance of the
Account and for use by the Customer in testing the Account Assets for regulatory
compliance and similar purposes. The Customer shall establish and maintain
reasonable procedures to keep Investment Reports confidential and to prevent
disclosure or distribution to any Person other than to the Customer’s
Representatives who have a reasonable need to know or have access to such
Investment Reports in connection with the receipt of the Services.  The Customer
will be responsible for compliance with the terms of this clause by its
Representatives.

 

Each party hereto will, to the extent legally possible, obtain the other party’s
approval before sending or making available any Investment Report to third
parties.  If a party is required by Applicable Requirements or requested (by
legal process, civil investigative demand or similar process) to disclose any
confidential information of the other party, the party being required or
requested to make such disclosure will to the extent legally possible promptly
notify the other party so that the other party may to the extent legally and
practically possible seek an appropriate protective order or waive compliance
with this confidentiality covenant.

 

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ARTICLE VI

REPRESENTATIONS AND WARRANTIES

 

6.1.         Representations and Warranties of the Investment Manager.

 

The Investment Manager represents, warrants and covenants that:

 

(a)        It is duly incorporated under the laws of England and Wales.

 

(b)                        It has and will maintain throughout the term of this
Agreement, all of the powers, rights and authorities to carry on the business of
an investment manager under Applicable Requirements (including, without
limitation, the appropriate permissions from the FSA, but excluding solely for
this purpose any registrations with the SEC).

 

(c)                         Neither the execution and delivery nor the
performance of this Agreement will violate any Applicable Requirements or
applicable court order, nor will the same constitute a breach of, or default
under, provisions of any agreement or contract to which it is a party or by
which it is bound and assuming the accuracy of sub-clause 6.2(b) below, all
required regulatory filings and notices, if any, have been made and, if
necessary, approvals received  (or applicable waiting or notice periods lapsed)
in connection with this Agreement.

 

(d)                        It has the power, right and authority to execute,
deliver and perform this Agreement and any transaction contemplated by the terms
of this Agreement.

 

(e)                         It has, at least 48 hours prior to entering into
this Agreement furnished to the Customer a true and complete copy of Part II of
its most recent Form ADV; and since the date of such Form ADV, there has not
been, occurred or arisen any material adverse change in the financial condition
or in the business of the Investment Manager or any event, condition, or state
of facts which materially and adversely affects, or to its knowledge threatens
to materially affect, the business or financial condition of the Investment
Manager.

 

(f)                           In terms of intellectual property, it is the sole
owner of all right, title and interest in and to the intellectual property used
by it to perform its obligations hereunder or, to its knowledge, possesses all
appropriate licenses to use the intellectual property; has not sold, granted,
conveyed, licensed or assigned to any third party, or in any way encumbered, the
intellectual property in a manner that interferes with the Investment Manager’s
obligations under this Agreement; and the intellectual property used by the
Investment Manager does not to the Investment Manager’s knowledge infringe the
rights of any third party.

 

6.2          Representations and Warranties of the Customer.

 

The Customer hereby represents and warrants that:

 

(a)                         It has the power to enter into and perform its
obligations under this Agreement, and has duly executed this Agreement so as to
constitute a valid and binding obligation of the Customer.

 

(b)                        Neither the execution and delivery nor the
performance of this Agreement (including the payment of fees to the Investment
Manager) will violate any Applicable Requirements or applicable court order, nor
will the same constitute a breach of, or default under, provisions of any
agreement or

 

15

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contract to which it is a party or by which it is bound and, assuming the
accuracy of sub-clause 6.1(c) above, all required regulatory filings and
notices, if any, have been made, and if necessary, approvals received  (or
applicable waiting or notice periods lapsed) in connection with this Agreement.

 

ARTICLE VII

NATURE OF RELATIONSHIP

 

 

7.             Nature of Relationship; Conflicts of Interest.

 

 

(a)                                  The Investment Manager acts as the agent of
the Customer, who will therefore be bound by the Investment Manager’s acts under
this Agreement providing the Investment Manager acts within the authority
granted to it by the Customer.  Nevertheless, none of the Services nor any other
matter shall give rise to any fiduciary or equitable duties which would prevent
or hinder the Investment Manager from providing similar services to other
customers or otherwise from acting as provided in this Agreement.

 

(b)                                 The Investment Manager may effect
transactions in which the Investment Manager or an Associate has or may have,
directly or indirectly, a material interest or relationship of any description
with another party which may involve a potential conflict with the Investment
Manager’s duty to the Customer, without reference to the Customer, provided that
such transactions are at arm’s length.  Neither the Investment Manager nor any
Associate shall be liable to account to the Customer for any profit, commission
or remuneration made or received from or by reason of such transactions or any
connected transactions and the Investment Manager’s fees shall not, unless
otherwise provided, be abated thereby.

 

(c)                                  The Investment Manager will ensure that
such transactions are effected on terms that are no less favourable to the
Customer than if the potential conflict had not existed.

 

(d)                                 The Investment Manager shall (subject to
receiving instructions from the Customer to the contrary) take all necessary
steps (acting always in the best interests of the Account) to ensure that the
Investment Guidelines are fully complied with, and to rectify any breach of such
Investment Guidelines which may occur through movements in the market as soon as
reasonably practicable after such breach occurs.

 

(e)                                  In accordance with the FSA Rules, the
Investment Manager notifies the Customer that the potential conflicting interest
or duties referred to in clause (b) above may arise because:

 

(i)                                   any of the Investment Manager’s directors
or employees (or those of an Associate) is a director of, holds or deals in
securities of, or is otherwise interested in any company whose securities are
held or dealt in on behalf of the Customer;

 

(ii)                                  the transaction is in relation to an
investment in respect of which the Investment Manager or an Associate benefits
from a commission, fee, mark-up or mark-down payable otherwise than by the
Customer, and/or the Investment Manager or an Associate is also remunerated by
the counterparty to any such transaction;

 

(iii)                               the Investment Manager acts as agent for the
Customer in relation to a transaction in which it is also acting as an agent for
the account of other Customers and/or Associate;

 

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(iv)                              the Investment Manager or an Associate deals
in investments as principal with the Customer, or acting as principal, sells to
or purchases from the Customer currency other than sterling;

 

(v)                                 a transaction is effected in securities
issued by an Associate or the Customer of an Associate;

 

(vi)                              the Investment Manager deals on behalf of the
Customer with or in securities of an Associate;

 

(vii)                           the transaction is in units or shares of a
collective investment scheme (e.g. a unit trust) or of any company of which in
either case the Investment Manager or an Associate is the investment manager,
operator, banker, adviser or trustee;

 

(viii)                        the transaction is in the securities of a company
for which the Investment Manager or an Associate has underwritten, managed or
arranged an issue within the period of 12 months before the date of the
transaction;

 

(ix)                                the Investment Manager may effect
transactions involving placings and or new issues with an Associate who may be
acting as principal or receiving agents commission;

 

(x)                                   the Investment Manager or an Associate
receives remuneration or other benefits by reason of acting in corporate finance
or similar transactions involving companies whose securities are held by the
Customer; and

 

(xi)                                the transaction is in securities in respect
of which the Investment Manager or an Associate or a director or employee of
either is contemporaneously trading or has traded on its own account has either
a long or short position.

 

ARTICLE VIII

MISCELLANEOUS

 

8.1           Other Charges.

 

The Investment Manager shall direct the Custodian to pay out of the relevant
Account Assets the total transaction costs including all reasonable Broker’s
commissions with respect to transactions of the Account and all taxes or
governmental fees, domestic or foreign, attributable to such transactions.

 

8.2           Investment Manager’s Conduct.

 

(a)                                  In furnishing the Customer with the
Services, neither the Investment Manager nor any officer, director or agent
thereof shall be held liable to the Customer, its creditors or the holders of
its securities for good faith errors of judgment or for anything except wilful
misfeasance, bad faith or gross negligence in the performance of its duties, or
reckless disregard of its obligations and duties under the terms of this
Agreement.  It is further understood and agreed that the Investment Manager may
rely upon information furnished to it by the Customer that the Investment
Manager reasonably believes to be accurate and reliable. 

 

(b)                                 No warranty is given by the Investment
Manager as to the performance or profitability of the Account any part thereof
and there is no guarantee that the Investment Objectives will be achieved,
including without limitation any risk control, risk management or return
objectives.  The Account may suffer loss

 

17

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of principal, and income, if any, may fluctuate.  The value of investments may
be affected by a variety of factors, including, but not limited to, economic and
political developments, interest rates and issuer-specific events, market
conditions, sector positioning, or other reasons.

 

(c)                  Notwithstanding any limitation of liability contained in
sub-clause (a) above, the Investment Manager shall indemnify and hold the
Customer harmless from and against any losses, damages, expenses (including
reasonable attorneys’ fees), liabilities, penalties, demands and claims of any
nature whatsoever (collectively, “Losses”) with respect to or arising out of the
Investment Manager’s breach or violation of this Agreement or any Applicable
Requirement or the wilful misfeasance, bad faith or gross negligence by the
Investment Manager in the performance of its duties, or reckless disregard of
its obligations and duties under the terms of this Agreement.

 

(d)                                 The Customer shall indemnify and hold the
Investment Manager harmless from and against all Losses with respect to or
arising out of the Customer’s breach or violation of this Agreement or any
Applicable Requirement or with respect to or arising out of the Investment
Manager’s actions or inactions in providing the Services as long as such Losses
did not result from the Investment Manager’s breach of this Agreement or any
Applicable Requirements, wilful misfeasance, bad faith or gross negligence in
the performance of its duties, or reckless disregard of its obligations and
duties under the terms of this Agreement.

 

(e)                                  The Investment Manager shall be entitled to
rely upon any notice, designation, instruction, direction, request or other
communication given it hereunder (whether given in writing by letter, fax, email
teletype, order or other document, or orally by telephone or in person) by or on
behalf of any person notified by the Customer from time to time as being
authorised to instruct the Investment Manager in respect of the Account Assets
without being required to determine the authenticity or correctness thereof,
provided the Investment Manager believes such notice, designation, instruction,
direction, request or other communication to be genuine or given by a person
duly authorized and unless the Investment Manager shall have received written
notice to the contrary that the authority of any such person shall have been
terminated.  The Investment Manger shall be entitled to rely upon advice of
counsel selected by it concerning all matters pertaining to this Agreement and
the Investment Manager’s duties hereunder.

 

8.3          Notices.

 

Notices hereunder shall be by confirmed fax, telecopy or other written form of
electronic communication (including e-mail) or by letter which shall be mailed
by certified mail, postage paid, addressed (except as the same may by like
notice be changed) as follows:

 

To the Customer:

 

Financial Assurance Company Limited

 

 

Vantage West

 

 

Great West Road

 

 

Brentford Middlesex TW8 9AG

 

 

Attn:         Chief Finance Officer

Telephone No:

 

 

Fax No:

 

 

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To the Investment Manager:

 

 

 

 

 

GE Asset Management Limited

 

 

6 Agar Street

 

 

London

 

 

WC2N 4HR

 

 

Attn: Chief Executive Officer

Telephone No: 44 207 599 5200

 

 

Fax No: 44 207 599 5233

 

 

8.4           Assignment; Governing Law and Jurisdiction.

 

This Agreement shall not be assignable in whole or in part by either party
without the prior consent of the other party (such consent not to be
unreasonably withheld), provided that this Agreement shall automatically be
assigned to any Person to which the business of the Customer is transferred by
virtue of any order made by the Court under Part VII of FSMA . For purposes of
this clause, the term “assignment” with respect to the Investment Manager as
assignor shall have the same meaning as defined in Section 202 of the Investment
Advisors Act. Any successor or permitted assignee of the Customer to whom the
rights and/or the obligations of the Customer under this Agreement are in any
way transferred may require that the Investment Manager (and if it does so
require, the Investment Manager shall) provide all or certain of the Services to
the Customer after that transfer, for such period as that successor or permitted
assignee may require, and in addition to the Services which the Investment
Manager shall provide to that successor or permitted assignee pursuant to the
terms of this Agreement.  This Agreement shall be governed by the laws of
England..

 

8.5           Force Majeure.

 

The Investment Manager shall not be liable to the Customer for any failure to
carry out or delay in carrying out any of its obligations hereunder attributable
to any cause of whatever nature outside its reasonable control provided that the
Investment Manager shall (1) use its best efforts to remedy any such failure or
delay or malfunction, event or circumstance as soon as practicable and (2)
maintain throughout the term of this Agreement effective disaster recovery
systems, details of which will be provided to the Customer upon reasonable
request.

 

8.6                                 Independent Contractor.

 

The Investment Manager shall be deemed to be an independent contractor and,
except as expressly provided or authorized in this Agreement, shall have no
authority to act for or represent the Customer. The Customer shall always retain
the ultimate authority to make investment decisions on its own behalf.

 

8.7                                 Advertising and Promotion.

 

A party shall not engage in any advertising or promotional activity that refers
to the other party without receiving the written consent of the other party
prior to publication or announcement. The Investment Manager shall however be
entitled to disclose the Customer’s name and the size of the Account Assets in
the client listings and other similar material.

 

8.8                                 Severability.

 

Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such

 

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prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

 

8.9           Amendments.

 

No term or provision of this Agreement may be amended, waived, discharged or
terminated orally, but only by an instrument in writing signed by both parties.

 

8.10                           Counterparts.

 

This Agreement may be executed in one or more counterparts, and such
counterparts together shall constitute one and the same agreement

 

8.11         Complaints.

 

If the Customer has any complaint about the Investment Manager, it should be
directed to the Compliance Officer at the Investment Manager’s address at the
head of this Agreement.  The Customer acknowledges that it is not an eligible
complainant as defined by the FSA Rules and as such does not have a right to
refer a complaint to the Financial Ombudsman Service.

 

8.12         Contracts (Rights of Third Parties) Act of 1999.

 

Other than as specifically provided for, the parties to this Agreement do not
intend that any term of this Agreement should be enforceable by virtue of the
Contracts (Right of Third Parties) Act of 1999, by any person who is not a party
to this Agreement.

 

8.13         Entire Agreement.

 

This Agreement (including the Exhibits to this Agreement which shall be regarded
as incorporated into, and forming part of, this Agreement) embodies the entire
understanding of the parties hereto with respect to its subject matter,
supersedes any prior or contemporaneous agreements or understandings between the
parties with respect to such subject matter and cannot be altered, waived,
amended, supplemented or abridged except by the written agreement of the
parties.

 

8.14         Exclusion or Termination of Liability.

 

Nothing in this Agreement shall exclude any liability of the Investment Manager
to the Customer arising under Applicable Requirements (including, without
limitation, the FSMA or the FSA Rules).

 

ARTICLE IX

DISPUTE RESOLUTION

 

9.1          General Provisions.

 

(a)                                  Any dispute, controversy or claim arising
out of or relating to this Agreement or the validity, interpretation, breach or
termination thereof (a “Dispute”), shall be resolved in accordance with the
procedures set forth in this Article IX, which shall be the sole and exclusive
procedures for the resolution of any such Dispute unless otherwise specified
below.

 

(b)                                 Commencing with a request contemplated by
Section 9.2 set forth below, all communications between the parties or their
representatives in connection with the attempted resolution of any Dispute,
including any mediator’s evaluation referred to in Section 9.3 set forth below,
shall be deemed to be without prejudice communications and to have been
delivered in furtherance

 

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of a Dispute settlement and shall be exempt from inspection, and shall not be
admissible in evidence for any reason (whether as an admission or otherwise), in
any arbitral or other proceeding for the resolution of the Dispute.

 

(c)                                  In connection with any Dispute, the parties
expressly waive and forego any right to (i) punitive, exemplary,
statutorily-enhanced or similar damages in excess of compensatory damages, and
(ii) trial by jury.

 

(d)                                 The specific procedures set forth below,
including but not limited to the time limits referenced therein, may be modified
by agreement of the parties in writing.

 

(e)                                  The running of time shall be suspended in
respect of any Dispute for the purposes of any defences based upon the passage
of time (whether under the Limitation Act 1980 (in its present form or as
subsequently amended or replaced or otherwise) while the procedures specified in
this Article IX are pending. The parties will take such action, if any, required
to effectuate this suspension.

 

 

9.2                               Consideration by Senior Executives.  If a
Dispute is not resolved in the normal course of business at the operational
level, the parties shall attempt in good faith to resolve such Dispute by
negotiation between executives who hold, at a minimum, the office of President
and CEO of the respective business entities involved in such Dispute.  Either
party may initiate the executive negotiation process by providing a written
notice to the other (the “Initial Notice”).  Fifteen (15) days after delivery of
the Initial Notice, the receiving party shall submit to the other a written
response (the “Response”).  The Initial Notice and the Response shall include
(i) a statement of the Dispute and of each party’s position, and (ii) the name
and title of the executive who will represent that party and of any other person
who will accompany the executive.  Such executives will meet in person or by
telephone within thirty (30) days of the date of the Initial Notice to seek a
resolution of the Dispute.

 

9.3                               Mediation.  If a Dispute is not resolved by
negotiation as provided in Section 9.2 within forty-five (45) days from the
delivery of the Initial Notice, then either party may submit the Dispute for
resolution by mediation pursuant to the CPR Institute for Dispute Resolution
(the “CPR”) Model Mediation Procedure as then in effect.  The parties will
select a mediator from the CPR Panels of Distinguished Neutrals.  Either party
at commencement of the mediation may ask the mediator to provide an evaluation
of the Dispute and the parties’ relative positions.

 

9.4          Arbitration

 

(a)                                  If a Dispute is not resolved by mediation
as provided in Section 9.3 within thirty (30) days of the selection of a
mediator (unless the mediator chooses to withdraw sooner), either party may
submit the Dispute to be finally resolved by arbitration pursuant to the CPR
Rules for Non-Administered Arbitration as then in effect (the “CPR Arbitration
Rules”).  The parties consent to a single, consolidated arbitration for all
known Disputes existing at the time of the arbitration and for which arbitration
is permitted.

 

(b)                                 The neutral organization for purposes of the
CPR Arbitration Rules will be the CPR.  The arbitral tribunal shall be composed
of three arbitrators, of whom each party shall appoint one in accordance with
the “screened” appointment procedure provided in Rule 5.4 of the CPR Arbitration
Rules.  The arbitration shall be conducted in London, England.  Each party shall
be permitted to present its case, witnesses and evidence, if any, in the
presence of the other party.  A written transcript of the proceedings shall be
made and furnished to the parties.  The arbitrators shall determine the Dispute
in accordance with

 

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the law of England, without giving effect to any conflict of law rules or other
rules that might render law inapplicable or unavailable, and shall apply this
Agreement according to its terms.

 

(c)                                  The parties agree to be bound by any award
or order resulting from any arbitration conducted in accordance with this
Section 9.4 and further agree that judgment on any award or order resulting from
an arbitration conducted under this Section 9.4 may be entered and enforced in
any court having jurisdiction thereof.

 

(d)                                 Except as expressly permitted by this
Agreement, no party will commence or voluntarily participate in any court action
or proceeding concerning a Dispute, except (i) for enforcement as contemplated
by Section 9.4(c) above, (ii) to restrict or vacate an arbitral decision based
on the grounds specified under applicable law, or (iii) for interim relief as
provided in paragraph (e) below.  For purposes of the foregoing, the parties
hereto submit to the non-exclusive jurisdiction of the courts of England.

 

(e)                                  In addition to the authority otherwise
conferred on the arbitral tribunal, the tribunal shall have the authority to
make such orders for interim relief, including injunctive relief, as it may deem
just and equitable.  Notwithstanding Section 9.4(d) above, each party
acknowledges that in the event of any actual or threatened breach of Article V,
the damages would not be adequate, and therefore injunctive or other interim
relief may be sought immediately to restrain such breach.  If the tribunal shall
not have been appointed, either party may seek interim relief from a court
having jurisdiction if the award to which the applicant may be entitled may be
rendered ineffectual without such interim relief.  Upon appointment of the
tribunal following any grant of interim relief by a court, the tribunal may
affirm or disaffirm such relief, and the parties will seek modification or
rescission of the court action as necessary to accord with the tribunal’s
decision.

 

(f)                                    Each party will bear its own attorneys’
fees and costs incurred in connection with the resolution of any Dispute in
accordance with this Article IX

 

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.

 

 

 

FINANCIAL ASSURANCE COMPANY LIMITED

 

 

 

 

 

By:

/s/ William Goings

 

 

Name: William Goings

 

Title: Director

 

 

 

GE ASSET MANAGEMENT LIMITED

 

 

 

 

 

By:

/s/ Gavin Hill

 

 

Name: Gavin Hill

 

Title: Chief Executive

 

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FINANCIAL ASSURANCE COMPANY LIMITED

DULY AUTHORISED REPRESENTATIVES

Exhibit A

 

The following persons are duly authorized to act on behalf of the above
captioned for accounts managed by GE Asset Management Limited.

 

 

Signature:

 

 

Type of Authorisation

Name:

 

Bind Firm (sign/amend contracts)

Title:

 

Authorise Contributions/Withdrawals

Firm Name:

 

Comments:

 

 

 

Signature:

 

 

Type of Authorisation

Name:

 

Bind Firm (sign/amend contracts)

Title:

 

Authorise Contributions/Withdrawals

Firm Name:

 

Comments:

 

 

 

Signature:

 

 

Type of Authorisation

Name:

 

Bind Firm (sign/amend contracts)

Title:

 

Authorise Contributions/Withdrawals

Firm Name:

 

Comments:

 

 

 

Signature:

 

 

Type of Authorisation

Name:

 

Bind Firm (sign/amend contracts)

Title:

 

Authorise Contributions/Withdrawals

Firm Name:

 

Comments:

 

24

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Schedule

 

                The following agreement is substantially identical in all
material respects to the Investment Management Agreement between Financial
Assurance Company Limited and GE Asset Management Limited.  Differences between
the agreements are noted below.

 

Agreement

 

Differences

Investment Management Agreement between Financial Insurance Company Limited and
GE Asset Management Limited

 

Parties to the Agreements differ.  (See Agreement titles.)

 

 

 

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