<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Separate Account D
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Golden American Life, Inc.
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
GOLDEN AMERICAN LIFE INSURANCE COMPANY
A Subsidiary of Bankers Trust Company
1001 Jefferson Street, Wilmington, DE 19801
Tel: (800) 366-0066
Fax: (302) 576-3430
July 1, 1996
Dear GoldenSelect Contractowner:
I'm writing to tell you about some very exciting changes concerning Golden
American Life Insurance Company ("Golden American"), who is the sponsor of The
Managed Global Account Division of Separate Account D of Golden American (the
"Account"), and Directed Services, Inc. ("DSI"), who is the Account's Manager,
and to send you proxy materials for an upcoming special meeting of
Contractowners of the Account that will be held on July 29, 1996. The Account
is an investment company that serves as the investment vehicle for your
GoldenSelect variable annuity contract.
The Board of Governors of Account D has approved these proposals and
recommends that you vote "FOR" the proposals on the enclosed proxy card. I
urge you to review the enclosed proxy statement, to cast your vote, and to
return promptly the enclosed proxy in the envelope provided.
NEW MANAGEMENT AGREEMENTS AND A UNIFIED FEE STRUCTURE
At the special meeting, you will be asked to approve a new Management
Agreement with DSI and an amendment to the Portfolio Management Agreement with
Warburg, Pincus Counsellors, Inc. ("Warburg, Pincus"), the Manager and
Portfolio Manager, respectively, of the Account. These agreements would
replace the way the Account currently pays its expenses with a simple
"unified" fee arrangement, which would lock in fees at the current level
provided under DSI's current expense limitations, and provide for lower fees
as assets increase. To accomplish this, DSI would assume responsibility for
providing or paying for all of the services necessary for the ordinary
operation of the Account. In return DSI would receive one fee at an annual
rate of 1.25% of the Account's average daily net assets. DSI's fee would drop
to 1.05% for the Account's assets in excess of $500 million. These are the
same expense levels that are currently in place under an expense limitation
commitment from DSI that expires at the end of this year. This simplified fee
arrangement is reflected in the new Management Agreement and the amendment to
the Portfolio Management Agreement with Warburg, Pincus, which are submitted
for your approval.
AGREEMENT TO ACQUIRE GOLDEN AMERICAN AND DSI BY EQUITABLE OF IOWA COMPANIES
Equitable of Iowa Companies has entered into an agreement to acquire Golden
American and DSI. The agreement is subject to several conditions, including
approval from certain state insurance authorities and other approvals.
Equitable of Iowa Companies is a New York Stock Exchange listed company that
owns Equitable Life Insurance Company of Iowa, USG Annuity & Life Company,
Locust Street Securities, Inc., and Equitable Investment Services, Inc. It had
assets of $10 billion as of March 31, 1996. It is intended that Golden
American and DSI would maintain their Delaware operations and management. The
acquisition would align Golden American and DSI with a financially strong
family of life insurance companies.
A special meeting of Contractowners has been called for purposes related to
the acquisition described above. Upon the closing of the agreement under which
Equitable of Iowa Companies would acquire Golden American and DSI, the
existing Management Agreement under which DSI serves as Manager to the Account
would terminate. Similarly, the Portfolio Management Agreement with Warburg,
Pincus may also terminate.
<PAGE>
Accordingly, Contractowners will be asked to approve at the special meeting of
Contractowners (1) a new Management Agreement between the Account and DSI, and
(2) a new Portfolio Management Agreement among the Account, DSI, and Warburg,
Pincus. The terms of the new Management Agreement and new Portfolio Management
Agreement are identical in all material respects to the terms of the
agreements they would replace. The proposals in this proxy statement are
intended to keep in place the current management and advisory arrangements for
the Account after the prospective change in the ownership of DSI.
We believe that the prospective acquisition by Equitable of Iowa Companies
will provide a financially strong parent for Golden American and DSI that is
committed to seeking growth in the assets of the Account.
REORGANIZATION OF THE MANAGED GLOBAL ACCOUNT
The Account is organized as a segregated asset account of Golden American
that is registered with the SEC as an open-end management investment company.
Under this structure, the Account directly holds and manages portfolio
securities and other assets, and contracts with DSI and Warburg, Pincus for
the management and advisory services that it needs. A reorganization is
proposed under which your interests in the Account would be held by a
segregated asset account of Golden American that is registered with the SEC as
a unit investment trust, and which would invest in a separate mutual fund
portfolio--the Managed Global Series of The GCG Trust. Under this structure,
the Trust would hold and manage portfolio securities and other assets, and
would contract with DSI and Warburg, Pincus for the management and advisory
services that it needs. The segregated asset account would simply hold shares
of the Managed Global Series.
This reorganization would simplify the reports we send to you by
consolidating them with the report for other Series of the Trust. It would
also permit the Managed Global Series to be offered for different products,
and therefore increase the growth potential for the portfolio. The
reorganization would not increase costs for you.
BOARD OF GOVERNORS RECOMMENDS APPROVAL
The Board of Governors of Account D has carefully considered these
proposals and recommends that you vote "FOR" the proposals on the enclosed
proxy card. I urge you to review the enclosed proxy statement, to cast your
vote, and to return promptly the enclosed proxy in the envelope provided.
Sincerely,
/s/ Terry L. Kendall
Terry L. Kendall
President
<PAGE>
THE MANAGED GLOBAL ACCOUNT DIVISION OF
SEPARATE ACCOUNT D OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1001 JEFFERSON STREET, SUITE 400
WILMINGTON, DELAWARE 19801
NOTICE OF SPECIAL MEETING OF CONTRACTOWNERS
JULY 29, 1996
To the Contractowners of Variable Annuity Contracts with Accumulation Value
in The Managed Global Account Division of Separate Account D of Golden
American Life Insurance Company:
A Special Meeting (the "Meeting") of the owners of the variable annuity
contracts (the "Contracts") with accumulation value allocated to The Managed
Global Account Division of Separate Account D ("Account D") of Golden American
Life Insurance Company ("Golden American") will be held at 1001 Jefferson
Street, Suite 400, Wilmington, Delaware 19801 on July 29, 1996 at 10:00 a.m.,
local time, for the following purposes:
I.To approve a new Management Agreement with Directed Services, Inc.
("DSI");
II.If Proposal I is approved, to approve an amended Portfolio Management
Agreement with DSI and Warburg, Pincus Counsellors, Inc. ("Warburg,
Pincus");
III.To approve a new Management Agreement with DSI in the same form as
the agreement described in Proposal I, to become effective following the
acquisition of its corporate parent;
IV.If Proposal III is approved, to approve a new Portfolio Management
Agreement with DSI and Warburg, Pincus in the same form as the agreement
described in Proposal II, to become effective following the acquisition of
the corporate parent of DSI;
V.To approve the reorganization ("Reorganization") of Account D from a
separate account of Golden American registered as a management investment
company to a separate account of Golden American registered as a unit
investment trust that invests in a separate mutual fund; and
VI.To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The matters referred to above are discussed in detail in the Proxy Statement
attached to this Notice. Contractowners of record at the close of business on
June 28, 1996 are entitled to notice of, and to vote at, the Meeting and any
adjournment thereof.
You are cordially invited to attend the Meeting. All Contractowners who do
not expect to attend the Meeting are requested to complete, date and sign the
enclosed form of proxy and return it promptly in the envelope provided for
that purpose. The enclosed proxy is solicited by the Board of Governors of
Account D.
YOUR VOTE IS IMPORTANT. IN ORDER TO AVOID THE UNNECESSARY EXPENSE OF FURTHER
SOLICITATION, WE URGE YOU TO INDICATE VOTING INSTRUCTIONS ON THE ENCLOSED
PROXY, DATE AND SIGN IT, AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, NO
MATTER HOW LARGE OR SMALL YOUR HOLDING MAY BE.
By Order of the Board of Governors,
/s/ Myles Tashman
Myles R. Tashman
Secretary
July 1, 1996
<PAGE>
THE MANAGED GLOBAL ACCOUNT DIVISION OF
SEPARATE ACCOUNT D OF
GOLDEN AMERICAN LIFE INSURANCE COMPANY
1001 JEFFERSON STREET, SUITE 400
WILMINGTON, DELAWARE 19801
PROXY STATEMENT
SPECIAL MEETING OF CONTRACTOWNERS
JULY 29, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Governors of Separate Account D ("Account
D") of Golden American Life Insurance Company ("Golden American") for use at a
Special Meeting (the "Meeting") of the owners of the variable annuity
contracts with accumulation value allocated to The Managed Global Account
Division of Account D (the "Contracts") and issued by Golden American. The
Meeting will be held on July 29, 1996 at 10:00 a.m., local time, at 1001
Jefferson Street, Suite 400, Wilmington, Delaware 19801 for the purposes set
forth herein. At the Meeting, Contractowners will be asked:
I.To approve a new Management Agreement with Directed Services, Inc.
("DSI");
II.If Proposal I is approved, to approve an amended Portfolio Management
Agreement with DSI and Warburg, Pincus Counsellors, Inc. ("Warburg,
Pincus");
III.To approve a new Management Agreement with DSI in the same form as
the agreement described in Proposal I, to become effective following the
acquisition of its corporate parent;
IV.If Proposal III is approved, to approve a new Portfolio Management
Agreement with DSI and Warburg, Pincus in the same form as the agreement
described in Proposal II, to become effective following the acquisition of
the corporate parent of DSI;
V.To approve the reorganization ("Reorganization") of Account D from a
separate account of Golden American registered as a management investment
company to a separate account of Golden American registered as a unit
investment trust that invests in a separate mutual fund; and
VI.To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The initial mailing of this Proxy Statement to Contractowners will be on or
about July 5, 1996. The expense of proxy solicitation will be borne by Golden
American, DSI, and/or Equitable of Iowa Companies. In addition to solicitation
of proxies by mail, proxies may also be solicited by telephone, telegraph or
personal interview conducted by personnel of Golden American or DSI, or by
proxy solicitation firms retained by Golden American or DSI.
If the enclosed proxy is executed and returned, it may nevertheless be
revoked at any time before its exercise by a written revocation or a later
proxy received by the Secretary of Account D. The proxy will not be voted if
the Contractowner is present at the Meeting and elects to vote in person.
However, attendance at the Meeting alone will not serve to revoke the proxy.
The persons named in the accompanying proxy will vote as directed by the
proxy, but in the absence of voting directions in any proxy that is signed and
returned, they intend to vote FOR each proposal and may vote in their
discretion with respect to other matters not now known to the Board of
Governors of Account D that may be presented at the Meeting. Executed proxies
marked as abstentions will not be considered votes cast for or against the
proposals requiring approval of a specified percentage of votes cast, but will
be considered as negative votes on issues requiring the affirmative vote of a
specified portion of the outstanding voting interests of Account D.
Abstentions will also be counted for quorum purposes.
<PAGE>
As of June 21, 1996 (the "Record Date"), there were 82,969,465.64 votes
entitled to be cast at the Meeting with respect to Account D. Each
Contractowner may cast one vote for every $1.00 of accumulation value in
Account D, with fractional interests counted.
Proposals I, II, III, IV, and V are voted upon separately. Approval of
Proposals I, II, III, and IV requires a majority vote of the outstanding
voting securities of The Managed Global Account, the sole existing division of
Account D, while approval of Proposal V requires a majority vote of the voting
securities present and voting at the Meeting. A "majority vote of the
outstanding voting securities" means the lesser of:
(1) More than 50% of all votes entitled to vote on Proposals I, II, III,
and IV; or
(2) At least 67% of the votes which are present at the Meeting, if
holders of more than 50% of all votes entitled to be cast in respect of
Proposals I, II, III, and IV are present in person or represented by proxy.
If a sufficient number of votes is not represented at the Meeting to approve
any item, the Meeting may be adjourned for the purpose of further proxy
solicitation, or for any other purpose. A vote may be taken on any one of the
proposals in this Proxy Statement prior to any adjournment if sufficient votes
have been received for approval. Unless otherwise instructed, proxies will be
voted in favor of any adjournment. At any subsequent reconvening of the
Meeting, proxies will (unless previously revoked) be voted in the same manner
as they would have been voted at the Meeting.
PROPOSAL I
APPROVAL OF MANAGEMENT AGREEMENT WITH DSI
BACKGROUND
DSI serves as Manager to The Managed Global Account under the terms of a
Management Agreement between Account D and DSI dated October 2, 1992 (the
"Current Management Agreement"). At a meeting held on June 10, 1996, the Board
of Governors of Account D, including those members of the Board who are not
parties to the agreement or interested persons of any such parties, considered
and approved for submission to Contractowners a new Management Agreement (the
"New Management Agreement") for The Managed Global Account between Account D
and DSI as Manager. The New Management Agreement differs from the Current
Management Agreement in that DSI, in addition to its current responsibilities
as Manager, would provide or procure for The Managed Global Account, at DSI's
expense, the services reasonably necessary for the operation of The Managed
Global Account, including custodial, portfolio accounting, auditing, ordinary
legal services, and other services necessary for the ordinary operation of The
Managed Global Account. DSI also would be responsible for engaging and
compensating any Portfolio Manager of The Managed Global Account.
Thus, under the New Management Agreement, DSI would bear the ordinary
operational expenses of The Managed Global Account that currently are borne
directly by Account D. The fees payable to DSI under the New Management
Agreement are higher than those payable to DSI under the Current Management
Agreement; however, because DSI will directly bear the expenses of The Managed
Global Account's ordinary operations, based upon current asset levels, the New
Management Agreement is not expected to increase the expenses of The Managed
Global Account. Further, the New Management Agreement would result in a
decrease in the expenses that would be borne by Account D at current asset
levels in the absence of the Manager's expense limitation policy. See "Effect
on Expenses of Account D."
THE CURRENT MANAGEMENT AGREEMENT
The Current Management Agreement was last approved by the Board of Governors
of Account D at a meeting held September 21, 1995, and by Contractowners with
value allocated to The Managed Global Account at a meeting held on September
15, 1994 pursuant to the requirements of Section 15(a) of the Investment
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Company Act of 1940 (the "1940 Act"), which requires Contractowner approval of
each investment advisory contract. The Current Management Agreement provides
that it will continue in effect until October 2, 1996, and from year to year
thereafter, provided such continuance is approved annually by (i) holders of a
majority of the outstanding voting securities of The Managed Global Account or
by a majority of the Board of Governors, and (ii) a majority of the members of
the Board of Governors who are not parties to the Current Management Agreement
or "interested persons" (as defined by the 1940 Act) of any such party.
As Manager under the Current Management Agreement, DSI has overall
responsibility, subject to the supervision of the Board of Governors, for
engaging Portfolio Managers for The Managed Global Account, and for monitoring
and evaluating the management of the assets of The Managed Global Account and
the performance of the Portfolio Manager. Account D bears expenses associated
with securities custody, portfolio accounting, its Board of Governors, and
legal and auditing services.
For its services to The Managed Global Account, DSI receives a monthly fee
equal to an annual rate of 0.40% of the first $500 million of The Managed
Global Account's average daily net assets and 0.30% of the amount over $500
million. For the fiscal year ended December 31, 1995, Account D paid custodial
fees of $111,693 to Account D's custodian, Bankers Trust Company, which is
affiliated with DSI.
Pursuant to the Current Management Agreement, DSI will not be subject to
liability for, or subject to any damages, expenses, or losses in connection
with, any act or omission connected with or arising out of any services
rendered under the Current Management Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties,
or by reason of reckless disregard of its obligations and duties under the
Current Management Agreement.
Account D may terminate the Current Management Agreement by majority vote of
the entire Board of Governors, or by a vote of a majority of the outstanding
voting securities of The Managed Global Account, upon 60 days' written notice
given by the Board of Governors. DSI may terminate the Current Management
Agreement without penalty upon 60 days' notice to Account D. In addition, the
Current Management Agreement will terminate automatically in the event of its
"assignment," as that term is defined in the 1940 Act.
The Managed Global Account and DSI have agreed to limit expenses of The
Managed Global Account, other than mortality and expense risk charges, asset-
based administrative charges, and other contractual charges assessed on
variable annuity contracts having value allocated to The Managed Global
Account, through December 31, 1996 so that such expenses do not exceed 1.25%
of the first $500 million of average daily net assets and 1.05% of the excess
over $500 million on an annual basis.
THE NEW MANAGEMENT AGREEMENT
If the New Management Agreement is approved by a majority vote of the
outstanding securities of The Managed Global Account, it will take effect on
the earlier of August 30, 1996 or the Closing Date of the Acquisition
described in Proposal III, and will continue in effect until two years from
that date, and will continue from year to year thereafter, subject to approval
annually by the Board of Governors of Account D or by a majority vote of the
voting securities of The Managed Global Account, and also, in either event,
approval by a majority of those members of the Board of Governors who are not
parties to the New Management Agreement or interested persons of any such
party at a meeting called for the purpose of voting on such approval. The New
Management Agreement is attached hereto as Exhibit A.
The provisions of the New Management Agreement regarding the management
services to be provided by DSI are substantially similar to DSI's
responsibilities under the Current Management Agreement. DSI would continue to
be responsible for analyzing and recommending for consideration by Account D's
Board of Governors Portfolio Managers to provide investment advice to The
Managed Global Account, for periodic monitoring and evaluating the performance
of the Portfolio Managers with respect to the investment objective and
policies of The Managed Global Account, and, if appropriate, for analyzing and
recommending for
3
<PAGE>
consideration by the Board termination of a contract with a Portfolio Manager.
DSI would be responsible for monitoring the Portfolio Managers for compliance
with the investment policies and restrictions of The Managed Global Account,
and applicable legal requirements. DSI would also continue to be responsible
for providing all supervisory and management services described previously
under the section entitled "The Current Management Agreement" of this Proposal
I.
The New Management Agreement differs from the Current Management Agreement
in that DSI would be responsible for providing or procuring additional
services for Account D. DSI would have overall responsibility, subject to the
supervision of the Board of Governors, for providing administrative and other
services necessary for the ordinary operation of The Managed Global Account
other than investment advisory services. DSI would be responsible for
providing, at its own expense, the services reasonably necessary for the
operation of The Managed Global Account, including custodial, administrative,
portfolio accounting, auditing, and ordinary legal services. DSI would also
bear the expenses of any of Account D's meetings of Contractowners, the
preparation and mailings of prospectuses and reports of Account D to its
Contractowners, the filing of reports with regulatory bodies, the maintenance
of Account D's existence and qualification to do business, and the
registration of interests in Account D with federal and state securities or
insurance authorities. In addition, commencing with the date of the New
Management Agreement, DSI will be responsible for any remaining unamortized
organizational expenses of Account D. Under the proposed agreement, DSI would
not bear the expenses of brokerage fees or other transactional expenses for
securities or other assets, taxes (if any) paid by Account D, interest on
borrowing, fees and expenses of the independent members of the Board of
Governors, and extraordinary expenses, such as litigation or indemnification
expenses.
The New Management Agreement is different from the Current Management
Agreement in that, pursuant to its terms, many of the expenses of The Managed
Global Account's operations, including custodial, administrative, portfolio
accounting, auditing, and ordinary legal expenses would be paid by DSI as the
Manager; whereas, under the Current Management Agreement, these expenses are
paid directly from the assets of Account D. In this regard, Account D would be
distinct from most registered open-end investment companies because most
registered open-end investment companies pay these expenses directly from
their own assets.
The circumstances under which Account D or DSI may incur liability and the
circumstances under which the New Management Agreement would terminate are the
same as for the Current Management Agreement.
Under the New Management Agreement, the Trust would pay DSI a monthly fee at
an annual rate of 1.25% of the first $500 million of average daily net assets
of The Managed Global Account, and 1.05% on the amount of assets in excess of
$500 million. For a comparison of these fees with those paid under the Current
Management Agreement, and a discussion of the effect of the proposed
arrangements on the expenses of The Managed Global Account, see "Effect on
Expenses of Account D," following.
EFFECT ON EXPENSES OF ACCOUNT D
As described previously, DSI generally would be responsible for providing
all of the services necessary for the ordinary operation of The Managed Global
Account under the New Management Agreement. Based upon current asset levels,
the New Management Agreement is not expected to increase the expenses of the
Managed Global Account, even though the fees payable to DSI under the New
Management Agreement are greater than the fees currently payable to DSI under
the Current Management Agreement. For the fiscal year ended December 31, 1995,
Account D paid DSI management fees equal to $293,930 under the Current
Management Agreement (before expense reimbursements). For the same period,
Account D would have paid DSI management fees equal to $921,619, representing
a 313% increase, if the New Management Agreement had been in effect.
Table 1 following presents information to help analyze the fees payable to
DSI under the New Management Agreement. The table sets forth information
regarding the fees and expenses of Account D under its current contractual
arrangements and under the proposed contractual arrangements. The proposed
contractual arrangements also reflect the fees payable to the Portfolio
Manager under the Portfolio Management Agreement
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<PAGE>
that is proposed in Proposal II. Under the New Management Agreement, these
Portfolio Management fees would become the responsibility of DSI rather than
Account D.
As previously noted, DSI has agreed to limit the ordinary operating expenses
of The Managed Global Account through December 31, 1996. Prior to the current
expense limitation agreement, predecessor agreements were in effect that
limited the expenses of The Managed Global Account at levels equal to those
under the Current Management Agreement. Table 2 below presents information to
help analyze the fees payable to DSI under the New Management Agreement in
relation to the historic expense levels of The Managed Global Account under
the expense limitation that has been in effect, as well as expense levels that
The Managed Global Account would have incurred in the absence of any expense
limitation. The Managed Global Account expenses in Table 2 are presented as
ratios of expenses to average net assets.
TABLE 1. COMPARISON OF THE MANAGED GLOBAL ACCOUNT'S
EXPENSES UNDER THE CURRENT MANAGEMENT AGREEMENT
AND THE NEW MANAGEMENT AGREEMENT
<TABLE>
<CAPTION>
CURRENT EXPENSE CURRENT EXPENSE PROPOSED
STRUCTURE WITH STRUCTURE WITHOUT EXPENSE
EXPENSE LIMIT** EXPENSE LIMIT STRUCTURE***
--------------- ----------------- ------------
<S> <C> <C> <C>
Management Fee*................. $230,544 $293,930 $921,619
Portfolio Management Fee*....... 440,770 440,770 0
Costs of Other Expenses*........ 251,727 251,727 7,409
-------- -------- --------
Total Expenses*................. $923,041 $986,427 $929,028
======== ======== ========
</TABLE>
- --------
*Based on asset levels and financial statements as of December 31, 1995.
** Under the Current Management Agreement, "Costs of Other Expenses" are
limited by The Managed Global Account's current expense limitation
agreement with DSI, under which DSI reimbursed Account D $63,386 during
Account D's fiscal year ended December 31, 1995.
***Presumes that the Account will not incur extraordinary expenses.
TABLE 2. COMPARISON OF HISTORICAL EXPENSE RATIOS TO
ANTICIPATED EXPENSES UNDER THE NEW MANAGEMENT AGREEMENT
<TABLE>
<CAPTION>
HISTORICAL EXPENSE RATIOS
FOR THE PERIOD ENDED 12/31
ANTICIPATED ---------------------------
EXPENSES* 1995 1994 1993 1992**
----------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total Expenses (Without Expense
Limitation)......................... 1.26% 1.35% 1.40% 1.73% 1.84%
Total Expenses (After Expense
Limitation)......................... n/a 1.25% 1.31% 1.69% 1.84%
</TABLE>
- --------
*Assumes average net assets of $75,389,433; at December 31, 1995, net assets
were $73,489,409.
**Annualized.
Table 2 indicates that the proposed New Management Agreement would maintain
expenses of The Managed Global Account at the level that is in effect under
the current expense limitation agreement.
After December 31, 1996, there can be no assurance that DSI will renew the
expense limitation agreement or enter into a new expense limitation agreement.
In the event that any expense limitation arrangements were to be discontinued,
the expenses that would be borne by Account D under current contractual
arrangements and at current asset and expense levels would exceed the expenses
that would be borne by Account D if the New Management Agreement were
effective. Under these circumstances, approval of the New Management Agreement
would, immediately after effectiveness, result in a decrease in the expenses
that would be borne by Account D.
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<PAGE>
It is possible that service providers to Account D could increase the costs
of services provided to The Managed Global Account or that it may become
necessary to procure additional services in the future for the ordinary
operation of The Managed Global Account. Under the Current Management
Agreement, this risk is borne by Account D. Under the New Management
Agreement, DSI, rather than Account D, will bear the risk that expenses may
increase. Alternatively, DSI may benefit to the extent that it can negotiate
more favorable terms from service providers. It is possible that with
increases in the size of the assets of The Managed Global Account, the costs
of services necessary for the ordinary operation of The Managed Global
Account, as a percentage of net assets, could decrease by virtue of economies
of scale. Under the Current Management Agreement, savings realized through
economies of scale would largely inure to the benefit of Account D. Under the
New Management Agreement, any savings realized through economies of scale may
inure to the benefit of DSI. However, the New Management Agreement provides
that, as The Managed Global Account assets increase, the fee payable to DSI
will decrease at a certain level of assets, or "breakpoint." Accordingly,
whether any savings achieved through economies of scale will benefit DSI or
Account D under the New Management Agreement will depend on whether such
savings are lesser or greater than the reduction in revenue to DSI caused by
meeting the breakpoint at an increased level of assets. To the extent that any
savings realized through economies of scale inure to the benefit of DSI, they
will not lower the expenses of Account D.
By combining all of the ordinary operating expenses under one unified fee
and engaging the Manager to provide or procure all of the services needed for
the ordinary operation of The Managed Global Account, the New Management
Agreement will provide certainty in the ordinary expenses of The Managed
Global Account in the future. Thus, the New Management Agreement will provide
simplicity and predictability to the fee structure for The Managed Global
Account.
THE MANAGER
DSI, 1001 Jefferson Street, Suite 400, Wilmington, Delaware 19801, is a New
York corporation that is a wholly owned indirect subsidiary of Bankers Trust
Company, the indirect parent corporation of Golden American. Bankers Trust
Company is a New York banking corporation with executive offices at 130
Liberty Street, New York, New York 10006. As of December 31, 1995, Bankers
Trust New York Corporation, parent of Bankers Trust Company, was the seventh
largest bank holding company in the United States with total assets of
approximately $104 billion. Bankers Trust Company conducts a variety of
general banking and trust activities and is a leading wholesale supplier of
financial services to the domestic and international markets.
DSI is a registered investment adviser and broker-dealer and is a member of
the National Association of Securities Dealers, Inc. In addition to providing
the services described previously as Manager to Account D, DSI acts as Manager
to The GCG Trust, and serves as the distributor of its shares without
remuneration. DSI also serves as distributor of the Contracts and other
variable insurance contracts issued by Golden American, and may receive
distribution fees in connection with distribution of the Contracts.
See Exhibit B for a list of the directors and the principal executive
officer of DSI.
THE BOARD OF GOVERNORS' RECOMMENDATION
In approving the New Management Agreement, and in deciding to recommend that
Contractowners approve the New Management Agreement, the Board of Governors,
including the members who are not interested persons of Account D or DSI,
considered several factors, including: (1) the fairness and reasonableness of
the compensation to be paid by Account D to DSI under the New Management
Agreement, taking into account the expanded array of services to be provided
or procured by DSI; (2) the reasonableness of the overall level of expenses
under the New Management Agreement when compared against The Managed Global
Account's historic expense levels before reduction by the expense limitation,
under which a portion of The Managed Global
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Account's expenses had been reimbursed by the Manger since 1993; (3) the
reasonableness of the expenses under the New Management Agreement in light of
the expenses associated with The Managed Global Account's investment policies
of investing globally in equity securities; (4) the Board of Governors' and
the Manager's positive experience managing other investment companies with fee
structures similar to the proposed fee structure, as well as the Board's and
Manager's familiarity with operating an investment company with the proposed
expense structure; and (5) the desirability of maintaining the current
management relationship with DSI in light of the nature and quality of the
services previously rendered by the Manager under the Current Management
Agreement and the Board's expectation of the quality of services that will be
rendered in the future.
ACCORDINGLY, THE BOARD OF GOVERNORS (INCLUDING THE MEMBERS OF THE BOARD OF
GOVERNORS WHO ARE NOT PARTIES TO OR INTERESTED PERSONS OF ANY PARTY TO THE NEW
MANAGEMENT AGREEMENT) RECOMMENDS THE APPROVAL OF THE NEW MANAGEMENT AGREEMENT.
If Contractowners do not approve Proposal I, the current management and
portfolio management arrangements for The Managed Global Account will remain
intact. If Contractowners approve Proposal I but not Proposal II, Account D's
Board of Governors will consider what future action to take. Such action may
include entering into new portfolio management arrangements, subject to
approval by Contractowners, or the possible resubmission of the Proposal to
the Contractowners for consideration at a later date.
PROPOSAL II
APPROVAL OF AMENDED PORTFOLIO MANAGEMENT
AGREEMENT WITH WARBURG, PINCUS
In connection with its approval of the New Management Agreement, the Board
of Governors of Account D, at a meeting held on June 10, 1996, approved an
amendment to Warburg, Pincus' portfolio management agreement dated June 9,
1994 (the "Portfolio Management Agreement") with DSI and Account D. It is
proposed that Warburg, Pincus furnish portfolio management services to The
Managed Global Account pursuant to an amended Portfolio Management Agreement
(the "Amended Portfolio Management Agreement") with Account D and DSI, the
terms of which are identical to those of the Portfolio Management Agreement
with DSI and Account D, except for the source of payment (DSI rather than
Account D) and other changes necessary to conform to the provisions of the New
Management Agreement. Contractowners are being asked to approve the Amended
Portfolio Management Agreement for The Managed Global Account, to take effect
immediately following the effective date of the New Management Agreement.
Approval of the Amended Portfolio Management Agreement is contingent upon
approval of the New Management Agreement. The Amended Portfolio Management
Agreement is attached hereto as Exhibit C.
THE PORTFOLIO MANAGEMENT AGREEMENT
The Portfolio Management Agreement was approved by Account D's Board of
Governors on June 9, 1994, and by Contractowners at a meeting held on
September 15, 1994 pursuant to the requirements of Section 15(a) of the 1940
Act, which requires Contractowner approval of each investment advisory
contract. The Portfolio Management Agreement provides that it will continue in
effect until June 9, 1997, and from year to year thereafter, provided such
continuance is approved annually by (i) holders of a majority of the
outstanding voting securities of The Managed Global Account or by a majority
of the Board of Governors, and (ii) majority of the members of the Board of
Governors who are not parties to the Portfolio Management Agreement or
interested persons of any such party.
Subject to the supervision of the Board of Governors and DSI, Warburg,
Pincus manages the day-to-day operations and investment and reinvestment of
The Managed Global Account's assets, including the purchase,
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retention and disposition of the investments, securities and cash, in
accordance with The Managed Global Account's investment objective and
policies. For its services as Portfolio Manager, Warburg, Pincus receives a
monthly fee equal to an annual rate of 0.60% of the first $500 million of The
Managed Global Account's average daily net assets, and 0.50% of the amount
over $500 million. During Account D's fiscal year ended December 31, 1995,
Account D paid Warburg, Pincus fees equal to $440,770 for services provided by
Warburg, Pincus as Portfolio Manager of The Managed Global Account.
Under the Portfolio Management Agreement, Warburg, Pincus will not be
subject to liability for, or subject to any damages, expenses, or losses in
connection with, any act or omission arising from its services thereunder,
except by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties thereunder. The Portfolio Management Agreement will
terminate if it is assigned, and it may be terminated without penalty by DSI
or Warburg, Pincus at any time upon 60 days' written notice to the other
parties to the agreement. Upon the vote of a majority of the Board of
Governors or a majority of the outstanding voting securities of The Managed
Global Account, Account D may terminate the Portfolio Management Agreement
without penalty at any time upon 60 days' written notice to the other parties
to the agreement.
THE AMENDED PORTFOLIO MANAGEMENT AGREEMENT
As noted previously, the terms of the Amended Portfolio Management Agreement
are identical to the terms of the Portfolio Management Agreement, except for
the source of payment and certain conforming changes. For the services of
Warburg, Pincus as Portfolio Manager under the Amended Portfolio Management
Agreement, DSI (and not Account D) will pay Warburg, Pincus a monthly fee
equal to an annual rate of 0.60% of the first $500 million of The Managed
Global Account's average daily net assets, and 0.50% of the amount over $500
million.
THE PORTFOLIO MANAGER
Warburg, Pincus is a Delaware corporation whose principal place of business
is 466 Lexington Avenue, New York, New York 10017. Warburg, Pincus is a
professional investment counseling firm which provides investment services to
investment companies, employee benefit plans, endowment funds, foundations and
other institutions and individuals. As of April 30, 1996, Warburg, Pincus
managed approximately $15.2 billion of assets, including approximately $8.5
billion of investment company assets. Incorporated in 1970, Warburg, Pincus is
a wholly owned subsidiary of Warburg, Pincus Counsellors G.P., a New York
general partnership. E.M. Warburg, Pincus & Co., Inc. controls Warburg, Pincus
through its ownership of a class of voting preferred stock of Warburg, Pincus.
Warburg, Pincus Counsellors G.P. has no business other than being a holding
company of Warburg, Pincus and its subsidiaries.
See Exhibit D for a list of the directors and the principal executive
officer of Warburg, Pincus and a table setting forth the other investment
companies, or series thereof, with similar investment objectives to those of
The Managed Global Account for which Warburg, Pincus serves as investment
adviser, including the fees payable to such investment companies or series and
their approximate net assets.
THE BOARD OF GOVERNORS' RECOMMENDATION
In approving the Amended Portfolio Management Agreement, and in deciding to
recommend that Contractowners approve the Amended Portfolio Management
Agreement, the Board of Governors, including the members who are not
interested persons of Account D, DSI or Warburg, Pincus, considered several
factors, including: (1) the maintenance of the portfolio management fee paid
by DSI, and Account D indirectly, under the Amended Portfolio Management
Agreement at current levels; (2) the fairness and reasonableness of the
compensation to be paid by DSI to Warburg, Pincus under the Amended Portfolio
Management Agreement, taking into account the services to be provided by the
Portfolio Manager and The Managed Global Account's global investment policies;
and (3) the desirability of maintaining the current portfolio management
relationship with Warburg, Pincus in light of the nature and quality of the
services previously rendered by the Portfolio
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Manager under the Portfolio Management Agreement, and the Board's expectation
of the quality of services that will be rendered in the future, as well as the
existing working relationship between DSI and Warburg, Pincus.
ACCORDINGLY, THE BOARD OF GOVERNORS (INCLUDING THE MEMBERS OF THE BOARD OF
GOVERNORS WHO ARE NOT PARTIES TO OR INTERESTED PERSONS OF ANY PARTY TO THE
AMENDED PORTFOLIO MANAGEMENT AGREEMENT) RECOMMENDS THE APPROVAL OF THE AMENDED
PORTFOLIO MANAGEMENT AGREEMENT.
PROPOSAL III
APPROVAL OF MANAGEMENT AGREEMENT WITH DSI TO BECOME
EFFECTIVE FOLLOWING THE ACQUISITION OF DSI'S CORPORATE PARENT
BACKGROUND
Under the terms of a stock purchase agreement dated May 3, 1996 between
Equitable of Iowa Companies ("Equitable of Iowa") and Whitewood Properties
Corp. ("Whitewood"), Equitable of Iowa has agreed, subject to certain
conditions and regulatory approvals, that it or an affiliate will acquire 100%
ownership of BT Variable, Inc., a wholly owned subsidiary of Whitewood (the
"Acquisition"). BT Variable, Inc. is the corporate parent of Golden American
and DSI. The total purchase price is $144 million in cash, which includes
repayment of $51 million of debt owed by BT Variable, Inc. to Bankers Trust
Company. No specific proportion of this consideration has been apportioned to
the value of DSI. The date on which the Acquisition will be completed (the
"Closing Date") currently is anticipated to be August 30, 1996.
The proposed Acquisition will result in a change of control of DSI, which
may have the effect of terminating the management and portfolio management
agreements with Account D that are in effect at the time of the Acquisition.
However, DSI has represented that no material changes in its management and
administration are contemplated following the Acquisition. After the Closing
Date of the Acquisition, DSI will continue to operate from its offices at 1001
Jefferson Street, Suite 400, Wilmington, Delaware 19801, with the same
personnel functioning in the same capacities as before the Acquisition. It is
anticipated that the same persons who presently are responsible for the
management of DSI will continue to direct DSI's management following
consummation of the Acquisition.
Section 15(f) of the 1940 Act provides that when a change in control of an
investment adviser of a registered investment company occurs, the investment
adviser or any of its affiliated persons may receive any amount or benefit in
connection therewith as long as two conditions are satisfied. First, no
"unfair burden" may be imposed on the investment company as a result of the
transaction relating to the change of control, or any express or implied
terms, conditions or understandings applicable thereto.
The term "unfair burden," as defined in the 1940 Act, includes any
arrangement during the two-year period after the change in control whereby the
investment adviser (or predecessor or successor adviser), or any interested
person of any such adviser, receives or is entitled to receive any
compensation, directly or indirectly, from the investment company or its
security holders (other than fees for bona fide investment advisory or other
services) or from any person in connection with the purchase or sale of
securities or any other property to, from, or on behalf of the investment
company (other than fees for bona fide principal underwriting services). Based
upon representations from DSI, the Board of Governors believes that no such
compensation arrangements are contemplated in the Acquisition or any other
transactions described in this Proxy Statement. Moreover, Equitable of Iowa
has agreed that subsequent to consummation of the Acquisition, it would
conduct its business, subject to applicable fiduciary duties, to ensure that
no "unfair burden" would be imposed on Account D by or as a result of the
Acquisition.
The second condition is that, during the three-year period immediately
following the Closing Date, at least 75% of the investment company's board
must not be "interested persons" of the investment adviser or
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predecessor investment adviser within the meaning of the 1940 Act. The Board
of Governors presently consists of five members, two of whom are "interested
persons" of DSI. To facilitate compliance with this second condition, one
"interested" member of the Board, John L. Murphy, has submitted his
resignation from the Board, effective upon the consummation of the
Acquisition. It is currently intended that thereafter, the Board of Governors
will consist of four members, three of whom will not be "interested persons"
of DSI or Account D. If the Acquisition is not consummated, Mr. Murphy's
resignation will not become effective, and the Board of Governors will
continue to consist of five members.
There are a number of conditions precedent to the closing of the proposed
Acquisition. Such conditions include, among other things, that all regulatory
filings, applications and notifications will have been duly and properly made
or obtained. If the conditions for the Acquisition are not met and the
Acquisition is not completed, Account D's management and portfolio management
agreements in effect at that time will remain intact, at least until
completion of the Reorganization (if approved).
INFORMATION ABOUT EQUITABLE OF IOWA
Equitable of Iowa, 604 Locust Street, Des Moines, Iowa 50319, is a
corporation organized under the laws of Iowa with assets of $10 billion as of
March 31, 1996. Equitable of Iowa is the holding company for Equitable Life
Insurance Company of Iowa ("Equitable Life"), USG Annuity & Life Company
("USG"), Locust Street Securities, Inc., and Equitable Investment Services,
Inc. Equitable Life is an Iowa domiciled life insurance company, and USG is an
Oklahoma domiciled life insurance company. Equitable Life and USG offer
individual annuity and life insurance products in 49 states and the District
of Columbia.
POST-ACQUISITION MANAGEMENT AGREEMENT
As noted previously, the transactions contemplated by the Acquisition may
terminate Account D's management agreement with DSI that is effective at the
time the Acquisition is completed. It is proposed that DSI continue to furnish
management services to The Managed Global Account following the Acquisition
pursuant to a management agreement whose terms are identical to the terms of
the New Management Agreement between Account D and DSI. Approval of Proposal
III will authorize Account D to enter into a post-Acquisition management
agreement with DSI on terms identical to those of the New Management
Agreement. The New Management Agreement is attached as Exhibit A, and its
terms are described previously under the captions "The New Management
Agreement" and "Effect on Expenses of Account D" in Proposal I.
THE BOARD OF GOVERNORS' RECOMMENDATION
In recommending that Contractowners approve a post-Acquisition management
agreement that is substantially identical to the New Management Agreement, the
Board of Governors, including the members who are not interested persons of
Account D or DSI, considered several factors, including: (1) the fairness and
reasonableness of the compensation to be paid under the post-Acquisition
management agreement in relation to the services to be provided thereunder by
DSI; (2) the nature and quality of management services previously rendered and
expected to be provided by DSI; (3) DSI's background, experience, performance,
and reputation within the securities industry; and (4) the desirability of
maintaining a consistent management program (assuming the approval of Proposal
I) for The Managed Global Account following the Acquisition.
ACCORDINGLY, THE BOARD OF GOVERNORS (INCLUDING THE MEMBERS OF THE BOARD OF
GOVERNORS WHO ARE NOT PARTIES TO OR INTERESTED PERSONS OF ANY PARTY TO THE
AGREEMENT) RECOMMENDS THE APPROVAL OF A MANAGEMENT AGREEMENT WITH DSI, IN THE
SAME FORM AS THE AGREEMENT DESCRIBED IN PROPOSAL I, TO BECOME EFFECTIVE
FOLLOWING THE ACQUISITION OF THE CORPORATE PARENT OF DSI.
If Contractowners do not approve Proposal III (and, therefore, Proposal IV),
or if they approve Proposal III but not Proposal IV, the Board of Governors
may enter into new management and/or portfolio management
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arrangements following the Acquisition, subject to approval by Contractowners,
or resubmit the Proposal(s) to the Contractowners for consideration at a later
date. If Contractowners do not approve Proposal III, Equitable of Iowa and
Whitewood each have reserved the right to determine whether to consummate the
Acquisition.
PROPOSAL IV
APPROVAL OF PORTFOLIO MANAGEMENT AGREEMENT
WITH WARBURG, PINCUS TO BECOME EFFECTIVE FOLLOWING
THE ACQUISITION OF DSI'S CORPORATE PARENT
Warburg, Pincus' portfolio management agreement with DSI and Account D may
terminate upon completion of the Acquisition. It is proposed that Warburg,
Pincus continue to furnish portfolio management services to The Managed Global
Account following the Acquisition pursuant to a portfolio management agreement
whose terms are identical to the terms of the Amended Portfolio Management
Agreement with Account D and DSI. Approval of Proposal IV will authorize
Account D to enter into a post-Acquisition portfolio management agreement with
DSI and Warburg, Pincus on terms identical to those of the Amended Portfolio
Management Agreement. The Amended Portfolio Management Agreement is attached
as Exhibit C, and its terms are described previously in Proposal II. Approval
of Proposal IV is contingent on approval of Proposal III.
THE BOARD OF GOVERNORS' RECOMMENDATION
In recommending that Contractowners approve a post-Acquisition portfolio
management agreement that is substantially identical to the Amended Portfolio
Management Agreement, the Board of Governors, including the members who are
not interested persons of Account D, DSI or Warburg, Pincus, considered
several factors, including: (1) the fairness and reasonableness of the
compensation to be paid under the post-Acquisition portfolio management
agreement in relation to the services to be provided thereunder by Warburg,
Pincus; (2) the nature and quality of portfolio management services previously
rendered and expected to be provided by Warburg, Pincus; (3) Warburg, Pincus'
background, experience, performance, and reputation within the securities
industry; (4) the existing working relationship among DSI and Warburg, Pincus;
and (5) the desirability of maintaining a consistent portfolio management
program (assuming approval of Proposal II) for The Managed Global Account
following the Acquisition.
ACCORDINGLY, THE BOARD OF GOVERNORS (INCLUDING THE MEMBERS OF THE BOARD OF
GOVERNORS WHO ARE NOT PARTIES TO OR INTERESTED PERSONS OF ANY PARTY TO THE
AGREEMENT) RECOMMENDS THE APPROVAL OF A PORTFOLIO MANAGEMENT AGREEMENT WITH
WARBURG, PINCUS, IN THE SAME FORM AS THE AGREEMENT DESCRIBED IN PROPOSAL II,
TO BECOME EFFECTIVE FOLLOWING THE ACQUISITION OF THE CORPORATE PARENT OF DSI.
PROPOSAL V
REORGANIZATION OF SEPARATE ACCOUNT D
Contractowners are being asked to approve the Agreement and Plan of
Reorganization (the "Plan") described below, which is attached to the Proxy
Statement as Exhibit E.
DESCRIPTION OF THE PARTIES
Account D is a separate account of Golden American that is registered with
the Securities and Exchange Commission (the "SEC") as an open-end management
investment company. Account D currently contains only one Division--The
Managed Global Account. As part of an open-end management investment company,
The
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Managed Global Account invests directly in portfolio securities and engages an
investment adviser and portfolio manager to manage its assets. The investment
objective of The Managed Global Account is high total investment return,
consistent with a prudent regard for capital preservation. The Managed Global
Account seeks to achieve this objective by employing an asset allocation
strategy involving shifts among a wide range of investments and market sectors
throughout the world.
Under the Plan, The Managed Global Account would become a Division of
Separate Account B ("Account B") of Golden American. Account B is a separate
account of Golden American that serves as a funding medium for variable
annuity contracts issued by Golden American. It is registered as a unit
investment trust with the SEC. A unit investment trust is different from an
open-end management investment company, in that it does not conduct ongoing
management of its assets, and invests only in specified securities. Account B
presently comprises fifteen investment divisions, all of which invest in
separate investment series of a separate mutual fund--The GCG Trust (the
"Trust"). The Trust is registered as an open-end management investment company
with the SEC. Each series has a distinct investment objective and investment
policies. The Trust sells shares of certain of its series to Account B and to
other separate accounts of Golden American and other insurance companies to
serve as the investment medium for variable life insurance policies and
variable annuity contracts. The address of both Account B and the Trust is
1001 Jefferson Street, Suite 400, Wilmington, DE 19801.
DESCRIPTION OF THE REORGANIZATION
Subject to the terms and conditions of the Plan, Golden American, on behalf
of Account D, intends to sell, assign, and transfer all of Account D's cash,
securities, and other investments held or in transit, receivables for sold
investments, and dividends and interest receivables (collectively, the
"Assets") to Account B. The Assets will be held as the property of a newly
created division of Account B (the "Division"). Simultaneously with the
previous transaction, Account B will exchange the Assets for shares of the
Managed Global Series (the "Series"), a newly created series of the Trust.
Contractowners will continue to have the same Contract unit values and numbers
of units in the Division as they had in The Managed Global Account prior to
the Reorganization.
Golden American will have the shares it receives from the Series recorded
and held on its records as assets of the newly created Division, so that
Contractowners' interests in the Division will then be equivalent to their
former interests in The Managed Global Account. Golden American will take all
actions necessary to ensure that these interests in the Division, as of the
closing date of the Reorganization, are properly recorded on Contractowners'
individual account records.
After the Reorganization, the Series will be available as an investment
option to Contractowners, in addition to the currently existing series of the
Trust, and may be offered to the owners of other annuities or life insurance
policies which are supported by the Trust, which is a larger group of variable
contracts than the Contracts supported by Account D. Golden American will
allocate Contractowners' contributions under the Contracts to the Division and
to the other divisions of Account B in accordance with Contractowners'
instructions. Golden American will invest assets so allocated to the Division
in shares of the Series. The value of the benefits derived from the allocation
of a Contractowner's contributions to the Division will vary depending upon
the investment experience of the Series.
GENERAL EFFECTS AND PURPOSES OF THE REORGANIZATION
The Reorganization has been authorized by the Board of Directors of Golden
American on June 15, 1995, by the Board of Governors of Account D on June 26,
1995, and by the Board of Trustees of the Trust on December 20, 1994 based on
each Board's determination that the Reorganization is in the best interests of
each party to the Plan, and of the Contractowners. As discussed in greater
detail below, this determination is based, in part, on the assumption that
Contractowners will benefit from having interests that currently are in
Account D
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invested in what has the potential to be a single larger, more viable
investment vehicle (i.e., the Trust and the Series), rather than continuing to
be managed as a separate, smaller portfolio of assets allocated to Account D.
Account D currently funds only variable annuity contracts offered by Golden
American. After the Reorganization, the Division and Series also will be
available to serve as a funding medium for variable life insurance policies
issued by Golden American, and could be offered to fund insurance contracts
issued by other insurers.
It is anticipated that the proposed Reorganization will benefit
Contractowners by providing, among other benefits: (1) a simpler structure to
serve as the investment vehicle for the Contracts so that all investment
aspects associated with the Contracts will take place in one entity--the
Trust--and Owners can look to the prospectus and annual and semi-annual
reports of the Trust for pertinent financial and other information, rather
than to separate prospectuses and reports for both the Trust and Account D,
and (2) the opportunity for the Series to offer its shares as an investment
vehicle for a broader array of variable contracts, which could increase assets
and may offer increased opportunities for investment and diversification of
assets. These potential benefits are created at no cost to any Contractowner,
as Golden American and DSI have undertaken to assume all expenses relating to
the Reorganization.
In practical economic terms, the interests of Contractowners following the
Reorganization will not differ in any measurable way from their interests
before the Reorganization. The overall level of fees and charges borne by
Contractowners with an interest in Account D will be no greater immediately
after the Reorganization than immediately before it. It is anticipated that
the same Warburg, Pincus personnel will provide portfolio management services
to the Series after the Reorganization, and the value of Contractowners'
interests will not be changed by the Reorganization. The Reorganization is not
expected to have any direct or indirect adverse tax consequences for
Contractowners or result in a charge for federal income taxes. See "Tax
Consequences of the Reorganization."
EFFECTS ON INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objective, policies, and restrictions of The Managed Global
Account prior to the Reorganization will be identical to the investment
objective, policies, and restrictions of the Series.
EFFECTS OF THE REORGANIZATION ON VOTING RIGHTS
It is anticipated that the Reorganization will have no material effect on
Contractowner voting rights. Contractowners with value allocated to Account D
currently have certain voting rights, including the right to vote at meetings
to elect members of the Board of Governors, as held, to approve or disapprove
of investment management and portfolio management agreements, to ratify the
selection of independent auditors, and to vote on other matters as required by
the 1940 Act. The Amended Rules and Regulations of Account D do not require
annual election of the Board of Governors. Contractowners with value allocated
to Account B have similar voting rights regarding matters affecting the Trust
and its series. Because the Trust is organized as a business trust under
Massachusetts law, it is not required to elect trustees annually.
Under Contracts having value allocated to Account B and the Trust, the
number of votes attributable to a Contractowner in each division of Account B
is determined by dividing the Contract's accumulation value in that division
by the net asset value of one share of the series in which the division
invests. Fractional votes also are counted. Contractowners having value
allocated to The Managed Global Account are entitled to one vote for every
$1.00 of accumulation value in The Managed Global Account, with fractional
interests counted.
Following the Reorganization, for so long as required by the SEC,
Contractowners will have the opportunity to instruct Golden American with
respect to the voting interest in Trust shares attributable to their
respective interests under the Contracts on matters as to which they currently
have voting rights. A Contractowner will have the right to instruct Golden
American on the same basis as is currently used for Contractowners having
value
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allocated to Account B and the Trust. Golden American will exercise the voting
rights of each series of the Trust held by Account B and attributable to the
Contracts in accordance with instructions timely received from Contractowners.
Voting interests of the Trust held by Account B which are not attributable to
Contractowners or for which instructions have not been received will be voted
in proportion to the instructions timely received from Contractowners.
Following the Reorganization, voting rights exercised by the Contractowners
currently having value allocated to Account D will consist of the right to
instruct Golden American on the exercise of voting interests in the Trust,
rather than to vote directly on matters submitted to Contractowners by Account
D. It is not anticipated that these differences, as a practical matter, will
diminish Contractowners' existing voting rights.
EFFECT OF THE REORGANIZATION ON MANAGEMENT, SERVICES AND EXPENSES
Following the consummation of the Reorganization, Account D will cease
operations, and values under the Contracts subsequently will be determined by
the investment performance of the Series. In this connection, the investment
objective, policies, and restrictions of the Series will be the same as The
Managed Global Account prior to the Reorganization.
As a series of the Trust, the Series will be governed under the Trust's
Amended and Restated Agreement and Declaration of Trust in the same manner as
the other series of the Trust. Ultimate management responsibility for the
Series is vested in the Trust's Board of Trustees, which currently consists of
the same persons who serve on Account D's Board of Governors. It is presently
anticipated that four of the five persons currently serving as members of
Account D's Board of Governors and the Trust's Board of Trustees will continue
to serve on the Trust's Board of Trustees following the Reorganization.
Additionally, the officers charged with the management of the Trust and
Account D are presently identical.
Bankers Trust Company currently serves as custodian of the portfolio assets
of The Managed Global Account. It furnishes similar custodial services to the
Trust. Ernst & Young LLP provides auditing services to the Accounts, as well
as to the Trust. DSI serves as the distributor of the Contracts and the shares
of the Trust. These service relationships are not expected to change as a
result of the Reorganization.
As discussed previously, and subject to Contractowner approval of Proposals
I through IV, it is anticipated that Account D's management personnel and all
of its current service relationships will remain in place following the
Reorganization. In addition, DSI will serve as distributor of the Series'
shares at no expense to Contractowners.
The Reorganization will have no effect on the expenses borne by
Contractowners. If Contractowners approve the management agreements discussed
in Proposals I and III, fees paid to DSI as Manager of the Series will be
identical to those paid by Account D to DSI as Manager of The Managed Global
Account under the management agreement in effect at the time of the
Reorganization. All other expenses and charges associated with Contracts
currently funded through Account D are expected to be the same immediately
after the Reorganization. Moreover, DSI will review expenses after the
Reorganization to ensure that Contractowners do not bear increased expenses as
a direct result of the Reorganization.
EFFECT OF THE TRANSFER OF ASSETS
It is not anticipated that the Reorganization will require liquidation of
any Assets of Account D. The only sales of Assets of Account D will be those
arising in the ordinary course of business. Therefore, neither of the Accounts
nor the Trust will incur any extraordinary costs, such as brokerage
commissions, in effecting the transfer of Assets.
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TAX CONSEQUENCES OF THE REORGANIZATION
If Contractowners approve the Reorganization, the exchanges necessary to
effect the Reorganization will occur simultaneously and be coordinated with
one another. Golden American and the Trust believe that Contractowners will
recognize no gain or loss on the transfer of the Assets of Account D to the
Trust, and Contractowners will pay no tax as a result of the transfer.
It is intended that the Series will qualify as a regulated investment
company. To so qualify, the Series must meet certain diversification and other
requirements under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). If it so qualifies, the Series will not be subject to
federal income tax or excise tax on any net income or any capital gains to the
extent they are distributed to shareholders. As a result, the allocation of
premiums under the Contracts to Account B for investment in shares of the
Series, rather than to The Managed Global Account for direct investment in
securities to be held by The Managed Global Account, will not result in any
increased federal income taxes being borne by Account B or by Contractowners.
Account D is not subject to Subchapter M of the Code, so the Series will be
subject to requirements not currently applicable to Account D. However, all of
the series of the Trust are subject to Subchapter M, and the possibility that
the Series may incur taxes by reason of a failure to meet the requirements of
Subchapter M is considered remote.
EXEMPTIVE APPLICATION
In connection with the Reorganization, Account D, Account B, Golden
American, DSI and the Trust (together, the "Applicants") have filed an
application for exemption (the "Application") from certain provisions of the
1940 Act with the SEC. In the Application, the Applicants request an order of
the SEC, to the extent necessary, to permit the Applicants to undertake the
transactions necessary to effect the Reorganization.
It is anticipated that the Reorganization will be completed on or before
September 9, 1996. However, receipt of the order is a necessary precondition
to the Reorganization, and the Reorganization will not be completed until the
order has been issued. There can be no assurance that the SEC will issue the
requested order, but the Applicants believe that, on the basis of prior SEC
orders granted under similar circumstances, there is reason to believe that
the order will be granted.
FIRST MEETING OF SHAREHOLDERS OF THE SERIES
Prior to the closing date of the Reorganization, the first meeting of
shareholders of the Series will be held to consider and vote upon the matters
described below. At that point, Golden American, as depositor of Account B,
will be the only shareholder of the Series and, if Contractowners vote to
approve the Reorganization, will vote to approve the following:
(1) A management agreement on behalf of the Series; and
(2) A portfolio management agreement on behalf of the Series.
These agreements will be identical to the management agreement and the
portfolio management agreement in effect at the time of the Reorganization,
except for the effective dates and other nonmaterial matters. Thus, by
approving the Reorganization, Contractowners also will automatically approve
agreements that put into place the same management and advisory arrangements
for the Series as will be in place for The Managed Global Account at the time
of the Reorganization. In voting to approve the Reorganization, Contractowners
also will be deemed to give authorization to Golden American, as the sole
initial shareholder of the Series, to consider such other matters and to take
such other actions that properly are submitted to shareholders of the Series.
THE BOARD OF GOVERNORS' RECOMMENDATION
In approving the Plan and determining that the proposed Reorganization is in
the best interests of Contractowners, the Board of Governors noted the
following benefits expected to be derived from the
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Reorganization: (1) a simpler structure to serve as the investment vehicle for
the Contracts so that all investment aspects associated with the Contracts
will take place in one entity--the Trust--and Owners can look to the
prospectus and annual and semi-annual reports of the Trust for pertinent
financial and other information, rather than to separate prospectuses and
reports for both the Trust and Account D, and (2) the opportunity for the
Series to offer its shares as an investment vehicle for a broader array of
variable contracts, which could increase assets and may offer increased
opportunities for investment and diversification of assets.
ACCORDINGLY, THE BOARD OF GOVERNORS (INCLUDING THE MEMBERS OF THE BOARD OF
GOVERNORS WHO ARE NOT INTERESTED PERSONS OF ANY PARTY TO THE PLAN) RECOMMENDS
THE APPROVAL OF THE PLAN AND THE REORGANIZATION OF ACCOUNT D AS A DIVISION OF
ACCOUNT B.
OTHER BUSINESS
The Board of Governors knows of no other business to be brought before the
Meeting. However, if any other matters properly come before the Meeting,
proxies will be voted in accordance with the judgment of the proxy holders.
ADDITIONAL INFORMATION CONCERNING GOLDEN AMERICAN
Golden American, 1001 Jefferson Street, Suite 400, Wilmington, Delaware
19801, is a stock life insurance company organized under the laws of the State
of Delaware. It is authorized to do business in the District of Columbia and
all states except New York. Golden American is the depositor of Account B and
the sponsoring insurance company for Account D. As of December 31, 1995,
Golden American had total assets of approximately $1,197,688,000.
ACCOUNT B AND ACCOUNT D
Account B was established on July 14, 1988, and may invest in mutual funds,
unit investment trusts, or other suitable investment portfolios. Account D was
established on April 18, 1990 and invests directly in securities in accordance
with its investment objective and policies. As a separate account under
Delaware insurance law, the portion of each Account's assets equal to the
reserves and other liabilities relating to the Contracts shall not be
chargeable with liabilities arising out of any other business Golden American
may conduct. Accordingly, income, gains or losses, whether or not realized,
from assets of an Account are credited to or charged against the Account
without regard to Golden American's other income, gains or losses. Although
legally the assets of an Account are Golden American's property, each
Contractowner has a claim against an Account equal to the amount accumulated
in an Account attributable to such Contractowner's Contract. As the issuer of
the Contracts, the obligations set forth therein (other than those of
Contractowners) are obligations of Golden American. Golden American may retain
in Account B assets that are in excess of the reserves and other liabilities
relating to the Contracts or certain other contracts, or may transfer the
assets to its General Account.
Account B will be used as a funding vehicle for the Contracts and for other
variable policies or contracts issued by Golden American in the future. If the
Reorganization is approved by Contractowners, the Contracts will be amended or
endorsed to the extent necessary to give effect to the Reorganization and to
effect all other related changes described herein as appropriate. In all other
respects, the Contracts will remain unchanged.
RIGHT TO INSTRUCT VOTING OF TRUST SHARES
In accordance with its view of present applicable law, Golden American will
vote the shares or other voting interests in each series of the Trust held by
Account B at regular and special meetings of the shareholders of the Trust
based on instructions received from persons having the voting interest in
corresponding divisions of Account B. However, if the 1940 Act or any rules
thereunder should be amended, or if the present interpretation
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<PAGE>
thereof should change, and as a result Golden American determines that it is
permitted to vote the shares or other voting interests in the Trust in its own
right, it may elect to do so.
DISREGARD OF VOTING INSTRUCTIONS
Notwithstanding contrary Contractowner voting instructions, Golden American
may vote Trust shares in any manner necessary to enable the Trust to (1) make
or refrain from making any change in the investments or investment policies
for any series of the Trust, if required by any insurance regulatory
authority; (2) refrain from making any change in the investment policies or
any investment manager, portfolio manager, or principal underwriter of any
series which may be initiated by Contractowners or the Trust's Board of
Trustees, provided Golden American's disapproval of the change is reasonable
and, in the case of a change in investment policies or investment manager or
portfolio manager based on a good faith determination that such change would
be contrary to state law or otherwise inappropriate in light of the series'
investment objective and policies; or (3) enter into or refrain from entering
into any investment management agreement, portfolio management agreement, or
underwriting contract, if required by any insurance regulatory authority.
In the event that Golden American does disregard voting instructions, a
summary of the action and the reasons for such action will be included in the
next Semi-Annual Report to Contractowners.
MISCELLANEOUS
There is no Contractowner who owns a Contract that entitles the
Contractowner to give voting instructions with respect to 5% or more of the
voting interests of The Managed Global Account.
REPORTS TO CONTRACTOWNERS
Account D will furnish, without charge, a copy of its Annual Report dated
December 31, 1995 to any Contractowner upon request. Requests for such reports
should be directed to Golden American Life Insurance Company, Customer Service
Center, at 1-800-366-0066.
PROPOSALS FOR FUTURE CONTRACTOWNER MEETINGS
For so long as it remains registered as an investment company, Account D
does not intend to hold annual Contractowner meetings, but meetings may be
called by the Board of Governors from time to time. Proposals of
Contractowners that are intended to be presented at a future Contractowner
meeting must be received by Account D by a reasonable time prior to Account
D's solicitation of proxies relating to such meeting.
THE BOARD OF GOVERNORS OF ACCOUNT D URGES YOU PROMPTLY TO DATE, MARK YOUR
PREFERENCE ON, SIGN AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
By Order of the Board of Governors,
/s/ Myles Tashman
Myles R. Tashman
Secretary
July 1, 1996
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT NAME
------- ------------
<C> <S>
A Form of New Management Agreement
B Other Information Regarding Directed Services, Inc.
C Form of Amended Portfolio Management Agreement
D Other Information Regarding Warburg, Pincus Counsellors, Inc.
E Form of Agreement and Plan of Reorganization
</TABLE>
<PAGE>
EXHIBIT A
FORM OF NEW
MANAGEMENT AGREEMENT
Agreement made this day of , 1996 among Golden American Life Insurance
Company ("Golden American") Separate Account D and Directed Services, Inc.
("Manager"), a New York corporation (the "Agreement").
WHEREAS, Golden American has established a separate account designated
"Separate Account D" to segregate assets funding the variable benefits
provided by group and individual variable annuity contracts ("Contracts")
offered by Golden American; and
WHEREAS, the investment management-related aspects of Separate Account D are
governed by a group designated as the Board of Governors of Separate Account D
("Board of Governors"); and
WHEREAS, premiums paid to purchase a Contract are allocated to Separate
Account D, which invests directly in securities and other assets; and
WHEREAS, Separate Account D is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, Separate Account D desires to avail itself of the services of the
Manager for the provision of advice with respect to the selection and
monitoring of the portfolio manager for Separate Account D and for the
provision of management, administrative, and other services for Separate
Account D; and
WHEREAS, the Manager is willing to render such services to Separate Account
D.
NOW THEREFORE, in consideration of the premises, the promises and mutual
covenants herein contained, it is agreed between the parties as follows:
1. Appointment. Separate Account D hereby appoints the Manager, subject to
the direction of the Board of Governors, for the period and on the terms set
forth in this Agreement, to provide advisory, management, administrative and
other services, as described herein, with respect to Separate Account D. The
Manager accepts such appointment and agrees to render the services herein set
forth for the compensation herein provided.
2. Services of the Manager. The Manager represents and warrants that it is
registered as an investment adviser under the Investment Advisers Act of 1940
and in all states where required, and will maintain such registration for so
long as required by applicable law. Subject to the general supervision of the
Board of Governors of Separate Account D, the Manager shall provide the
following advisory, management, administrative, and other services with
respect to Separate Account D, or, as applicable, to each division thereof
(individually and collectively "the Separate Account").
(a) Provide general, overall advice and guidance with respect to the
Separate Account and provide advice and guidance to the Separate Account's
Governors, and oversee the management of the investments of the Separate
Account and the composition of the Separate Account's portfolio of
securities and investments, including cash, and the purchase, retention and
disposition thereof, in accordance with the Separate Account's investment
objectives and policies as stated in the Separate Account's current
registration statement, which management shall be provided by others
selected by the Manager and approved by the Board of Governors as provided
below or directly by the Manager as provided in Section 3 of this
Agreement;
(b) Analyze and recommend for consideration by the Board of Governors an
investment advisory firm (however organized) to provide investment advice
to the Separate Account, and, at the expense of the Manager, engage (which
engagement may also be by the Separate Account) such investment advisory
firms
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to render investment advice and manage the investments of the Separate
Account and the composition of the Separate Account's portfolio of
securities and investments, including cash, and the purchase, retention and
disposition thereof, in accordance with the Separate Account's investment
objectives and policies as stated in the Separate Account's current
registration statement (any such firm approved by the Board of Governors
and engaged by the Separate Account and/or the Manager is referred to
herein as a "Portfolio Manager");
(c) Periodically monitor and evaluate the performance of each Portfolio
Manager with respect to the investment objectives and policies of the
Separate Account;
(d) Monitor each Portfolio Manager for compliance with the investment
objective, policies and restrictions of the Separate Account, the 1940 Act,
Section 817(h) of the Internal Revenue Code, and if applicable, regulations
under such provisions, and other applicable law;
(e) If appropriate, analyze and recommend for consideration by the Board
of Governors termination of a contract with a Portfolio Manager under which
the Portfolio Manager provides investment advisory services to the Separate
Account;
(f) Supervise each Portfolio Manager with respect to the services that
such Portfolio Manager provides under a portfolio management agreement
("Portfolio Management Agreement"), although the Manager is not authorized,
except as provided in Section 3 of the Agreement, directly to make
determinations with respect to the investment of the Separate Account's
assets or the purchase or sale of portfolio securities or other investments
for the Separate Account;
(g) Provide all supervisory, management, and administrative services
reasonably necessary for the operation of the Separate Account other than
the investment advisory services performed by each Portfolio Manager,
including but not limited to, (i) coordinating all matters relating to the
operation of the Separate Account, including any necessary coordination
among the Portfolio Manager, custodian, and portfolio accounting agent
(including pricing and valuation of the portfolios), accountants,
attorneys, and other parties performing services or operational functions
for the Separate Account, (ii) providing the Separate Account, at the
Manager's expense, with the services of a sufficient number of persons
competent to perform such administrative and clerical functions as are
necessary to ensure compliance with federal securities laws and to provide
effective supervision and administration of the Separate Account; (iii)
maintaining or supervising the maintenance by third parties selected by the
Manager of such books and records of the Separate Account as may be
required by applicable federal or state law; (iv) preparing or supervising
the preparation by third parties selected by the Manager of all federal,
state, and local tax returns and reports relating to the Separate Account
required by applicable law; (v) preparing and filing and arranging for the
distribution of proxy materials and periodic reports to shareholders of the
Separate Account as required by applicable law; (vi) preparing and
arranging for the filing of registration statements and other documents
with the Securities and Exchange Commission (the "SEC") and other federal
and state regulatory authorities as may be required by applicable law;
(vii) taking such other action with respect to the Separate Account as may
be required by applicable law in connection with the Separate Account
including without limitation the rules and regulations of the SEC and other
regulatory agencies; and (viii) providing the Separate Account, at the
Manager's expense, with adequate personnel, office space, communications
facilities, and other facilities necessary for operation of the Separate
Account as contemplated in this Agreement.
(h) Provide or procure on behalf of the Separate Account, and at the
expense of the Manager, the following services for the Separate Account:
(i) custodian services to provide for the safekeeping of the Separate
Account's assets; (ii) portfolio accounting services to maintain the
portfolio accounting records for the Separate Account; and (iii) other
services necessary for the ordinary operation of the Separate Account. The
Separate Account may, but is not required to, be a party to any agreement
with any third person contracted to provide the services referred to in
this Section 2(h).
(i) Render to the Board of Governors of Separate Account D such periodic
and special reports as the Board of Governors may reasonably request; and
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(j) Make available its officers and employees to the Board of Governors
and officers of Separate Account D for consultation and discussions
regarding the administration and management of the Separate Account and
services provided to the Separate Account under this Agreement.
3. Investment Management Authority. In the event that a Portfolio Management
Agreement pertaining to the Separate Account is terminated or if, at any time,
no Portfolio Manager is engaged to manage the assets of the Separate Account,
the Manager, subject to the supervision of the Board of Governors, will
provide a continuous investment program for the portfolio and determine the
composition of the assets for the portfolio, including determination of the
purchase, retention, or sale of the securities, cash, and other investments
contained in the portfolio. The Manager will provide investment research and
conduct a continuous program of evaluation, investment, sales, and
reinvestment of the assets by determining the securities and other investments
that shall be purchased, entered into, sold, closed, or exchanged for the
Separate Account, when these transactions should be executed, and what portion
of the assets of the Separate Account should be held in the various securities
and other investments in which it may invest, and the Manager is hereby
authorized to execute and perform such services on behalf of the Separate
Account. To the extent permitted by the investment policies of the Separate
Account, the Manager shall make decisions for the Separate Account as to
foreign currency matters and make determinations as to, and execute and
perform, foreign currency exchange contracts on behalf of the Separate
Account. The Manager will provide the services under this Agreement in
accordance with the investment objective, policies, and restrictions as stated
in the Separate Account's Registration Statement filed with the SEC, as
amended. Furthermore:
(a) The Manager will (1) take all steps necessary to manage the Separate
Account so as to ensure compliance by the Separate Account with the
diversification requirements of Section 817(h) of the Internal Revenue Code
and regulations issued thereunder, and (2) use reasonable efforts to manage
the Separate Account so as to ensure compliance by the Separate Account
with any other rules and regulations pertaining to investment vehicles
underlying variable annuity or variable life insurance policies. In
managing the Separate Account in accordance with these requirements, the
Manager shall be entitled to receive and act upon advice of counsel to the
Separate Account or counsel to the Manager.
(b) The Manager will conform with the 1940 Act and all rules and
regulations thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures. adopted by the Board of
Governors, and the provisions of the Registration Statement of the Separate
Account under the Securities Act of 1933 and 1940 Act, as supplemented or
amended.
(c) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of the Separate Account as well as any
other investment advisory clients, the Manager may, to the extent permitted
by applicable laws and regulations, but shall not be obligated to,
aggregate the securities to be so sold or purchased with those of its other
clients where such aggregation is not inconsistent with the policies set
forth in the Registration Statement. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Manager in a manner that is fair and
equitable in the judgment of the Manager in the exercise of its fiduciary
obligations to the Separate Account and to such other clients.
(d) In connection with the purchase and sale of securities of the
Separate Account, the Manager will arrange for the transmission to the
custodian for the Separate Account on a daily basis, of such confirmation,
trade tickets, and other documents and information, including, but not
limited to, CUSIP, Sedol, or other numbers that identify securities to be
purchased or sold on behalf of the Separate Account, as may be reasonably
necessary to enable the custodian to perform its administrative and
recordkeeping responsibilities with respect to the Separate Account. With
respect to portfolio securities to be purchased or sold through the
Depository Trust Company, the Manager will arrange for the automatic
transmission of the confirmation of such trades to the Depository Trust's
custodian.
(e) The Manager will assist the custodian or portfolio accounting agent
for the Separate Account in determining, consistent with the procedures and
policies stated in the Registration Statement for the Separate Account, the
value of any portfolio securities or other assets of the Separate Account
for which the
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custodian or portfolio accounting agent seeks assistance or review from the
Manager. The Manager will monitor on a daily basis the determination by the
custodian or portfolio accounting agent for the Separate Account of the
value of portfolio securities and other assets of the Separate Account and
the determination of net asset value of the Separate Account.
(f) The Manager will make available to the Separate Account, promptly
upon request, all of the Separate Account's investment records and ledgers
as are necessary to assist the Separate Account to comply with requirements
of the 1940 Act and the Investment Advisers Act of 1940, as well as other
applicable laws. The Manager will furnish to regulatory authorities having
the requisite authority any information or reports in connection with such
services which may be requested in order to ascertain whether the
operations of the Separate Account are being conducted in a manner
consistent with applicable laws and regulations.
(g) The Manager will regularly report to the Board of Governors on the
investment program for the Separate Account and the issuers and securities
represented in the Separate Account's portfolio, and will furnish the Board
of Governors with respect to the Separate Account such periodic and special
reports as the Portfolio Manager or the Board of Governors may reasonably
request.
(h) The Manager will not disclose or use any records or information
obtained pursuant to this Agreement (excluding investment research and
investment advice) in any manner whatsoever except as required to carry out
its duties as investment manager and administrator pursuant to this Section
3 or in the ordinary course of business in connection with placing orders
for the purchase and sale of securities, and will keep confidential any
information obtained pursuant to this Agreement, and disclose such
information only if the Board of Governors of Separate Account D has
authorized such disclosure, or if such disclosure is expressly required by
applicable federal or state law or regulations or regulatory authorities
having the requisite authority.
(i) In rendering the services required under this Section of this
Agreement, the Manager may, from time to time, employ or associate with
itself such person or persons as it believes necessary to assist it in
carrying out its obligations under this Agreement. The Manager shall be
responsible for making reasonable inquires and for reasonably ensuring that
any employee of the Manager, any person or firm that the Manager has
employed or with which it has associated, or any employee thereof has not,
to the best of the Manager's knowledge, in any material connection with the
handling of Separate Account assets:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor arising out of conduct involving embezzlement, fraudulent
conversion, or misappropriation of funds or securities, or involving
violations of Sections 1341, 1342, or 1343 of Title 18, United States
Code; or
(ii) been found by any state regulatory authority, within the last
ten (10) years, to have violated or to have acknowledged violation of
any provision of any state insurance law involving fraud, deceit, or
knowing misrepresentation; or
(iii) been found by any federal or state regulatory authorities,
within the last ten (10) years, to have violated or to have acknowledge
violation of any provisions of federal or state securities laws
involving fraud, deceit, or knowing misrepresentation.
(j) In connection with its responsibilities under this Section 3, the
Manager is responsible for decisions to buy and sell securities and other
investments for the Separate Account's portfolio, broker-dealer selection,
and negotiation of brokerage commission rates. The Manager's primary
consideration in effecting a security transaction will be to obtain the
best execution for the Separate Account, taking into account the factors
specified in the Prospectus and/or Statement of Additional Information for
the Separate Account, which include price (including the applicable
brokerage commission or dollar spread), the size of the order, the nature
of the market for the security, the timing of the transaction, the
reputation, experience and financial stability of the broker-dealer
involved, the quality of the service, the difficulty of execution,
execution capabilities and operational facilities of the firms involved,
and the firm's risk in positioning a block of securities. Accordingly, the
price to the Separate Account in any transaction may be less favorable than
that available from another broker-dealer if the difference is reasonably
justified, in the judgment of the Manager
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in the exercise of its fiduciary obligations to the Separate Account, by
other aspects of the portfolio execution services offered. Subject to such
policies as the Board of Governors may determine and consistent with
Section 28(e) of the Securities Exchange Act of 1934, the Manager shall not
be deemed to have acted unlawfully or to have breached any duty created by
this agreement or otherwise solely by reason of its having caused the
Separate Account to pay a broker-dealer for effecting a portfolio
investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Manager or its affiliate determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, viewed in terms of either
that particular transaction or the Manager's or its affiliate's overall
responsibilities with respect to the Separate Account and to their other
clients as to which they exercise investment discretion. To the extent
consistent with these standards and in accordance with Section 11(a) of the
Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, the Manager
is further authorized to allocate the orders placed by it on behalf of the
Separate Account to the Manager if it is registered as a broker-dealer with
the SEC, to its affiliated broker-dealer, or to such brokers and dealers
who also provide research or statistical material or other services to the
Separate Account, the Manager or an affiliate of the Manager. Such
allocation shall be in such amounts and proportions as the Manager shall
determine consistent with the above standards, and the Manager will report
on said allocation regularly to the Board of Governors of Separate Account
D indicating the broker-dealers to which such allocations have been made
and the basis therefor.
4. Conformity with Applicability Law. The Manager, in the performance of its
duties and obligations under this Agreement, shall act in conformity with the
Registration Statement of Separate Account D and with the instructions and
directions of the Board of Governors of Separate Account D and will confirm
to, and comply with, the requirements of the 1940 Act and all other applicable
federal and state laws and regulations.
5. Exclusivity. The services of the Manager to Separate Account D under this
Agreement are not to be deemed exclusive, and the Manager, or any affiliate
thereof, shall be free to render similar services to other investment
companies and other clients (whether or not their investment objectives and
policies are similar to those of any of the Separate Account) and to engage in
other activities, so long as its services hereunder are not impaired thereby.
6. Documents. Separate Account has delivered properly certified or
authenticated copies of each of the following documents to the Manager and
will deliver to it all future amendments and supplements thereto, if any:
(a) certified resolution of the Board of Governors of Separate Account D
authorizing the appointment of the Manager and approving the form of this
Agreement;
(b) the Registration Statement as filed with the SEC and any amendments
thereto; and
(c) exhibits, powers of attorney, certificates and any and all other
documents relating to or filed in connection with the Registration
Statement described above.
7. Records. The Manager agrees to maintain and to preserve for the periods
prescribed under the 1940 Act any such records as are required to be
maintained by the Manager with respect to the Separate Account by the 1940
Act. The Manager further agrees that all records which it maintains for the
Separate Account are the property of Separate Account D and it will promptly
surrender any of such records upon request.
8. Expenses. During the term of this Agreement, the Manager will pay all
expenses incurred by it in connection with its activities under this
Agreement, except such expenses as are assumed by the Separate Account under
this Agreement and such expenses as are assumed by a Portfolio Manager under
its Portfolio Management Agreement. The Manager further agrees to pay all
salaries, fees and expenses of any officer or trustee of the Separate Account
who is an officer, director or employee of the Manager or any of its
affiliates. The Manager shall be responsible for all of the expenses of its
operations and for the following expenses:
(a) Expenses of all audits by the Separate Account's independent public
accountants;
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(b) Expenses of the Separate Account's recordkeeping and portfolio
accounting services;
(c) Expenses of the Separate Account's custodial services, including
recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of the
Separate Account's net assets;
(e) Expenses of obtaining Separate Account Activity Reports and Analyses
of International Management reports (as appropriate) for the Separate
Account's net assets;
(f) Expenses of maintaining the Separate Account's tax records;
(g) Costs and/or fees incident to meetings of the Separate Account's
shareholders, the preparation and mailings of prospectuses and reports of
the Separate Account to its shareholders, the filing of reports with
regulatory bodies, the maintenance of the Separate Account's existence, and
the registration of shares with federal and state securities or insurance
authorities;
(h) The Separate Account's ordinary legal fees, including the legal fees
related to the registration and continued qualification of the Separate
Account's securities for sale;
(i) The Separate Account's pro rata portion of the fidelity bond required
by Section 17(g) of the 1940 Act, or other insurance premiums;
(j) Association membership dues; and
(k) Organizational and offering expenses and, if applicable,
reimbursement (with interest) of underwriting discounts and commissions.
Commencing with the date of this Agreement, the Manager is responsible for
any remaining unamortized organizational expenses of the Series as of the
date of this Agreement.
The Separate Account shall be responsible for the following expenses:
(a) Salaries and other compensation of any of the Separate Account's
executive officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Manager or an affiliate of the Manager;
(b) Taxes levied against the Separate Account;
(c) Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for the Separate Account;
(d) Costs, including the interest expense, of borrowing money;
(e) Governor's fees and expenses to Governors who are not officers,
employees, or stockholders of the Manager, any Portfolio Manager, or any
affiliates of either; and
(f) Extraordinary expenses as may arise, including extraordinary
consulting expenses and extraordinary legal expenses incurred in connection
with litigation, proceedings, other claims (unless the Manager is
responsible for such expenses under Section 10 of this Agreement or a
Portfolio Manager is responsible for such expenses under Section 15 of a
Portfolio Management Agreement), and the legal obligations of the Separate
Account to indemnify its members of the Board of Governors, officers,
employees, shareholders, contractholders, distributors, and agents with
respect thereto.
9. Compensation. For the services provided by the Manager pursuant to this
Agreement, the Separate Account will pay the Manager a fee at an annual rate
based upon the following percentages of the average daily net assets of the
Separate Account: 1.25% of the first $500 million; and 1.05% of the amount
over $500 million. This fee shall be computed and accrued daily and payable
monthly.
10. Liability of the Manager. The Manager may rely on information reasonably
believed by it to be accurate and reliable. Except as may otherwise be
required by the 1940 Act or the rules thereunder, neither the Manager nor its
stockholders, directors, employees, or agents shall be subject to and the
Separate Account will indemnify such persons from and against, any liability
for, or any damages, expenses, or losses incurred in
A-6
<PAGE>
connection with, any act or omission connected with or arising out of any
services rendered under this agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of the
Manager's duties, or by reason of reckless disregard of the Manager's
obligations and duties under this Agreement. Except as may otherwise be
required by the 1940 Act or the rules thereunder, neither the Manager nor its
stockholders, officers, directors, employees, or agents shall be subject to,
and the Separate Account will indemnify such persons from and against, any
liability for, or any damages, expenses, or losses incurred in connection
with, any act or omission by a Portfolio Manager or any of the Separate
Account Manager's stockholders or partners, officers, directors, employees, or
agents connected with or arising out of any services rendered under a
Portfolio Management Agreement, except by reason of willful misfeasance, bad
faith, or gross negligence in the performance of the Manager's duties under
this Agreement, or by reason of reckless disregard of the Manager's
obligations and duties under this Agreement.
11. Continuation and Termination. This Agreement shall become effective on
the date first written above. Unless terminated as provided herein, the
Agreement shall continue in full force and effect for two (2) years from the
effective date of this Agreement, and shall continue from year to year
thereafter with respect to each Separate Account so long as such continuance
is specifically approved at least annually (i) by the vote of a majority of
the Board of Governors of Separate Account or (ii) by vote of a majority of
the outstanding voting shares of Separate Account D, and providing continuance
is also approved by the vote of a majority of the Board of Governors of
Separate Account D who are not parties to this Agreement or "interested
persons" (as defined in the 1940 Act) of Separate Account D or the Manager,
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement may not be amended in any material respect without a majority
vote of the outstanding voting shares (as defined in the 1940 Act).
However, any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 1940 Act) of Separate Account D shall be
effective to continue this Agreement with respect to such Separate Account
notwithstanding (i) that this Agreement has not been approved by the holders
of a majority of the outstanding shares of any subaccount of Separate Account
D or (ii) that this Agreement has not been approved by the vote of a majority
of the outstanding shares of any other division of Separate Account D, unless
such approval shall be required by any other applicable law or otherwise. This
Agreement may be terminated by Separate Account D at any time, without the
payment of any penalty, by vote of a majority of the entire Board of Governors
of Separate Account D or by a vote of a majority of the outstanding voting
shares of Separate Account D, or with respect to a subaccount of the Separate
Account, by vote of a majority of the outstanding voting shares of such
subaccount of the Separate Account, on sixty (60) days' written notice to the
Manager, or by the Manager at any time without the payment or any penalty, on
sixty (60) days' written notice to the Separate Account. This Agreement will
automatically and immediately terminate in the event of its "assignment" (as
described in the 1940 Act).
12. Use of Name. It is understood that the name or any derivative thereof or
logo associated with the name Directed Services, Inc. is the valuable property
of the Manager, and that the Separate Account has the right to use such name
(or derivative or logo) only so long as this Agreement shall continue with
respect to such Separate Account. Upon termination of this Agreement, the
Separate Account shall forthwith cease to use such name (or derivative or
logo) and, in the case of the Separate Account, shall promptly amend its Rules
and Regulations of Separate Account D to change its name (if such name is
included therein).
13. Notice. Notices of any kind to be given to the Manager by the Separate
Account shall be in writing and shall be duly given if mailed or delivered to
the Manager at 1001 Jefferson Street, Suite 400, Wilmington, Delaware 19801,
or at such other address or to such individual as shall be specified by the
Manager to the Separate Account. Notices of any kind to be given to the
Separate Account by the Manager shall be in writing and shall be duly given if
mailed or delivered to 1001 Jefferson Street, Suite 400, Wilmington, Delaware
19801, or at such other address or to such individual as shall be specified by
the Separate Account to the Manager.
14. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
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<PAGE>
15. Applicable Law.
(a) This Agreement shall be governed by the laws of the State of
Delaware, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Investment Act of 1940, or any rules or
order of the SEC thereunder.
(b) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby and, to this extent, the provisions of this
Agreement shall be deemed to be severable.
(c) The captions of this Agreement are included for convenience only and
in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
GOLDEN AMERICAN LIFE INSURANCE
COMPANY
By: _________________________________
_____________________________________
Attest _____________________________________
Title
_____________________________________
Title
DIRECTED SERVICES, INC.
By: _________________________________
_____________________________________
Attest
_____________________________________
Title
_____________________________________
Title
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<PAGE>
EXHIBIT B
OTHER INFORMATION REGARDING DIRECTED SERVICES, INC.
DSI's directors and principal executive officer and their principal
occupations are shown below. Except for Mr. Kendall, whose principal business
address is 1001 Jefferson Street, Suite 400, Wilmington, Delaware 19801, the
principal business address of each Director is 280 Park Avenue, New York, New
York 10017.
<TABLE>
<CAPTION>
NAME AND
POSITION WITH DSI PRINCIPAL OCCUPATION
----------------- --------------------
<C> <S>
Paul Daniel Borge, Jr. Managing Director, Bankers Trust
Director Company; Director, Golden American Life
Insurance Company, Whitewood Properties
Corp. and BT Variable, Inc.
Richard A. Marin Managing Director, Bankers Trust
Director Company; Director, Whitewood Properties
Corp., BT Variable, Inc., and Golden
American Life Insurance Company.
Terry L. Kendall* Managing Director, Bankers Trust
Director and Chief Executive Officer Company; President, Director, and Chief
Executive Officer, Golden American Life
Insurance Company; President, Director,
and Chief Executive Officer, BT
Variable, Inc. and Director, Whitewood
Properties Corp.
</TABLE>
- --------
* Mr. Kendall is the President of Account D.
DSI does not act as investment adviser to any other registered investment
companies with investment objectives and policies similar to those of The
Managed Global Account.
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<PAGE>
EXHIBIT C
FORM OF AMENDED
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this day of , 199 among Separate Account D of Golden
American Life Insurance Company ("Golden American"), Directed Services, Inc.
("Manager"), a New York corporation, and Warburg, Pincus Counsellors, Inc.
("Portfolio Manager"), a Delaware corporation.
WHEREAS, Golden American has established a separate account designated
"Separate Account D" with a division designated "The Managed Global Account"
(the "Separate Account") to segregate assets funding the variable benefits
provided by group and individual deferred variable annuity contracts
("Contracts") offered by Golden American; and
WHEREAS, the investment management-related aspects of the Separate Account
are governed by a group designated as the Board of Governors of the Separate
Account ("Board of Governors"); and
WHEREAS, premiums paid to purchase a Contract are allocated to the Separate
Account, which invests directly in securities and other assets; and
WHEREAS, the Separate Account is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end, management investment
company; and
WHEREAS, pursuant to a Management Agreement, effective as of , 199 , a
copy of which has been provided to the Portfolio Manager, the Separate Account
has retained the Manager to render advisory, management and administrative
services to the Separate Account; and
WHEREAS, the Separate Account and the Manager wish to retain the Portfolio
Manager to furnish investment advisory services to the Separate Account, and
the Portfolio Manager is willing to furnish such services to the Separate
Account and the Manager;
NOW THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Separate Account, the
Manager, and the Portfolio Manager as follows:
1. Appointment. The Separate Account and the Manager hereby appoint Warburg,
Pincus Counsellors, Inc. to act as Portfolio Manager to the Separate Account
for the periods and on the terms set forth in this Agreement. The Portfolio
Manager accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
2. Portfolio Management Duties. Subject to the supervision of the Separate
Account's Board of Governors and the Manager, the Portfolio Manager will
provide a continuous investment program for the Separate Account's portfolio
and determine the composition of the assets of the Separate Account's
portfolio, including determination of the purchase, retention, or sale of the
securities, cash, and other investments contained in the portfolio. The
Portfolio Manager will provide investment research and conduct a continuous
program of evaluation, investment, sales, and reinvestment of the Separate
Account's assets by determining the securities and other investments that
shall be purchased, entered into, sold, closed, or exchanged for the Separate
Account, when these transactions should be executed, and what portion of the
assets of the Separate Account should be held in the various securities and
other investments in which it may invest, and the Portfolio Manager is hereby
authorized to execute and perform such services on behalf of the Separate
Account. To the extent permitted by the investment policies of the Separate
Account, the Portfolio Manager shall make decisions for the Separate Account
as to foreign currency matters and make determinations as to and execute and
perform foreign currency exchange contracts on behalf of the Separate Account.
The Portfolio Manager will provide the services under this Agreement in
accordance with the Separate Account's investment objective or objectives,
policies, and
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restrictions as stated in the Separate Account's Registration Statement filed
with the Securities and Exchange Commission ("SEC"), as amended, copies of
which shall be sent to the Portfolio Manager by the Manager. The Portfolio
Manager further agrees as follows:
(a) The Portfolio Manager will (1) manage the Separate Account so as to
ensure compliance by the Separate Account with the diversification
requirements of Section 817(h) of the Internal Revenue Code and regulations
issued thereunder, and (2) use reasonable efforts to manage the Separate
Account so as to ensure compliance by the Separate Account with any other
rules and regulations pertaining to investment vehicles for variable
annuity or variable life insurance policies. The Manager or the Separate
Account will notify the Portfolio Manager of any pertinent changes,
modifications to, or interpretations of Section 817(h) of the Internal
Revenue Code and regulations issued thereunder and will notify the
Portfolio Manager of any other rules and regulations pertaining to
investment vehicles for variable annuity or variable life insurance
policies.
(b) The Portfolio Manager will conform with the 1940 Act and all rules
and regulations thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the Separate
Account's Board of Governors of which the Portfolio Manager has been sent a
copy, and the provisions of the Registration Statement of the Separate
Account under the Securities Act of 1933 (the "1933 Act") and the 1940 Act,
as supplemented or amended, of which the Portfolio Manager has received a
copy. The Manager or the Separate Account will notify the Portfolio Manager
of pertinent provisions of applicable state insurance law with which the
Portfolio Manager must comply under this Paragraph 2(b).
(c) On occasions when the Portfolio Manager deems the purchase or sale of
a security to be in the best interest of the Separate Account as well as of
other investment advisory clients of the Portfolio Manager or any of its
affiliates, the Portfolio Manager may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate
the securities to be so sold or purchased with those of its other clients
where such aggregation is not inconsistent with the policies set forth in
the Registration Statement. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Portfolio Manager in a manner that is fair and
equitable in the judgment of the Portfolio Manager in the exercise of its
fiduciary obligations to the Separate Account and to such other clients,
subject to review by the Manager and the Board of Governors.
(d) In connection with the purchase and sale of securities for the
Separate Account, the Portfolio Manager will arrange for the transmission
to the custodian and portfolio accounting agent for the Separate Account on
a daily basis, such confirmation, trade tickets, and other documents and
information, including, but not limited to, CUSIP, Sedol, or other numbers
that identify securities to be purchased or sold on behalf of the Separate
Account, as may be reasonably necessary to enable the custodian and
portfolio accounting agent to perform its administrative and recordkeeping
responsibilities with respect to the Separate Account. With respect to
portfolio securities to be purchased or sold through the Depository Trust
Company, the Portfolio Manager will arrange for the automatic transmission
of the confirmation of such trades to the Separate Account's custodian and
portfolio accounting agent.
(e) The Portfolio Manager will monitor on a daily basis the determination
by the portfolio accounting agent for the Separate Account of the valuation
of portfolio securities and other investments of the Separate Account. The
Portfolio Manager will assist the portfolio accounting agent for the
Separate Account in determining or confirming, consistent with the
procedures and policies stated in the Registration Statement for the
Separate Account, the value of any portfolio securities or other assets of
the Separate Account for which the portfolio accounting agent seeks
assistance from or identifies for review by the Portfolio Manager.
(f) The Portfolio Manager will make available to the Separate Account and
the Manager, promptly upon request, all of the Separate Account's
investment records and ledgers maintained by the Portfolio Manager (which
shall not include the records and ledgers maintained by the portfolio
accounting agent for the Separate Account) as are necessary to assist the
Separate Account and the Manager to comply with requirements of the 1940
Act and the Investment Advisers Act of 1940 (the "Advisers Act"), as well
as
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<PAGE>
other applicable laws. The Portfolio Manager will furnish to regulatory
authorities having the requisite authority any information or reports in
connection with such services which may be requested in order to ascertain
whether the operations of the Separate Account are being conducted in a
manner consistent with applicable laws and regulations.
(g) The Portfolio Manager will provide reports to the Separate Account's
Board of Governors for consideration at meetings of the Board on the
investment program for the Separate Account and the issuers and securities
represented in the Separate Account's portfolio, and will furnish the
Separate Account's Board of Governors with respect to the Separate Account
such periodic and special reports as the Board and the Manager may
reasonably request.
(h) In rendering the services required under this Agreement, the
Portfolio Manager may, from time to time, employ or associate with itself
such person or persons as it believes necessary to assist it in carrying
out its obligations under this Agreement. However, the Portfolio Manager
may not retain as subadviser any company that would be an "investment
adviser," as that term is defined in the 1940 Act, to the Separate Account
unless the contract with such company is approved by a majority of the
Separate Account's Board of Governors and a majority of Governors who are
not parties to any agreement or contract with such company and who are not
"interested persons," as defined in the 1940 Act, of the Separate Account,
the Manager, or the Portfolio Manager, or any such company that is retained
as subadviser, and is approved by the vote of a majority of the outstanding
voting securities of the Separate Account to the extent required by the
1940 Act. The Portfolio Manager shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the Portfolio
Manager, any subadviser that the Portfolio Manager has employed or with
which it has associated with respect to the Separate Account, or any
employee thereof has not, to the best of the Portfolio Manager's knowledge,
in any material connection with the handling of Separate Account assets:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor arising out of conduct involving embezzlement, fraudulent
conversion, or misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Title 18, United States
Code, or involving the purchase or sale of any security; or
(ii) been found by any state regulatory authority, within the last
ten (10) years, to have violated or to have acknowledged violation of
any provision of any state insurance law involving fraud, deceit, or
knowing misrepresentation; or
(iii) been found by any federal or state regulatory authorities,
within the last ten (10) years, to have violated or to have
acknowledged violation of any provision of federal or state securities
laws involving fraud, deceit, or knowing misrepresentation.
3. Broker-Dealer Selection. The Portfolio Manager is responsible for
decisions to buy and sell securities and other investments for the Separate
Account's portfolio, broker-dealer selection, and negotiation of brokerage
commission rates. The Portfolio Manager's primary consideration in effecting a
security transaction will be to obtain the best execution for the Separate
Account, taking into account the factors specified in the prospectus and/or
statement of additional information for the Separate Account, which include
price (including the applicable brokerage commission or dollar spread), the
size of the order, the nature of the market for the security, the timing of
the transaction, the reputation, the experience and financial stability of the
broker-dealer involved, the quality of the service, the difficulty of
execution, and the execution capabilities and operational facilities of the
firm involved, and the firm's risk in positioning a block of securities.
Accordingly, the price to the Separate Account in any transaction may be less
favorable than that available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in the exercise
of its fiduciary obligations to the Separate Account, by other aspects of the
portfolio execution services offered. Subject to such policies as the Board of
Governors may determine and consistent with Section 28(e) of the Securities
Exchange Act of 1934, the Portfolio Manager shall not be deemed to have acted
unlawfully or to have breached any duty created by this Agreement or otherwise
solely by reason of its having caused the Separate Account to pay a broker-
dealer for effecting a portfolio investment transaction in excess of the
amount of commission another
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<PAGE>
broker-dealer would have charged for effecting that transaction, if the
Portfolio Manager or its affiliate determines in good faith that such amount
of commission was reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, viewed in terms of either
that particular transaction or the Portfolio Manager's or its affiliate's
overall responsibilities with respect to the Separate Account and to their
other clients as to which they exercise investment discretion. To the extent
consistent with these standards, the Portfolio Manager is further authorized
to allocate the orders placed by it on behalf of the Separate Account to the
Portfolio Manager if it is registered as a broker-dealer with the SEC, to its
affiliated broker-dealer, or to such brokers and dealers who also provide
research or statistical material, or other services to the Separate Account,
the Portfolio Manager, or an affiliate of the Portfolio Manager. Such
allocation shall be in such amounts and proportions as the Portfolio Manager
shall determine consistent with the above standards, and the Portfolio Manager
will report on said allocation regularly to the Board of Governors of the
Separate Account indicating the broker-dealers to which such allocations have
been made and the basis therefor.
4. Disclosure about Portfolio Manager. The Portfolio Manager has reviewed
the Registration Statement for the Separate Account filed with the Securities
and Exchange Commission that contains disclosure about the Portfolio Manager,
and represents and warrants that, with respect to the disclosure about the
Portfolio Manager or information relating, directly or indirectly, to the
Portfolio Manager, such Registration Statement contains, as of the date
hereof, no untrue statement of any material fact and does not omit any
statement of a material fact which was required to be stated therein or
necessary to make the statements contained therein not misleading. The
Portfolio Manager further represents and warrants that it is a duly registered
investment adviser under the Advisers Act and a duly registered investment
adviser in all states in which the Portfolio Manager is required to be
registered.
5. Expenses. During the term of this Agreement, the Portfolio Manager will
pay all expenses incurred by it and its staff and for their activities in
connection with its portfolio management duties under this Agreement. The
Manager or the Separate Account shall be responsible for all the expenses of
the Separate Account operations including, but not limited to:
(a) Expenses of all audits by the Separate Account's independent public
accountants;
(b) Expenses of the Separate Account's recordkeeping and portfolio
accounting services;
(c) Expenses of the Separate Account's custodial services including
recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of the
Separate Account's net assets;
(e) Expenses of obtaining Separate Account Activity Reports and Analyses
of International Management Reports (as appropriate) for each Separate
Account;
(f) Expenses of maintaining the Separate Account's tax records;
(g) Salaries and other compensation of any of the Separate Account's
executive officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Portfolio Manager or an affiliate of the
Portfolio Manager;
(h) Taxes levied against the Separate Account;
(i) Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for the Separate Account;
(j) Costs, including the interest expense, of borrowing money;
(k) Costs and/or fees incident to meetings of the Separate Account's
shareholders, the preparation and mailings of prospectuses and reports of
the Separate Account to its shareholders, the filing of reports with
regulatory bodies, the maintenance of the Separate Account's existence, and
the registration of securities with federal and state securities or
insurance authorities;
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(l) The Separate Account's legal fees, including the legal fees related
to the registration and continued qualification of the Separate Account's
securities for sale;
(m) Fees and expenses to Members of the Board of Governors who are not
officers, employees, or stockholders of the Portfolio Manager or any
affiliate thereof;
(n) The Separate Account's pro rata portion of the fidelity bond required
by Section 17(g) of the 1940 Act, or other insurance premiums;
(o) Association membership dues;
(p) Extraordinary expenses of the Separate Account as may arise including
expenses incurred in connection with litigation, proceedings, and other
claims (unless the Portfolio Manager is responsible for such expenses under
Section 14 of this Agreement), and the legal obligations of the Separate
Account to indemnify its Governors, officers, employees, shareholders,
distributors, and agents with respect thereto; and
(q) Organizational and offering expenses.
6. Compensation. For the services provided, the Manager will pay the
Portfolio Manager a fee, payable monthly, equal to an annual rate based upon
the following percentages of the average daily net assets of the Separate
Account: 0.60% of the first $500 million; and 0.50% of the amount over $500
million.
7. Seed Money. The Manager agrees that the Portfolio Manager shall not be
responsible for providing money for the initial capitalization of the Separate
Account.
8. Compliance.
(a) The Portfolio Manager agrees that it shall immediately notify the
Manager and the Separate Account in the event (1) that the SEC has censured
the Portfolio Manager; placed limitations upon its activities, functions or
operations; suspended or revoked its registration as an investment adviser;
or has commenced proceedings or an investigation that may result in any of
these actions, or (2) upon having a reasonable basis for believing that the
Separate Account has ceased to comply with the diversification provisions
of Section 817(h) of the Internal Revenue Code or the Regulations
thereunder. The Portfolio Manager further agrees to notify the Manager and
the Separate Account immediately of any material fact known to the
Portfolio Manager respecting or relating to the Portfolio Manager that is
not contained in the Registration Statement or prospectus for the Separate
Account, or any amendment or supplement thereto, or of any statement
contained therein that becomes untrue in any material respect.
(b) The Manager agrees that it shall immediately notify the Portfolio
Manager in the event (1) that the SEC has censured the Manager or the
Separate Account; placed limitations upon either of their activities,
functions, or operations; suspended or revoked the Manager's registration
as an investment adviser; or has commenced proceedings or an investigation
that may result in any of these actions, or (2) upon having a reasonable
basis for believing that the Separate Account has ceased to comply with the
diversification provisions of Section 817(h) of the Internal Revenue Code
or the Regulations thereunder.
9. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Portfolio Manager hereby agrees that all records which
it maintains for the Separate Account are the property of the Separate Account
and further agrees to surrender promptly to the Separate Account any of such
records upon the Separate Account's or the Manager's request, although the
Portfolio Manager may, at its own expense, make and retain a copy of such
records. The Portfolio Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-l under the 1940 Act and to preserve the records
required by Rule 204-2 under the Advisers Act for the period specified in the
Rule.
10. Cooperation. Each party to this Agreement agrees to cooperate with each
other party and with all appropriate governmental authorities having the
requisite jurisdiction (including, but not limited to, the SEC and state
insurance regulators) in connection with any investigation or inquiry relating
to this Agreement or the Separate Account.
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11. Representations respecting Portfolio Manager. The Manager and the
Separate Account agree that neither the Separate Account, the Manager, nor
affiliated persons of the Separate Account or the Manager shall give any
information or make any representations or statements in connection with the
sale of securities of the Separate Account concerning the Portfolio Manager or
the Separate Account other than the information or representations contained
in the Registration Statement, prospectus, or statement of additional
information for the Separate Account securities, as they may be amended or
supplemented from time to time, or in reports or proxy statements for the
Separate Account, or in sales literature or other promotional material
approved in advance by the Portfolio Manager, except with the prior permission
of the Portfolio Manager. The parties agree that in the event that the Manager
or an affiliated person of the Manager sends sales literature or other
promotional material to the Portfolio Manager for its approval and the
Portfolio Manager has not commented within 30 days, the Manager and its
affiliated persons may use and distribute such sales literature or other
promotional material, although, in such event, the Portfolio Manager shall not
be deemed to have approved of the contents of such sales literature or other
promotional material.
12. Control. Notwithstanding any other provision of the Agreement, it is
understood and agreed that the Separate Account shall at all times retain the
ultimate responsibility for and control of all functions performed pursuant to
this Agreement and reserves the right to direct, approve, or disapprove any
action hereunder taken on its behalf by the Portfolio Manager.
13. Services Not Exclusive. It is understood that the services of the
Portfolio Manager are not exclusive, and nothing in this Agreement shall
prevent the Portfolio Manager (or its affiliates) from providing similar
services to other clients, including investment companies (whether or not
their investment objectives and policies are similar to those of the Separate
Account) or from engaging in other activities.
14. Liability. Except as may otherwise be required by the 1940 Act or the
rules thereunder or other applicable law, the Separate Account and the Manager
agree that the Portfolio Manager, any affiliated person of the Portfolio
Manager, and each person, if any, who, within the meaning of Section 15 of the
1933 Act controls the Portfolio Manager shall not be liable for, or subject to
any damages, expenses, or losses in connection with, any act or omission
connected with or arising out of any services rendered under this Agreement,
except by reason of willful misfeasance, bad faith, or gross negligence in the
performance of the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under this
Agreement.
15. Indemnification.
(a) The Manager agrees to indemnify and hold harmless the Portfolio
Manager, any affiliated person of the Portfolio Manager, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act controls
("controlling person") the Portfolio Manager (all of such persons being
referred to as "Portfolio Manager Indemnified Persons") against any and all
losses, claims, damages, liabilities, or litigation (including legal and
other expenses) to which a Portfolio Manager Indemnified Person may become
subject under the 1933 Act, the 1940 Act, the Advisers Act, the Internal
Revenue Code, under any other statute, at common law or otherwise, arising
out of the Manager's responsibilities to the Separate Account which (1) may
be based upon any misfeasance, malfeasance, or nonfeasance by the Manager,
any of its employees or representatives or any affiliate of or any person
acting on behalf of the Manager, or (2) may be based upon any untrue
statement or alleged untrue statement of a material fact supplied by, or
which is the responsibility of, the Manager and contained in the
Registration Statement or prospectus covering securities issued by the
Separate Account, or any amendment thereof or any supplement thereto, or
the omission or alleged omission to state therein a material fact known or
which should have been known to the Manager and was required to be stated
therein or necessary to make the statements therein not misleading, unless
such statement or omission was made in reliance upon information furnished
to the Manager or the Separate Account or to any affiliated person of the
Manager by a Portfolio Manager Indemnified Person; provided however, that
in no case shall the indemnity in favor of the Portfolio Manager
Indemnified Person be deemed to protect such person against any liability
to which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of its reckless disregard of obligations and duties
under this Agreement.
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<PAGE>
(b) Notwithstanding Section 14 of this Agreement, the Portfolio Manager
agrees to indemnify and hold harmless the Manager, any affiliated person of
the Manager, and each person, if any, who, within the meaning of Section 15
of the 1933 Act, controls ("controlling person") the Manager (all of such
persons being referred to as "Manager Indemnified Persons") against any and
all losses, claims, damages, liabilities, or litigation (including legal
and other expenses) to which a Manager Indemnified Person may become
subject under the 1933 Act, 1940 Act, the Advisers Act, the Internal
Revenue Code, under any other statute, at common law or otherwise, arising
out of the Portfolio Manager's responsibilities as Portfolio Manager of the
Separate Account which (1) may be based upon any misfeasance, malfeasance,
or nonfeasance by the Portfolio Manager, any of its employees or
representatives, or any affiliate of or any person acting on behalf of the
Portfolio Manager, (2) may be based upon a failure to comply with Section
2, Paragraph (a) of this Agreement, or (3) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or prospectus covering the securities issued by the
Separate Account, or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact known or which should
have been known to the Portfolio Manager and was required to be stated
therein or necessary to make the statements therein not misleading, if such
a statement or omission was made in reliance upon information furnished to
the Manager, the Separate Account, or any affiliated person of the Manager
or Separate Account by the Portfolio Manager or any affiliated person of
the Portfolio Manager; provided, however, that in no case shall the
indemnity in favor of a Manager Indemnified Person be deemed to protect
such person against any liability to which any such person would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence in
the performance of its duties, or by reason of its reckless disregard of
its obligations and duties under this Agreement.
(c) The Manager shall not be liable under Paragraph (a) of this Section
15 with respect to any claim made against a Portfolio Manager Indemnified
Person unless such Portfolio Manager Indemnified Person shall have notified
the Manager in writing within a reasonable time after the summons, notice,
or other first legal process or notice giving information of the nature of
the claim shall have been served upon such Portfolio Manager Indemnified
Person (or after such Portfolio Manager Indemnified Person shall have
received notice of such service on any designated agent), but failure to
notify the Manager of any such claim shall not relieve the Manager from any
liability which it may have to the Portfolio Manager Indemnified Person
against whom such action is brought otherwise than on account of this
Section 15. In case any such action is brought against the Portfolio
Manager Indemnified Person, the Manager will be entitled to participate, at
its own expense, in the defense thereof or, after notice to the Portfolio
Manager Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Portfolio Manager Indemnified Person. If the Manager
assumes the defense of any such action and the selection of counsel by the
Manager to represent both the Manager and the Portfolio Manager Indemnified
Person would result in a conflict of interests and therefore, would not, in
the reasonable judgment of the Portfolio Manager Indemnified Person,
adequately represent the interests of the Portfolio Manager Indemnified
Person, the Manager will, at its own expense, assume the defense with
counsel to the Manager and, also at its own expense, with separate counsel
to the Portfolio Manager Indemnified Person, which counsel shall be
satisfactory to the Manager and to the Portfolio Manager Indemnified
Person. The Portfolio Manager Indemnified Person shall bear the fees and
expenses of any additional counsel retained by it, and the Manager shall
not be liable to the Portfolio Manager Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred by the
Portfolio Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation. The Manager
shall not have the right to compromise on or settle the litigation without
the prior written consent of the Portfolio Manager Indemnified Person if
the compromise or settlement results, or may result in a finding of
wrongdoing on the part of the Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under Paragraph (b) of this
Section 15 with respect to any claim made against a Manager Indemnified
Person unless such Manager Indemnified Person shall have notified the
Portfolio Manager in writing within a reasonable time after the summons,
notice, or other first legal process or notice giving information of the
nature of the claim shall have been served upon such
C-7
<PAGE>
Manager Indemnified Person (or after such Manager Indemnified Person shall
have received notice of such service on any designated agent), but failure
to notify the Portfolio Manager of any such claim shall not relieve the
Portfolio Manager from any liability which it may have to the Manager
Indemnified Person against whom such action is brought otherwise than on
account of this Section 15. In case any such action is brought against the
Manager Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after notice to
the Manager Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Manager Indemnified Person. If the Portfolio Manager
assumes the defense of any such action and the selection of counsel by the
Portfolio Manager to represent both the Portfolio Manager and the Manager
Indemnified Person would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Manager Indemnified Person,
adequately represent the interests of the Manager Indemnified Person, the
Portfolio Manager will, at its own expense, assume the defense with counsel
to the Portfolio Manager and, also at its own expense, with separate
counsel to the Manager Indemnified Person which counsel shall be
satisfactory to the Portfolio Manager and to the Manager Indemnified
Person. The Manager Indemnified Person shall bear the fees and expenses of
any additional counsel retained by it, and the Portfolio Manager shall not
be liable to the Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Manager Indemnified
Person independently in connection with the defense thereof other than
reasonable costs of investigation. The Portfolio Manager shall not have the
right to compromise on or settle the litigation without the prior written
consent of the Manager Indemnified Person if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of the
Manager Indemnified Person.
16. Duration and Termination. This Agreement shall become effective on the
date first indicated above. Unless terminated as provided herein, the
Agreement shall remain in full force and effect for two (2) years from the
date first indicated above and continue on an annual basis thereafter with
respect to each Separate Account unless terminated as provided in this
Section; provided that such annual continuance is specifically approved each
year by (a) the vote of a majority of the entire Board of Governors of the
Separate Account, or by the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of each Separate Account, and (b) the
vote of a majority of those members of the Board of Governors who are not
parties to this Agreement or interested persons (as such term is defined in
the 1940 Act) of any such party to this Agreement cast in person at a meeting
called for the purpose of voting on such approval. The Portfolio Manager shall
not provide any services for such Separate Account or receive any fees on
account of such Separate Account with respect to which this Agreement is not
approved as described in the preceding sentence. However, any approval of this
Agreement by the holders of a majority of the outstanding securities (as
defined in the 1940 Act) of a subaccount of the Separate Account shall be
effective to continue this Agreement with respect to such subaccount of the
Separate Account notwithstanding (i) that this Agreement has not been approved
by the holders of a majority of the outstanding securities of any other
Separate Account or (ii) that this agreement has not been approved by the vote
of a majority of the outstanding securities of the Separate Account, unless
such approval shall be required by any other applicable law or otherwise.
Notwithstanding the foregoing, this Agreement may be terminated: (a) by the
Manager at any time without penalty, upon sixty (60) days' written notice to
the Portfolio Manager and the Separate Account, (b) at any time without
payment of any penalty by the Separate Account, upon the vote of a majority of
the Separate Account's Board of Governors or a majority of the outstanding
voting securities of the Separate Account, upon sixty (60) days' written
notice to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days' written notice to
the Manager and the Separate Account. In the event of termination for any
reason, all records of the Separate Account for which the Agreement is
terminated shall promptly be returned to the Manager or the Separate Account,
free from any claim or retention of rights in such record by the Portfolio
Manager, although the Portfolio Manager may, at its own expense, make and
retain a copy of such records. The Agreement shall automatically terminate in
the event of its assignment (as such term is described in the 1940 Act). In
the event this Agreement is terminated or is not approved in the manner
described above, the Sections or Paragraphs numbered 2(f), 9, 10, 11, 14, 15,
and 18 of this Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 16.
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<PAGE>
17. Amendments. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a majority of the
outstanding voting securities of the Separate Account, in the case of an
amendment that is material to such security holders, and (ii) the Board of
Governors of the Separate Account, including a majority of the members of the
Board of Governors of the Separate Account who are not interested persons of
any party to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required by applicable
law.
18. Consent to Jurisdiction and Notices.
(a) Each party hereto: (i) consents to the subject matter and in personam
jurisdiction and venue in the United States District Court for the Southern
District of New York; (ii) waives the right to contest the subject matter
and in personam jurisdiction and venue in the United States District Court
for the Southern District of New York on any ground; and (iii) agrees that
service of process upon it can be made by certified or registered mail,
return receipt requested, to its address referred to in paragraph (b) of
this Section 18 and agrees promptly to notify the other party hereto of any
change of such address and agrees that service to such address shall be
deemed to constitute sufficient service of process under both the federal
and state rules of civil procedure wherever the case is filed. In the event
it is determined that the United States District Court for the Southern
District of New York should lack subject matter jurisdiction for any
reason, the parties consent to the subject matter and in personam
jurisdiction and venue in a New York State court of competent jurisdiction
in the Borough of Manhattan.
(b) All notices hereunder shall be given in writing and sent by (i)
certified or registered mail, return receipt requested, postage prepaid,
(ii) national (or international) prepaid overnight (or two nights) delivery
service, (iii) telecopy or other facsimile transmission with appropriate
answerback received (followed by hard copies to be sent by national (or
international) prepaid overnight (or two nights) delivery service) or (iv)
personal delivery with receipt acknowledged in writing, as follows:
If to the Separate Account:
Golden American Life Insurance Company Separate Account D
Attention: Marilyn Talman, Esquire
1001 Jefferson Street, Suite 400
Wilmington, Delaware 19801
Telephone: (302) 576-3516
Facsimile: (302) 576-3520
If to the Manager:
Directed Services, Inc.
Attention: Marilyn Talman, Esquire
1001 Jefferson Street, Suite 400
Wilmington, Delaware 19801
Telephone: (302) 576-3516
Facsimile: (302) 576-3520
If to the Portfolio Manager:
Warburg, Pincus Counsellors, Inc.
Attention: Eugene Podsiadlo
466 Lexington Avenue
New York, New York 10017-3147
Telephone: (212) 878-0600
Facsimile: (212) 878-9351
C-9
<PAGE>
All notices shall be deemed given when actually received or refused by
the party to whom the same is directed (except to the extent sent by
certified or registered mail, return receipt requested, postage prepaid, in
which event such notice shall be deemed given three (3) days after the date
of mailing). Each party may designate a change of address or supplemental
addressee(s) by notice to the other parties.
19. Use of Name.
(a) It is understood that the name "Directed Services, Inc." or any
derivative thereof or logo associated with that name is the valuable
property of the Manager and/or its affiliates, and that the Portfolio
Manager has the right to use such name (or derivative or logo) only with
the approval of the Manager and only so long as the Manager is Manager to
the Separate Account and/or the Separate Account. Upon termination of the
Management Agreement between the Separate Account and the Manager, the
Portfolio Manager shall forthwith cease to use such name (or derivative or
logo).
(b) It is understood that the name "Warburg, Pincus Counsellors, Inc." or
any derivative thereof or logo associated with that name is the valuable
property of the Portfolio Manager and its affiliates and that the Separate
Account has the right to use such name (or derivative or logo) in offering
materials of the Separate Account with the approval of the Portfolio
Manager and for so long as the Portfolio Manager is a portfolio manager to
the Separate Account. Upon termination of this Agreement between the
Separate Account, the Manager, and the Portfolio Manager, the Separate
Account shall forthwith cease to use such name (or derivative or logo).
20. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of New
York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the
SEC thereunder. The term "affiliate" or "affiliated person" as used in this
Agreement shall mean "affiliated person" as defined in Section 2(a)(3) of
the 1940 Act.
(b) The captions of this Agreement are included for convenience only and
in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) To the extent permitted under Section 16 of this Agreement, this
Agreement may only be assigned by any party with the prior written consent
of the other parties.
(d) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby, and to this extent, the provisions of this
Agreement shall be deemed to be severable.
(e) Nothing herein shall be construed as constituting the Portfolio
Manager as an agent of the Manager, or constituting the Manager as an agent
of the Portfolio Manager.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
SEPARATE ACCOUNT D OF GOLDEN
AMERICAN LIFE INSURANCE COMPANY
_____________________________________ By: _________________________________
Attest
_____________________________________ _____________________________________
Title: Title:
DIRECTED SERVICES, INC.
_____________________________________ By: _________________________________
Attest
_____________________________________ _____________________________________
Title: Title:
WARBURG, PINCUS COUNSELLORS, INC.
_____________________________________ By: _________________________________
Attest
_____________________________________ _____________________________________
Title: Title:
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<PAGE>
EXHIBIT D
OTHER INFORMATION REGARDING WARBURG, PINCUS COUNSELLORS, INC.
Warburg, Pincus' directors and principal officer and their principal
occupations are shown below. The business address of each such person is 466
Lexington Avenue, New York, New York 10017.
<TABLE>
<CAPTION>
NAME AND POSITION
WITH WARBURG, PINCUS PRINCIPAL OCCUPATION
- -------------------- ----------------------------------------------------
<S> <C>
Lionel I. Pincus Chief Executive Officer and Director of Warburg,
Chief Executive Officer and Pincus and similar positions with its affiliates.
Director
John L. Firth Chairman of the Board of Directors of Warburg,
Chairman of the Board of Di- Pincus and similar positions with its affiliates.
rectors
John L. Vogelstein Director of Warburg, Pincus and similar positions
Director with its affiliates.
</TABLE>
Warburg, Pincus also serves as adviser or sub-adviser to other investment
companies. The following table lists the other investment companies, or series
thereof, with an investment objective comparable to that of The Managed Global
Account for which Warburg, Pincus serves as adviser, the approximate net
assets of each investment company at June 11, 1996, and the annual advisory
fee charged by Warburg, Pincus (as a percentage of average daily net assets):
<TABLE>
<CAPTION>
NET ASSETS
NAME OF FUND (IN $000'S) ADVISORY FEE
------------ ----------- ------------
<S> <C> <C>
Warburg Pincus International Equity Fund $3,330,496 1.00%
Warburg Pincus Institutional Fund, Inc.--Interna-
tional Equity Portfolio $ 746,426 .80%
Warburg Pincus Trust--International Equity Portfo- $ 233,646 1.00%
lio
Sierra Trust Funds--International Growth Fund $ 152,438 .50%
The Sierra Variable Trust--International Growth $ 55,375 .50%
Fund
</TABLE>
From time to time, Warburg, Pincus waives some or all of its advisory fees,
which waivers are not reflected in the above table.
D-1
<PAGE>
EXHIBIT E
FORM OF
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement"), entered into
this day of , 1996, by and among Golden American Life Insurance Company
("Golden American"), a stock life insurance company organized and existing
under the laws of the State of Delaware, on its own behalf and on behalf of
Separate Account B of Golden American Life Insurance Company ("Account B"), a
separate account of Golden American; Separate Account D of Golden American
Life Insurance Company ("Account D"), a separate account of Golden American,
(collectively, Account B and Account D are referred to as the "Accounts"); and
The GCG Trust (the "Trust"), a business trust organized and existing under the
laws of the Commonwealth of Massachusetts.
WHEREAS, the Trust is a series-type mutual fund currently consisting of
fifteen operational series, and is registered with the Securities and Exchange
SEC (the "SEC") as an open-end, diversified management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust may in the future add or delete series from time to time;
WHEREAS, Account B is registered with the SEC as a unit investment trust
under the 1940 Act and presently comprises fifteen divisions, each of which
invests in a corresponding operational series of the Trust;
WHEREAS, divisions may be added to or deleted from Account B;
WHEREAS, Account D is registered with the SEC as an open-end, non-
diversified management investment company under the 1940 Act and consists of
one division, The Managed Global Account, which seeks high total investment
return, consistent with a prudent regard for capital preservation, by
investing in a wide range of equity and debt securities and money market
instruments of both domestic and foreign issuers;
WHEREAS, the Managed Global Account of Account D is governed by a board
designated as a Board of Governors who oversee the Managed Global Account
pursuant to the Rules and Regulations of Separate Account D;
WHEREAS, the Accounts currently serve as funding and investment vehicles for
immediate variable annuity and deferred variable annuity contracts (the
"Contracts") issued by Golden American under which Contractowners are
permitted to allocate their net premium or premiums among the divisions of the
Accounts;
WHEREAS, based upon a recommendation from Golden American and management of
Account D, the Board of Governors of Account D has determined that Account D
should be registered under the 1940 Act as a unit investment trust rather than
as an open-end non-diversified management investment company;
WHEREAS, the Board of Governors of Account D and Golden American have
approved the reorganization (the "Reorganization") of Account D into a newly-
created division (the "Division") of Account B, which Division will invest in
shares of a corresponding newly-created series (the "Series") of the Trust;
WHEREAS, the Board of Governors of Account D has further determined that
after such Reorganization, the separate registration of Account D as an
investment company with the SEC shall be terminated;
WHEREAS, following the Reorganization, the Series will act as the investment
vehicle for the Division and may in the future, to the extent permitted by the
1940 Act, serve as an investment vehicle for divisions of separate accounts
funding variable life insurance policies or other insurance products issued by
Golden American and other insurance companies;
E-1
<PAGE>
WHEREAS, the Board of Directors of Golden American, the Board of Governors
of Account D, and the Board of Trustees of the Trust have each considered and
approved the actions contemplated by this Agreement; and
WHEREAS, this Agreement is conditioned upon approval of the Reorganization
by a majority vote of the Contractowners of The Managed Global Account of
Account D present at a meeting called for that purpose, or any adjournments
thereof, at which a quorum is present.
NOW THEREFORE, in consideration of the mutual promises made herein, the
parties hereto agree as follows:
ARTICLE I
CLOSING DATE
SECTION 1.01. The reorganization contemplated by this Agreement shall be
effective on , 1996, or at such other date as may be mutually agreed upon
by all parties to this Agreement (the "Closing Date"). The time on the Closing
Date as of which the reorganization is consummated is referred to hereinafter
as the "Effective Time."
SECTION 1.02. The parties agree to use their best efforts to obtain all
regulatory and Contractowner approvals and perform all other acts necessary or
desirable to complete the reorganization as of the Closing Date.
ARTICLE II
REORGANIZATION TRANSACTIONS
SECTION 2.01. As of the Effective Time, Golden American, on behalf of
Account D, will sell, assign, and transfer all cash, securities, and other
investments held or in transit, receivables for sold investments, and
dividends and interest receivables ("portfolio assets") of Account D to
Account B, the portfolio assets to be held as the property of the Division.
SECTION 2.02. Simultaneously with the transactions described in Section
2.01, Account B will transfer all of the portfolio assets of Account D to the
Trust, to be held as the property of the Series.
SECTION 2.03. In exchange for the portfolio assets of the Accounts, the
Trust will issue shares of the Series and will assume any unsatisfied
liability incurred by Account D before the close of trading on the business
day preceding the Closing Date. The number of shares of the Series to be
issued in the exchange shall be determined by dividing the value of the net
assets of Account D to be transferred, as of the close of trading on the
business day preceding the Closing Date, by the initial per share value of the
shares of the Series, which shall be determined by the officers of the Trust
or otherwise.
SECTION 2.04. As of the Effective Time, Account D shall be combined into the
Division of Account B.
SECTION 2.05. As of the Effective Time, Golden American shall cause the
shares it receives from the Trust pursuant to Section 2.03 above to be duly
and validly recorded and held on its records as assets of the Division, such
that Contractowners' interests in the Division after the Closing Date will
then be equivalent to their former interests in Account D. Golden American
shall take all action necessary to ensure that such interests in the Division,
immediately following the Effective Time, are duly and validly recorded on
Contractowners' individual account records.
SECTION 2.06. The Series shares to be issued hereunder shall be issued in
open account form by book entry without the issuance of certificates. Each
Series share that is issued pursuant to Section 2.03 above will be deemed to
have been issued for a consideration equal to the initial per share value of
the Series.
E-2
<PAGE>
SECTION 2.07. If, at any time after the Closing Date, Account B, Account D,
the Trust, or Golden American shall determine that any further conveyance,
assignment, documentation, or action is necessary or desirable to complete the
reorganization contemplated by this Agreement or confirm full title to the
assets transferred, the appropriate party or parties shall execute and deliver
all such instruments and take all such actions.
SECTION 2.08. Following the Closing Date, Account D will no longer be
charged for management and portfolio management services, and, with respect to
Contracts issued prior to the Effective Time, no management or other expenses
shall be charged against the Series of a type or in an amount which could not
have been charged against the Accounts, had the Reorganization not occurred
unless such expenses are reimbursed with respect to such Contracts by Golden
American. Such reimbursement shall not be required to apply to any
extraordinary expenses or to any federal income tax if the Trust fails to
qualify as a "regulated investment company" under the applicable provisions of
the Internal Revenue Code, as amended from time to time, or to any charge for
Golden American federal income taxes or deferred acquisition cost taxes
attributable to the Contracts, for which Golden American had reserved the
right to charge against the Accounts.
SECTION 2.09. Following the Closing Date, Account D shall file with the SEC
an application under Section 8(f) of the 1940 Act to deregister as an
individual investment company.
ARTICLE III
WARRANTIES AND CONDITIONS
SECTION 3.01. Account D, the Trust, and Golden American, on its own behalf
and on behalf of Account B, as appropriate, make the following representations
and warranties, which shall survive the Closing Date:
(a) There are no suits, actions, or proceedings pending or threatened
against any party to this Agreement which, to its knowledge, if adversely
determined, would materially and adversely affect its financial condition,
the conduct of its business or its ability to carry out its obligations
hereunder;
(b) There are no investigations or administrative proceedings by the SEC
or by any insurance or securities regulatory body of any state, territory,
or the District of Columbia pending against any party to this Agreement
which, to its knowledge, would lead to any suit, action, or proceeding that
would materially and adversely affect its financial condition, the conduct
of its business, or its ability to carry out its obligations hereunder;
(c) Should any party to this Agreement become aware, prior to the
Effective Time, of any suit, action, or proceeding, of the types described
in paragraphs (a) or (b) above, instituted or commenced against it, such
party shall immediately notify and advise all other parties to this
Agreement;
(d) Immediately prior to the Effective Time, Golden American shall have
valid and unencumbered title to the portfolio assets of Account D, except
with respect to those assets for which payment has not yet been made; and
(e) Each party shall make available all information concerning itself
which may be required in any application, registration statement or other
filing with a governmental body to be made by the Trust, by Golden
American, by Account B, or by Account D or by any or all of them in
connection with any of the transactions contemplated by this Agreement and
shall join in all such applications or filings, subject to reasonable
approval by their counsel. Each party represents and warrants that all of
such information so furnished shall be correct in all material respects and
that it shall not omit any material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
SECTION 3.02. The obligations of the parties hereunder shall be subject to
satisfaction of each of the following conditions:
E-3
<PAGE>
(a) The representations contained herein shall be true as of and at the
Effective Time with the same effect as though made at such time, and such
parties shall have performed all obligations required by this Agreement to
be performed by each of them prior to such time;
(b) The SEC shall not have issued an unfavorable advisory report under
Section 25(b) of the 1940 Act nor instituted any proceedings seeking to
enjoin consummation of the Reorganization contemplated hereby;
(c) The appropriate parties shall have received orders from the SEC
providing such exemptions and approvals as they and their counsel
reasonably deem necessary, including from Sections 17(a) and 17(d) of the
1940 Act and Rule 17d-1 thereunder, and shall have made all necessary
filings, if any, with, and received all necessary approvals from, state
securities or insurance authorities;
(d) Golden American and Account B shall have filed with the SEC one or
more post-effective amendments to their registration statements under the
Securities Act of 1933 (the "1933 Act") and the 1940 Act as are necessary
or desirable in connection with the reorganization contemplated by this
Agreement; the Trust shall have filed with the SEC one or more post-
effective amendments to its registration statement under the 1933 Act and
the 1940 Act as may be necessary or desirable to effect the purposes of the
reorganization; and the registration statements for the Trust, Account B,
and Golden American under the 1933 Act and the 1940 Act reflecting the
Reorganization shall have been declared effective or shall have gone
effective as of the Closing Date;
(e) At a Contractowners' meeting called for such purposes (or any
adjournments thereof), a majority of the outstanding voting securities of
Account D present at such meeting shall have voted in favor of approving
this Agreement and the Reorganization contemplated hereby, and
Contractowners shall have authorized Golden American to vote the Series
shares held by it to:
(1) approve an investment management agreement between the Trust, on
behalf of the Series, and Directed Services, Inc. ("DSI") with
substantially the same terms as the corresponding agreement in use by
Account D as of the Closing Date, subject to appropriate modifications
to reflect the different parties, the different management structure of
the Trust, and such other modifications as the Trust and DSI may
reasonably deem appropriate;
(2) approve a portfolio management agreement between the Trust, on
behalf of the Series, DSI, and Warburg, Pincus Counsellors, Inc.
("Warburg, Pincus") with substantially the same terms as the
corresponding agreement in use by Account D as of the Closing Date,
subject to appropriate modifications to reflect the different parties,
the different management structure of the Trust, and such other
modifications as the Trust, DSI, and Warburg, Pincus may reasonably
deem appropriate; and
(3) consider such other matters that properly are submitted to
shareholders;
(f) The Board of Trustees of the Trust shall have taken the following
action at a meeting duly called for such purposes:
(1) approve this Agreement and adopt it as a valid obligation of the
Trust and legally binding upon it;
(2) approve an investment management agreement, or an amendment
thereto, between DSI and the Trust, with substantially the same terms
as the corresponding agreement in use by Account D as of the Closing
Date, subject to appropriate modifications to reflect the different
parties, the different management structure of the Trust, and such
other modifications as the Trust and DSI may reasonably deem
appropriate;
(3) approve a portfolio management agreement, or an amendment
thereto, with substantially the same terms as the corresponding
agreement in use by Account D as of the Closing Date, subject to
appropriate modifications to reflect the different parties, the
different management structure of the Trust, and such other
modifications as the Trust, DSI, and Warburg, Pincus may reasonably
deem appropriate;
(4) approve investment objectives, policies, and restrictions for the
Series that are substantially identical to the investment objectives,
policies, and restrictions of The Managed Global Account of
E-4
<PAGE>
Account D as in effect immediately prior to the Reorganization (which
may include changes approved at the Contractowners' meetings referred
to above); and
(5) authorize the issuance by the Trust of shares of the Series at
their initial per share value on the Closing Date in exchange for the
portfolio assets of Account D, as contemplated by this Agreement;
(g) Golden American and the Accounts shall have received an opinion or
opinions of counsel to the Trust in form and substance reasonably
satisfactory to them to the effect that, as of the Closing Date:
(1) the Trust has been duly organized, is existing in good standing
and is authorized to issue shares of the Series for the purposes
contemplated by this Agreement and is duly registered as an investment
company under the 1940 Act;
(2) the shares of the Series to be issued pursuant to the terms of
this Agreement have been duly authorized and, when issued and delivered
as provided herein, will be validly issued, fully paid and non-
assessable by the Trust;
(3) all corporate and other proceedings required to be taken by or on
the part of the Trust to authorize and carry out this Agreement and
effect the Reorganization have been duly and properly taken;
(4) this Agreement is a valid obligation of the Trust and legally
binding upon it in accordance with its terms;
(h) The Trust and the Accounts shall have received an opinion or opinions
from counsel to Golden American (who may be the same as counsel to the
Trust) in form and substance reasonably satisfactory to them to the effect
that, as of the Closing Date:
(1) Golden American, Account B, and Account D are validly organized
and in good standing under the laws of the State of Delaware and are
fully empowered and qualified to carry out their business in all
jurisdictions where they do so, including to enter into this Agreement
and effect the transactions contemplated hereby;
(2) all corporate and other proceedings necessary and required to be
taken by or on the part of Account B, Account D, and Golden American to
authorize and carry out this Agreement and to effect the Reorganization
have been duly and properly taken; and
(3) this Agreement is a valid obligation of Account B, Account D, and
Golden American and legally binding upon them in accordance with its
terms;
(i) Each party shall have furnished, as reasonably requested by any other
party, other legal opinions, officers' certificates, incumbency
certificates, certified copies of board and committee resolutions, good
standing certificates, certificates of custodians, and other closing
documentation as may be appropriate for a transaction of this type.
ARTICLE IV
COSTS
SECTION 4.01. Golden American or DSI shall bear all expenses in connection
with effecting the Reorganization contemplated by this Agreement, including,
without limitation, any expenses in connection with actions taken pursuant to
Section 2.07 herein, preparation and filing of registration statements and
applications and amendments on behalf of any and all parties hereto,
organizational expenses of the Series, and all legal, accounting, and data
processing services necessary to effect the Reorganization.
E-5
<PAGE>
ARTICLE V
TERMINATION
SECTION 5.01. This Agreement may be terminated and the Reorganization
abandoned at any time prior to the Effective Time, notwithstanding approval by
Contractowners:
(a) by mutual consent of the parties hereto;
(b) by any of the parties if any condition set forth in Section 3.02 has
not been fulfilled by the other parties; or
(c) by any of the parties if the Reorganization does not occur as of ,
199 , and no subsequent date can be mutually agreed upon.
SECTION 5.02. At any time prior to the Effective Time, any of the terms or
conditions of this Agreement may be waived by the party or parties entitled to
the benefit thereof if such waiver will not have a material adverse effect on
the interests of Contractowners.
ARTICLE VI
GENERAL
SECTION 6.01. The Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which shall constitute
one and the same instrument.
IN WITNESS WHEREOF, as of the day and year first above written, each of the
parties has caused this Agreement to be executed on its behalf by its
President or a Vice President or Chairman and attested by its Secretary or
Assistant Secretary, all thereunto duly authorized.
Attest: GOLDEN AMERICAN LIFE INSURANCE
COMPANY
By:
- ------------------------------------- ----------------------------------
Title: Name:
Title:
Attest: SEPARATE ACCOUNT D OF GOLDEN
AMERICAN LIFE INSURANCE COMPANY
By:
- ------------------------------------- ----------------------------------
Title: Name:
Title:
Attest: THE GCG TRUST
By:
- ------------------------------------- ----------------------------------
Title: Name:
Title:
E-6
<PAGE>
VOTING INSTRUCTION/PROXY
THE MANAGED GLOBAL ACCOUNT DIVISION OF SEPARATE ACCOUNT D
The Undersigned Contract Owner of a variable annuity contract (a
"Contract") issued by Golden American Life Insurance Company ("Golden American")
hereby instructs Golden American on behalf of the separate account to vote the
interest in The Managed Global Account attributable to his or her Contract at a
Special Meeting to be held on July 29, 1996, at 10:00 a.m., EDT, at 1001
Jefferson Street, Suite 400, Wilmington, Delaware, and at any adjournment
thereof, in the manner directed below with respect to the matters referred to in
the Proxy Statement for the Meeting, receipt of which is hereby acknowledged,
and in Golden American's discretion, upon such other matters as may properly
come before the Meeting or any adjournment thereof.
This proxy is solicited on behalf of the Board of Governors of Separate
Account D (the "Account") of Golden American. The Board of Governors recommends
that you vote FOR all of the following proposals. The costs associated with the
Meeting will be paid by Equitable of Iowa Companies and Directed Services, Inc.
("DSI"). Neither the Account nor its Contractowners will bear any costs
associated with this Meeting.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
1. Proposal I: To approve a new Management Agreement with DSI.
[_] [_] [_]
2. Proposal II: If Proposal I is approved, to approve an amended
Portfolio Management Agreement with DSI and Warburg, Pincus [_] [_] [_]
Counsellors, Inc. ("Warburg, Pincus").
3. Proposal III: To approve a new Management Agreement with DSI
in the same form as the agreement described in Proposal I, to [_] [_] [_]
become effective following the acquisition of the corporate
parent of DSI.
4. Proposal IV: If Proposal III is approved, to approve a new
Portfolio Management Agreement with DSI and Warburg, Pincus [_] [_] [_]
in the form as the agreement described in Proposal II, to
become effective following the acquisition of the corporate
parent of DSI.
5. Proposal V: To approve the reorganization of the Account from a
separate account of Golden American registered as a management [_] [_] [_]
investment company to a separate account of Golden American
registered as a unit investment trust that invests in a separate
mutual fund.
</TABLE>
This voting instruction will be voted as specified. If NO SPECIFICATION
IS MADE, THIS VOTING INSTRUCTION WILL BE VOTED FOR ALL PROPOSALS.
PLEASE VOTE, SIGN EXACTLY AS LISTED BELOW AND DATE THIS VOTING INSTRUCTION AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
IMPORTANT:
Joint Owners must EACH sign. Trustees and others signing in a representative
capacity should so indicate.
Dated: ,1996
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Signature(s) of Contract Owners(s)
