Exhibit 10.21
INVESTMENT SERVICES AGREEMENT
This INVESTMENT SERVICES AGREEMENT (the "Agreement") is made as of the 3rd
day of April, by and between RAM REINSURANCE COMPANY LTD, a Bermuda insurance
company (the "Client"), and MBIA CAPITAL MANAGEMENT CORP., a Delaware
corporation (the "Advisor") and shall become effective on May 1, 2003 (the
"Effective Date").
RECITALS
WHEREAS, Client seeks investment advisory services in connection with
certain assets owned by it; and
WHEREAS, Advisor is in the business of providing investment advisory
services; and
WHEREAS, Client desires to retain Advisor to render advice and services to
Client pursuant to the terms and conditions of this Agreement and Advisor is
willing to furnish such advice and services.
NOW THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto mutually agree as follows:
1. Authority of the Advisor. (a) Advisor shall have full power to manage
and direct the investments of and for Client's account (the
"Account"), without prior consultation with Client, subject, however,
to the limitations referred to in clause (b) of this paragraph 1 and
paragraph 5 hereof. This discretionary authority makes the Advisor
agent and attorney-in-fact with full power and authority on behalf of
the Account (i) to buy, sell, exchange, convert and otherwise trade in
any and all stocks, bonds and other securities and investments as the
Advisor may select; and (ii) to establish and deal through accounts
with one or more securities brokerage firms, dealers or banks as
Advisor may select; provided, however, that none of such firms,
dealers or banks shall be a person or entity that controls, or is
controlled by, or is under common control with, Advisor. This
discretionary authority shall remain in full force and effect for the
duration of this Agreement or until the Advisor receives written
notice from Client of its termination in accordance with the terms of
this Agreement. Advisor will not be responsible for giving client
investment advice or taking any other action with respect to any
assets of Client not included in the Account.
(b) Notwithstanding any other provision of this Agreement, it is
understood and acknowledged by the parties hereto that Client shall at
all times have ultimate control of and responsibility with respect to
the functions which Client is delegating to Advisor pursuant to the
terms of this Agreement. In furtherance of the foregoing, Advisor
shall follow the instructions of Client's Chief Executive Officer.
Chief Financial Officer or Chief Underwriting Officer in connection
with the management and investment of Account.
2. Custody of Assets. Client has appointed Fleet National Bank and
Deutsche Bank Trust Company Americas, as its custodians (the
"Custodians"). The Custodians will take and have possession of the
assets of the Account. Advisor shall not act as custodian for Client's
Account or take or have possession of any of the assets thereof, but
may issue instructions to the Custodian of such assets as required in
connection with the settlement of transactions effected by Advisor
hereunder. Accounts and records maintained by Advisor in connection
with this Agreement shall be the property of the Client.
Notwithstanding the foregoing, or any other provisions of this
Agreement to the contrary, Client and Advisor acknowledge and agree
that Advisor shall at all times own and have custody of its own
general corporate accounts and records. Client shall pay all fees of
Custodians.
3. Brokerage. To the extent permitted in paragraph 1 of this Agreement,
Advisor may place orders for the execution of transactions for the
Account with or through such brokers, dealers, or banks as Advisor may
select and, complying with Section 28(e) of the Securities Exchange
Act of 1934, may select brokers-dealers charging a commission in
excess of the commission another broker-dealer would have charged. The
Advisor and other clients advised by the Advisor may benefit from any
information received from broker-dealers selected in connection with
Client's Account. Advisor may (but is not obligated to) purchase or
sell the same securities for several clients at approximately the same
time and combine or batch such orders. This may result in differences
in prices and commissions or other transaction costs from those that
might have been obtained had such orders been placed independently.
4. Administrative Services. The Client hereby engages the Advisor to
provide those administrative and securities management services
described in Exhibit A attached hereto.
5. Legal Proceedings. Advisor will not advise or act for Client in any
legal proceedings, including bankruptcies or class actions, involving
securities
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held in the Account or issuers of those securities. Advisor will
provide Client with notice of the bankruptcy of such issuer and of any
class action in which Client as owner of a security or investment held
in the Account would be eligible to participate as a plaintiff.
6. Risk. Advisor cannot guarantee the future performance of the Account,
promise any specific level of performance or promise that its
investment decisions, strategies or overall management of the Account
will be successful. The investment decisions Advisor will make for
Client are subject to various market, currency, economic, political
and business risks, and will not necessarily be profitable.
7. Investment Manager Independent. For all purposes of this Agreement,
the Advisor shall be deemed to be an independent contractor and shall
have no authority to act for, bind or represent the Client or the
Client's shareholders in any way, except as described herein, and
shall not otherwise be deemed to be an agent of the Client. Nothing
contained herein shall create or constitute the Advisor and the Client
as a member of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, nor shall anything
contained herein be deemed to confer on any of them any express,
implied, or apparent authority to incur any obligation or liability on
behalf of any other person.
8. Sub-Advisors and Consultants. Advisor may, at its own expense, employ
other persons to furnish to Advisor statistical and other factual
information, advice regarding economic factors and trends, information
with respect to technical and scientific developments, and such other
information, advice and assistance as Advisor may desire; provided,
however, that such sub-advisors and consultants shall not have
authority to make investment decisions for Client's Account.
9. Investment Objectives and Guidelines. Client has provided Advisor with
a written Statement of Investment Guidelines (the "Guidelines") in the
form attached hereto as Exhibit B and incorporated herein by
reference. Advisor agrees to at all times be in compliance with the
Guidelines when making investments for Client's Account. Client shall
give Advisor prompt written notice of any investments made for
Client's Account which Client believes to have been made outside the
Guidelines. Client may change or modify the Guidelines from time to
time by providing the Advisor reasonable advance written notice of
such change or modification provided, that Client may not amend the
Guidelines to impose additional monitoring, reporting, or other
material obligations on the Advisor without the Advisor's written
consent. Neither Advisor's acceptance of the
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Guidelines, nor any other provision of this Agreement shall be
considered a guaranty that any specific investment performance result
will be achieved. In the event of an amendment to the Guidelines, the
parties shall mutually agree to an appropriate fee schedule for any
additional asset class not contemplated hereunder, and if the parties
cannot mutually agree in good faith to an appropriate fee schedule
within 10 days of the receipt of notice by the Advisor, Client shall
have the right to select another investment manager for the applicable
portion of the Account, provided however, that in such event the
Client shall provide the Advisor with written notice of the identity
of such other investment manager.
10. Allocation of Charges and Expenses, (a) Advisor shall furnish at its
own expense executive, supervisory and other personnel services,
office space, equipment, utilities and telephone services in
connection with supplying the investment management, advisory,
statistical, analytical and research services contemplated by this
Agreement.
(b) Custodian fees, transfer agent fees and brokerage costs, fees and
commissions will be charged to Client's Account.
(c) For all reasonable expenses not otherwise covered in subsections (a)
and (b) above, it is understood that Client will pay or reimburse
Advisor for such expenses, including, without limitation, governmental
fees, interest charges, taxes, fees and expenses of independent
auditors, legal fees and other expenses connected with the execution
of security transactions or the purchase or sale of any assets in the
Account or the performance by Advisor of any other duties under this
Agreement or any actions taken by Advisor at the request of Client.
Except for taxes, governmental fees and any other expenses outside of
Advisor's control, Advisor will notify Client not less than five (5)
business days prior to incurring any individual expense under this
subsection (c) and Client shall have five (5) business days from
receipt of such notice within which to notify Advisor of its
disapproval of any such expense. Failure of Client to so notify
Advisor of its disapproval within five (5) business days shall be
deemed Client's approval of such expense.
(d) Advisor shall provide Client, no later than ten (10) business days
following the end of each calendar month, with a (i) summary of the
investment transactions and (ii) all monthly reports listed on Exhibit
A attached hereto for that month.
(e) Advisor shall provide Client, quarterly in arrears, with a statement
of any fees and expenses chargeable to Client pursuant to subsections
(b) and (c)
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above. Any undisputed amounts shall be paid by Client within fifteen
(15) days of receipt of said statement.
11. Compensation of Advisor. The compensation of Advisor for its services
under this Agreement shall be an annual fee of 20 basis points,
payable quarterly in arrears based on the average market value of the
assets under management for such quarter.
12. Valuation. In computing the market value of any security held in the
custody account:
(a) Each security listed on any national securities exchange, for which
recent market quotations are readily available, shall be valued at the
last reported sale price on the principal exchange on which such
security is traded, or, if there has been no recently reported sale,
at the last reported bid price;
(b) Unlisted securities shall be valued at the then current bid price, if
market quotations are readily available;
(c) Any other security or asset shall be valued in a manner determined in
good faith by Advisor to reflect its fair market value and such
valuation shall be determinative.
13. Records. Advisor shall maintain accurate and detailed records of all
transactions in connection with the Account, which shall be subject to
inspection by the Client upon reasonable notice during Advisor's
regular business hours. It is understood and acknowledged that such
records are the property of the Client and shall be returned to the
Client upon termination of this Agreement. Notwithstanding the
foregoing, however, it is understood that the Advisor is permitted to
disclose information contained in such records pursuant to the
requirements of applicable law or of any banking, insurance or
securities regulatory agency. Moreover, Advisor will be permitted to
keep and maintain one copy of such record. On request, representatives
of Advisor shall meet with the Client's officers and directors and the
officers and directors of the Client's parent company to discuss
investment performance and other matters relating to Advisor's
obligations under this Agreement.
14. Duration and Termination. (a) Subject to the provisions of paragraph
13 hereof, this Agreement shall commence as of the Effective Date and
shall continue until terminated (i) by mutual consent of Advisor and
Client or (ii) as hereinafter provided. Fees will be prorated to the
date of
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termination and any unearned portion of repaid fees will be refunded
to Client.
(b) Either party may terminate this Agreement without cause upon at least
thirty (30) days prior written notice.
(c) At its discretion, Client may immediately terminate this Agreement by
written notice to Advisor upon the occurrence of any one of the
following events:
(i) The insolvency of Advisor, the inability of Advisor to pay debts as
they mature, the making of an assignment by Advisor for the benefit of
creditors, the dissolution of Advisor, the appointment of a receiver
or liquidator for Advisor or for a substantial part of Advisor's
property, or the institution of bankruptcy, reorganization,
arrangement, insolvency or similar proceedings by or against Advisor
under the laws of any jurisdiction; or
(ii) The default under or any violation of the terms of this Agreement by
Advisor which is not cured by Advisor within fifteen (15) days after
receipt by Advisor of notice of such default from Client of the
failure of Advisor to perform satisfactorily its duties as set forth
in this Agreement.
(d) At its discretion, Advisor may immediately terminate this Agreement by
written notice to Client upon the occurrence of any one of the
following events:
(i) The insolvency of Client, the inability of Client to pay debts as they
mature, the making of an assignment by Client for the benefit of
creditors or the dissolution of Client, the appointment of a receiver
or liquidator for Client or for a substantial part of Client's
property, or the institution of bankruptcy, reorganization,
arrangement, insolvency or similar proceedings by or against Client
under the laws of any jurisdiction;
(ii) The default under or any violation of the terms of this Agreement by
Client which is not cured by Client within fifteen (15) days after
receipt by Client of notice of such default from Advisor of the
failure of Client to perform satisfactorily its duties as set forth in
this Agreement.
(e) Upon termination of this Agreement, if Client so elects and for a
period not exceeding the earlier of two (2) months or the date on
which Client appoints a successor to Advisor, Advisor shall be
obligated to perform those investment services which are necessary to
ensure the proper management of Client's Account. Termination of this
Agreement shall
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not relieve either party of liability for the performance of
obligations imposed upon such party during the effective period of
this Agreement which have not been performed at the time of
termination thereof. It is specifically agreed to and acknowledged
that Advisor shall be entitled to fees referred to in paragraph 11 for
services rendered pursuant to this subparagraph (e).
15. Non-Exclusive Contract. The services of the Advisor to Client are not
to be deemed to be exclusive. Advisor is free to render service to
others. Client agrees that Advisor may give advice and take action
with respect to any of its other clients which may differ from advice
given or the timing or nature of action taken with respect to Client's
Account. Nothing in this Agreement shall be deemed to impose upon the
Advisor any obligation to purchase or sell or to recommend for
purchase or sale by or for Client any security or other property which
Advisor, its officers, employees or affiliates may purchase or sell
for their own accounts or which the Advisor may purchase or sell for
the account of any other client. Client recognizes that transactions
in a specific security may not be accomplished for all or any other
clients at the same time or at the same price.
16. Representations. (a) The Advisor represents and warrants that it is
registered as an investment advisor with the Securities and Exchange
Commission pursuant to the Investment Advisers Act of 1940 as amended.
(b) Advisor represents and warrants that this Agreement has been duly
authorized in accordance with Advisor's governing documents and when
executed and delivered will be binding upon Advisor in accordance with
its terms.
(c) Client represents and warrants that this Agreement has been duly
authorized by Client's Board of Directors in accordance with Client's
governing documents and when executed and delivered will be binding
upon Client in accordance with its terms.
(d) Client represents and warrants that it has received a copy of
Advisor's Form ADV Part II as required by Rule 204-3 under the
Investment Advisers Act of 1940 at least 48 hours prior to the date of
execution of this Agreement.
17. Applicable Laws. Advisor shall comply with all securities laws and
other laws applicable to investment managers, including, without
limitation, the Investment Advisers Act of 1940, as amended. Advisor
shall comply with the guidelines in providing its services hereunder,
and, except for
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monitoring compliance with the provisions of law referred to in the
Guidelines, shall have no independent duty or responsibility to assure
that investments permitted by Client's Guidelines qualify as permitted
investments under applicable insurance laws.
18. Voting Rights. Decisions on voting of proxies will be made by Client.
19. Liability of Advisor. In providing Client with investment advice and
other services as herein provided, neither Advisor nor any officer,
director, employee or agent thereof shall be held liable to Client,
its creditors or its stockholder(s) for errors of judgment or any
losses suffered by any of them related to this Agreement and the
transactions contemplated hereby, provided such losses did not arise
out of Advisor's action or inaction constituting willful malfeasance,
bad faith or gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the terms of
this Agreement. It is further understood and agreed that Advisor may
rely upon information furnished to it reasonably believed to be
accurate and reliable and upon any instructions of Client. Nothing
herein shall constitute a waiver or limitation of any rights which the
Client may have under any federal securities laws.
20. Indemnification. Client shall indemnify and hold harmless Advisor and
its shareholders, employees, agents and affiliates from and against
any losses (including reasonable attorney's fees) arising out of or in
connection with Advisor's entry into this Agreement or any act or
inaction (or any alleged act or inaction) on behalf of Client
hereunder, other than acts or failures to act that constitutes willful
misfeasance, bad faith or gross negligence in the performance of
Advisor's duties or reckless disregard of its obligations and duties
under the terms of this Agreement.
21. Confidential Relationship. Each of the Client and the Advisor agrees
that the terms and conditions of this Agreement, all information and
advice furnished by either party under this Agreement and any records
generated by this Agreement (collectively, the ("Information") are
confidential and agrees to: (i) hold and treat the Information in
strict confidence, (ii) take all reasonable measures to keep the
Information secret and confidential, and (iii) disclose the
Information only as required by law or applicable regulatory
requirement or stock exchange rule. Each party under this Agreement
will inform its respective officers, directors, employees, legal
counsel and auditors that the Information is confidential and direct
them to keep it confidential.
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22. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered by hand, telecopier, or mailed by
registered or certified mail (return receipt requested) to the parties
at the following addresses and shall be deemed given on the date on
which such notice is received:
To Client at: RAM Renaissance Company Ltd.
RAM Re House
00 Xxxx Xxxxxx
Xxxxxxxx XX00, Xxxxxxx
Attention: Xxxxxxx Xxxxx
Chief Financial Officer
Or by telecopier at: 441 -296-6509
To Advisor at: MBIA Capital Management Corp.
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
President
Or by telecopier at: 000-000-0000
Either party may change its address or telecopier number for purposes of this
paragraph by giving the other party written notice of the new address or
telecopier number in the manner set forth below.
23. Waiver. Waiver by either party of any obligation of the other party
does not constitute a waiver of any further or other obligation of the
other party.
24. Amendment. This Agreement may be modified or amended only by an
instrument in writing signed by duly authorized representatives of
both Advisor and Client.
25. Agreement not Assignable. This Agreement is not assignable by either
Client or Advisor.
26. Cumulative. All rights, powers and privileges conferred hereunder upon
the parties shall be cumulative and shall not restrict those given by
law.
27. Counterparts. This Agreement may be executed in counterparts, each of
which so executed shall be deemed to be an original and such
counterparts together shall constitute but one and the same contract,
which shall be sufficiently evidenced by any such original
counterpart.
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28. Construction; Governing Law. The captions used in this Agreement are
for convenience only, and shall not affect the construction or
interpretation of any of its provisions. Each of the provisions of
this Agreement is severable, and invalidity or inapplicability of one
or more provisions, in whole or in part, shall not affect any other
provision. This Agreement shall be construed in accordance with the
laws of the State of New York, without giving effect to the provision
thereof relating to conflicts of law and is subject to the provisions
of the Investment Advisers Act of 1940, as amended, and the rules and
regulations of the Securities and Exchange Commission.
29. Dispute Resolution. Any disputes arising under this Agreement shall be
settled by arbitration in New York City in accordance with the
American Arbitration Association rules then in effect, any award
rendered thereon shall be enforceable in any court of competent
jurisdiction. The parties each irrevocably waive, to the fullest
extent permitted by law, any objection which they may now or hereafter
have to the laying of the venue of any such proceeding brought in any
such court and any claim that any such proceeding brought in such
court has been brought in an inconvenient forum. The parties each
agree that final judgement in any such suit, action or proceeding
brought in such a court shall be conclusive and binding on it and may
be enforced in any court to the jurisdiction of which it is subject by
a suit upon such judgment.
30. Entirety of Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and
supersedes and cancels any prior understandings and agreements between
the parties.
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IN WITNESS WHEREOF, the parties have caused the signatures of their duly
authorized offices to be hereto affixed.
By: /s/ By: /s/
--------------------------------- ------------------------------------
Title: Chief Financial Officer Title: President
"Client" "Advisor"
EXHIBIT A
ADMINISTRATIVE SERVICES
Advisor will provide the following securities support functions:
- Settlement/Custody Control
Daily coordination of any securities purchased or sold with investment
manager, brokers and clearance bank. Confirmation of funds movement upon
receipt/delivery of securities. Reconciliation of asset position between
custody bank and investment operations.
- Transaction Processing
Daily recording of individual security transactions on trade date.
- Income Collection
Daily collection and recording principal (maturity/redemption) and interest
payments. Follow up on overdue payments.
- Bank Reconciliation
Monthly reconciliation of all cash transactions in demand deposit accounts.
- Market Valuation of Assets
Assets priced monthly by an outside service.
- Investment Accounting Staff Support
Staff support will be provided to assist the Client in responding to audit,
tax or other regulatory interrogatories related to investment transactions
as reported.
Independent administrative services which are not provided by Advisor under this
Agreement include:
-- Custody services.
-- Outside audit services.
The following reports will be provided to the Client and will include
transaction reports and investment management reports prepared monthly or
quarterly, as the case may be:
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(a) Transaction Reporting:
(i) Monthly detail reports on all transactions including an Income Earned
Report, Stat Transaction Report, Stat Valuation Report, a report
detailing cash reconciliations with custodians and a report detailing
purchases and sales.
(ii) Transactional information on investments, as needed, to support tax
return preparation.
(b) Portfolio Review:
Monthly summary and detail on the Client's holdings will be provided. This
report will include market values, overall quality ratings, portfolio yield
and a summary review of market conditions and portfolio strategy. The
Client's holdings will be reported separately for each Regulation 114 trust
account and each uncollateralized account, and for all accounts in the
aggregate.
(c) Performance Reporting:
Quarterly performance results on both yields on new commitments and total
return for the portfolio will be provided. Performance will be measured
against agreed upon indices.
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EXHIBIT B
RAM REINSURANCE COMPANY LTD.
STATEMENT OF INVESTMENT OBJECTIVES & GUIDELINES
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