EXHIBIT 10.11
INVESTMENT ADMINISTRATION AGREEMENT
THIS INVESTMENT ADMINISTRATION AGREEMENT (this "Agreement"), dated as of
December 21, 2000, is made by and between FAIRFAX FINANCIAL HOLDINGS LIMITED and
TRANSNATIONAL INSURANCE COMPANY. As used in this Agreement, "we", "us", and
"our" shall refer to TRANSNATIONAL INSURANCE COMPANY, and "you" and "your" shall
refer to FAIRFAX FINANCIAL HOLDINGS LIMITED.
In consideration of the mutual promises contained herein, the parties agree
as follows:
1. We authorize you to provide, and by signing below you agree to
provide, the investment administration services set forth in Schedule
A 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.
2. You shall be entitled to such fees, payable quarterly in arrears, for
the service provided hereunder, as you may specify from time to time.
Attached hereto as Schedule B is a copy of your current fee schedule
and you agree to give us thirty (30) days prior written notice of any
change in such schedule, which change shall require the approval of
the Connecticut Department of 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 third parties for
such services. We will remit payment to you not later than 15 days
following delivery to us of a report showing the amount due
hereunder.
3. This Agreement shall be for a term of one year and shall renew
automatically for an additional term of one year at each annual
expiration unless either party shall provide to the other written
notice of its intent not to renew this Agreement not later than 30
days prior to the expiration of the term. In addition, either party
hereto 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.
4. This Agreement shall enure to the benefit of and shall be binding
upon the parties hereto and their respective successors. This
Agreement may not be assigned by either party.
5. 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.
6. Any dispute or difference arising with reference to the applicable
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 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 fifteen (15) days, advising of its arbitrator. The
umpire shall thereafter be chosen by 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, each arbitrator
shall nominate three candidates within ten (10) days thereafter, two of
whom the other shall decline, and the decision shall be made by drawing
lots. 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 to the Board.
The sittings of the Board shall take place in Morristown, New Jersey.
The Board shall make its decision with regards 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.
7. The provisions in Schedule A and Schedule B attached hereto are
hereby incorporated into, and form part of, this Agreement.
8. 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 Department.
9. 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 or other
similar form of transmission) by you or us, as applicable, at the
address or fax number first above written or such other address or
fax number as shall be specified in a notice similarly given:
If to us:
Chief Financial Officer
Transnational Insurance Company
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Telecopy Number 973/490-6612
If to you:
FAIRFAX FINANCIAL HOLDINGS LIMITED
00 Xxxxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
Fax No.: (000) 000-0000
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.
10. 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 hereto submits to the jurisdiction of the state and federal
courts of the State 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 9 as such person or address
may be changed from time to time.
11. 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 Department,
within fifteen (15) days of any request from the Department therefor,
copies of all your books and records as they pertain to us (or any
portion thereof as may be specifically requested).
SCHEDULE A
SERVICES
Tasks underlying the fees to be performed by Fairfax Financial Holdings
Limited are:
MONTHLY
-- computation of all regulatory figures
-- analysis and reconciliation of portfolios
-- yield review
-- computation of market decline tests
-- computation of liquidity analysis
-- analysis of bookvalues, e.g. bond amortizations and investment
provisions
-- analysis of gross gain and loss positions
-- cash flow obligations
-- investment review meeting
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
SCHEDULE B
FEE SCHEDULE
Fees will be calculated at the end of each calendar quarter based upon the
average of the market value of the funds held in the investment account (the
"Account") governed by the terms of the Investment Management Agreement between
Transnational Insurance Company and Xxxxxxx Wasta Investment Counsel, Ltd.,
dated as of December 21, 2000 at the close of business for the three (3)
preceding months. Charges are stated on a calendar year basis.
MARKET VALUE CHARGE
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On Total Market Value....................................... .10%
In the event that the day upon which this Agreement is terminated is a day
other than the first day of a calendar quarter, the fees payable 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 Transnational Insurance Company by the Custodian for the Account.
IN WITNESS WHEREOF, this Agreement is hereby executed by duly authorized
officers of the parties hereto as of the date first written above.
TRANSNATIONAL INSURANCE COMPANY
By: /s/ XXXX XXXX XXXXXXXXX
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Authorized Signature
Xxxx Xxxx Xxxxxxxxx
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Name of Authorized Signatory
FAIRFAX FINANCIAL HOLDINGS LIMITED
By: /s/ XXXXXXX X. XXXXXX
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Authorized Signature
Xxxxxxx X. Xxxxxx
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Name of Authorized Signatory
