Exhibit 10.11
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement"), dated as of January 1, 2002, is
made by and between XXXXXXX WATSA INVESTMENT COUNSEL LTD. ("HW"), FAIRFAX
FINANCIAL HOLDINGS LIMITED ("FFH") and ODYSSEY AMERICA REINSURANCE CORPORATION
("OARC"). As used in this Agreement, "we", "us" and "our" shall refer to OARC,
and "you" and "your" shall refer to HW and FFH jointly. This Agreement
supersedes and replaces the Investment Management Agreement between OARC and HW
dated April 13, 1999 and the Investment Administration Agreement between OARC
and FFH dated April 13, 1999.
In consideration of the mutual promises contained herein, the parties agree as
follows:
Investment Management
1. We authorize HW to manage on a continuous basis an investment account (the
"Account") on our behalf on the terms and conditions set out in this
Agreement.
2. HW shall manage the Account in accordance with the investment objectives
from time to time communicated in writing by us to HW, subject at all times
to the investment guidelines. Until mutually agreed otherwise, the
investment guidelines shall be as set out in the investment guidelines
attached hereto as Schedule A. The investment guidelines shall at all times
be in compliance with the investment statutes of the State of Connecticut.
3. Subject to Section 2 above, HW shall manage the Account in our name and HW
is hereby authorized to take such action for the Account as HW, in your
sole discretion, may consider appropriate for the operation of the Account
including, without limitation, the power to buy, sell and exchange and
otherwise deal in all securities which may at any time form part of the
Account and to invest, in securities selected by HW, all funds contained
in, paid to or derived from the operation of, the Account, except to the
extent that HW is otherwise instructed in writing by us.
The services to be performed by HW shall be performed only by officers and
employees who have appropriate qualifications. HW agrees to provide to us
such information as we may reasonably request concerning the education and
experience of any individuals HW proposes to assign to the performance of
such services. Also, upon our request, HW agrees to provide a list of
individual names
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and a brief description of their responsibilities. HW agrees to promptly
notify us of any changes in HW's staff involving individuals that perform
material functions on our Account.
3A. Without limiting the authority granted in Section 3, but subject to the
restrictions contained in this Section 3A, you are specifically authorized
to exchange or sell securities between affiliated companies, even if the
value of the transaction exceeds the lesser of 3% of the admitted assets or
25% of the policyholder surplus of such companies, without the prior
approval of the Connecticut Insurance Department, provided that Odyssey
America files an amendment to its holding company registration statement
fifteen days after the month end in which the exchange has taken place.
Each such transaction shall comply with the following:
a. The only securities, which may be exchanged or sold in these
transactions are publicly traded securities issued by high quality,
credit worthy entities.
b. These exchanges or sales shall be made at fair market value. The value
of the securities shall be determined on the closing date of the
transaction as follows:
i. The closing price for the security listed in Bloomberg or on a
public exchange or quotation system for the immediately preceding
trading day; or
ii. The price determined as follows:
(a) On the date of the transaction, you will contact the
original issuing broker for the particular security.
(b) The broker will then contact their trader on the floor at
that time to provide a real-time quote.
(c) The trader will provide a "spread quote" (the spread quote
is expressed as the number of basis points the particular
security is trading above a comparable coupon and maturity
U.S. treasury security).
(d) All 3 steps above shall be documented via a paper printout
of a Bloomberg e-mail exchange amongst the parties. A copy
of such documentation shall be provided to all parties
involved in the exchange or sale.
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(e) You will then load the spread quote into the Bloomberg
pricing model software. The software, in turn, will convert
the spread quote into a customary price quotation for the
security. The software mode calculation screen shall be
printed, retained in the file, and provided to all parties
involved in the exchange or sale.
c. Expenses incurred and payment received by any of us shall be allocated
in conformity with customary insurance accounting practices
consistently applied.
d. The transactions will be reported to us in sufficient detail that our
books, accounts, and records may be so maintained as to clearly and
accurately disclose the precise nature and details of the
transactions.
4. The securities and funds of the Account have been deposited with and shall
be held by The Bank of New York (or with such other custodian as is chosen
by you from time to time and is approved by the Connecticut Insurance
Department) (the "Custodian") pursuant to an agreement, which we have
entered into with the Custodian. We have instructed the Custodian to
promptly follow your directions at all times and to provide HW with all
such information concerning the Account as HW may from time to time require
in connection with your management of the Account, including without
limitation, copies of relevant monthly statements.
5. Provided HW has used reasonable care and diligence, HW shall not be liable
for any damage, loss, cost or other expense sustained in the operation of
the Account or relating in any manner to the carrying out of your duties
under this Agreement. Notwithstanding the foregoing, any losses suffered as
a result of an error in implementing investment decisions caused by HW's
negligence or dishonesty are to be fully reimbursed by HW. To the extent
any errors occur in implementing investment decisions, HW shall immediately
notify us in writing of all relevant facts. HW shall bear full
responsibility for any such errors to the extent such errors result from
HW's negligence or dishonesty and shall be liable for all financial injury
to us resulting therefrom. We agree that HW shall be entitled to assume
that any information communicated by us or the Custodian to HW is accurate
and complete, and that in making investment decisions HW shall be entitled
to rely on publicly available information or on information which HW
believes to have been provided to you in good faith, in both cases barring
actual knowledge by HW to the contrary.
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6. HW will provide us with a monthly statement and a quarterly presentation
respecting the securities held in the Account.
7. HW shall deliver in writing to us, as soon as practicable after
implementation of an investment decision, HW's confirmation of such
implementation to enable us to ascertain that such implementation has been
effected pursuant to the guidelines and procedures of our Board of
Directors or a duly authorized committee thereof. Otherwise, the nature and
timing of HW's reporting to us on the status of the Account shall be at
least quarterly, within 45 days after the end of each quarter.
8. We acknowledge receipt of a copy of policies that HW has established to
ensure that investment opportunities are allocated fairly among HW's
discretionary investment accounts and we confirm that these policies, until
revised by HW, will apply to the account.
Investment Administration
9. We authorize FFH to provide, and by signing below FFH agrees to provide,
the investment administration services set forth in Schedule B attached
hereto, on our behalf and on the terms and conditions set out in this
Agreement, subject to such guidelines, procedures and limitations as may be
duly established and approved by our Board of Directors or a duly
authorized committee of said Board.
General
10. You shall be entitled to such fees for the services provided hereunder as
FFH may specify from time to time. Attached hereto as Schedule C is a copy
of the current fee schedule and FFH agrees to give us thirty (30) days
prior written notice of any change in such schedule, which change shall
require the approval of Connecticut Insurance Department. Such fees shall
be the exclusive fees and charges payable (excluding third party
disbursements reasonably incurred) for the services provided hereunder. As
regards third party services, you will charge us only the amount of your
actual disbursements paid to arm's length third parties for such services,
and HW will select as agents, brokers or dealers executing orders or acting
on the purchase or sale of portfolio securities only agents, brokers or
dealers operating in the United States. Such disbursements to third parties
shall be reported to us quarterly, provided, that we shall pay third
parties such disbursements directly if requested to do so by you. We will
pay you all fees and disbursements hereunder not later than 20 days after
receiving your quarterly report.
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All fees will be paid to FFH and FFH shall reimburse HW for its investment
management services. HW acknowledges that it has no right under this
agreement to receive fees directly from us.
11. Either you or FFH and HW may terminate this Agreement without penalty by
giving the other party at least thirty (30) days advance written notice of
its desire to terminate the same. In the event that the day upon which this
Agreement is so terminated is a day other than the first day of a calendar
quarter, the fees payable in accordance with paragraph 6 for such quarter
shall be pro-rated and shall be determined having regard to the market
value of the Account based upon the most recent financial report which has
been delivered to you by the Custodian.
12. All notices and communications to each party to this Agreement shall be in
writing and shall be deemed to have been sufficiently given if signed by or
on behalf of the party giving the notice and either delivered personally or
sent by prepaid registered mail addressed to such party at the address of
such party indicated herein. Any such notice or communication shall be
deemed to have been received by any such party if delivered, on the date of
delivery, or if sent by prepaid registered mail on the fourth business day
following mailing thereof to the party to whom addressed. For such purpose,
no day during which there shall be a strike or other occurrence interfering
with normal mail service shall be considered a business day.
13. This Agreement shall be effective for a period of twelve (12) months from
the date hereof, and will be automatically renewed at each such anniversary
date unless otherwise terminated in accordance with paragraph 11 herein.
The parties may renegotiate the terms of the Agreement sixty (60) days
prior to each anniversary date. This Agreement shall inure to the benefit
of and shall be binding upon the parties hereto and their respective
successors. This Agreement may not be assigned by any party.
14. We acknowledge that we have read and understood this Agreement and that we
have received a copy of the same. You and we each acknowledge that the
terms of this Agreement are the exclusive and conclusive terms of our
mutual agreement with regard to the subject matter hereof.
15. Any dispute or difference arising with reference to the interpretation or
effect of this Agreement, or any part thereof, shall be referred to a Board
of Arbitration (the "Board") of two (2) arbitrators and an umpire.
The members of the Board shall be active or retired
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disinterested officers of insurance or reinsurance companies.
One arbitrator shall be chosen by the party initiating the arbitration and
designated in the letter requesting arbitration. The other party shall
respond, within thirty (30) days, advising of its arbitrator. The umpire
shall thereafter be chosen by the two (2) arbitrators. In the event either
party fails to designate its arbitrator as indicated above, the other party
is hereby authorized and empowered to name the second arbitrator, and the
party which failed to designate its arbitrator shall be deemed to have
waived its rights to designate an arbitrator and shall not be aggrieved
thereby. The two (2) arbitrators shall then have thirty (30) days within
which to choose an umpire. If they are unable to do so within thirty (30)
days following their appointment, the umpire shall be chosen by the manager
of the American Arbitration Association and such umpire shall be a person
who is an active or retired and disinterested officer of an insurance or
reinsurance company. In the event of the death, disability or incapacity of
an arbitrator or the umpire, a replacement shall be named pursuant to the
process, which resulted in the selection of the arbitrator or umpire to be
replaced.
Each party shall submit its case to the Board within one (1) month from the
date of the appointment of the umpire, but this period of time may be
extended by unanimous written consent of the Board.
The Board shall make its decision with regard to the custom and usage of
the insurance and reinsurance business. The Board is released from all
judicial formalities and may abstain from the strict rules of law. The
written decision of a majority of the Board shall be rendered within sixty
(60) days following the termination of the Board's hearings, unless the
parties consent to an extension. Such majority decision of the Board shall
be final and binding upon the parties both as to law and fact, and may not
be appealed to any court of any jurisdiction. Judgment may be entered upon
the final decision of the Board in any court of proper jurisdiction.
Each party shall bear the fees and expenses of the arbitrator selected by
or on its behalf, and the parties shall bear the fees and expenses of the
umpire as determined by the party, as above provided, the expenses of the
arbitrators, the umpire and the arbitration shall be equally divided
between the two parties. The arbitrators may allocate any and all of the
costs and fees against the losing party upon a determination that the
position of the
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losing party was, in whole or in part, groundless, specious or otherwise
without merit or asserted primarily for the purposes of obfuscation or
delay.
16. Additional terms and conditions applicable to this Agreement are set forth
in Schedule D. The provisions in Schedule A, Schedule B, Schedule C and
Schedule D attached hereto are hereby incorporated into, and form part of,
this Agreement.
17. This Agreement, including the schedules attached hereto and made a part
hereof, may only be amended by written agreement signed by the parties and
approved by the Connecticut Insurance Department.
IN WITNESS WHEREOF, this Agreement is hereby executed by duly authorized
officers of the parties hereto as of the date first written above.
ODYSSEY AMERICA REINSURANCE CORPORATION
BY: /S/ Xxxxxxx X. Xxxxxxx
-----------------------------------
AUTHORIZED SIGNATURE
Xxxxxxx X. Xxxxxxx
-----------------------------------
NAME OF AUTHORIZED SIGNATORY
XXXXXXX WATSA INVESTMENT COUNSEL LTD.
BY: /S/ Xxxxx Xxxxxxxxxx
-----------------------------------
AUTHORIZED SIGNATURE
Xxxxx Xxxxxxxxxx
-----------------------------------
NAME OF AUTHORIZED SIGNATORY
FAIRFAX FINANCIAL HOLDINGS LIMITED
BY: /S/ Xxxxxxx X. Xxxxxx
-----------------------------------
AUTHORIZED SIGNATURE
Xxxxxxx X. Xxxxxx
-----------------------------------
NAME OF AUTHORIZED SIGNATORY
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SCHEDULE A
INVESTMENT OBJECTIVES
1. Investment for the long term always providing sufficient liquidity for the
payment of claims and other policy obligations.
2. Ensure preservation of invested capital for policyholder protection.
3. Invest in accordance with insurance regulatory guidelines.
INVESTMENT GUIDELINES
1. Approach
All investments are to be made using the value approach by investing in
companies at prices below their underlying long-term values to protect
capital from loss and earn income over time and provide operating income as
needed.
With regard to equities, no attempt is made to forecast the economy or the
stock market. The manager will attempt to identify financially sound
companies with good potential profitability which are selling at large
discounts to their intrinsic value. Appropriate measures of low prices may
consist of some or all of the following characteristics: low price earnings
ratios, high dividend yields, significant discounts to book value and free
cash flow. Downside protection is obtained by seeking a margin of safety in
terms of a sound financial position and a low price in relation to
intrinsic value. Appropriate measures of financial integrity, which are
regularly monitored, include debt/equity ratios, financial leverage, asset
turnover, profit margin, return on equity, and interest coverage.
As a result of this bargain-hunting approach, it is anticipated that
purchases will be made when economic and issue-specific conditions are less
than ideal and sentiment is uncertain or negative. Conversely, it is
expected that gains will be realized when issue-specific factors are
positive and sentiment is buoyant. The investment time horizon is one
business cycle (approximately 3-5 years).
As regards bonds, the approach is similar. No attempt is made to forecast
the economy or interest rates. The manager will attempt to purchase
attractively priced bonds offering yields better than Treasury bonds with
maturities of 10 years or less that are of sound quality, i.e. whose
obligations are expected to be fully met as they come due. We do not regard
rating services as being an unimpeachable
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source for assessing credit quality any more than we would regard a
broker's recommendation on a stock as being necessarily correct. In any
form of investment research and evaluation, there is no substitute for the
reasoned judgment of the investment committee and its managers.
2. Liquidity
An adequate cash flow should be maintained to ensure that claims and
operating expenses are paid on a timely basis. An operating cash position
is to be maintained at appropriate levels and will be managed by the
insurance operating company in accordance with the approved list for
investments as determined from time to time by the Investment Committee.
These securities will be managed by the Insurance Company as part of the
Treasury function and currently are restricted primarily to Treasury and
Agency securities of the U.S. government.
3. Regulatory
Insurance regulations will be complied with, specifically Section 38a-102
through Section 38a-102i inclusive and Section 38a-117, 118, 119, 119, 120,
121, 122, 123, and 124 of the Insurance Code of the State of Connecticut.
4. Diversification
The portfolio is to be invested in a wide range of securities of different
issuers operating in different industries and jurisdictions in order to
minimize risk.
5. Prudent Person Rule
Prudent investment standards are considered in the overall context of an
investment portfolio and how a prudent person would invest another person's
money without undue risk of loss or impairment and with a reasonable
expectation of fair return.
STRATEGY
1. Maintain Adequate Liquidity
A review of portfolio liquidity is undertaken on a monthly basis. The
liquidity analysis determines how much of each portfolio can be converted
to cash in a given time period. Each company determines its liquidity
requirements and the liquidity of the portfolio must match the requirement.
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2. Asset Allocation
The asset allocation will be determined by the Portfolio Manager and will
include short-term investments that will generate appropriate cash flows
and long-term investments in stocks, bonds, debentures and money market
investments, both domestic and foreign. The allocation will be in
compliance with regulatory guidelines and should meet policy liabilities.
3. Foreign Exchange Risk
Any foreign currency investments and exposures would normally be hedged via
the use of forward foreign exchange contracts and/or currency options or
preferably by a natural hedge with foreign pay liabilities of the Insurance
Company. Unhedged foreign investments will be limited to 10% of invested
assets at cost if judged appropriate. Unhedged exposure above this amount
must be approved by the Investment Committee.
4. Interest Rate Risk
Interest rate risk will be minimized primarily through investment in fixed
income securities with maturities less than ten years. While there are no
specific duration/maturity limits for convertible securities, these issues
are included in the total fixed income duration/term measure. Maximum fixed
income portfolio duration is limited to the equivalent of a ten-year term
to maturity Treasury security.
INVESTMENT POLICY MIX
The Investment Committee has established the following exposure ranges for
various asset mix classes:
Range
-----
Equities 0-25%
Fixed Income 0-100%
Cash Residual
Total 100%
Within the Fixed Income portfolio, the Taxable/Tax Exempt mix will be determined
relative to the consolidated tax position of the Insurance Company and the
relative investment attractiveness of available tax-exempt securities.
The Investment Committee will control the total asset mix and will give
performance objectives to the Investment Manager regarding the assets managed.
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RETURN EXPECTATIONS
Total asset mix policy is expected on an annual basis to result in returns
better than the Consumer Price Index plus 3% over a ten-year period before the
disbursement of investment management fees. However, in any one year, the annual
return may be significantly above or below this expectation.
INVESTMENT OBJECTIVE OF THE FUND MANAGER
The manager, subject to regulatory and company imposed constraints mentioned
elsewhere expects to provide additional returns to those returns that would be
earned by the alternative of passively managing a surrogate market index.
Performance of the Fund Manager is expected to result in the following returns:
All Equities S&P 500 + 1% point
Fixed Income:
Taxable Xxxxx Xxxxxxx Xxxxx Intermediate Treasury Index + 0.25%
Tax-Advantaged Bonds Xxxxxx Brothers 3&5-Year State GO Indexes
Measured over four (4) year moving periods.
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AGGREGATE INVESTMENT LIMITS, PERMITTED INVESTMENT CATEGORIES AND INDIVIDUAL
INVESTMENT LIMITS
PERMITTED INVESTMENT CATEGORIES WITHIN ASSET CLASSES
Cash: Cash on hand, demand deposits, treasury bills, short-term notes
and bankers' acceptances, term deposits and guaranteed investment
certificates.
Equity: Common shares, rights and warrants
Fixed Income: Bond, debentures, preferred shares, including those
convertible into common shares
All of the above may be either U.S. domestic, Canadian, or other foreign
investments.
Convertible preferred securities will be classified as equities if the preferred
dividend is not being paid.
Private placement issues in public companies are allowed.
INVESTMENT CONSTRAINTS
All investments will be made in accordance with all applicable legislation.
INDIVIDUAL INVESTMENT LIMITS
Any combination of investments in any one corporate issuer will be limited to a
maximum of 5% of admitted assets. Exposure beyond 5% will require approval of
the Investment Committee.
QUALITY CONSTRAINTS
The Investment Manager may invest in the permitted investment categories subject
to the following quality constraints:
Investments in money market instruments (less than or equal to 1-year term)
will be limited to the approved list. This list will include money market
instruments of the U.S. Treasury, agencies of the U.S. government, and as a
minimum commercial paper rated A1 by Xxxxx'x and rated P1 or higher by
Standard & Poors.
Investments in bonds and preferreds will be limited by quality tier as
follows:
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LIMITS AS A PERCENTAGE OF THE FIXED INCOME PORTFOLIO
Bond Rating % of Total Min./Max.
---------- ---------
A or better 65% Min.
BBB 35% Max.
BB, B 10% Max.
C, D 0%
The above limits are subject to adjustment to conform with the regulatory
requirements of Connecticut State insurance Law.
Limits are determined on a cost basis and include convertible securities.
Downgrades will be taken into account when making new investments but will
not necessarily result in the sale of existing positions.
Securities unrated by the public rating agencies must be rated by the
Investment Manager and included as part of the categories above for the
purposes of determining overall exposure by quality tier.
Any exceptions to the above must be approved by the Investment Committee.
PROHIBITED INVESTMENTS
No loans will be made in any of the investment portfolios.
No Real Estate will be purchased without Investment Committee approval.
No mortgages on real estate will be purchased without Investment Committee
approval. The exceptions to this are obligations issued by an agency of the U.S.
Government, or by U.S. domiciled corporations that are issued as part of a
registered public offering that also meet the minimum quality tier requirements.
FOREIGN INVESTMENT LIMITS
Foreign securities may be purchased in compliance with established regulatory
guidelines and with the policy on foreign exchange risk outlined herein.
Foreign investments must be in the same kinds of securities and investments as
the Insurance Company is normally allowed.
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OTHER
Derivative securities may be purchased up to 2% of the portfolio's cost at book.
Use of derivative investments is infrequent and for hedging purposes. Derivative
investments will be justified to the Investment Committee prior to use.
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SCHEDULE B
SERVICES
Investment Administration to be performed are:
MONTHLY
- daily processing of securities
- portfolio accounting functions including posting of all trades, monitoring
investment income, corporate actions, open payables and receivables
- computation of all regulatory figures
- analysis and reconciliation of portfolios
- yield review
- computation of market decline tests
- computation of liquidity analysis
- analysis of book values, e.g. bond amortizations and investment provisions
- analysis of gross gain and loss positions
- cash flow obligations
- investment review meeting
- NAIC and SVO filings
- custodial relationships
- broker relationships
PERIODIC
- review and analysis of foreign exchange position
- placement of foreign exchange contracts, where appropriate
- discussions with regulators regarding portfolio (positions)
- reporting to the investment committee
- reporting to the audit committee
- general assistance with accounting issues
- maintaining contact with external auditors
- such other administrative services as the parties shall mutually agree from
time to time
- 5900 report on investment controls
- performance reporting
- software provider (including e-Xxx) - functioning and testing
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SCHEDULE C
FEE SCHEDULE
Investment fees are comprised of two parts:
(A). The Base Fee Amount
and
(B). The Incentive Fee Amount
(A) The Base Fee Amount
1) Fees will be payable quarterly. Interim invoices may be issued based
on our estimates of the final fees payable.
2) After the end of each calendar quarter, FFH shall submit its
investment management charges in accordance with the schedule below.
3) The charges are on a calendar year basis. They will be calculated at
the end of each calendar quarter based upon the average of the market
value of the funds at the close of business for the three (3)
preceding months.
4) MARKET VALUE CHARGE
------------ ------
On Total Market Value .20%
(B) The Incentive Fee Amount
The incentive fee amount relates to the investment management of equity
securities only.
Annual Base Fee: a) If performance equals or exceeds benchmark, base fee
is unchanged from current fee.
b) If performance is less than benchmark, base fee is
90% of current fee.
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Maximum Fee: 1.75% (including base).
Benchmark: S&P 500 + 200 basis points.
Incentive Fee:
Continuous rate of 10 basis point for every 100 basis
points of outperforming the benchmark. (Incentive fee
is in addition to base fee).
Basis of Calculation:
Payable annually based on calendar year results. Not
earned or paid unless results since inception (net of
all fees) exceed benchmark return.
Inception Date: January 1, 2002
(C) Fees on Realized Investment Gains
An additional management fee of 10 basis points may be earned if, the
realized gains exceed 1% of the average investment portfolio in any given
year and subject to cumulative realized gains on investments, exceeding 1%
of the average investment portfolio. This incentive fee will be calculated
quarterly based on the realized gains threshold and recorded when it
becomes payable at the end of each year.
(D) Maximum Investment Management Fee
Notwithstanding the foregoing, the maximum investment management fee
payable in any calendar year will be .40% of the Total Market Value (as
calculated in (A) 4) above); provided that any investment management fee
not payable in any calendar year as a result of the restriction in the
preceding sentence will be carried over to a succeeding calendar year, but
the total investment management fee payable in any such calendar year,
including any carry-over payment, shall be limited as provided by the
preceding sentence.
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SCHEDULE D
1. Notices
Unless otherwise specified herein, all notices, instructions, advices or
other matters covered or contemplated by this Agreement, shall be deemed duly
given when received in writing (including by fax) by you or us, as applicable,
at the address or fax number set forth below or such other address or fax number
as shall be specified in a notice similarly given:
If to us:
ODYSSEY AMERICA REINSURANCE CORPORATION
Xx. Xxxxxxx Xxxxxxx, Xx.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Fax No.: 000- 000-0000
If to you:
XXXXXXX WATSA INVESTMENT COUNSEL LTD.
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax No.: (000) 000-0000
and
FAIRFAX FINANCIAL HOLDINGS LIMITED
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx XX X0X 0X0
Fax No.: (000) 000-0000
2. Governing Laws; Jurisdiction; Service of Process
This Agreement shall be governed and construed in accordance with the laws
of the State of Connecticut, our state of domicile. Each of the parties thereto
submits to the jurisdiction of the state and federal courts of Connecticut, in
any action or proceeding arising out of or relating to this Agreement and all
claims in respect of any such action or proceeding may be heard or determined in
any such court; and service of process, notices and demands of such courts may
be made upon you by personal service to the person and at the address contained
in Section 1 above as such person or address may be changed from time to time.
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3. Insurance Department Approval
This Agreement may be subject to the non-disapproval or approval of the
State of Connecticut Insurance Department, and such terms and conditions hereof
as may be required by the State of Connecticut Insurance Department to be
altered or amended shall be deemed acceptable to the parties hereto, to the
extent same shall not change the substance and intent of this Agreement.
4. Inspection of Records
You and we and the duly authorized representatives of each of us shall, at
all reasonable times, each be permitted access to all relevant books and records
of the other pertaining to this Agreement. You and your duly authorized
representatives shall provide to the State of Connecticut Insurance Department
within fifteen (15) days of any request from the State of Connecticut Insurance
Department therefore, copies of all your books and records as they pertain to us
(or any portion thereof as may be specifically requested).
5. Headings
The inclusion of headings in this Agreement is for convenience of reference
only and shall not affect the construction or interpretation hereof.
6. Severability
Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of any other provision hereof.
7. Entire Agreement
This Agreement and the documents to be delivered pursuant hereto constitute
the entire agreement between the parties pertaining to the subject matter of
this Agreement.
8. Control
Notwithstanding any other provision of this Agreement, it is understood and
agreed that we shall at all times retain the ultimate control of the investment
of our investable funds and we reserve the right, upon written notice by us to
you, to direct, approve, or disapprove any investment made by you hereunder or
any action taken by you with respect to any such investment. Furthermore, it is
understood and agreed that we shall at all times own and have custody of our
general corporate accounts and records.
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9. Confidential Relationship
The parties hereto will treat as confidential all information that is not
publicly available received from the other party.
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