1
Exhibit 10.20
Investment Management Agreement
This Investment Management Agreement (the "Agreement") between Global
Markets Guaranty Ltd. (the "Client) and The Prudential Investment
Corporation, a New Jersey corporation (the "Investment Manager"), is made this
_____________________________.
WHEREAS, the Client desires to appoint the Investment Manager to manage
certain of its assets in account(s) established by the Client ("Investment
Manager Accounts"); and
WHEREAS, the Investment Manager is willing to accept the duties and
responsibilities of an investment manager with respect to the investment
Manager Accounts;
NOW, THEREFORE, in consideration of the promises and mutual considerations
provided herein, and intending to be legally bound hereby, the Client and the
Investment Manager agree as follows:
1. Appointment. The Investment Manager will act as an investment manager
with respect to the Investment Manager Accounts.
2. Fees. The Client will pay the Investment Manager, as compensation for
its services under this Agreement, a fee determined in accordance with Schedule
A to this Agreement. Such fee may be changed by the Investment Manager upon
45-days' written notice to the client.
3. Authority of Investment Manager. Subject to Section 4 of this
Agreement the Investment Manager shall have the discretionary authority to
manage and control assets of the Client that are segregated in an Investment
Manger Account, including the power to acquire and dispose of assets in each
Investment Manager. In the exercise of that power the Investment Manger may
invest and reinvest the assets, without distinction between principal and
income, in investments described by the Client's investment management
guidelines.
When exercising its authority under this Section 3, the Investment Manager
shall be under no obligation to consult with or obtain the consent of the
Client.
The assets initially segregated into each Investment Manager Account shall
be cash. Assets other that cash may be segregated into an Investment Manager
Account with the consent of the Investment Manager. The client may remove
assets from any Investment Manager Account at any time without the consent of
the Investment Manger.
2
Upon segregating assets of the Client into an Investment Manager
Account, the Client shall promptly inform the Investment Manager of all assets
segregated into the Investment Manager Account. The Client shall also establish
reporting and accounting arrangements so that the Investment Manager will be
fully informed at all times as to the assets segregated into any Investment
Manager Account.
4. Investment Limitations and Guidelines. The client may, from time to
time, communicate in writing general investment guidelines to the Investment
Manager. Such communication shall be effective no more than five days
subsequent to its receipt by Investment Manager.
5. Brokerage. Subject to any guidelines annexed hereto, the Investment
Manager shall use its best efforts to obtain best execution of orders at the
most favorable prices reasonably obtainable. When determining the most
favorable prices reasonably obtainable, the Investment Manager may consider, in
accordance with section 28(e) of the Securities Exchange Act of 1934, the value
of the receipt by the Investment Manager of service that affect securities
transactions and incidental functions, such as clearance and settlement
services, and advice as to the value of securities, the advisability of
investing in securities, the availability of securities or purchasers or buyers
of securities and analyses and reports concerning issues, industries,
securities, economic factors, trends portfolio strategy, and the performance of
accounts. Commissions charged by brokers who provide these services may be
somewhat higher than the commissions charged by brokers who do not provide
these services.
With respect to the Investment Manager Accounts, the Investment
Manager may cause securities transactions to be executed concurrently with
authorizations to purchase or sell the same securities for other accounts
managed by the Investment Manager, including proprietary accounts or accounts
of affiliates, in these instances, the executions of purchases or sales, where
possible, shall be allocated equitably among the various accounts (including
the Investment Manager Accounts).
6. Other Activities of the Investment Manager. In addition to the
investment management services performed under this Agreement, the Investment
Manager or any of its affiliates may engage in any other business and may
render investment advisory services to any other person. The Investment Manager
or any of its affiliates may render investment advisory services to any other
person, even if the investment Manager, its affiliates, or other person has
investment policies similar to those followed by the Investment Manager for the
Investment Manager Accounts. The Investment Manager may, at anytime, buy or
sell, or may direct or recommend that another person buy or sell, securities of
the same kind or class that are purchased or sold for any Investment Manager
Account, at a price which may or may not differ from the price of the
securities purchased or sold for the Investment Manager Account.
3
7. Reports. The Investment Manager shall provide to the Client such
reports and information that the client may reasonably request.
8. Investment Manager Covenant. The Investment Manager covenants
that it is a registered investment adviser under the Investment Advisers Act of
1940, as amended (the "Adviser Act"). The Investment Manager shall immediately
notify the Client of any changing its status as such.
9. Proxies. [If voting: The Investment Manager will follow the
policies and procedures for the voting of proxies set forth in [the guidelines
contained in Schedule B][Schedule C]. -N.B. May apply to convertible debt
instruments].[If not voting: The Investment Manager will not be required to
take any action or render any advice with respect to the voting of proxies for
securities held in any Investment Manager Account, nor will it be obligated to
render advice or take any action on behalf of the Client with respect to
securities presently or formerly held in any Investment Manager Account which
become the subject of any legal proceedings, including bankruptcies.]
10. Termination. The Investment Manager may terminate this Agreement
on 30-days' written notice to the Client. The Client may terminate the
Investment Manager's appointment as an investment manager without advance
notice. Upon termination of this agreement, The Investment Manager shall be
under no obligation to recommend any action with regard to, or liquidate the
securities or other investments in, The Investment Manager Accounts; provided,
however, that upon such termination, the Client may direct the Investment
Manager to remove assets from the Investment Manager Accounts in accordance
with Section 3.
11. No Assignment. Neither party may assign this Agreement without
the prior written consent of the other.
12. Change in Control of Investment Manager. The Investment Manager
shall immediately notify the Client of any material change in the control or
ownership of the Investment Manager.
13. Communication. To the extent reasonable and practical,
communications from the Client to the Investment Manager, or vice versa, shall
be made in writing or in another reasonable manner and promptly confirmed in
writing. Notice shall be deemed effective if made to the parties as follows:
4
If to the Client: If to the Investment Manager:
Global Markets Guaranty Ltd. Prudential Investments
_ Xxxxxxxx Xxxx, Victory Street 2 Gateway Center
_ X.X. Xxx XX 0000 0XX Xxxxx
_ Xxxxxxxx, XX FX, Bermuda Xxxxxx, XX 00000
_Attention: Xx Xxxx Xxxx Xxxxxxxxx Attention: Xx. Xxxxx Xxxxxxx
14. Disclosure Statement. The Client hereby acknowledges that not less than
48 hours before the date it has executed this Agreement it received
from the Investment Manager a copy of the disclosure statement required
by Rule 204-(3) of the Advisors Act.
15. Liability. The Investment Manager undertakes to manage the Investment
Manager Accounts in accordance with the guidelines set forth herein and in a
professional and responsible manner. The Investment Manager will not be liable
for any loss or liability incurred by reason of any investment decision made or
other action taken or omitted in what the Investment Manager believes in good
faith to be the proper performance of its duties hereunder, and the Investment
Manager shall not, in any event, be liable for any loss or liability incurred by
any reason as a result of any willful or negligent failure to act on the part of
any broker or custodian, with respect to the Investment Manager Accounts;
provided, however, that this provision shall not constitute a waiver of any
right the Client may have under federal securities law.
16. Confidential Relationship. Each party shall use its best efforts to
treat all information and advise furnished by the other party to it as
confidential and to avoid disclosing same to third parties (other than
associates of the Investment Manager) except as otherwise agreed to in writing
by both parties as required by law.
5
17. Entire Agreement; Amendments; Serverability. This Agreement constitutes
the entire agreement between the parties with respect to the investment Manager
Accounts, and supersedes any prior oral or written agreements with respect to
the Investment Manager Accounts. This Agreement may not be amended except by a
writing signed by the parties. If any provision of this agreement shall be held
or made invalid by a statute, rule, regulation, decision of a tribunal or
otherwise, the remainder of this Agreement shall not be affected thereby.
18. Governing Laws. This Agreement shall be construed in accordance with
the laws of the State of New Jersey (without regard to the legislative or
judicial conflict of laws or rules of any state), except to the extent
superseded by federal law.
6
IN WITNESS WHEREOF, the Client and the Investment Manger have executed
this Agreement as of the day and year written above.
(Client)
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Title: President and C.E.O.
(Investment Manager)
By: /s/ Xxxxx W Otterly
------------------------------------
Title: Vice President
Prudential Investment Corporation
7
Schedule A
TO THE
INVESTMENT MANAGEMENT AGREEMENT
BETWEEN
Global Markets Guaranty Ltd.
And
Prudential Investment Corporation
The fee payable to the Investment Manager under Section 2 of the Agreement
shall be payable at an annual rate as follows:
First $100 million 0.175%
Thereafter 0.10%
The fee determined herein will be computed by applying the above schedule
to the market value of the assets in the Investment Manager Account(s) on the
last business day of each calendar quarter, and dividing such resulting amount
by four. Bills will be rendered by the Investment Manager quarterly, and shall
become payable by the Client upon receipt thereof. {In certain cases as agreed
by the Client and the Investment Manager, the fee may be paid directly to the
Investment Management Account(s).}
If the Agreement is terminated other than on the last day of a month, the
fee for the quarter in which such termination occurred shall be based on the
average assets under management (i) on the last day of each month during such
quarter and (ii) on the day the Agreement is terminated, prorated to reflect
the partial month in which the termination occurred.
