March 14, 2000
Xxxxxx X. Xxxxx
President & Chief Executive Officer
PXRE Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: Investment Advisory Services
Dear Xx. Xxxxx:
This letter will serve to confirm our agreement that Mariner Investment
Group, Inc. ("Mariner") will provide investment advisory, trade execution and
related services to PXRE Corporation and its U.S. affiliates (the "Client") on
the terms, and subject to the conditions, set forth herein.
Scope of Responsibilities
Mariner will perform the services and have the authority set forth
herein with respect to certain cash, securities and other investment assets of
the Client specified in writing by the Client and all proceeds thereof and
additions thereto (the "Account"). Mariner will supervise and direct the
investment of the Account in accordance with, and subject to, the investment
guidelines provided by the Client in writing (a copy of the initial guidelines
being annexed as Exhibit A), as the same may be amended, revised or replaced
from time to time by the Client (the "Investment Guidelines"). Subject to the
foregoing, Xxxxxxx, as agent and attorney-in-fact with respect to the Account
may, when it deems appropriate, buy, sell, exchange, retain, reinvest or
otherwise trade in securities of the types specified in the Investment
Guidelines and place orders for the execution of such investment transactions
with or through such brokers, dealers or other persons as Mariner may select;
provided, however, that Mariner shall consult with Client prior to consummating
any transaction, or series of related transactions, in excess of $5,000,000.
Mariner shall deliver, or shall cause to be delivered, to Client or to such
custodian as Client may direct in writing to Mariner, all assets in the Account,
as Client may direct from time to time, and Mariner shall not retain any assets
in the Account. Client may make any addition to or withdrawal from the Account
at any time and in any amount that Client determines, so long as Client promptly
notifies the Manager in writing of any addition to the Account and the amount of
the addition, and so long as Client makes no withdrawal from the Account without
first delivering to the Manager within a reasonable time prior to the
withdrawal, written notice of
intended withdrawal and the amount of the withdrawal. Mariner will comply with
all legal requirements and rules of securities exchanges applicable to its
duties in connection with the execution of transactions.
Mariner will provide or cause to be provided to the Client such
periodic reports concerning the status of the Account (including a valuation
thereof based upon such valuation method(s) agreed with Client) as the Client
may reasonably request. Mariner will provide to the Client on request, and not
less frequently than quarterly, a report of Account transactions effected by
Mariner since the date of the most recent such report. Mariner will preserve its
records relating to the Account for no less than six years and shall make such
records available for inspection at reasonable times during normal business
hours, upon the request of the Client, to the Client, its auditors or any
pertinent regulatory authority. Prior to discarding or destroying any such
records, Mariner will give the Client reasonable opportunity, at the Client's
expense, to review them and to take all or such portion of them as the Client
wishes to retain. All information and advice furnished by either party to the
other hereunder will be treated as confidential and will not be disclosed to
third parties except as provided in this paragraph or as required by law.
Fees
Client agrees to pay Mariner a fee, or defer such fee pursuant to an
arrangement agreed to in writing by both parties, payable or deferred quarterly
in advance, calculated, based on the valuation of the Account as at the end of
the previous quarter, using the fee schedule below for the assets under
management.
Asset Class Annual fee %
Traditional Equities .25%
Non-Mariner Hedge Funds 1.25%
Mariner Hedge Funds 0%
High Yield Public Debt .25%
Private Securities .50%
The methodology for valuing the Account for fee calculation purposes shall be as
agreed in writing by Mariner and Client. If Mariner shall serve for less than
the whole of any calendar quarter, its compensation shall be payable on a pro
rata basis for the period of the calendar quarter for which it has served as
manager hereunder, and Mariner shall promptly reimburse Client accordingly in
respect of any advance payment.
Expenses
Client shall reimburse Mariner for any reasonable investment-related
out-of-pocket costs and expenses incurred in monitoring the Account of a type
previously agreed in writing by the Client upon presentation of appropriate
supporting documentation.
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Indemnity
Client shall indemnify and hold harmless Mariner, its directors,
officers, employees and agents ("Indemnified Parties"), individually and
collectively, against any losses (including financial results poorer than
expected by Client), claims, damages, liabilities or expenses, including
reasonable attorneys' fees (collectively, "Losses") to which Mariner may become
subject in so far as such Losses arise out of or are based upon any activities
undertaken by, or inaction of, Mariner as investment advisor, unless such Losses
arise out of the gross negligence, willful misfeasance or bad faith of the
Indemnified Parties.
Mariner shall give Client written notice as soon as practicable after
it becomes aware of any fact, condition or event which may give rise to Losses
for which indemnification hereunder may be sought. If any lawsuit or enforcement
action is filed against any Indemnified Parties which may give rise to any
indemnification Losses, written notice thereof shall be given to Client as
promptly as practicable (and in any event, within 10 days after the service of
the citation or summons); provided, that the failure to give such notice shall
not relieve Client from its indemnification obligations hereunder, except and
only to the extent that such failure increases the indemnified Losses. Client
shall be entitled, if it so elects, to take control of the defense and
investigation of any such lawsuit or action and to employ and engage attorneys
of its choice (and at its expense) to handle and defend the same. No settlement
relating to any Losses shall be made unless Mariner gives its written consent to
such settlement which consent shall not be unreasonably delayed or withheld.
Status of Investment Manager
Mariner will for all purposes herein be deemed to be an independent
contractor and will, except as otherwise expressly provided or authorized by or
under this letter agreement, have no authority to act for or represent the
Client in any way or otherwise be deemed an agent of the Client.
Activities of Investment Manager
Mariner and its affiliates, may engage, simultaneously with the
investment management activities on behalf of the Account, in other businesses
and make investments for their own accounts, and may render services similar to
those described in this agreement for other individuals, companies, trusts or
persons, and shall not by reason of such engaging in other businesses, making
such investments or rendering of services for others be deemed to be acting in
conflict with the interest of the Account.
Term
This Agreement is effective from May 1, 1999 and may be terminated upon
ninety-(90) days written notice by Mariner, or upon thirty (30) days written
notice by Client, to the other or
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upon shorter notice upon the mutual agreement of the parties; provided, however,
Client may terminate this Agreement without such advance notice if Client pays a
termination fee determined as if the Manager had continued to provide services
under this Agreement for a period of thirty (30) days after the termination
date. Termination of this Agreement for any reason shall not relieve the Manager
of liability or responsibility under this Agreement with respect to the period
prior to the effectiveness of the termination. This letter agreement will be
governed by, and construed in accordance with, the laws of the State of New
York, (other than any conflict of law rule which might result in the application
of the law of any other jurisdiction).
Notification
All notices and other communications hereunder shall be in
writing and shall be deemed to have been given when delivered by hand against
written receipt; when confirmation of a fax or email sent during business hours
of the recipient is received by the sender; or upon the fifth day following
mailing which shall be by certified or registered mail, postage paid:
1. If to Mariner at: Mariner Investment Group, Inc.
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx, XX, XX 00000
Fax number: 000 000 0000
Email: xxxxxxxxxxxxx@xxxxxxx.xxx
Attention: Xxxxxxx X. Xxxxxxxxxxxx
If to Client at: PXRE Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax number: 000-000-0000
Email: xxx_xxxx@xxxx.xxx
Attention: Xxxxx X. Xxxx
Assignment
Without the written consent of the other party, this Agreement may not
be assigned by either of the parties hereto; any such attempted assignment being
void.
Authority to Perform
Each of the parties to this Agreement hereby represents that it is
duly authorized and empowered to execute, deliver and perform this Agreement and
the transactions contemplated hereby, that such actions do not conflict with or
violate any provision of law, regulation, or contract, deed of trust, agreement
or other instrument to which it is a party or by which it is bound or to which
it is subject and that no consent of any person or government regulatory agency
to such person's performing its obligations under this Agreement is required
which has not been obtained, and that this Agreement is a valid and binding
obligation upon that party, enforceable in accordance with its terms.
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Miscellaneous
This Agreement is the entire agreement of the parties with respect to
the management of the assets in the Account and may not be amended except in a
writing signed by the parties.
Please confirm your agreement with the terms set forth herein by
signing the enclosed copy of this letter where indicated below and returning it
to Mariner.
Very truly yours,
MARINER INVESTMENT GROUP, INC.
By /s/ Xxxxxxx Xxxxxxxxxxxx
------------------------------
Title: Chairman
AGREED AND ACKNOWLEDGED,
PXRE CORPORATION
By /s/ Xxxxx Xxxx
-------------------------------
Title: Executive Vice President
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