Exhibit 10.31
INVESTMENT MANAGEMENT
AGREEMENT – FIXED INCOME
THIS AGREEMENT, dated as of the 26
day of June, 2003, by and between Asset Allocation &
Management Company, L.L.C, an Delaware limited liability company
having its principal place of business at Thirty North LaSalle
Street, 35th Floor, Chicago, Illinois, 60602 (herein
“AAM”), and Max Re Ltd., having its principal place of
business at Max Re House, 2 Front Street, Hamilton, HM 11 Bermuda
(herein “Client”).
In consideration of the promises set
forth in this Agreement, AAM and Client agree as
follows:
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1.
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Authorization
As Investment Advisor.
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Subject to the terms and conditions
set forth herein, Client hereby designates and appoints AAM as
investment adviser for the management of securities with regard to
the cash and securities listed in Exhibit A, which is attached
hereto, and such other cash and securities (other than those
identified as Unmanaged Assets, as defined below) as shall be
subsequently contained in Client’s account by reason of
purchases, sales, exchanges, withdrawals, additions or otherwise.
Assets placed in the Client’s account by the Client that are
not managed by AAM are either separately identified on Schedule A
or shall be identified subsequently (“Unmanaged
Assets”). AAM shall include Unmanaged Assets in its periodic
reports to the Client, but will exclude their value in calculating
AAM’s advisory fees.
AAM shall have full authority and
discretion to supervise the management of said cash and securities
(other than Unmanaged Assets), including, without limitation,
authority and discretion to select, purchase and sell securities
and to determine timing and means of execution for such selection,
sales or purchases, in accordance with the investment guidelines
set forth on Exhibit B hereto (the “Investment
Guidelines”). The Client may modify the Investment Guidelines
from time to time; provided, that, any such modification shall be
effective only upon the provision of notice of such modification by
the Client in accordance with the notice provisions
herein.
For its investment advisory
services, AAM shall be compensated based on a percentage of the
value, as determined below, of all assets in the Client’s
account (excluding Unmanaged Assets) as of the last trading day of
each calendar month. The applicable percentages for calculating the
advisory fee are set forth on the schedule of fees attached hereto.
Upon sixty (60) days prior written notice to Client, AAM may
amend or change the schedule of compensation.
AAM will value all of the securities
in the portfolio on a monthly basis utilizing reputable industry
standard pricing services or direct dealer quotes. Where the market
value of any security is not readily available from standard
pricing sources, AAM will price the security through multiple
direct dealer quotes.
Advisory fees will be payable
quarterly in arrears within thirty (30) days after receipt of
AAM’s invoice by the Client. Any advisory fee payable for
less than a full calendar quarter shall be pro-rated. Upon any
termination of this Agreement other than at the end of a calendar
quarter, the advisory fee shall be calculated as of the termination
date.
This Agreement shall be effective as
of the date of this Agreement and shall continue in effect until
terminated by either party upon thirty (30) days prior written
notice.
In the event of termination of this
Agreement, this Agreement, except for Section 4 (Limitation of
Liability), Section 12 (Confidentiality), Section 14
(Arbitration), and this Section 3 (Term of Agreement), shall
immediately become void and have no further force or effect.
Section 9 (Confidentiality) shall survive for a one year
period following the termination date. Termination of this
Agreement will not affect the Client’s obligation to pay
advisory fees in accordance with Section 2 (Advisory Fees)
through the date of termination.
Upon termination of this Agreement
and upon specific written request, AAM shall within twenty
(20) business days return to the Client all books and records
of the Client, and all other information relating to the
Client’s account then in the possession of AAM, except for
any software or other intellectual property that is proprietary to,
or owned or licensed by, AAM or any of its affiliates, which shall
remain the property of AAM.
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4.
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Limitation
of Liability.
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AAM shall be liable to and indemnify
the Client to the extent any loss, liability, or damage results
from the negligence or bad faith of AAM, violation of applicable
law by AAM or the reckless disregard by AAM of its obligations and
duties under this Agreement.
Except as set forth in the
immediately preceding paragraph of this Section 4 (Limitation
of Liability), neither AAM nor any of its employees, stockholders,
members, managers, or any officers, or directors shall be liable
hereunder for any action performed or omitted to be performed or
for any errors or judgments in connection with AAM’s services
rendered under this Agreement. The federal securities laws impose
liabilities under certain circumstances on persons who act in good
faith, and therefore, nothing herein shall in any way constitute a
waiver or limitation of any rights which Client may have under any
federal securities laws.
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Where AAM places orders for the
execution of transactions, AAM may select such brokers and dealers
for execution on such markets and at such process or commission
rates as AAM determines in its good faith judgment to be in the
best interests of Client. AAM may take into consideration in the
selection of such brokers and dealers not only the available prices
and rates of brokerage commissions, but also other relevant factors
(such as, without limitation, execution capabilities and the value
of its ongoing relationship with such brokers and dealers) without
having to demonstrate that such factors are of a direct benefit to
Client.
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6.
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Custodianship
of Cash and Securities.
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Under no circumstances shall AAM act
as custodian for or hold Client’s cash and securities. AAM
may issue instructions to the client’s custodian as may be
appropriate in connection with the settlement of transactions
initiated by AAM hereunder.
AAM shall manage the Client’s
account in accordance with the Investment Guidelines; provided,
however, that AAM will not be responsible for giving the Client
investment advice or taking any other action with respect to
Unmanaged Assets.
At reasonable times and upon
reasonable notice, AAM shall provide access to all books, records,
accounts, facilities, and personnel that relate specifically to the
performance of its obligations to the Client under this Agreement
to the internal and independent auditors and regulators of the
Client.
Within six (6) days following
the end of each month, AAM shall send to the Client monthly written
reports showing the identity, cost and current market value of the
assets in the Client’s account and each transaction made for
the Client’s account during the period covered by the
report.
At the close of each business day,
AAM shall provide to the Client an electronic trade blotter
detailing the transaction that occurred during suc
