EXHIBIT 10.9
INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT (this "Agreement"), dated as
of April 30, 2002, between MONY Holdings, LLC, a limited liability company
organized under the laws of Delaware (the "Company"), and MONY Capital
Management, Inc., a Delaware corporation that is an affiliate of the Company
(the "Investment Manager").
WHEREAS, the Company desires to obtain the services of the
Investment Manager who will provide investment management advice and services in
connection with the investment of certain moneys pursuant to, and in accordance
with, the terms and conditions of this Agreement; and
WHEREAS, such moneys constitute the assets (the "Assets") held
in the Debt Service Coverage Account ("DSCA") as described in the Indenture (the
"Indenture"), dated as of April 30, 2002, by and among the Company, Ambac
Assurance Corporation (the "Insurer"), The MONY Group, Inc. (solely for the
limited purposes set forth in the Indenture) and Bank One Trust Company, N.A.
(the "Trustee"); and
WHEREAS, the Investment Manager is willing to provide
investment management advice and services related to the Assets to the Company
pursuant to, and in accordance with, the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties agree as follows:
1. Appointment of Investment Manager. Subject to the terms and
conditions of this Agreement, the Company hereby appoints the Investment Manager
to act as an investment manager to the Company as of the date hereof, and to
provide certain investment advice and services to the Company. Except as
otherwise required by applicable law, the Company and the Investment Manager
each agree to maintain the confidentiality of all advice and information
provided to the Company by the Investment Manager.
2. Services to Be Provided by Investment Manager. The Investment
Manager shall provide the following advice and services to the Company regarding
investment strategies and specific transactions with respect to the investment
of the Assets:
(a) Subject to the Investment Policy (as defined below) and
the requirements of applicable law, the Investment Manager, consistent with
sound business judgment, shall maintain a continuous investment program for the
Assets and shall invest and reinvest the Assets in the name of the Trustee from
time to time in accordance with the Investment Policy; provided, however, that
the Investment Manager cannot and does not ensure any increase in the value of
the Assets, which may in actuality decrease.
(b) In rendering its services hereunder, the Investment
Manager shall have full power and authority, subject to the terms of this
Agreement and the requirements of applicable law: (i) to purchase or sell
securities, directly from or to a broker, dealer or other person selected by the
Investment Manager in its discretion; (ii) to exercise or abstain from
exercising any option, privilege or right (including voting rights) acquired in
connection with an investment and (iii) to withdraw Assets from the DSCA solely
for investment management purposes and cash solely on a cash against delivery
basis.
(c) The Investment Manager shall render to the Company such
periodic and special reports as the Company may reasonably request from time to
time.
3. Status of Investment Manager. The Investment Manager shall for
all purposes be an independent contractor and not an agent or employee of the
Company. The Investment Manager shall have no authority to act for, represent,
bind or obligate the Company except as specifically provided herein.
4. Investment Strategies. All investment strategies and advice
provided to the Company shall at all times conform to and be in accordance with
the requirements imposed by the Investment Policy Statement with respect to the
Assets attached hereto as Annex A (the "Investment Policy"), and with the
requirements imposed by applicable law.
5. Fees and Expenses. The fees and expenses to be paid to the
Investment Manager pursuant to this Agreement shall be as set forth on the
schedule attached hereto as Annex B. Such fees and expenses shall be paid by the
Company to the Investment Manager in immediately available funds and shall be in
compensation for all of the Investment Manager's services, costs and expenses
incurred in the performance of its duties pursuant to this Agreement. To the
extent that the Investment Manager shall render services to the Company at the
Company's specific request other than those services required to be rendered
pursuant to the provisions of this Agreement, such additional services shall be
compensated separately on terms to be agreed upon in writing between the
Investment Manager and the Company from time to time.
6. Computation of Fees and Expenses.
The Investment Manager shall be responsible for computing the
fees and expenses payable by the Company pursuant to the provisions of this
Agreement. The Investment Manager shall submit each expense report to the
Company on or before the fifteenth day of the month prior to the month in which
reimbursement is to be paid. The Company shall have the right to review the
Investment Manager's computation of all fees and expenses payable pursuant to
this Agreement. If there is any disagreement regarding such computation, the
dispute shall be submitted to an independent accounting firm mutually acceptable
to the Company and the Investment Manager whose determination shall be
conclusive and binding upon both parties. The fees of such independent
accounting firm shall be paid 50 percent by the Company and 50 percent by the
Investment Manager.
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7. Operating Expenses of the Company. The Company shall be
responsible for all of its operating and other expenses, including, without
limitation: investment expenses, legal expenses, professional fees, accounting
expenses, auditing and tax preparation expenses, organizational expenses and
other similar expenses related to the Company. The Company will not rely on the
Investment Manager for legal, accounting or tax advice.
8. Indemnification.
(a) None of the Investment Manager or any of its affiliates,
partners, officers, directors, members, employees, agents or representatives or,
in the circumstances described in the last sentence of Section 13(d) hereto, the
Insurer (each, an "Indemnified Person"), shall be liable to the Company: (i) for
mistakes of judgment or for action or inaction or for losses due to such
mistakes, action or inaction so long as said person acted honestly and in good
faith and reasonably believed that his, her or its conduct was in the best
interests of the Company; or (ii) for losses due to the negligence, dishonesty
or bad faith of any broker or agent selected, engaged or retained by an
Indemnified Person, provided that said person exercised reasonable care in
selecting, engaging or retaining such broker or agent.
(b) To the fullest extent permitted by applicable law, the
Indemnified Person shall be indemnified and held harmless by the Company against
losses and expenses resulting from its acts or omissions in its capacity as
Investment Manager, except for those finally judicially determined to have
resulted from its willful malfeasance, bad faith or gross negligence.
(c) The Company shall advance to an Indemnified Person (to the
extent that it has available assets and need not borrow to do so) reasonable
attorneys' fees and other costs and expenses incurred in connection with the
defense of any action or proceeding arising out of such performance or
non-performance. The Investment Manager agrees, and each other Indemnified
Person will agree as a condition to any such advance, that in the event that it
receives any such advance, it shall reimburse the Company for such fees, costs
and expenses to the extent that it shall be finally judicially determined that
it was not entitled to indemnification under this Agreement.
9. Activities of the Investment Manager and Others. The
Investment Manager and the partners, members, directors, employees, officers and
affiliates of the Investment Manager, who may or may not also be directors,
employees or officers of the Company, may engage, simultaneously with their
investment management activities on behalf of the Company, in other businesses,
and may render services similar to those described in this Agreement for other
individuals, companies, trusts or persons, and shall not by reason of engaging
in such other businesses or rendering such other services be deemed to be acting
in conflict with the interests of the Company. Notwithstanding the foregoing,
the Investment Manager shall devote sufficient time to providing services to the
Company as the Investment Manager determines to be reasonably necessary. The
partners, members, directors, employees or officers of the Investment Manager or
its affiliates, in their individual capacities, may engage in securities
transactions which may
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be different from, and contrary to, transactions engaged in, or recommended, by
the Investment Manager on behalf of the Company.
10. Representations and Warranties. Each party represents and
warrants to the other that: (i) it is duly authorized to enter into this
Agreement and the transactions contemplated hereby; (ii) this Agreement has been
duly executed and delivered by it and constitutes its legal, valid and binding
obligation enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally, and subject further, as to enforceability, to general principles of
equity; and (iii) its execution, delivery and performance of this Agreement does
not and will not result in a breach or violation of, or cause a default under,
its limited liability company agreement or articles of incorporation, as
applicable, or any provision of any law, regulation, order, license, decree,
judgment or agreement applicable to or binding upon it or its assets.
11. Termination. This Agreement shall remain in effect until
terminated by the Company or the Investment Manager at any time upon 30 days'
prior written notice to the other party.
12. Bankruptcy or Insolvency of the Company. As long as no
Insurer Default (as defined in the Indenture) has occurred and is continuing,
except as may be
agreed to in writing by the Insurer, the Investment Manager shall not seek or
initiate bankruptcy or insolvency proceedings with respect to the Company.
13. Miscellaneous.
(a) Notices. Any notice, consent or other communication made
or given in connection with this Agreement shall be in writing and shall be
deemed to have been duly given when delivered by hand, or five days after having
been mailed by certified mail, return receipt requested, as follows:
If to the Company:
MONY Holdings, LLC
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
If to the Investment Manager:
MONY Capital Management, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
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(b) Entire Agreement. This Agreement contains all of the terms
agreed upon or made by the parties relating to the subject matter of this
Agreement and supersedes all prior and contemporaneous agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter.
(c) Amendments and Waivers. No provision of this Agreement may be
amended, modified, waived or discharged except as agreed to in writing by the
parties hereto. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver thereof
or deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(d) Binding Effect: Assignment. This Agreement shall be binding
upon and inure to the benefit of the Company, the Investment Manager, each
Indemnified Person and their respective successors and permitted assigns. The
Company may assign or delegate all or a portion of its rights, obligations or
liabilities under this Agreement to The MONY Group Inc. The Investment Manager
may not assign or delegate, by operation of law or otherwise, all or any portion
of its rights, obligations or liabilities under this Agreement without the prior
written consent of the Company. Notwithstanding the foregoing, in the event that
the Insurer is exercising its rights pursuant to Section 4.09 of the Indenture
to direct investments of the Assets, the Insurer shall be entitled to the
benefits of Section 8 hereof as an Indemnified Person.
(e) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF.
(f) Headings. The headings contained in this Agreement are
intended solely for convenience and shall not affect the rights of the parties
to this Agreement.
(g) Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument, and all such counterparts together shall be deemed an
original of this Agreement.
(h) Survival. The provisions of Sections 7 and 8 hereof shall
survive the termination of this Agreement.
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IN WITNESS WHEREOF the parties hereto have caused this Investment
Management Agreement to be executed as of the date first written above.
MONY HOLDINGS, LLC
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Chief Financial Officer
MONY CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name:
Title:
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Annex A to Investment Management Agreement
Investment Policy Statement for the Debt Service Coverage Account
Investment Policy for the Debt Service Coverage Account of MONY Holdings
Investments of the assets in the Debt Service Coverage Account will be
undertaken pursuant to the following policy provisions. The goal of these policy
provisions is to obtain reasonable income while providing liquidity and a high
level of safety of capital. To accomplish these objectives the policy provisions
provide for investing in investment grade, fixed income securities. Investment
restrictions will apply at the time of purchase of assets and will be calculated
on a GAAP book value basis. The determination of the GAAP book value basis will
be based on the immediately preceding month-end portfolio balance. The
investment policy statement for the assets in the Debt Service Coverage Account
may be amended from time to time with the consent of Ambac, but without the
consent of the noteholders.
Permissible Investments
Permissible investments include the asset types listed below.
Investment Grade Securities
The Debt Service Coverage Account may purchase public fixed income
securities with a rating at the time of purchase of at least A2 by Xxxxx'x and A
by Standard and Poor's (hereinafter called the Minimum Credit Quality Limit) or,
if a rating is unavailable from one of these agencies, an equivalent rating from
an NRSRO. In addition, the account may purchase:
(i) fixed income securities with a maturity of one year or
less if they have a rating of at least A-1 or P-1; and
(ii) shares of open-end funds that:
. invest primarily in short-term debt instruments,
. meet the conditions of paragraphs (c)(2), (c)(3) and
(c)(4) of Rule 2a-7 under the Investment Company
Act, and
. are issued by an investment company registered under
the Investment Company Act or by an exempt issuer.
Securities Rated Below the Minimum Credit Quality Limit
Securities that do not satisfy the Minimum Credit Quality Limit at the
time of purchase may not be purchased by the Debt Service Coverage Account.
However, the Debt Service Coverage Account may hold securities below the Minimum
Credit Quality Limit as a result of downgrades that may occur from time to time.
If those securities are downgraded below A3 by Xxxxx'x or A- by Standard &
Poor's, then we must divest the downgraded securities within six months from the
initial date of downgrade. We may hold such downgraded securities for longer
than six months with the consent of Ambac.
Maximum Maturity
The Debt Service Coverage Account may not purchase securities with a
remaining maturity in excess of five years from the date of purchase. The
maturity profile of invested assets will take into account anticipated
withdrawals from the Debt Service Coverage Account.
Single Issuer Limits
The Debt Service Coverage Account may invest without limitation in debt
obligations issued or guaranteed by the U.S. Government and U.S.
Government-related entities. Maximum permitted debt exposure to any other single
issuer may not exceed 3% of the amount of the Debt Service Coverage Account.
Separate Accounts
No transactions may be effected with separate accounts sponsored by
MONY Life or MONY Group or any of its affiliates.
Transactions With Affiliates
All transactions related to investment management or asset sales and
purchases between MONY Life, MONY Holdings or MONY Group and their affiliates,
for the purposes of this document, shall be on an arms-length basis.
Asset Manager Selection
Assets will be managed by one or more affiliates of MONY Group or third
party investment managers for a negotiated, market-based fee at the discretion
of the Company.
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Annex B to Investment
Management Agreement
Investment Expense Schedule
(Applicable to Closed Block Assets, Surplus and Related Assets and Debt Service
Coverage Account Assets on an annual basis)
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Cash and Short Term 10 bps
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Investment Grade Publics 15 bps
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Investment Grade Privates 25 bps
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Below Investment Grade Publics 25 bps
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Below Investment Grade Privates 45 bps
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Real Estate Mortgages 35 bps
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Agricultural Mortgages 45 bps
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Bank Loans 50 bps
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Construction Loans 50 bps plus origination fees up to 1%
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Mezzanine Loans 100 bps plus 5% of earnings above 10%
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Real Estate Equities 60 bps
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Venture Capital 100 bps plus 5% of earnings above 10%
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Common Stock 100 bps
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