EXHIBIT 10.2
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement"), dated as of January 8, 2004, is
made by and between XXXXXXX WATSA INVESTMENT COUNSEL LTD. ("HW"), FAIRFAX
FINANCIAL HOLDINGS LIMITED ("FFH") and XXXX AND XXXXXXX INSURANCE COMPANY. As
used in this Agreement, "we", "us" and "our" shall refer to XXXX AND XXXXXXX
INSURANCE COMPANY, and "you" and "your" shall refer to HW and FFH jointly.
In consideration of the mutual promised 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 New Jersey.
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 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 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.
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 New Jersey
Department of Banking and Insurance (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.
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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.
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 as
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 New Jersey Department of Banking
and Insurance. Such fees shall be the exclusive fees and charges
payable (excluding third
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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.
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. No termination or addition, other than a change to Schedule
A, shall be effective unless such termination or addition is (i) filed
with the New Jersey Department of Banking and Insurance ("NJDBI") at
least 30 days prior to the proposed effective date, (ii) not
disapproved by the NJDBI, (iii) made in writing, and (iv) signed by the
parties hereto.
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 enure 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")
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of two (2) arbitrators and an umpire. Such dispute and the Board shall
be governed by the rules of the American Arbitration Association.
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 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.
Sittings of the Board shall take place in Morristown, New Jersey. 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 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.
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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 New Jersey Department of Banking and Insurance;
provided, however, that any amendment to Schedule A may become
effective without the prior approval of the New Jersey Department of
Banking and Insurance, provided that such amendment shall be filed with
the New Jersey Department of Banking and Insurance not later than its
effective date and shall, if disapproved by the New Jersey Department
of Banking and Insurance, be void as of the date of such disapproval.
IN WITNESS WHEREOF, this Agreement is hereby executed by duly authorized
officers of the parties hereto as of the date first written above.
XXXX AND XXXXXXX INSURANCE COMPANY
BY: /s/ XXXXXX XXXXXX
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AUTHORIZED SIGNATURE
Xxxxxx XxXxxx
------------------------------------
NAME OF AUTHORIZED SIGNATORY
BY: /s/ XXXXXXX X. XXXXXXXX
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AUTHORIZED SIGNATURE
Xxxxxxx X. Xxxxxxxx
------------------------------------
NAME OF AUTHORIZED SIGNATORY
XXXXXXX WATSA INVESTMENT COUNSEL LTD.
BY:
------------------------------------
AUTHORIZED SIGNATURE
------------------------------------
NAME OF AUTHORIZED SIGNATORY
FAIRFAX FINANCIAL HOLDINGS LIMITED
BY:
------------------------------------
AUTHORIZED SIGNATURE
------------------------------------
NAME OF AUTHORIZED SIGNATORY
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SCHEDULE A
INVESTMENT OBJECTIVES
1. Invest for the long term always providing sufficient liquidity for the
payment of claims and other policy obligations.
2. Ensure preservation of invested capital for policy holder 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/and unimpeachable 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.
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2. Liquidity
An adequate cash flow shall 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.
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 detailed review of portfolio liquidity is undertaken on a monthly
basis. This 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.
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.
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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. 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
faxed 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%
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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.
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.
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INVESTMENT OBJECTIVES 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.
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: Bonds, 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.
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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 listed
in the Investment Objectives and Policy Statement subject to the following
quality constraints:
Investments in money market instruments (less than or equal to 1 year
term) will be limited to those included on the list approved by the
Company. 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 or higher by Xxxxx'x and rated P1 or higher by Standard
& Poor's.
Investments in bonds and preferreds will be limited by quality tier as
follows:
LIMITS AS A % 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 Chapter 24 of Title 17 of the
New Jersey
Statutes.
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 un-rated 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.
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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.
OTHER
Derivative securities may be purchased up to 2% of the portfolios cost at book.
Use of derivative investments is infrequent and only for hedging purposes.
Derivative investments will be justified to and approved by the Investment
Committee prior to use of derivative instruments will at all times be in
compliance with NAIC guidelines regarding derivative investments.
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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 Board of Directors of The North River Insurance
Company
- 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 .30%
(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.
Maximum Fee: 1.75% (including base).
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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) 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:
XXXX AND XXXXXXX INSURANCE COMPANY
000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 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 New Jersey our state of domicile. Each of the
parties thereto submits to the jurisdiction of the state and federal courts of
the State of New Jersey, 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 shall be subject to the non-disapproval or
approval of the New Jersey Department of Banking and Insurance, and such terms
and conditions hereof as may be required by the New Jersey Department of Banking
and Insurance 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. No amendment or modification of this Agreement shall be effective
unless such amendment or modification is (i) filed with the New Jersey
Department of Banking and Insurance at least thirty (30) days prior to the
proposed effective dated, (ii) not disapproved by the New Jersey Department of
Banking and Insurance, (iii) made in writing, and (iv) signed by the parties
hereto.
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 New Jersey Department of Banking
and Insurance, within fifteen (15) days of any request from the New Jersey
Department of Banking and Insurance therefor, 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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