INVESTMENT MANAGEMENT AGREEMENT
Exhibit 10.114
This Investment Management Agreement (this “Agreement”) is made and entered into
this 1st day of March 2010 by and between Golden Eagle Insurance Corporation
(the “Company”), a New Hampshire stock insurance company and Liberty Mutual Group Inc.
(the “Advisor”), a Massachusetts corporation.
WHEREAS, the Company desires to enter into a contract for the purpose of appointing
the Advisor to manage the assets of its investment portfolios in accordance with the terms
hereof; and
WHEREAS, the Advisor is willing to manage the assets of the Company’s investment
portfolios in accordance with the terms hereof;
NOW, THEREFORE, the Company and the Advisor hereby agree as follows:
1. Appointment. The Company hereby authorizes and appoints the Advisor as its
investment advisor and, as its agent and attorney-in-fact, to exercise the investment discretion
set forth below with respect to the assets of the Company’s investment portfolios, excluding those
accounts managed by other investment managers (collectively, the “Investment Portfolios”) and the
cash, securities or other property contained therein from time to time. The Company hereby
authorizes and appoints the Advisor, as its agent and attorney-in-fact, to (i) execute all
documentation on the Company’s behalf necessary to open additional accounts in the Company’s name
to facilitate investments made within the investment discretion set forth in the Investment
Guidelines, as defined below, and (ii) to execute all documentation, on the Company’s behalf, to
facilitate investment in securities for the Company’s Investment Portfolios.
2. Scope of Authorization for Investment Discretion. The Advisor shall manage the
Company’s Investment Portfolios in accordance with the investment policy and guidelines set forth
on Appendices A and B respectively (such guidelines, the “Investment Guidelines”), as such
may be amended from time-to-time by written agreement between the parties hereto. In connection
therewith, the Advisor shall have full power to supervise and direct the investment and
reinvestment of the cash, securities and other assets and to engage in such transactions on behalf
of the Company as the Advisor may deem appropriate, in the Advisor’s absolute discretion and
without prior consultation with the Company, subject only to this Agreement and the Investment
Guidelines. The Company hereby acknowledges that the Advisor need not seek approval prior to
engaging in any transaction where such transaction complies with the terms and conditions of the
Investment Guidelines. The Company acknowledges that performance objectives referred to in
Appendices A and B are intended as goals and not as an assurance or guarantee of performance.
The cash and assets of the Company shall be held by third-party custodian(s) that have agreed
to act as custodian(s) for the Company in accordance with the Advisor’s instructions. The Advisor
shall at no time have custody or physical control of the Company’s assets, and the Advisor shall
not be liable for any act or omission of the custodian(s). The Advisor may give instructions to the
custodian(s), in writing or orally. The Company shall instruct the custodian to provide the Advisor
with such periodic reports concerning the status of any Company account as the Advisor may
reasonably request from time to time.
In performing its duties under this Agreement, the Advisor will act in the interests of the
Company, except as otherwise provided herein. The Advisor will not deal with the assets in
the Company’s Account in its own interest or for its own account and, in particular, will not,
without
1
prior written consent of the Company, as principal, sell assets to, purchase assets from, or
borrow money or other property from the Company’s Account.
Without limiting the foregoing, the Company hereby authorizes the Advisor:
(a) to act as the Company’s agent and attorney-in-fact with respect to the Company’s
Investment Portfolios and to have complete discretionary control over the composition of
the Investment Portfolios, including the power to make such acquisitions and disposals of
investments as the Advisor considers appropriate, but always in accordance with the
Investment Guidelines;
(b) to issue to brokers instructions to buy or to sell or otherwise trade in or
deal with any asset in the Investment Portfolios;
(c) to instruct any custodian of any asset in the Investment Portfolios to
deliver any security or other asset sold, exchanged or otherwise disposed of from the
Investment Portfolios;
(d) to pay any fee incurred on behalf of the Company in providing services under
this Agreement, including commission expenses, attendant Securities and Exchange
Commission transaction fees and National Association of Insurance Commissioners
transaction fees which shall be paid from the Investment Portfolios in the conventional
manner;
(e) to delegate any of its responsibilities, duties and authority set forth herein
to, or otherwise to utilize the investment management services of, any of its affiliates
provided that the Advisor will be fully accountable for any acts or omissions of an
affiliate pursuant to such an arrangement, as if such acts or omissions were its own;
(f) to place any securities on deposit with any governmental authority as may be
necessary or desirable to comply with applicable law, and to substitute other securities
in their place;
(g) to perform any other act necessary or desirable to enable the Advisor to carry
out its obligations under this Agreement; and
(h) unless directed otherwise by the Company, to vote proxies on behalf of the
Investment Portfolios, solicited by or with respect to the issuers of securities in which
the assets of the Investment Portfolios may be invested, pursuant to proxy voting guidelines
maintained by the Advisor.
3. Reports and Compliance. Advisor shall promptly furnish to or place at the disposal
of the Company, as appropriate, such information, reports, evaluations, analysis, and opinions as
the Company may, at any time or from time to time, reasonably request. Additionally, Advisor shall
furnish such information, reports and evaluations as the Company may from time to time reasonably
request which may be necessary or appropriate in order to enable the Company to maintain oversight
over the Investment Portfolios and assure compliance with the Investment Guidelines.
4. Fees. The Advisor shall be entitled to compensation for its services hereunder as set
forth in Appendix C attached hereto, and which is made part of this Agreement. Commission
expenses and attendant Securities and Exchange Commission transaction fees resulting from
transactions executed on behalf of the Company shall be paid from the Investment Portfolios’
assets. Compensation amounts owing between the parties shall be settled between the parties
on a
2
quarterly basis and payments of amounts owing shall be made within 45 days after the end of
the calendar quarter.
| 5. | Limits on Advisor Responsibility. |
(a) The Advisor shall not be responsible for the solvency of or the performance of
the obligations of any third party bank, clearing organization, broker, intermediary,
nominee or agent appointed or employed by the Advisor in good faith for the performance of
its duties but the Advisor shall assign to the Company such rights (if any) as the Advisor
may have against such person in the event of the insolvency of any of the above or its
failure properly to perform such obligations and shall give, without further compensation,
such assistance as the Company may reasonably require to exercise such rights.
(b) The Advisor shall be fully protected in acting and relying upon any written
advice, certificate, notice, instruction, request or other paper or document which the
Advisor in good faith believes to be genuine and to have been signed or presented by an
authorized person or other proper party or parties, and may assume that any person
purporting to give such written advice or other paper or document has been duly authorized
to do so unless contrary instructions have been delivered to the Advisor by the Company.
With respect to the acts of custodians and agents acting on behalf of the Advisor, the
Advisor will be liable for the actions of such custodians and agents who follow the
directions of the Advisor and for which the Advisor would otherwise be liable if it had
taken such actions directly.
(c) The Advisor shall not be liable to the Company for any acts or omissions by the
Advisor, its employees and agents under and in connection with this Agreement, except by
reason of acts or omission constituting gross negligence, willful misconduct or fraud on
the part of the Advisor, including its employees. Notwithstanding any of the foregoing to
the contrary, the provisions of this Section 5 shall not be construed to provide for the
exculpation of the Advisor or any affiliate from any liability to the extent that such
liability may not be waived, modified or limited under applicable law, but shall be
construed so as to effectuate the provisions of this Section 5 to the fullest extent
permitted by law.
(d) The Company shall reimburse and indemnify the Advisor for, and hold it harmless
against, any loss, liability or expense, including, without limit, reasonable counsel
fees, incurred on the part of the Advisor arising out of or in connection with its
acceptance of, or the performance of its duties and obligations under, this Agreement, as
well as the costs and expenses of defending against any claim or liability arising out of
or relating to this Agreement unless such loss, liability or expense is the result of
acts or omissions by the Advisor constituting gross negligence, willful misconduct or
fraud; provided, however, that nothing contained herein shall constitute a waiver or
limitation of any rights which the Company may have under applicable securities or other
laws.
6. Representations and Agreements.
(a) The Advisor represents to and agrees with the Company that:
(1) the terms of this Agreement do not violate any obligation by which
the Advisor is bound, whether arising by contract, operation of law or
regulation, or otherwise;
(2) this Agreement has been duly authorized, executed and delivered by
the Advisor and constitutes a legal, valid and binding agreement of the
Advisor enforceable in
3
accordance with its terms, and the Advisor has full power and authority to
enter into this Agreement and to perform its duties hereunder;
(3) it shall maintain at all times during the term of this Agreement
competent personnel to perform the duties required of it hereunder, and the
Advisor’s expenses in connection therewith shall be borne by the Advisor; and
(4) the representations and warranties contained herein shall continue and
remain in effect during the term of this Agreement, and, if at any time during the
term of this Agreement any event occurred which would make any of these foregoing
representations untrue, incomplete or inaccurate in any respect, the Advisor will
promptly notify the Company of such event.
(b) The Company represents to and agrees with the Advisor that:
(1) the terms of this Agreement do not violate any obligation by which
the Company is bound, whether arising by contract, operation of law or
regulation, or otherwise;
(2) the Company is the sole owner of the assets covered hereby and such
assets are free and clear of any and all liens and restrictions on their
transfer or sale, except for applicable transfer restrictions under various
securities laws;
(3) this Agreement has been duly authorized, executed and delivered by
the Company and constitutes a legal, valid and binding agreement of the
Company enforceable in accordance with its terms, and the Company has full
power and authority to enter into this Agreement and to perform its duties
hereunder;
(4) the Investment Portfolios are not subject to the U.S. Employee
Retirement Income Security Act of 1974, as amended (“ERISA”);
(5) it is not a “Benefit Plan Investor,” as defined under ERISA;
(6) the Company will deliver or cause to be delivered to the Advisor in
writing, all the information, documents and instruments that the Advisor may
reasonably request in order to perform its duties hereunder; and
(7) the representations and warranties contained herein shall continue and
remain in effect during the term of this Agreement, and, if at any time during the
term of this Agreement any event occurred which would make any of these foregoing
representations untrue, incomplete or inaccurate in any respect, the Company will
promptly notify the Advisor of such event.
7. Acknowledgements and Consents. The Company acknowledges that:
(a) the Advisor may place orders for the execution of transactions with or through
such brokers, dealers or banks as the Advisor may select in its sole discretion. In
selecting such broker, Advisor will give primary consideration to obtaining the most
favorable price and efficient execution. The Advisor may consider, in addition, the
financial stability and reputation of brokers and dealers and the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities and Exchange Act
of 1934, as amended) provided by brokers and dealers that may benefit the Company. The
Advisor may, and is authorized to, consistent with its duty of best execution and in
compliance with all applicable securities laws, pay a commission for executing a
transaction which may be greater than the amount of the commission another broker or
dealer might have charged for effecting that transaction, provided that the Advisor
4
determines in good faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services provided. Subject to the foregoing, the Company acknowledges
that such research services rendered may be useful in providing services to clients other than the
Company, and that not all such information will necessarily be used by the Advisor in connection
with rendering services to the Company. The Company understands and agrees that it will not direct
brokerage, and that the choice of brokers is in the Advisor’s sole discretion;
(b) (i) the Advisor acts as adviser to other clients and may give advice, and take
action, with respect to any of those clients which may differ from the advice given, or
the time or nature of action taken, with respect to the Company’s Account; (ii) where
there is a limited supply of a security, the Advisor will use its best efforts to allocate
or rotate investment opportunities in a fair and equitable manner, and the Company
acknowledges that the Advisor cannot assure, and assumes no responsibility for, equality
among all accounts and customers; (iii) affiliates of the Advisor and officers, directors
and employees of the Advisor and such affiliates of the Advisor may engage in
transactions, or cause or advise other customers to engage in transactions, which may
differ from or be identical to transactions engaged in by the Advisor for the Investment
Portfolios and the Company acknowledges that the Advisor and affiliates of the Advisor and
officers, directors and employees of the Advisor and such affiliates of the Advisor may at
any time acquire, increase, decrease or dispose of positions in securities or other assets
which are, at the same time being acquired, held or disposed of for the Company’s Account;
and (iv) the Advisor shall not have any obligation to recommend any transaction or
initiate the purchase or sale of any security or other asset for the Investment Portfolios
which any of such affiliates or any of the officers, directors or employees of Advisor or
such affiliates may engage in for their own accounts or the account of any other customer,
except as otherwise required by applicable law;
(c) from time to time the Advisor may determine, in its reasonable judgment, to sell a
security for the Company that certain of the Advisor’s investment advisory clients or the
clients of its affiliated broker-dealer wishes to buy, or buy a security that certain of
the Advisor’s investment advisory clients or the clients of its affiliated broker-dealer
wishes to sell. Such an agency-cross transaction could result in the payment of fees to the
Advisor by both the Company and such other client. By execution of this agreement, the
Company authorizes and grants consent to the Advisor to participate in agency-cross
transactions involving the Investment Portfolios. The Company may revoke its consent at any
time by written notice to the Advisor; and
(d) the Advisor may aggregate sales and purchase orders for the Company’s Account
with similar orders being made concurrently for other accounts managed by the Advisor, if in the Advisor’s reasonable
judgment such aggregation shall result in an overall economic benefit to the Company’s
Account, taking into consideration the selling or purchase price, brokerage
commission and other expenses; in such case the actual prices applicable to the
transaction will be averaged among the accounts for which the transaction is effected, including the Company’s
Account.
8. Termination. This Agreement may be terminated by the Advisor upon 180 days
written notice to the Company, and terminated by the Company at any time upon written notice to
the Advisor, termination effective upon receipt of such notice by the Advisor (the “Termination
Date”). Upon termination, the Advisor shall have no further investment management responsibility
for assets in the Account, but shall have reasonable time, not to exceed 90 days, to transfer
assets to a custodian of the Company’s selection. The fee payable to the Advisor
5
pursuant hereto will be prorated to the Termination Date and any unearned portion of prepaid
fees will be refunded to the Company.
9. Enforceability. If any provisions of this Agreement are held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other provision, and the
Agreement shall be construed and enforced as if such provisions had not been included.
10. Assignment. No assignment of this Agreement, including by operation of law, may be
made by any party to this Agreement without the consent of the other parties hereto. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding upon the parties hereto,
their successors and assigns.
11. Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach of the same, shall be settled by arbitration in accordance with the rules
of the American Arbitration Association, or another nationally recognized arbitration association
mutually agreed upon by the parties hereto. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction. All arbitration expenses shall be borne equally
by the Advisor and the Company. Notwithstanding any of the foregoing to the contrary, the
provisions of this Section 11 do not constitute a waiver of any right provided by any applicable
law, including the right to choose the forum, whether arbitration or adjudication, in which to
seek resolution of disputes.
12. Governing Law. This Agreement shall be construed in accordance with applicable
federal law and, to the extent not preempted, the laws of The Commonwealth of Massachusetts
without regard to its conflict of laws principles.
13. Counterparts and Facsimile. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all of which, when taken
together, shall constitute one and the same instrument.
14. Entire Agreement/Amendment. This Agreement, including the Appendices hereto,
constitutes the entire agreement among the parties with respect to the subject matter hereof and
supersedes all previous agreements, promises, representations, understandings and negotiations,
whether written or oral, between the parties with respect to the subject matter hereof. This
Agreement, including the Appendices hereto, may not be amended except in writing signed by each
of the parties hereto.
6
IN WITNESS WHEREOF, the parties hereto have caused this Investment Management
Agreement to be executed as of the date set forth above.
| Golden Eagle Insurance Corporation |
||||
| By: | 
|
|||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Vice President, Chief Financial Officer and Treasurer | |||
| Liberty Mutual Group Inc. |
||||
| By: | 
|
|||
| Name: | A. Xxxxxxxxx Xxxxxxxx | |||
| Title: | Executive Vice President and Chief Investment Officer | |||
7
Appendix A
STATEMENT OF INVESTMENT POLICY
The investment policy of the Company, like that of the other portfolios managed for the
accounts of Liberty Mutual Insurance Group (“LMIG”), has been formulated with two basic tenets in
mind. First, as a property and casualty insurance company, the primary purpose of the investment
portfolio is to support the company’s insurance operations and to be consistent with the company’s
objectives for long-term financial strength in order to meet its obligations to policyholders.
Second, as an insurance company, the preponderance of risk assumed should be in the underwriting of
the company’s insurance products, not in the investment of its assets. Within these broad risk
parameters, management of the portfolio will focus on maximizing the long-term after-tax total rate
of return on invested assets through disciplined asset allocation and security selection, balanced
with the need for the portfolio to produce investment income, stable cash flow, and sufficient
liquidity. Asset management should also provide safety through adequate diversification of risk,
the preservation of principal, and the avoidance of unacceptable levels of asset/liability
mismatches. Within this context, individual investment decisions will be based on fundamental
economic, financial, credit and security analysis/selection combined with relative value
considerations among securities and market sectors. The specific terms and conditions of individual
securities and the specific asset’s fit within the total portfolio framework will be evaluated
prior to investment. The overall policy will be managed through adherence to a set of broadly
defined policy guidelines designed to give the Advisor discretion in meeting portfolio objectives.
This investment policy and the investment guidelines, all of which will be reviewed on a periodic
basis in conjunction with changing regulatory and business requirements, are subject to the final
approval of the Company’s Board of Directors or a duly appointed and authorized committee thereof.
The ongoing implementation of the investment policy will be the responsibility of the Advisor
through the authority granted by the Company’s Board of Directors. The Advisor consists of the same
group of investment professionals responsible for managing the other insurance companies investment
assets of LMIG, currently totaling over $50.0 billion. As such, the implementation and maintenance
of the investment policy will occur within the same basic framework, as LMIG’s other portfolios and
adjusted, when and where appropriate, to accommodate the specific requirements of the Company. All
investment related decisions and transactions will be implemented by those individuals with proven
abilities to do so effectively and that have been granted that authority by the Company’s Board of
Directors through the Chief Investment Officer of LMIG. All investment transactions will be
reported to the Board at the regularly scheduled meetings.
8
Appendix B
INVESTMENT GUIDELINES
The investments will be managed on a fully discretionary basis, subject to the guidelines and
constraints described below and in a manner consistent with the overall policy framework. Table 1
below presents broad policy guidelines as to the percent of total long-term assets that may be
invested in any particular asset category. The level of exposure within the established range will
be governed by the fundamental long-term outlook for total returns within the given asset category
in relation to assessed risk combined with shorter-term tactical or technical issues. The Advisor
may invest up to ten percent of invested assets in assets not falling within the investments
authorized below provided that the investment is permitted under applicable state regulations and
the transaction is reported to the Board of Directors of the Company or the authorized committee
thereof at its next regularly scheduled meeting.
Table 1
Asset Category Guidelines
Asset Category Guidelines
| Maximum % of | ||||
| Asset Category | Invested Assets or Surplus | Limits Within Asset Category | ||
Debt Obligations: |
||||
U. S Government / Agency — Any Direct
Obligations & Guaranteed Issues Carrying
Full Faith and Credit (Includes Small
Business Administration (“SBA”) and
Government National Mortgage
Association (“GNMA”) Pass-Throughs
and Commercial Mortgage Obligations
(“CMO”))
|
Up to 100% of invested assets | None | ||
U.S. Agencies & Government Sponsored
Enterprises — Any Direct Obligations &
Guaranteed Issues (Excluding Mortgage
Backed Securities (“MBS”) & CMO
Which are Not Full Faith & Credit))
|
Up to 50% of invested assets | 15% of invested assets per issuer | ||
MBS & CMO of U.S. Agencies &
Government Sponsored Enterprises
|
Up to 35% of invested assets | 20% of invested assets for Federal National Mortgage Association (“FNMA”) and 20% for Federal Home Loan Mortgage Corp. “FHLMC” | ||
Non-Agency / Non-Government
Sponsored Enterprise Asset Based
Securities (“ABS”), Commercial
Mortgage Backed Securities (“CMBS”) &
Commercial Mortgage Loans
|
Up to 25% of invested assets | 2% of invested assets per deal | ||
Municipal Obligations
|
Up to 65% of invested assets | 3% of invested assets per issuer | ||
Corporates: |
9
| Maximum % of | ||||
| Asset Category | Invested Assets or Surplus | Limits Within Asset Category | ||
Investment Grade (includes foreign governments) |
Up to 60% of invested assets | 2% of invested assets per issuer | ||
Noninvestment Grade (includes foreign governments) |
Lesser of 10% of invested assets or 50% of surplus | 0.5% of investment assets per issuer (at time of purchase) or 2% of invested assets per issuer if due to downgrade) | ||
Equities: |
||||
Public Common Securities
|
Lesser of 10% of invested assets or 50% of surplus | 2% of invested assets per issuer | ||
Preferred Securities/Direct Investment
|
Up to 10% of invested assets | 2% of invested assets per issuer | ||
Limited Partnerships, LLC’s or other
investment fund vehicle.
|
Lesser of 10% of invested assets or 50% of surplus | Limited partnerships limitation of 5% aggregate | ||
Short-Term Obligations: |
||||
Cash Equivalents or Short-Terms
|
Up to 100% of invested assets | None |
Notwithstanding anything herein to the contrary, the portfolio will at all times be
maintained in compliance with the statutes of the Company’s state of domicile.
Exposure to all categories with surplus restriction will not exceed 100% of surplus.
Maturity Constraints: The duration of the Company holdings of debt obligations will be managed
commensurate with the general terms of its liabilities.
Credit Quality: The overall credit quality of the Company holdings of debt
obligations will not be below BBB.
Concentration Benefits: If the Company can achieve a specific monetary, regulatory, or other
benefit by concentrating assets above the amounts given in these guidelines, then, if consistent
with state law, the Company may exceed these guidelines upon approval by the Company’s Chief
Investment Officer.
OTHER AUTHORIZED INVESTMENT PRACTICES
| 1. | Reverse repurchase-agreements may be entered into for purposes of liquidity management and yield enhancement to the degree that the total amount outstanding does not exceed 25% of portfolio assets and the original term does not exceed 90 days. Such reverse repurchase agreements will be executed in a manner consistent with standard industry practices regarding the pledging of collateral, marking-to-market, et cetera. | |
| 2. | Lending of portfolio securities will be permitted in any amount up to 40% of portfolio assets and subject to constraints and provisions as may be agreed upon in a securities lending agreement with an agent of the portfolio manager’s choice or may be conducted directly by the portfolio manager. In any event, all securities lending activities will be conducted in accordance with the guidelines outlined in Addendum A, attached hereto. |
10
| 3. | Mortgage-Backed Securities dollar rolls will be permitted in an amount up to 25% of total holdings of eligible mortgage-backed securities. |
In no event shall the aggregate amount of reverse repurchase agreements, securities lending
transactions, and mortgage-backed securities dollar rolls exceed 40% of the portfolio at the
time any commitments are made.
11
Addendum A
Securities Lending Program
The proposed lending program would be structured along the following lines:
| • | Lending Activity will remain secondary to the active management of the company’s portfolios reflecting its role as an enhancement to portfolio income rather than an alternative investment strategy. | |
| • | Lending will be subject to the following constraints: |
| (1) | No more than 40% of total assets holdings will be on loan at any point in time. | ||
| (2) | Combined securities lending, dollar-roll, and reverse repurchase activity will not exceed 40% of total holdings. |
| • | Exposure to any single borrower from securities lending, excluding repurchase agreements done as collateral investments will be limited to 5% of total asset holdings. | |
| • | Collateral investments other than repurchase agreements and short-term bank obligations will be restricted to security types in which the portfolios would normally invest. In addition, leveraged MBS (mortgage backed securities) products (e.g. IO’s, PO’s, Inverse Floaters, etc.) will be excluded as repurchase collateral. | |
| • | Collateral investments will be limited to U.S. dollar-denominated obligations. Investments of cash collateral may be made in issuers having a split short-term rating, provided that no portion of the rating is below A2/P2. Foreign issuers will be limited to banks with the further restrictions that these issuers must carry a minimum single “A” long-term rating. | |
| • | Letter of Credit will not be taken as collateral. | |
| • | Lending activity and Collateral reports will be generated on a weekly basis. |
12
Golden Eagle Insurance Corporation
and
Liberty Mutual Group Inc.
and
Liberty Mutual Group Inc.
Compensation
Advisor shall receive a quarterly management fee calculated as follows:
{(the market value under US GAAP of all cash and securities in the Company
Account on the first day of each calendar quarter plus the market value under US GAAP of
all cash and securities in the Company Account on the last day of that same calendar
quarter) divided by two} times .00045.
For the purposes of the above calculations, the market value of the securities shall be
determined as of the close of business on the first and last days of each quarter.
Company shall be responsible for all custody related charges and wire transfer fees
originating from the custody account.
Notwithstanding the formula set forth above, the compensation paid hereunder shall be no
more than the actual costs without a profit factor built into the cost.
13
