Exhibit 10.8
AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT ("Agreement") made and entered into as of 21 September 1995
amends and restates the agreement entered into on 22 November 1993 by and
between Aon Advisors (U.K.) Limited, a corporation organized under the laws of
the United Kingdom ("Manager"), and LaSalle Re Limited, a corporation organized
under the laws of Bermuda (the "Client").
PREAMBLES:
WHEREAS, the Manager is a member of the Investment Management Regulatory
Organization ("IMRO") and is regulated in the conduct of its investment business
by IMRO;
WHEREAS, Client is a business investor as defined by the IMRO rules in the
form attached hereto as Schedule A;
WHEREAS, the Client desires to appoint Manager as the investment manager of
all the assets contained in the Client's investment portfolio described in
Schedule B hereto (the "Portfolio"); and
WHEREAS, Manager, on the terms provided below, desires to be the investment
manager for the Portfolio.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and for other good and valuable consideration, the parties hereto agree as
follows:
1. THE PORTFOLIO. The Client warrants and represents to Manager that the
Client is the beneficial owner of the Portfolio and that there are no
restrictions on the transfer or sale of all or any portion thereof. The Client
shall notify the Manager promptly, in writing, if any such restrictions arise
(and of the nature of such restrictions) or if the Client, or any Affiliate
(defined below) of the Client, is an affiliate, director, or controlling person
of any issuer whose securities are in the Portfolio. "Affiliate" shall mean an
entity that directly or indirectly through one or more intermediaries controls,
is controlled by or is under common control with the Manager or the Client, as
the case may be.
2. INVESTMENT MANAGER APPOINTMENT. The Client hereby appoints Manager as
investment manager and to supervise, manage, and direct the investment and
reinvestment, and vary the investment of, the Portfolio. Manager hereby accepts
such appointment on the terms and conditions of this Agreement.
3. PORTFOLIO MANAGEMENT.
a. MANAGEMENT. Manager agrees to supervise and direct, with full
authority and at its discretion, on the Client's behalf and at the Client's sole
risk, the investment and reinvestment of the Portfolio under the terms of this
Agreement. Manager shall manage the Portfolio in such manner as Manager may
deem advisable in accordance in all material respects with the written
investment instructions and guidelines attached hereto as Schedule C (the
"Investment Guidelines"). The Client may from time to time amend the Investment
Guidelines in writing. Manager will not be bound to follow any amendment to the
Investment Guidelines, however, until it has received a copy of the amended
Investment Guidelines from the Client and has acknowledged such receipt to
Client. Other than by the Investment Guidelines and the terms of this
Agreement, the investment and reinvestment of the Portfolio by Manager shall not
be restricted in any manner, whether such restrictions arise under the current
or future laws of any jurisdiction or by virtue of the terms of any contract or
instrument purporting to bind the Client. The Client hereby ratifies and
confirms any and all transactions heretofore or hereafter engaged in by the
Manager where such transactions comply in all material respects with the
Investment Guidelines.
b. COMPLIANCE. All securities purchased for the Portfolio and
security positions reflected in any periodic report to the Client will be deemed
to be in compliance with the Investment Guidelines and will be deemed approved
by the Client unless written notice to the contrary is received by Manager from
the Client within ten (10) days of the settlement date as specified on the
confirmation delivered to the Client for such securities or security positions.
c. INVESTMENT OF CASH. The Client understands that the Manager may,
consistent with the terms of this Agreement, invest Portfolio cash balances in
money market funds or in other investment vehicles as prudent management
dictates. The Client acknowledges that the yield on any money market fund or
other investment will be affected by the distribution, management,
administrative, and other charges imposed by the fund or investment. Fees
payable to the Manager hereunder shall not be offset or reduced by any portion
of such fees and charges, including advisory fees assessed against the Client's
balance therein.
d. CALLING. Manager shall have the authority to make unsolicited
calls to appropriate officers of Client. All personal visits and oral
communications will be at reasonable hours and only as permitted by IMRO rules.
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4. DIRECTIONS TO MANAGER. The Client shall furnish the Manager with a
certified copy of a resolution of the Board of Directors of Client authorizing
specified persons to give Portfolio investment directions to the Manager on the
Client's behalf ("Authorized Persons"). The Manager shall be entitled to rely
upon such resolution as conclusive evidence of the Authorized Persons' authority
to give such directions to the Manager. All such directions by or on behalf of
the Client to Manager shall be in writing and signed by an Authorized Person.
For this purpose, the term "in writing" shall include directions given by telex
or by facsimile. Directions received from the Client via facsimile transmission
must reflect signature of an Authorized Person. Manager shall acknowledge
receipt of such directions by letter, telex, facsimile, or telephone. All
acknowledgements by Manager shall be made before the close of business on the
following business day. The above notwithstanding, Manager shall be fully
protected in relying upon any direction signed or given by any person reasonably
believed by it to be an Authorized Signer. Manager shall also be fully
indemnified by Client and have no liability when acting upon directions from
Client reflected in an instrument, certificate or paper Manager reasonably
believes to be genuine and to be signed or presented by an Authorized Signer.
5. COMPLAINTS.
a. PROCEDURE. If Client is dissatisfied with any aspect of Manager's
service it may contact Manager's Compliance Officer or any other officer for
referral to the Compliance Officer. Within five (5) business days of the
Compliance Officer's receipt of such complaint, the Compliance Officer will
notify Client of the result of his deliberations and of the actions that has
been or will be taken in respect of such complaint.
b. IMRO. In the event of Client being dissatisfied with any aspect
of Manager's service, or if Client prefers not to contact Manager as provided
above, Client may contact IMRO directly, which itself will examine Client's
complaint. If requested, Manager will supply Client with a statement describing
Client's rights to compensation if Manager is unable to meet any of its
liabilities (if any) to Client arising under this Agreement.
6. BROKERS AND DEALERS.
a. SELECTION. Pursuant to the discretionary authority conferred on
the Manager by this Agreement, and unless the Client directs otherwise in
writing, the Manager will use its discretion in selecting the broker or dealer
to be used to execute each order for the Portfolio and to effect each Portfolio
transaction.
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b. DIRECTED SELECTION. The Client may direct the Manager to use a
particular broker or dealer to execute transactions for the Portfolio. In such
event, the Client's direction will be by a writing authorizing the Manager to
execute all or certain specified transactions with a designated broker or
dealer. The Client acknowledges that in directing the Manager to use a
particular broker or dealer, the Manager may not be in a position where it can
freely negotiate commission rates or spreads, or select brokers or dealers on
the basis of price and execution. The Client further acknowledges that such
directed brokerage transactions may not be commingled or "batched" for purposes
of execution with orders for the same securities for the accounts of other
persons or entities managed by the Manager. Accordingly, Client acknowledges
that the Client's direction of a particular broker or dealer to execute
transactions for the Portfolio could result in higher commissions, greater
spreads, or less favorable net prices.
c. INVESTMENT RESEARCH AND INFORMATION. Client acknowledges that the
investment research and information provided by brokers or dealers and their
ability to achieve quality executions and other brokerage services are
important. Client therefore agrees that brokers or dealers selected by the
Manager may be paid commissions for effecting transactions for the Client in
excess of the amounts other brokers or dealers would have charged for effecting
these transactions if the Manager determines in good faith that such amounts are
reasonable in relation to the value of the brokerage or research services
provided by those brokers or dealers. In the event that such transactions are
effected pursuant to a separate soft commission agreement, Manager will make
such disclosure as is required by IMRO rules.
7. TRANSACTIONS. The Manager may sell or purchase investments which are
included in, or intended to become part of, the Portfolio as part of a larger
transaction or series of transactions in which other persons are interested,
provided that the terms of such purchase or sale are in the Manager's reasonable
opinion fair and equitable. Where the Manager deals on behalf of the Client and
other persons as part of a larger transaction, or in a transaction not
specifically allocated to the Client at the time of dealing, the transaction is
to be identified in the Manager's records on the day of dealing as being
expressly, wholly or to a specified extent for the benefit of the Client, and is
to be allocated to the Client at the price paid or received in the original
transaction. The Manager shall value the Portfolio on a daily basis using
valuation methods mutually agreed by the Manager and Client. Valuations will be
provided to the Client at least quarterly, or as reasonably requested by Client.
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8. LIMITS ON MANAGER'S LIABILITY.
a. GOOD FAITH PERFORMANCE. The duties and obligations of the Manager
shall be determined solely by the express provisions of this Agreement and the
Manager shall be responsible only for the good faith performance of its duties
as specifically set out in this Agreement. The Manager shall not be bound in
any way by any agreement or contract between the Client and any other third
party (whether or not the Manager has knowledge thereof).
b. CLIENT BREACH. The Manager shall not be responsible in any manner
whatsoever for any failure or inability of the Client to honor any of the
provisions of this Agreement.
c. SOLVENCY AND PERFORMANCE. The Manager shall not be responsible
for the solvency of or the due and proper performance of the obligations of any
third party bank, clearing organization, broker, dealer, intermediary, nominee
or agent appointed or employed by the Manager. The Manager shall make available
to the Client such rights (if any) as the Manager may have against such person
or entity in the event of the insolvency of any of the above or the failure of
such person or entity properly to perform such obligations and shall give such
assistance as the Client may reasonably require for the Client to exercise such
rights.
d. RELIANCE. Manager shall be fully indemnified by Client and have
no liability for any action taken by Client in connection with this Agreement or
for acting and relying upon any written advice, certificate, notice, direction,
instruction, request or other paper or document which the Manager in good faith
believes to be genuine and to have been signed or presented by the proper
parties.
e. LEGAL COUNSEL. Manager may seek the advice of legal counsel in
the event of any dispute or questions as to the construction of any of the
provisions of this Agreement or its duties hereunder, and it shall incur no
liability and shall be fully protected in respect of any action taken, omitted
or suffered by it in good faith in accordance with the opinion of such counsel.
f. LIABILITY. Manager shall not be liable to the Client for any acts
or omissions by the Manager, its employees, independent contractors, or agents
under and in connection with this Agreement, except by reason of material acts
or omissions of the Manager constituting bad faith, gross negligence or willful
misconduct.
g. INDEMNIFICATION. The Client shall reimburse, and indemnify the
Manager for, and hold it harmless against, any
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loss, liability or expense (including, without limitation, attorney fees),
incurred by the Manager arising out of or in connection with Client's breach of
this Agreement or Manager's 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;
provided that Client shall not be obligated to provide such indemnification for
material acts or omissions of the Manager constituting bad faith, gross
negligence, or willful misconduct.
h. INFORMATION. Manager shall have no obligation to seek to obtain
any material non-public information about any issuer of securities, nor to
purchase or sell, or to recommend for purchase or sale, for the Portfolio the
securities of any issuer on the basis of any such information as may come into
its possession.
i. CLIENT COMPLIANCE. Manager shall not be responsible for Client's
own compliance with any laws, rules, or regulations.
j. OTHER BUSINESS. Manager shall have no liability whatsoever for
the management of any other assets of the Client other than the Portfolio and
shall incur no liability for any loss or other damage which may result from any
management of such other assets. Nothing contained in this Agreement shall
prevent the Manager or any of its Affiliates from engaging in any business or
rendering services of any kind to any other person or entity. In connection
therewith, the Manager and its Affiliates may, without limitation:
(i) be retained to provide services to (A) the Client or any of
its Affiliates or (B) any of the issuers of securities held
in the Portfolio; and
(ii) hold the capital stock of (A) the Client or any of its
Affiliates or (B) any of the issuers of securities held in
the Portfolio.
k. EXCHANGE RATES. The Manager shall not be liable for any loss
experienced on a Portfolio investment or reinvestment due to changes in currency
exchange rates.
l. EXCHANGES AND CLEARING HOUSES. Client acknowledges and agrees
that the rules of an exchange and its clearing house (if any) usually contain
wide powers in an emergency or otherwise undesirable situation or in the event
of a default (not necessarily on the part of Client or Manager) to close out
contracts traded under, or registered in accordance with, the rules of such
exchange or clearing house (as the case may be), to effect invoicing back of
such contracts, to exercise rights of
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set-off, and to take such other steps as the exchange or clearing house may
think fit. Client agrees that if any exchange or clearing house takes any such
action which affects any contract Manager may have with any intermediate broker
and which relates to a contract between Client and Manager, then, Manager may at
its discretion take such action as it considers desirable to correspond with the
action so taken by the exchange or clearing house, or to mitigate any loss.
Client agrees that it shall be bound by any action which is taken by Manager.
9. CUSTODY. The cash and assets of the Portfolio shall be held in
custody for Client by a bank described in Schedule E (the "Custodian") under
separate agreement between the Custodian and Client. The Custodian shall be
mutually agreeable to the Client and the Manager. The Client hereby represents
to Manager that the Custodian has agreed to act as sole custodian for the
Portfolio and in accordance with Manager's instructions. The Portfolio shall be
deposited by Manager into an account held by Custodian. The Client shall
instruct the Custodian to provide Manager with such periodic reports concerning
the status of the Portfolio as Manager may reasonably request from time to time.
The Client hereby represents to Manager that it will not change the Custodian
without giving Manager reasonable prior notice of its intention to do so
together with the name and other relevant information with respect to the new
Custodian. The Client shall pay all costs and fees of the Custodian and with
regard to any accounts Client maintains with the Custodian. The Client may, at
its discretion, provide written authorization permitting Manager's fees, as
described in this Agreement, to be paid directly from the Client's account held
by the Custodian.
10. CLIENT DEPOSITS AND WITHDRAWALS. The Client may deposit into the
Portfolio at any time additional cash, liquid securities or other readily
marketable property acceptable to the Manager in such amounts (not less than an
amount to be mutually agreed upon by the Manager and the Client, and in
accordance with the Client's separate agreement with the Custodian) as the
Client may determine. A deposit must be accompanied by a written notice of
deposit clearly indicating the character and amount of the deposit. The Client
shall immediately notify the Manager in writing of any such deposit. Manager
shall acknowledge notice of such deposit by letter, telex, facsimile, or
telephone before the close of business on the following business day. The
Client may, at any time, withdraw any amount up to the total value of the
Portfolio from the Portfolio subject to reasonable prior written notice to the
Manager and the Custodian of each withdrawal. The notice of withdrawal must (a)
indicate the name of the Portfolio, (b) state the amount to be withdrawn, and
(c) be signed by an Authorized Person. Client represents and warrants to
Manager that the Custodian will make payments of amounts withdrawn by wire
transfer in accordance with the Client's separate agreement with the Custodian.
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11. PROXY VOTING AND OTHER MATTERS.
a. RESPONSIBILITY. The Manager shall not be required to take any
action or render any advice with respect to (a) the voting of proxies solicited
by or with respect to the issuers of Portfolio securities, (b) the tender,
redemption, call, or conversion of Portfolio securities, (c) any waivers,
consents, or other instruments regarding Portfolio securities, (d) any
endorsement, transfer, or delivery of Portfolio securities, (e) any consent to
any class action, reorganization, merger, combination, consolidation,
liquidation, or other arrangement with respect to any Portfolio security or
security issuer, or (f) any other transaction or matter which is the same or
substantially the same or similar to any of the above. Manager will send the
Client any materials pertaining to the above which the Manager receives.
b. DISCRETION. In the event that within a reasonable time as
determined by Manager, the Manager has not received any direction from Client
with regard to any matter and materials described in (a) above, Manager at its
discretion may take such action regarding such matter and materials as it deems
prudent without liability to Client. In addition, the Manager will not be
obligated to render advice or take any action on behalf of the Client with
respect to securities or other investments presently or formerly held in the
Portfolio or the issuers thereof which become the subject of any proceedings
including without limitation bankruptcies or other proceedings whether legal or
otherwise.
12. FEES. The Client agrees to pay the Manager a fee, due quarterly in
arrears, computed in accordance with the terms of Schedule D attached hereto and
made a part hereof. Such fee shall be in addition to Client's payment of any
value added tax ("VAT") pertaining to such fee computed at the rate in force
from time to time. In accordance with the procedures set forth in Section 9 of
this Agreement, the fees stated herein may be paid directly to Manager out of
the account of Client maintained by the Custodian. Manager agrees to send to
Client and Custodian at the same time an invoice indicating the amount of such
fees, the value of the assets on which the fees are based, and the manner in
which Manager calculated the fees. The fees of Manager shall be paid within ten
(10) days following the date of each fee invoice of Manager. The fees payable
to Manager are in addition to any other fees that Manager (or to its knowledge
any Affiliate of Manager) may receive in connection with any transactions
effected by Manager for Client under this Agreement. Such fees are also in
addition to Client's required reimbursement of Manager for all costs, expenses,
and commissions incurred by Manager for transactions effected on behalf of
Client as well as of all travel, food, and lodging expenses of Manager for
travel to Client. Any such reimbursement of expenses and payment of VAT shall
be made at the time Manager's fees are payable.
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13. CONFIDENTIAL RELATIONSHIP. All nonpublic information and advice
furnished by either party to the Agreement to the other such party shall be
treated as confidential and shall not be disclosed to third parties except as
required by law or otherwise as expressly agreed to by the parties.
14. OTHER CLIENTS' INVESTMENTS. Client acknowledges and agrees that
Manager and its Affiliates act as advisers to other clients and may give advice,
and take action, with respect to any of those clients that may differ from the
advice given, or the time or nature of action taken, with respect to the
Portfolio. Manager shall have no obligation to recommend for purchase or sale
by the Portfolio, any security that Manager or its Affiliates, or their
employees, agents, or independent contractors may purchase for themselves or for
any other clients. Client further acknowledges and agrees that such other
clients may be involved in businesses and/or have investment objectives and/or
securities portfolios similar to that of Client but that the performance of the
assets managed by Manager or its Affiliates of such other clients may be
materially better or worse than that of the Portfolio. Manager shall have no
liability for any such performance differences.
15. TERM AND TERMINATION.
a. TERM. This Agreement shall be effective as of the date hereof and
shall remain in effect through December 31, 1998 unless terminated or extended
pursuant to this Section. The Client shall have the right, exercisable at any
time before September 30, 1998, to extend such initial term until December 31,
2000.
b. TERMINATION EFFECT. Termination of this Agreement will not affect
the liabilities or obligations of the parties under this Agreement arising from
transactions initiated prior to the effective date of Agreement termination and
will be without prejudice to the completion of transactions initiated by Manager
prior to such effective date of termination. Agreement termination shall also
not affect the Client's obligations to pay the Manager's fees accrued prior to
such effective date of termination. The Client also agrees to pay any
additional expenses which the Manager necessarily incurs on termination of the
Agreement and any losses necessarily realized in settling or concluding
outstanding obligations entered into by Manager pursuant to this Agreement.
Upon termination of this Agreement, the Manager shall be under no obligation
whatsoever to recommend any action with regard to, or to liquidate, the
securities or other investments of the Portfolio. The Manager retains the
right, however, to complete any transaction open as of the effective termination
date of this Agreement and to retain amounts in the Portfolio sufficient to
effect such completion.
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Upon termination, it shall be the Client's exclusive responsibility to issue
directions in writing regarding any assets held in the Portfolio.
16. REPRESENTATIONS AND WARRANTIES. The Client hereby represents and
warrants to the Manager as follows:
a. GOOD STANDING. The Client is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation indicated above. Client has the corporate power and authority to
own its assets and transact the business in which it is engaged.
b. CORPORATE POWER. The Client has the corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by the Client
and constitutes a legal, valid and binding obligation of the Client enforceable
against it in accordance with its terms. No consent of any person including,
without limitation, the stockholders or creditors of the Client, and no license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental authority or other
person or entity is required by the Client in connection with the Client's
execution, delivery and performance of this Agreement other than those already
obtained.
c. VIOLATION. The exercise, delivery and performance of this
Agreement will not violate any provision of any law or regulation binding on the
Client, or any order, judgment or decree of any court, arbitrator or government
authority binding on the Client, or the memorandum of association or bye-laws of
the Client, or any mortgage, indenture, lease, contract or other agreement,
instrument or undertaking to which the Client is a party or by which it or any
of its assets may be bound, or require the creation or imposition of any lien on
its property, assets or revenues.
d. AUTHORIZED PERSONS. The list of Authorized Persons provided as
part of the Board of Directors resolution referenced in Section 4 above
constitutes the complete and entire list of all officers, employees or agents of
the Client authorized to take action with respect to the Portfolio and the
Manager shall be entitled to rely conclusively on any document executed by any
one of them.
e. CLIENT SOPHISTICATION. The Client acknowledges that (i) it,
either directly or through its representatives, has such knowledge and
experience in financial affairs that it is capable of evaluating the merits and
risks of engaging the Manager to manage the Portfolio and (ii) movements in
currency
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exchange rates may have a material effect, unfavorable as well as favorable, on
Portfolio performance.
f. DEVELOPMENTS. The Client shall promptly notify the Manager in
writing of any facts or circumstances or any change therein which may, directly
or indirectly, affect the management of the Portfolio by the Manager.
g. INFORMATION. The Client shall promptly deliver to Manager such
information, papers and documents required or reasonably requested by the
Manager in connection with the performance of its duties under this Agreement.
h. OWNERSHIP. The Client is and shall, during the term of this
Agreement, remain as the beneficial owner of the Portfolio, free and clear of
any and all liens, charges, options and encumbrances or other third party rights
whatsoever.
17. REPORTS. At least quarterly the Manager will send the Client a report
indicating (a) the beginning and ending valuation of the Portfolio for such
quarter or other time period, and (b) Portfolio transactions for such quarter or
other time period. Any measures of Portfolio performance that may be included
by Manager as part of such reports shall be mutually agreed by Manager and
Client.
18. NOTICES. All notices and directions with respect to securities
transactions or any other matters contemplated by this Agreement shall be deemed
duly given when delivered in writing to the appropriate party at the address
appearing below for each party, or to such other address as shall be notified in
writing by that party to the other party from time to time.
If to Manager:
Aon Advisors (U.K.) Limited
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Attention:
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If to Client:
LaSalle Re Limited
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Attention:
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19. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement is made and shall be construed
under the laws of Bermuda. Any litigation concerning this Agreement shall be
brought before courts of competent
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jurisdiction located in Hamilton, Bermuda. The parties hereto agree to the
personal jurisdiction of such courts and that service of process may be made on
them at the addresses indicated in Section 18 above.
b. ENTIRE AGREEMENT. This Agreement represents the entire agreement
between the parties with regard to the subject matter hereof.
c. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a statute, rule, regulation, decision of a court of competent
jurisdiction or otherwise, the remainder of this Agreement shall not be affected
thereby and, to this extent, the provisions of this Agreement shall be deemed to
be severable.
d. WAIVER AND AMENDMENT. No provision of this Agreement may be (i)
amended except by a writing signed by both parties hereto, or (ii) waived except
by a writing signed by the party making the waiver.
e. ASSIGNABILITY. Neither party may assign this Agreement without
the prior written consent of the other party.
f. HEADINGS. The section headings used in this Agreement are purely
for convenience purposes and shall not be used to interpret this Agreement.
g. JOINT VENTURE. The Manager and Client are not partners or joint
venturers together and nothing herein shall be construed to make them such or
impose liability by reason thereof.
h. SUCCESSORS AND ASSIGNS. Subject to Section 18.e. above, the
provisions of this Agreement shall be binding upon and shall inure to the
benefit of and be enforceable, by each of the parties hereto and their
successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly appointed officers so as to be effective on the day,
month and year first above written.
Aon ADVISORS (U.K.) LIMITED LASALLE RE LIMITED
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx Xxxx
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Title: Chairman Title: Chief Financial Officer and
--------------------- Treasurer
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SCHEDULE A
DEFINITION OF A "BUSINESS INVESTOR"
(1) "Business Investor" means:
(a) a government, local authority or public authority within the meaning of
Note 1 to paragraph 3 of Schedule 1 to the Act or any body whose functions
are confined to acting on behalf of any such government, local authority or
public authority, or
(b) a Body Corporate satisfying any of the criteria set out in paragraph (2)
below and which carries on a business which is not Investment Business or,
if it is Investment Business, may under the Act be lawfully carried on by
that body without its being an Authorized Person, or
(c) a trustee of a trust where the aggregate value of the cash and investment
which form part of the trust's assets (before deducting the amount of its
liabilities) is (Pounds)10,000,000 or more or has been (Pounds)10,000,000
or more at any time during the previous two years, and
(2) The criteria referred to in paragraph (1) are the following:
(a) if the company is a Body Corporate which has more than 20 members or which,
being a Subsidiary, has a Holding Company which has more than 20 members,
the company or any of its Holding Companies or any of its Subsidiaries has
a called up share capital, or net assets, of not less than
(Pounds)5,000,000, or
(b) if the company is not a Body Corporate, the company has net assets of not
less than (Pounds)5,000,000.
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SCHEDULE B
PORTFOLIO
The Portfolio shall consist of all cash, securities, and other property
which from time to time are placed by Client under the Manager's management, all
changes therein occurring as a result of purchase, sale, or other transactions
affecting the Portfolio, as well as all accretions of any sort including
dividends, interest, stock splits, and realized capital gains. Any securities
or other property purchased out of such accretions shall be part of the
Portfolio. The initial value of the Portfolio as of the date of this Agreement
is expected to be approximately US $400,000,000.
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SCHEDULE C
INVESTMENT GUIDELINES
1. QUALITY OF ISSUER
1.1 In order for the debt securities of a borrower to qualify for
investment, the securities must have an S&P or Xxxxx'x bond rating of
a minimum of "AA". Where no rating is available the Manager shall
ascribe his own rating which must in no case be lower than the
equivalent of AA.
1.2 The banks whose certificates of deposit may be purchased or with whom
deposits may be made, shall be determined by the Manager, keeping in
mind marketability, but in any case will be limited to banks ranking
among the top 150 in terms of total assets as determined by the
Bankers Magazine. Euro-commercial paper of these banks, or other
borrowers, must be investment grade with minimum ratings of A1/P1, or
the equivalent, and readily marketable.
2. OBJECTIVE
To provide for the preservation of capital and liquidity requirements of
the Portfolio while maximizing the total Portfolio return through a
combination of investment income and capital appreciation. Investments
will be concentrated in short-term money market instruments, floating rate
securities and fixed income bonds and tied to agreed upon asset/liability
matching.
3. PERMISSIBLE INVESTMENTS
3.1 Certificates of Deposit issued by the London branches of major banks
and time deposits with banks of the same quality and other short-term
money market instruments maturing within 12 months or less.
3.2 Floating rate notes and floating rate certificates of deposit issued
by corporate borrowers, banks, governments and their agencies and
supranational agencies. The maturity of these instruments shall be
twelve (12) months or less and will be measured by the date on which
the coupon is next due to be refixed.
3.3 Fixed income bonds of up to 10 years' maturity.
3.4 Equity or equity-linked investments are not permitted.
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3.5 Investments are permitted in U.S. dollar and in foreign currency
denominated securities.
3.6 The purchase of property, other than securities, is not permitted.
3.7 Options, futures, and foreign exchange contracts are permitted only to
the extent required to hedge known claims to be paid subject to an
approved derivative transaction policy.
3.8 The acquisition of securities committing the Client to contribute
funds over and above the then market value of the Portfolio is not
permitted nor is any borrowing of funds by Manager on behalf of Client
using the Portfolio as collateral.
3.9 The Manager acting as a principal shall not buy from or sell to the
Portfolio any securities.
3.10 The Manager may not without prior disclosure to the Client effect
transactions with or for the Client in respect of which the Manager
has directly or indirectly a material interest (except for an interest
arising solely from the mere participation of the Manager as agent for
the Client) or a relationship of any description with another party
which may involve a conflict with the Manager's duty to the Client as
set forth by this Agreement together with a disclosure of the nature
of the interest.
4. SIZE AND NATURE OF HOLDINGS
4.1 The Manager's investment in any one issuer or borrower other than the
U.S. and U.K. governments, shall not exceed 5 per cent of the market
value of the Portfolio at time of purchase.
4.2 The maximum exposure to any one country will be 25% of the Portfolio.
This limit does not apply to U.S. and supranational borrowers.
5. GENERAL
5.1 Investments shall be in instruments which are free of all withholding
taxes or sold prior to the deduction of such taxes.
5.2 The Manager at least quarterly will provide a quarterly valuation
report for the Portfolio and an outlook for future investment policy.
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SCHEDULE D
FEE SCHEDULE
The Client shall pay the Manager a fee for its services on a quarterly basis, in
arrears, equal to the applicable percentage listed below of the average daily
balance of the Portfolio for that preceding quarter:
PORTFOLIO BALANCE ANNUAL FEE IN BASIS POINTS
----------------- --------------------------
(in millions)
0 through $100 35
Over $100 through $200 25
Over $200 15
Example. The fee for $150 Million in Managed Assets would be 25 basis points
for $50 Million and 35 basis points for $100 Million divided by four to reflect
the quarterly payment due.
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SCHEDULE E
PERMITTED CUSTODIANS
1. Banks within the United Kingdom as follows:
(a) institutions authorized by the Bank of England to take deposits under
the Banking Xxx 0000 with net tangible assets of not less than
(Pounds)100 million;
(b) wholly owned subsidiaries of such authorized institutions with net
tangible assets of not less than (Pounds)100 million and which are
themselves similarly authorized; and
(c) members of the London Discount Market Association, provided that the
deposits are secured.
2. For the purpose of 1 above, net tangible assets are defined as the
aggregate of issued share capital, consolidated reserves and subordinated
loans, less the amount of any intangible assets all as shown in the latest
audited financial statements of the institution. Financial statements
prepared in foreign currencies are to be translated at the exchange rate
prevailing at the balance sheet date.
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