INVESTMENT MANAGEMENT
AGREEMENT
WHITE MOUNTAINS
ADVISORS LLC, a Delaware limited liability company (the “
Adviser ”), having an address at 370 Church Street,
Guilford, Connecticut 06437, and OCCUM ACQUISITION CORP., a
Delaware corporation (the “ Client ”), having an
address at 370 Church Street, Guilford, Connecticut 06437, hereby
enter into this Investment Management Agreement, dated as of
March 14, 2004 (this “ Agreement ”), and
hereby agree that the Adviser shall act as discretionary adviser
with respect to the assets of the Client and/or its Subsidiaries,
(as defined in Schedule B) described below (the “
Investment Account ”) on the following terms and
conditions:
1.
Investment Account . The Investment Account shall consist of
cash and the securities of the Client and/or its
subsidiaries.
2.
Services of Adviser . By execution of this Agreement the
Adviser accepts appointment as adviser for the Investment Account
with full discretion and agrees to supervise and direct the
investments of the Investment Account in accordance with the
investment objectives, policies and restrictions described in the
investment guidelines to be furnished by the Client to the Adviser
in writing from time to time (the “ Investment
Guidelines ”). In the performance of its services, the
Adviser will not be liable for any error in judgment or any acts or
omissions to act except those resulting from the Adviser’s
gross negligence, willful misconduct or malfeasance. Nothing herein
shall in any way constitute a waiver or limitation of any right of
any person under the federal securities laws. The Adviser shall
have no responsibility whatsoever for the management of any assets
of the Client other than the Investment Account.
3.
Discretionary Authority . Subject to the terms of this
Agreement, the Adviser shall have full discretion to manage,
acquire and dispose of assets in the Investment Account, and for
this purpose to direct the investment, reinvestment, retention,
sale, purchase, transfer and exchange of, property from time to
time allocated to the Investment Account, to place orders with
brokers, dealers and other proper persons with respect to such
sales, purchases and exchanges, and to give directions for the
delivery and receipt of property and documents of transfer and
conveyance upon execution of such transactions. The Adviser shall
also have full discretion to structure, on behalf of the Client,
the Investment Account’s investment in Funds. To facilitate
the subscription for, redemption or transfer of interests in Funds,
the Adviser shall also have the power and authority on behalf of
and in the name of the Client to perform such acts and execute such
documents as may be necessary to subscribe or redeem interests in
Funds. In furtherance of the foregoing, the Adviser shall have full
discretion and authority to do anything that the Adviser shall deem
requisite, appropriate or advisable in connection therewith,
including without limitation, the selection of such brokers,
dealers, and others as the Adviser shall determine in its absolute
discretion.
4. Custody
. The assets of the Investment Account shall be held in one or more
separately identified accounts in the custody of one or more banks,
trust companies, brokerage firms or other entities designated by
the Client and acceptable to the Adviser. The Adviser will
communicate its investment purchase, sale and delivery instructions
directly with the Client’s
custodian or
other qualified depository. The Client shall be responsible for all
custodial arrangements and the payment of all custodial charges and
fees, and the Adviser shall have no responsibility or liability
with respect to custody arrangements or the acts, omissions or
other conduct of the custodians.
5.
Brokerage . When placing orders for the execution of
transactions for the Investment Account, the Adviser may allocate
all transactions to such brokers or dealers, for execution on such
markets, at such prices and commission rates, as are selected by
the Adviser in its sole discretion. In selecting brokers or dealers
to execute transactions, the Adviser need not solicit competitive
bids and does not have an obligation to seek the lowest available
commission cost. It is not the Adviser’s practice to
negotiate “execution only” commission rates, and, in
negotiating commission rates, the Adviser shall take into account
the financial stability and reputation of brokerage firms and
brokerage and research services provided by such brokers. The
Client may be deemed to be paying for research provided or paid for
by the broker which is included in the commission rate although the
Client may not, in any particular instance, be the direct or
indirect beneficiary of the research services provided. Research
furnished by brokers may include, but is not limited to, written
information and analyses concerning specific securities, companies
or sectors; market, finance and economic studies and forecasts;
financial publications; statistics and pricing services;
discussions with research personnel; and software and data bases
utilized in the investment management process. The Client
acknowledges that since commission rates are generally negotiable,
selecting brokers on the basis of considerations which are not
limited to applicable commission rates may at times result in
higher transaction costs than would otherwise be obtainable. The
Adviser is hereby authorized to, and the Client acknowledges that
the Adviser may, aggregate orders on behalf of the Investment
Account with orders on behalf of other clients of the Adviser. In
such event, allocation of the securities purchased or sold, as well
as expenses incurred in the transaction, shall be made in a manner
which the Adviser considers to be the most fair and equitable to
all of its clients, including the Client.
6.
Representations and Warranties of the Client . The Client
represents, warrants and agrees that:
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i)
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it
has full legal power and authority to enter into this
Agreement;
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ii)
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the
appointment of the Adviser hereunder is permitted by the
Client’s governing documents and has been duly authorized by
all necessary corporate or other action;
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iii)
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it
is a “qualified purchaser” as defined in the Investment
Company Act of 1940 and the regulations thereunder and an
“accredited investor” as defined in Regulation D,
Rule 501, as promulgated under the Securities Act of 1933,
because it is an entity that owns investments with a value of at
least $25,000,000;
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iv)
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it
is not a “restricted person” under
Section IM-2110-1 of the Conduct Rules adopted by the Board of
Governors of the National Association of Securities Dealers,
Inc.;
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v)
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it
will notify the Adviser if the preceding representations in
(iii) and (iv) become false during the term of this
Agreement and will provide the Adviser with any information that
may be required to complete any subscription agreements for
Funds;
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vi)
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it
is not (a) an employee benefit plan, (b) an IRA,
(c) a “benefit plan investor” subject to the
Employee Retirement Income Security Act of 1974, as amended, or
Section 4975 of the Internal Revenue Code of 1986, as amended,
or (d) an entity in which the participation by “benefit
plan investors” is “significant”, as those terms
are defined in regulations issued by the U.S. Department of
Labor;
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vii)
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it
understands that the Adviser will be relying upon the
representations and information provided herein or in connection
herewith by the Client in completing and entering into subscription
agreements on behalf of the Investment Account; and
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viii)
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it
will indemnify the Adviser and hold it harmless against any and all
losses, costs, claims and liabilities which the Adviser may suffer
or incur arising out of any breach of these representations and
warranties.
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7.
Reports . The Adviser shall provide the Client quarterly
reports containing a detailed listing of invested assets and
transactions in the Investment Account. All records maintained
pursuant to this Agreement shall be subject to examination by the
Client and by persons authorized by it, or by appropriate
governmental authorities, at all times upon reasonable notice. The
Adviser shall provide copies of trade tickets, custodial reports
and other records the Client reasonably requires for accounting or
tax purposes.
8.
Management Fee and Expenses .
(a) The
Adviser will be paid a quarterly management fee (the
“Management Fee” ) for its investment advisory
services provided hereunder, determined in accordance with
Schedule A to this Agreement. During the term of this
Agreement, the Management Fee shall be billed and payable in
arrears on a quarterly basis within 10 days after the last day
of each calendar quarter based upon the value of the Investment
Account as of the last day of the immediately preceding calendar
quarter. The Management Fee shall be pro-rated for any partial
quarter. It is understood that, in the event that the Management
Fee is to be billed and payable by the custodian out of the
Investment Account, the Client will provide written authorization
to the custodian to pay the Management Fee directly from the
Investment Account.
(b) The
Client shall be responsible for all expenses incurred directly in
connection with transactions effected on behalf of the Client
pursuant to this Agreement and shall include: the Management Fee;
custodial fees; investment expenses such as commissions; and other
expenses reasonably related to the purchase, sale or transmittal of
Investment Account assets (other than research fees and expenses
with respect to the Investment Account).
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9.
Confidential Relationship . All information and advice
furnished by either party to the other party pursuant to this
Agreement shall be treated by the receiving party as confidential
and shall not be disclosed to third parties except as required by
law.
10.
Non-Assignability . No assignment of this Agreement shall be
made by the Adviser or the Client without the written consent of
the other party hereto.
11.
Directions to the Adviser . All directions by or on behalf
of the Client to the Adviser shall be in writing signed by or on
behalf of the Client. The Adviser shall be fully protected in
relying upon any such writing which the Adviser believes to be
genuine and signed or presented by the proper person or persons,
shall be under no duty to make any investigation or inquiry as to
any statement contained therein and may accept the same as
conclusive evidence of the truth and accuracy of the statements
therein contained.
12.
Consultation with Counsel . The Adviser may consult with
legal counsel (who may be counsel to the Client) concerning any
question that may arise with reference to its duties under this
Agreement, and the opinion of such counsel shall be full and
complete protection in respect of any action taken or omitted by
the Adviser hereunder in good faith and in accordance with such
opinion.
13.
Services to Other Clients . It is understood that the
Adviser acts as investment adviser to other clients and may give
advice and take action with respect to such clients that differs
from the advice given or the action taken with respect to the
Investment Account. Nothing in this Agreement shall restrict the
right of the Adviser, its members, managers, officers, employees or
affiliates to perform investment management or advisory services
for any other person or entity, and the performance of such service
for others shall not be deemed to violate or give rise to any duty
or obligation to the Client.
14.
Investment by the Adviser for Its Own Account . Nothing in
this Agreement shall limit or restrict the Adviser or any of its
members, managers, officers, employees or affiliates from buying,
selling or trading any securities for its or their own account or
accounts. The Client acknowledges that the Adviser and its members,
managers, officers, employees, affiliates and other clients may at
any time have, acquire, increase, decrease or dispose of securities
which are at or about the same time acquired or disposed of for the
account of the Client. The Adviser shall have no obligation to
purchase or sell for the Investment Account or to recommend for
purchase or sale by the Investment Account any security mat the
Adviser or its members, managers, officers, employees or affiliates
may purchase or sell for itself or themselves or for any other
client.
15.
Proxies . Subject to any other written instructions of the
Client, the Adviser is hereby appointed the Client’s agent
and attorney-in-fact in its discretion to vote, convert or tender
in an exchange or tender offer any securities in the Investment
Account, to execute proxies, waivers, consents and other
instruments with respect to such securities, to endorse, transfer
or deliver such securities and to participate in or consent to any
plan of reorganization, merger, combination, consolidation,
liquidation or similar plan with reference to such securities, and
the Adviser shall not incur any liability to the Client by reason
of any exercise of, or failure to exercise, any such
discretion.
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16.
Notices . All notices and instructions with respect to
securities transactions or any other matters contemplated by this
Agreement shall be deemed duly given when delivered in writing or
deposited by first-class mail to the following addresses:
(a) if to the Adviser, at its
address set forth above, Attention: President, or (b) if to
the Client, at its address set forth above, Attention: Treasurer.
The Adviser or the Client may change its address or specify a
different manner of addressing itself by giving notice of such
change in writing to the other party.
17.
Entire Agreement; Amendment . This Agreement sets forth the
entire agreement of the parties with respect to management of the
Investment Account and shall not be amended except by an instrument
in writing signed by the parties hereto.
18.
Arbitration . Any controversy or claim arising out of or
relating to this Agreement, or the breach of the same, shall be
settled by arbitration in accordance with the rules of the American
Arbitration Association, and judgment upon the award rendered by
the arbitrators may be entered in any court haying jurisdiction.
All arbitration expenses shall be borne equally by the Adviser and
the Client.
19.
Termination . This Agreement shall continue in force from
the date hereof until terminated by either party without penalty by
written notice to the other party at least sixty (60) days
prior to the date upon which such termination is to become
effective, provided that the Client shall honor any trades executed
but not settled before the date of any such termination. Upon
termination of this Agreement, any accrued and unpaid Management
Fee hereunder shall be paid by the Client to the
Adviser.
20.
Governing Law . This Agreement shall be governed by and
construed in accordance with the laws of the State of
Connecticut.
21.
Effective Date . This Agreement shall become effective on
the date first written above.
22.
Anti-Money Laundering .
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(a)
The Client understands and agrees that the Adviser and Funds
prohibit the investment of funds by any persons or entities that
are acting, directly or indirectly, (i) in contravention of
any applicable laws and regulations, including anti-money
laundering regulations or conventions, (ii) on behalf of
terrorists or terrorist organizations, including those persons or
entities that are included on the List of Specially Designated
Nationals and Blocked Persons maintained by the U.S. Treasury
Department’s Office of Foreign Assets Control
1
(“OFAC”), as
such list may be amended from time to time, (iii) for a senior
foreign political figure, any member of a senior foreign political
figure’s immediate family or any close associate of a senior
foreign political figure 2 , unless the
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1
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The OFAC list
may be accessed on the web at http://www.treas.gov/ofac.
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2
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Senior foreign
political figure means a senior official in the executive,
legislative, administrative, military or judicial branches of a
foreign government (whether elected or not), a senior official of a
major foreign political party, or a senior executive of
a
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Adviser, after being specifically
notified by the Client in writing that it is such a person,
conducts further due diligence, and determines that such investment
shall be permitted, or (iv) for a foreign shell bank
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(such persons or
entities in (i) — (iv) are collectively referred to as
“Prohibited Persons”).
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(b)
The Client represents, warrants and covenants that: (i) it is
not, nor is any person or entity controlling, controlled by or
under common control with the Client, a Prohibited Person, and
(ii) to the extent the Client has any beneficial
owners, 4 (A) it has carried out thorough due
diligence to establish the identities of such beneficial owners,
(B) based on such due diligence, the Client reasonably
believes that no such beneficial owners are Prohi
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