Exhibit F
CREDIT SUISSE SECURITIES (USA) LLC
VOLARIS VOLATILITY MANAGEMENT
DISCRETIONARY INVESTMENT MANAGEMENT
AGREEMENT FOR BLIND TRUSTS
This Investment Management Agreement is entered into this ____ day of
March, 2006 by and between CREDIT SUISSE SECURITIES (USA) LLC, a Limited
Liability Company, having its principal place of business at 00 Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000 ("Adviser") and Pitcairn Trust Company, a Pennsylvania
Corporation, with an address at 000 Xxxxxxxx Xxxx Xx Xxx 0000, Xxxxxxxxxx, XX
00000, as Trustee of the 2006 EEM Volaris Trust (the "Client").
Whereas, Adviser designs and monitors an option overlay and spreading
strategy that seeks to enhance returns and reduce volatility (the "Strategy");
and
Whereas, the assets identified on Exhibit A hereof are held in an
account (the "Account") established with the Adviser and cleared and custodied
at Pershing LLC (the "Custodian");
Whereas, the Client wishes to engage the Adviser to act as a
discretionary investment adviser to the Client implementing the Strategy with
respect to the assets of the Account;
Now, therefore, Client and Adviser agree as follows:
1. Appointment of Adviser.
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Client appoints Adviser as discretionary investment adviser for the
assets of the Account listed in Exhibit A attached hereto with full power and
authority to supervise and direct the investments of and for the Account in
conjunction with implementation of the Strategy without prior consultation with
Client. Client has elected the Strategy in accordance with direction from the
Settlor of the 2006 EEM Volaris Trust.
Adviser's investment decisions and advice for the Account shall be in
accordance with (i) the investment objectives and guidelines for the Account as
described in Exhibit B attached hereto ("Investment Guidelines"), (ii) the Trust
Agreement, (iii) any written instructions provided by Client to Adviser and (iv)
the information on the New Account Form executed by Client which is incorporated
by reference. It shall be the responsibility of Client to advise Adviser in
writing of any changes to any of the referenced documents.
Adviser is hereby appointed Client's agent with full power and
authority with respect to the Account assets: (a) to purchase or sell options in
accordance with the Investment Guidelines; (b) to execute transactions for the
Account itself and/or with one or more securities brokerage firms as Adviser may
select; (c) to sign and enter into on behalf of Client all documentation
necessary for the management of the Account as contemplated in this Agreement,
for which purpose Client appoints Agent attorney-in-fact; and (d) to act on
behalf of Client in all matters necessary or incidental to management of the
Account. This discretionary authority shall remain in full force and effect
until terminated pursuant to paragraph 14 hereof.
2. Services of Adviser.
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By executing this Agreement, Adviser accepts the appointment as
investment adviser and agrees to supervise and direct the investments of and for
the Account in accordance with Paragraph 1 and the Strategy. The
responsibilities of Adviser do not extend to any assets of the Account other
than those listed on Exhibit A attached hereto and any options purchased or sold
pursuant to clause (a) of paragraph 1 hereof. Adviser does not give legal, tax
or estate planning advice.
Except as may be otherwise required by law, the Adviser will not be
required to take any action or render any advice with respect to the voting of
proxies solicited by or with respect to the issuers of securities in which the
assets of the Account may be invested.
3. Representations of Adviser.
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Adviser represents and warrants that it is and will at all times during
the term of this Agreement continue to be duly registered with the Securities
and Exchange Commission as an investment adviser under the Investment Advisers
Act of 1940, as amended (the "Advisers Act") and is not an affiliate of,
controlled by or under common control with the issuer of the assets held in the
Account.
4. Representations and Indemnification by Client.
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Client represents and warrants that it is authorized by law and by the
terms of the governing document to act as Trustee of the 2006 EEM Volaris Trust,
and that as such has the authority to delegate to Adviser the investment
management of the Account as provided in this Agreement, and such delegation has
been accomplished in accordance with procedures and permitted by the governing
document and by law.
The execution and delivery of this Agreement by Client shall constitute
the representation that the terms hereof do not violate any obligation by which
Client is bound, whether arising by contract, operation of law or otherwise, and
that (a) this Agreement will be binding upon Client in accordance with its
terms; (b) the person executing this Agreement on behalf of the Client is fully
authorized to enter into this Agreement; (c) the Client will deliver to the
Adviser such evidence of such person's authority to execute this Agreement on
behalf of the Client as the Adviser may reasonably require; (d) the Client
received a copy of Part II of the Adviser's Form ADV more than 48 hours prior to
execution of this Agreement; (e) the Client has received a copy of and has read
the document entitled Characteristics and Risks of Standardized Options
(document required to be sent to all clients prior to effecting option
transactions), and understands that the Adviser shall provide a current copy of
such document to the Client on request; and (f) the Client has read, executed
and understands the Risk Disclosure Statement Concerning Derivatives attached as
Exhibit C.
Client represents and warrants that all information it provides to
Adviser pursuant to Paragraph 6(d) hereof will be accurate and complete in all
material respects. Client agrees to indemnify and hold harmless Adviser, its
affiliates and its assignees (each such person, an "Indemnified Party") from and
against any and all losses, claims, damages and liabilities, joint or several,
to which such Indemnified Party may become subject, and relating to or arising
out of any breach of such representation and warranty, and will reimburse any
Indemnified Party for all expenses (including reasonable counsel fees and
expenses) as they are incurred in connection with the investigation of,
preparation for or defense or settlement of any pending or threatened claim or
any action, suit or proceeding arising therefrom, whether or not such claim,
action, suit or proceeding is initiated or brought by or on behalf of Client.
5. Transaction Procedures; Brokerage.
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Adviser may, but is not obligated to, aggregate purchase or sale orders
with those of other client accounts when executing transactions on behalf of
Client.
Unless otherwise directed, in exercising the authority granted to it to
place orders for the purchase or sale of securities and/or other financial
instruments, Adviser is authorized to execute transactions itself and/or
establish and maintain brokerage accounts, select any broker or dealer
(including any broker-dealer affiliated with Adviser) and negotiate commissions
and fees to be paid on such transactions, subject to a continuing obligation to
seek to obtain the best price, execution and overall terms. In instances where
the Adviser (as a registered broker-dealer) executes transactions, the Client
will pay brokerage commissions at the posted rates of Adviser unless otherwise
agreed in writing prior to the execution of this Agreement.
Client understands that, pursuant to an automatic cash sweep program,
cash awaiting investment or reinvestment will be invested in the money market
fund selected by Client at the time the Account is opened. Adviser may receive
revenue sharing payments or distribution payments pursuant to Rule 12b-1 of the
Investment Company Act of 1940. Such payments are not credited back to Client in
calculating the investment advisory fee set forth in paragraph 9. Information
regarding fees and charges imposed by the fund complex and revenue sharing
arrangements entered into by the fund complex are set forth in the current
prospectus or other organizational or offering documents for each mutual fund.
Such documents are available upon request.
Client shall promptly notify Adviser of the sale of assets held in the
Account listed on Exhibit A. Adviser shall employ the Strategy with respect to
the assets in the Account until notified by the client in writing of the sale of
such assets.
6. Execution of Transactions by Adviser.
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a. Principal Transactions
Before the completion of any transaction in which the Adviser proposes
to act as principal, the Adviser will disclose to the Client the Adviser's
capacity as principal and will obtain the Client's consent to such principal
transaction.
b. Authorization of Agency Cross Transactions
Pursuant to Section 206(3) of the Investment Advisers Act of 1940 and
Rule 206(3)-2 promulgated thereunder, the Client authorizes the Adviser to
effect agency cross transactions for the Account and understands that with
respect to agency cross transactions the Adviser will act as broker for, and
receive commissions from, and have a potentially conflicting division of
loyalties and responsibilities regarding both parties to such transactions. The
Client may revoke this authorization at any time upon written notice to the
Adviser.
c. Authorization to Effect Transactions
If the Account is subject to Section 11(a) of the 1934 Act and Rule
11a2-2(T) thereunder (or any similar rule which may be adopted in the future),
it is agreed that, unless otherwise instructed by Client in writing, Adviser may
retain commissions in connection with effecting any securities transactions for
the Account. To the extent applicable, Adviser will furnish Client with all
reports required by law.
d. Rule 144 of the Securities Act of 1933 ("Rule 144")
With respect to transactions, including but not limited to any sales,
covered call writing programs, derivative strategies, or other transactions
contemplated herein, Adviser shall transact in such securities in compliance
with Rule 144. Client shall promptly give notice to Adviser of any information
it may have concerning any intended dispositions or deemed dispositions of any
securities which may be aggregated with or attributable to Client for Rule 144
purposes prior to such disposition or deemed disposition, which may include, but
not be limited to gifts, sales, hedging activities, or other transfers. In
addition, Adviser shall promptly give notice to Client of any actions taken by
the Adviser that may be aggregated with or attributable to Client for Rule 144
purposes prior to such disposition or deemed disposition, which may include, but
not be limited to gifts, sales, hedging activities, or other transfers.
Adviser shall make all necessary Rule 144 filings on behalf of Client
that are required by the Adviser's activities pursuant to this Agreement in such
manner as is required by Rule 144. Client shall promptly supply Adviser with all
information necessary for Adviser to complete such filings relating to the
Adviser's activities in a timely fashion. Client shall keep complete and
accurate records of the number of shares with respect to which Rule 144 filings
have been made and which Adviser has reported to the Client have been sold.
Client shall notify Adviser when Client believes that additional Rule 144
filings are required, so that Client and Adviser can coordinate on the filing by
Client of Rule 144 filings and the transactions by Adviser contemplated herein.
Notwithstanding anything to the contrary contained in this Agreement, if Adviser
in its sole discretion reasonably believes that it has insufficient information
necessary for Adviser to comply with Rule 144 and its filing obligations
hereunder, Adviser shall have full power and authority to not engage in any
transaction for which such filing may be necessary and to take any other action
or actions with respect to the Account assets that it reasonably determines to
be appropriate under the circumstances until it receives the requisite
information.
7. Authorization to Aggregate Orders and to Average Pricing.
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The Client hereby authorizes the Adviser to aggregate purchases and
sales of securities for the Account with purchases and sales of securities of
the same issuer for other clients of the Adviser occurring on the same day. When
transactions are so aggregated, the actual prices applicable to the aggregated
transaction will be averaged, and the Account will be deemed to have purchased
or sold its proportionate share of the securities involved at the average price
so obtained. Average pricing will be used in both agency and principal trades in
reported securities (those that are listed on an exchange or designated as
national market securities.)
8. Limit of Liability.
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Client represents that (a) it recognizes the inherent market
fluctuation risks which surround the investment and reinvestment of assets; (b)
it is aware of the possible losses on the transactions in which Adviser will
engage for the Account, and it is financially capable of bearing such losses;
and (c) it has not received any written or verbal guarantees of performance of
the Account and understands that no representative or agent of Adviser is
authorized to make any such guarantees or representations now or in the future.
To the extent permitted by law, Adviser shall not be liable for any
error of judgment or for any loss suffered by the Client in connection with the
subject matter of this Agreement, except loss resulting from willful misconduct,
bad faith or gross negligence in the performance by Adviser of its duties, or by
reason of Adviser's reckless disregard of its obligations and duties under this
Agreement. Under certain circumstances, these laws may impose liabilities on
persons who act in good faith. Client expressly understands and agrees that
Adviser does not guarantee that a specific result will be achieved through
Adviser's management of the account.
Adviser shall not be responsible for any loss incurred by reason of any
act or omission of Client, the Custodian or any third party, other than any
third party controlled by, or under common control with, Adviser. Adviser shall
be fully protected in acting upon any instruction believed by it to be genuine
and signed or communicated by or on behalf of Client, and Adviser shall be under
no duty to make any investigation or inquiry regarding any Client instruction.
Adviser does not assume responsibility for the accuracy of information furnished
by Custodian or any third party on which it reasonably relies.
9. Fees.
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As compensation for the services provided by the Adviser under this
Agreement, the Client will pay the Adviser a fee in accordance with the fee
schedule described in Exhibit D to this Agreement which may only be amended in
writing by the parties. This fee for the Adviser's services with respect to the
Account shall be paid by debiting the Account quarterly in arrears at the end of
each calendar quarter in accordance with the attached fee schedule. The initial
fee will be assessed pro rata in the event this Agreement becomes effective
other than as of the first of the calendar quarter based on the number of days
during the quarter the assets were held in the Account.
The fee includes payment for: (i) investment advisory services; (ii)
clearing and custodial services provided by Pershing LLC which shall include,
among other things, custody of the assets of the Account, crediting of interest
and dividends on the Account assets, crediting principal on called or matured
securities in the Account together with other custodial functions customarily
performed with respect to securities brokerage accounts; (iv) administrative
services such as the charging and collection of account fees and the processing
of deposits and withdrawals from the Account pursuant to the Client's
instructions; and (v) the issuance of quarterly reports.
To the extent that there is insufficient cash or cash equivalents in
the Account to cover the fee payable to Adviser in accordance with the fee
schedule described in Exhibit D of this Agreement, Adviser will send an advisory
fee calculation report to the Client. Client acknowledges that Custodian charges
interest on the debit balance in the Account until such balance is satisfied.
10. Reporting/Valuation.
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By arrangement with Pershing LLC, Adviser will provide Client with a
monthly statement for any month during which there is trading activity in the
Account and Adviser will also provide annual reports reflecting realized and
unrealized gains and losses in the Account.
Adviser will provide Client with a valuation report of the Account as
of the last day of each calendar quarter. The Account shall be valued in such
manner as shall be determined in good faith by Adviser to reflect fair market
value and the reports will reflect any information that Client shall request in
order to satisfy its oversight responsibility as Trustee. It is agreed that
Adviser, in the maintenance of its records, does not assume responsibility for
the accuracy of information furnished by the Client and its agents. Client
understands that this report shall not be used for tax reporting purposes.
Adviser will use its reasonable best efforts to obtain access to
custody information for the Accounts through an online interface.
11. Notice.
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Any notice, instructions or other communications required or
contemplated by this Agreement shall be in writing and shall be addressed to the
recipient at the address first above written, except that either party may by
notice designate a different address for such party.
12. Termination.
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This Agreement may be terminated by either party at any time upon 30
days' written notice to the other party, which notice shall be effective when
received by the other party. The termination of this Agreement shall not affect
any obligation or liability of the Client for any transaction entered into or
obligation incurred by the Client or on the Client's behalf prior to such
termination.
13. Assignment; Delegation.
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This Agreement shall be binding upon the parties hereto and their
respective successors, heir and assigns; provided, however, that no "assignment"
of this Agreement (as such term is defined by the Investment Advisers Act of
1940 and the rules thereunder) shall be made by Adviser or Client without the
consent of the other party. Client understands that, as a result of this
provision, a transaction involving Adviser that does not result in a change in
the actual management or actual control of Adviser will not constitute an
assignment and thus, no Client consent need be obtained in the event of such a
transaction.
14. Confidentiality.
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Pursuant to Regulation S-P adopted by the Securities and Exchange
Commission, all nonpublic personal information provided by the Client to Adviser
shall be held confidential by the Adviser; unless (i) the Adviser is authorized
in writing by the Client to disclose such information to individuals and/or
entities not affiliated with the Adviser; (ii) required to do so by judicial or
regulatory process; (iii) it is necessary to carry out the purpose of this
Agreement; or (iv) otherwise permitted to do so in accordance with the
parameters of Regulation S-P. All recommendations, advice or other work product
of the Adviser developed under the terms of this Agreement and disclosed to the
Client shall be treated as confidential, except as required by law to be
disclosed.
15. Construction; Governing Law.
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Headings used in this Agreement are for convenience only, and shall not
affect the construction or interpretation of any of its provisions.
This Agreement shall be interpreted and construed in accordance with
the internal substantive laws (and not the choice of law rules) of the State of
New York. All actions and proceedings brought by either Party relating to or
arising from, directly or indirectly, this Agreement shall only be litigated in
courts located within the State of New York. The Parties hereby submit to the
personal jurisdiction of such courts; hereby waive personal service of process
upon it and consent that any such service of process may be made by certified or
registered mail, return receipt requested, directed to it at its address last
specified for Notices hereunder, and service so made shall be deemed completed
five (5) days after the same shall have been so mailed; and hereby waive the
right to a trial by jury in any action or proceeding with the other Party.
16. Non-Waiver of Rights.
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Nothing herein shall in any way constitute a waiver or limitation of
any rights that Client may have under applicable federal or state laws.
17. Entire Agreement; Amendment.
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This Agreement is the entire agreement between the parties as to the
subject matter covered herein and supersedes all prior agreements and
understandings of the parties in connection therewith. If there is any
inconsistency or conflict between this Agreement and any other agreement between
Adviser and Client relating to the Account, the terms and provisions of this
Agreement shall control. If any provision of this Agreement shall be held or
made invalid by statute, rule, regulation, decision of a tribunal or otherwise,
the remainder of this Agreement shall not be affected and, to this extent, the
provisions of this Agreement shall be deemed to be severable. This Agreement may
not be modified or amended except in a writing signed by the parties.
18. Disclosures.
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a. The Adviser shall not be liable hereunder for any failure
to recommend the purchase or sale of any security on behalf of the Client when,
in the Adviser's opinion, such transaction (i) may be contrary to policies and
procedures applicable to the Adviser, including those policies and procedures
designed to avoid the misuse or appearance of misuse of nonpublic information;
or (ii) may constitute a violation of any federal or state law, rule or
regulation or a breach of any fiduciary or confidential relationship between
Adviser or any of Adviser's officers or employees and any other person or
persons.
b. The Client understands that the Adviser's investment
banking division is the regular investment banker for a number of major
corporations and, from time to time, performs investment banking services for
other companies as well. The Adviser believes that the nature and range of
clients to whom it renders such investment banking services is such that it
would be inadvisable to exclude these companies from the Account's portfolio.
Accordingly, unless the Client instructs the Adviser to the contrary, it is
likely that the Client's holdings will include the securities of corporations
for whom the Adviser performs investment banking services. Moreover, the
Client's portfolio may include the securities of companies in which the Adviser
or its officers or employees have positions, long or short.
c. The Client understands that the Adviser's opinions,
recommendations and actions will be based on information deemed by the Adviser
to be reliable, but not guaranteed to or by the Adviser. The Client agrees that
the Adviser shall not in any way be liable for any error in judgment or any act
or omission, provided that the Adviser acts in good faith, except as may be
otherwise provided in applicable federal and state securities laws.
d. The Client understands that the Adviser in performance of
its obligations and duties under this Agreement is entitled to rely upon the
accuracy of information furnished by Client or on the Client's behalf, without
further investigation.
e. The Client agrees that the Adviser will not be liable for
any losses, costs or claims resulting from the Client's failure to notify the
Adviser pursuant to paragraph 1 of this Agreement of any modifications or
amendments to the Investment Guidelines or the Trust.
f. The Client understands that the Adviser and/or its
directors, officers and employees handles accounts for, and renders investment
advice and other investment management and broker-dealer services to other
investors and institutions with respect to, and it may for its own account hold,
purchase, sell or otherwise trade in and deal with securities which are the same
as or similar to those which the Adviser purchases, sells, or otherwise trades
in for the Investment Account, and that the same security will not always be
bought or sold at the same price for each account. The Adviser shall be in all
respects free to take action with respect to investments in securities for the
Investment Account which is the same as or different from the action taken by it
and/or any of the above-mentioned persons in handling such other accounts or
rendering such other investment management or broker-dealer services or with
respect to its or their investments in Securities. To the extent practicable, it
is the Adviser's policy to allocate investment opportunities to the Investment
Account over a period of time on a fair and equitable basis relative to other
investors and institutions.
19. Counterparts.
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This Agreement may be executed in one or more counterparts each of
which when executed and delivered shall be an original and both counterparts
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the first date written above.
THE CLIENT ACKNOWLEDGES RECEIVING A COPY OF THIS AGREEMENT.
PITCAIRN TRUST COMPANY, Trustee of the 2006 EEM Volaris Trust
By:
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Name:
Title:
CREDIT SUISSE SECURITIES (USA) LLC
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Branch Manager
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Managing Director
