Post by Sapphire Capital on Jul 12, 2008 0:01:08 GMT 4
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MANAGED ACCOUNT AGREEMENT
GENERAL TERMS AND CONDITIONS
The following terms and conditions shall apply to all services rendered by Manager to Client
pursuant to the Agreement except to the extent otherwise expressly provided by a Program
Supplement.
Each Program Supplement shall pertain solely to the specific program of
services described therein (each a “Program”). The provisions of each Program Supplement
shall control with respect to the Program over the General Terms to the extent inconsistent
therewith except to the extent otherwise expressly provided.
1.
Services. As of the Effective Date (as defined in Section 14 below), Client hereby
retains Manager to render investment management services and to manage Client's
separately managed securities investment account (the "Account") as set forth in
each Program Supplement with respect to the Account’s assets to be managed in
accordance with such Program Supplement (for each Program, the “Program
Assets”). Subject to each Program Supplement and its Investment Guidelines (as
defined therein), Client grants to Manager full discretion as to all investment
decisions regarding the Account, including but not limited to, authority to buy, invest
in, hold for investment, own, assign, transfer, sell exchange, trade in, lend, pledge,
deliver and otherwise deal in (on margin or otherwise) stocks, bonds, options, shares
of investment companies and exchange traded funds, repurchase agreements and all
other securities and intangible investment instruments and vehicles of every kind
and nature ("Securities") for the Account, and to exercise in Manager's discretion all
rights, powers, privileges and other incidents of ownership with respect to Securities
and funds in the Account. In connection therewith, Manager is authorized to select
and engage for the Account one or more banks, trust companies and brokerage firms
as custodians or brokers for funds and Securities held in the Account and to instruct
such custodians and brokers with respect to the purchase, sale, exchange, delivery
or other disposition of such Securities, funds and disbursements relating thereto.
A. Notwithstanding anything in the Agreement, including without limitation any
Program Supplement, to the contrary, Manager shall have no authority
hereunder to take or have possession of any assets in the Account or to direct
delivery of any Securities or payment of any funds held in the Account to
itself or to direct any disposition of such Securities or funds except (i) to
Client, (ii) for counter value or (iii) as provided in Section 4 below.
B. Notwithstanding any other provision of the Agreement, if Client is subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), Client retains all authority to exercise voting rights with
respect to Securities in the Account, and Manager is expressly precluded from
exercising voting rights with respect to such Securities.
C. Manager does not and shall not have any duty or obligation to advise or take
any action on behalf of Client in any proceeding, including without limitation
bankruptcies or class actions, involving Securities held in or formerly held in
the Account or the issuers of Securities.
D. Notwithstanding any other provision of the Agreement, as between Manager
and Client, Client retains, with respect to all Securities and funds in the
Account, to the same extent as if Client held the Securities and funds outside
the Account, the right to:
i. Withdraw Securities or funds;
ii. Vote Securities, or delegate the authority to vote Securities to another person;
iii. Be provided in a timely manner with a written confirmation or other notification of each securities transaction, and all other documents required by law to be provided to security holders; and
iv. Proceed directly as a security holder against the issuer of any security in the Account and not be obligated to join any person involved in the operation of the Program, or any other client of the program, as a condition precedent to initiating such proceeding.
2. Limited Power of Attorney.
To enable Manager to exercise fully its discretion and
authority hereunder, including without limitation as provided in Sections 1 and 3
hereof, Client has constituted and appointed Manager as Client's agent and
attorney-in-fact with full power and authority for Client and on Client's behalf to buy,
sell and otherwise deal in Securities and contracts relating to same for the Account,
pursuant to the Limited Power of Attorney with Trading Authorization which is expressly is incorporated by reference in the Agreement and made a part thereof.
3. Brokers to be Used.
A. Manager shall select the brokers effecting transactions for the Account. Such
brokers will be paid brokerage commissions by the Account (not to exceed the
rate the brokers currently charge to their retail customers) at levels to be
determined by Manager.
i. Manager's allocation of brokerage business in effecting transactions for
the Account shall not be based solely on a desire to get the best price
possible; rather Manager shall select brokers in part on the basis of
certain non-monetary benefits offered by those firms, which may
include, among other things, research services, special execution
capabilities, clearance, settlement, reputation, financial strength and
stability, efficiency of execution and error resolution, block trading and
block positioning capabilities, willingness to execute related or
unrelated difficult transactions in the future, order of call, on-line
access to computerized data regarding its clients' accounts, availability
of Securities to be sold short, referrals of prospective investment
advisory clients and other matters involved in the receipt of brokerage
services generally.
ii. Manager also shall be entitled to purchase from a broker, or allow a
broker to pay for, certain research services, economic and market
information, portfolio strategy advice, industry and company comments, technical data, recommendations, costs of research
conferences, general reports, periodical subscription fees,
consultations, performance measurement data, on-line pricing and
charges for news wire and market data services, quotation services,
certain computer software, and the like.
iii. Client may pay brokerage commissions in excess of those that other
brokers might charge for effecting the same transactions in recognition
of the value of the brokerage, research and other services provided. In
such cases, however, Manager will determine in good faith that the
commissions are reasonable in relation to the value of brokerage,
research and other services provided by such broker (“soft dollar
credits”), viewed in terms of either the specific transaction or
Manager's overall responsibilities to the portfolios over which Manager
exercises investment authority.
iv. Regarding certain products or services used for both research and
non-research purposes, Manager may allocate the costs of such
products or services between their research and non-research uses,
and use soft dollar credits to pay only for the portion allocated to
research uses.
v. Brokerage, research and other services furnished by brokers through
whom Manager intends to effect securities transactions may be used in
servicing any or all of Manager's accounts (including the Account), but
not all of such services may be used by Manager in connection with
the Account. Manager may receive soft dollar credits based on
principal, as well as agency, securities transactions with broker or
dealers or direct a broker that executes transactions to share some of
its commissions with a broker that provides soft dollar benefits to
Manager.
B. Manager shall be entitled to aggregate Securities sale and purchase orders for
the Account with similar orders being made contemporaneously for other
accounts managed by Manager or with accounts of affiliates of Manager if, in
Manager's reasonable judgment, such aggregation is reasonably likely to
result in an overall economic benefit to the Account, based on an evaluation
that the Account is benefited by relatively better purchase or sale prices,
lower commission expenses or beneficial timing of transactions, or a
combination of these and other factors. In many instances, the purchase or
sale of Securities for the Account will be effected substantially simultaneously
with the purchase or sale of like Securities for the accounts of other clients of
Manager and its affiliates. Such transactions may be made at slightly different
prices, due to the volume of Securities purchased or sold. In such event, the
average price of all Securities purchased or sold in such transactions may be
determined, and Client may be charged or credited, as the case may be, the
average transaction price.
C. Notwithstanding any of the foregoing provisions Section 3.A or 3.B above to
the contrary, if (i) because of a prior relationship between Client and one or
more brokers or (ii) for other reasons or no reasons, Client has instructed
Manager to execute any or all Securities transactions for the Account with or
through one or more brokers designated by Client, Client represents and
warrants that Client has negotiated the terms and conditions (including but
not limited to, commission rates, other fees, costs and expenses) relating to
all services to be provided by such brokers and that Client is satisfied with
such terms and conditions. Manager shall not have any responsibility for
obtaining for the Account from any such broker the best prices or any
particular commission rates for transactions with or through any such broker.
Client recognizes that Client may not obtain rates as low as it might otherwise
obtain if Manager had discretion to select broker-dealers other than those
chosen by Client. Client agrees that if Manager believes, in its exclusive
discretion, that Manager cannot satisfy its fiduciary duty of best execution by
executing a Securities transaction for the Account with a broker designated by
Client, Manager may execute that Securities transaction with a different
broker. Client shall promptly inform Manager in writing if Client desires that
Manager cease executing transactions with or through any such broker.
4. Manager’s Fees and Payment.
Client shall pay the fees to Manager for the
services to be rendered by Manager under the Agreement in accordance with each
Program Supplement relating to the Program Assets there under (“Manager’s Fees”).
5. Responsibility for Expenses.
The Account shall be responsible for all expenses
related to the Account or the trading the assets of the Account, including, but not
limited to, interest on margin borrowing, dividends payable with respect to securities
sold short, custodial fees, brokerage commissions, broker and bank service and
account fees, charges and expenses, interest on Account-related loans and debit
balances and legal fees and expenses incurred in attempting to protect or enhance
the value of the Securities in the Account.
6. Client Information, Consultations and Instructions.
A. With respect to each Program Supplement and the related Program Assets,
Client shall promptly advise Manager of (i) Client’s financial situation insofar
as it relates to the Account, the Program Supplement and the Program
Assets, (ii) the Investment Guidelines thereof (including without limitation the
investment objectives and restrictions thereof), and (ii) any changes or
modifications to the Client’s financial condition and those respective
Investment Guidelines.
Client promptly shall notify Manager in writing if
Client considers any investments recommended or made for the Account and
any Program Supplement to violate or to be otherwise inconsistent with such
Investment Guidelines.
B. Client promptly shall furnish, or shall cause Client's custodian, including any
broker acting as such, or agent thereof, to furnish, to Manager all data and
information Manager reasonably may request or require to render the
investment management services pursuant to the Agreement. Client shall be
solely responsible for the completeness and accuracy of the data and
information so furnished to Manager.
C. Subject to the Program Supplement, Client and Manager shall consult on a
periodic basis (not less than annually) regarding each Program Supplement
and the Program Assets, including without limitation Client's Investment
Guidelines in connection therewith.
D. Subject to the terms of the Agreement, including without limitation each
Program Supplement, Client may at any time direct Manager to sell such
Securities or take such other lawful actions as Client may specify to effect
compliance of the Account with Client's respective Investment Guidelines with
respect to the related Program Assets. In addition, Client may notify Manager
at any time not to invest any Account assets in specific Securities or specific
categories of Securities, and Manager will follow Client’s instructions in
respect thereof in the ordinary course of business as set forth in the Program
Supplement.
7.Account Statements.
To the extent not otherwise provided pursuant the Program
Supplement(s), Manager shall furnish to Client an account statement no less
frequently than at the end of each calendar quarter describing all activity in the
Account during the quarter, including all transactions made on behalf of the Account,
the aggregate market value of all Securities and funds in the Account at the
beginning and at the end of the quarter, Client's additions of funds and Securities to
and withdrawals of funds and Securities from the Account during such quarter and
the calculation of the Manager’s Fees paid or accrued during such quarter.
If, however, when considered together, the account statements provided pursuant to all
Program Supplements provide such information, Manager need not provide a
separate account statement for the Account pursuant to this Section 7. Manager
may prepare all account statements required by this Section 7 without the assistance
of outside accountants.
8. Representations and Warranties.
A. Client represents and warrants to Manager and agrees with Manager as
follows:
(i)Client has the requisite legal capacity and authority to execute, deliver
and perform its obligations under the Agreement. The Agreement has
been duly authorized, executed and delivered by Client and is the
legal, valid and binding agreement of Client, enforceable against Client
in accordance with its terms. Client's execution of the Agreement and
the performance of its obligations hereunder do not conflict with or
violate any provisions of the governing documents (if any) of Client or
any obligations by which Client is bound, whether arising by contract,
operation of law or otherwise. Client will deliver to Manager evidence
of Client's authority and compliance with its governing documents on
Manager's request.
(ii) Client is the owner of all funds and Securities in the Account, and,
except as have been or may be disclosed by Client to Manager in
writing as contemplated by Section 3 above, there are no restrictions
on the pledge, hypothecation, transfer, sale or public distribution of
such funds or Securities.
(iii) Client is knowledgeable regarding the engagement of investment
advisers and is aware of the risks associated with such engagements,
including but not limited to the risk that the Account could suffer
substantial diminution in value.
(iv) If Client is not subject to the provisions of ERISA, as of the Effective
Date, and at all times during the term of the Agreement, less than
twenty-five percent (25%) of the Account's assets are and will be
assets of "employee benefit plans" within the meaning of ERISA.
(v) If Client is (or in the future becomes) subject to the provisions of
ERISA:
a. Client will obtain and maintain for the period of the Agreement
any bond for fiduciaries required by Section 412 of ERISA, and
will include Manager among those covered by such bond.
b.
Client has independently determined that the retention of
Manager by Client satisfies all requirements of Section
404(a)(1) of ERISA, specifically including the "prudent man"
standards of Section 404(a)(1)(B) and the "diversification"
standard of Section 404(a)(1)(C), and will not be prohibited
under any of the provisions of Section 406 of ERISA or Section
4975(c)(1) of the Internal Revenue Code of 1986, as amended.
The undersigned authorized signatory for Client has requested
And received All information from Manager that the
undersigned, after due inquiry, considered relevant to such
determinations. In determining that the requirements of
Section 404(a)(1) are satisfied, the undersigned has taken into
account that 1) there is a risk of a loss of the Account, 2) the
Account may be relatively illiquid, and 3) funds so invested may
not be readily available for the payment of employee benefits.
Taking into account these and all other factors relating to
retention of Manager by Client, the undersigned has concluded
that the retention of Manager by Client constitutes an
appropriate part of Client's overall investment program.
b. Client will notify Manager, in writing, of (1) any termination,
substantial contraction, merger or consolidation of Client, or
transfer of its assets to any other employee benefit plan, (2)
any amendment to the organizing documents of Client or any
related instrument that materially affects the activities of
Manager contemplated hereunder or the authority of any
named fiduciary or investment manager to authorize Client
investments or retention of investment advisers, and (3) any
alteration in the identity of any named fiduciary or investment
manager, including itself, who has the authority to approve
Client investments.
c. In accordance with Sections 405(b)(1), 405(c)(2) and 405(d) of
ERISA, the fiduciary responsibilities of Manager and any
partner, employee or agent of Manager shall be limited to his,
her or its duties in managing the Account, and Manager shall
not be responsible for any other duties with respect to Client
(specifically including evaluating the initial or continued
appropriateness of Client's retention of Manager under Section
404(a)(1) of ERISA).
B.Manager represents and warrants to Client and agrees with Client as follows:
(i) Manager is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the “Advisers Act”).
(ii) To the extent required by applicable federal and California state law,
rules and regulations, Manager has registered those of its members,
officers, managers, employees or agents as “investment adviser
representatives” in the State of .
(iii) If Client is subject to the provisions of ERISA, Manager understands
that Manager shall be a "fiduciary" of Client, as that term is defined in
section 3(21)(A) of ERISA.
9. Conflicts of Interest.
A. Client acknowledges, understands and agrees that Manager engages in an
investment advisory business apart from managing the Account, including
without limitation managing mutual and hedge funds and other separately
managed accounts, and that this other business will create conflicts of
interest with the Account over Manager's time devoted to managing the
Account and the allocation of investment opportunities among accounts
(including the Account) managed by Manager. Manager will attempt to
resolve all such conflicts in a manner that is generally fair to all of its clients.
B. Client confirms that Manager is entitled to give advice and take action with
respect to any of its other clients that may differ from advice given or the
timing or nature of action taken with respect to Client so long as it is
Manager's policy, to the extent practicable, to allocate investment
opportunities to Client over a period of time on a fair and equitable basis
relative to other clients.
C. Nothing in the Agreement shall be deemed to obligate Manager to acquire for
the Account any Security that Manager or its officers or employees may
acquire for its or their own accounts or for the account of any other client, if
in the absolute discretion of Manager, it is not practical or desirable to acquire
a position in such Security for the Account.
10. Account Losses; Indemnification.
A. To the fullest extent permitted under applicable law, Manager shall not be
liable to Client for any losses incurred by Client that arise out of or are in any
way connected with any recommendation or other act or failure to act of
Manager under the Agreement, including, but not limited to, any error in
judgment with respect to the Account, so long as such recommendation or
other act or failure to act does not constitute a breach of Manager's fiduciary
duty to Client.
B. Client shall indemnify and defend Manager and each of its members, officers,
employees agents and hold each harmless from and against any and all
claims, losses, damages, liabilities and expenses, as they are incurred, by
reason of any act or omission of Client or any custodian, broker, agent or
other third party selected by Manager in a commercially reasonable manner
or selected by Client, including without limitation all expenses related to the
Account and the trading of the assets in the Account, including but not limited
to expenses referenced in Section 5 above, except solely to the extent such
as arise from Manager's breach of fiduciary duty to Client.
C. Anything in this Section 10 or otherwise in the Agreement to the contrary
notwithstanding, however, nothing herein shall constitute a waiver or
limitation of any rights that Client may have under any Federal or state
securities laws.
11. Confidentiality. Except as required by law, (A) Manager agrees to maintain in strict
confidence all personal financial information regarding Client that is furnished to
Manager by Client (except that if such Client is an institutional investor, Client
consents to disclosure of Client's identity as a client of Manager), and (B) Client
agrees to maintain in strict confidence all investment advice and information
furnished to Client by Manager.
12. Delivery of Information.
A. Client acknowledges that Client has received Manager's brochure required to
be delivered under the Advisers Act, including but not limited to the
information in Part II of Manager's Form ADV required by the Advisers Act
(the “Brochure”). Upon written request by Client, Manager shall deliver annually, without charge, Manager's Brochure to
Client.
B. If Client received the Brochure less than forty-eight (4Cool hours prior to
signing and causing the Agreement to be delivered, the Agreement may be
terminated by Client without penalty within five (5) business days from the
Effective Date.
13. Notices.
A. Client shall not give Manager any instructions orally with respect to the
Account, including without limitation with respect to any Securities or funds
transactions.
B. A party shall make all communications under the Agreement to any other
party hereto, including without limitation any notices or instructions by Client
with respect to any Securities or funds transactions or otherwise, only in
writing.
i. “In writing” means a party must deliver the communication in English
to the other party (a) physically via a tangible and easily legible media
(e.g., a letter or other physical document) or (b) electronically via 1) a
standard facsimile device, or 2) standard Internet electronic mail
(including without limitation as a document in customary electronic
form attached thereto.
ii. Such communication will be deemed duly given and received if
properly addressed to a person authorized by the other party to
receive such communication and (a) if via a tangible and easily legible
media 1) when delivered personally, 2) three (3) business days after
being duly sent by first class U.S. mail, or 3) one (1) business day
after being deposited for next-day delivery with Federal Express or
another nationally recognized overnight delivery service providing for
signed receipt upon delivery, in each case all charges or postage
prepaid, to the other party’s authorized mailing address, and (b) if
electronically via 1) facsimile, to a phone number or 2) Internet
electronic mail, to an Internet electronic mail address, each address as
authorized by the other party as indicated below that party's signature
on the Agreement, or at any other address that either party may
authorize and designate by notice to the other in writing.
14. Effective Date and Term of Agreement. Notwithstanding the date that the
Agreement is signed or delivered by either party, the "Effective Date" shall be
deemed to be the date Client first furnished funds or Securities to be managed by
Manager in the Account.
The term of the Agreement shall commence on the
Effective Date and shall continue until the Agreement is terminated in accordance
with Section 15 below.
15.Termination: Withdrawals.
A. The Agreement, or any Program Supplement, may be terminated by either
party with or without cause or for any reason or no reason, by notice in
writing to the other party, effective when given and received in accordance
with Section 13.B.ii above or such later date as may be specified in such
notice.
Termination of the Agreement shall simultaneously terminate all
Program Supplements, but termination of a Program Supplement shall not
terminate the Agreement in its entirety but shall terminate only that portion
of the Agreement to the extent relating to such Program Supplement, and the
remainder of the Agreement, including without limitation all other Program
Supplement then in effect, shall continue in full force and effect until
terminated as provided by this Section 15. Notwithstanding any other
provision of the Agreement to the contrary, Sections 10 and 11 above shall
survive the termination of the Agreement.
B. If Client terminates the Agreement within five (5) days of the Effective Date
pursuant to Section 12.B above, Manager shall not charge Client any
Manager’s Fees.
C. Subject to the Program Supplement, Client may withdraw part of the funds or
Securities in the Account by notifying Manager in writing as provided in the
Program Supplement for such funds or Securities at least five (5) days prior
to the withdrawal date, stating the amount of funds or the Securities to be
withdrawn and the date of the withdrawal; provided that no partial withdrawal
shall be permitted without Manager's consent if, after effecting the
withdrawal, the net market value of the Account would be less than ten
thousand dollars ($10,000) or such other minimum as Manager shall establish
from time to time upon notice to Client in writing.
16. Independent Contractor.
Manager is and will hereafter act as an independent
contractor and not as an employee of Client, and nothing in the Agreement may be
interpreted or construed to create any employment, partnership, joint venture or
other relationship between Manager and Client.
17. Assignment.
Neither party shall assign the Agreement without the prior consent of
Client, and an purported assignment not in accordance with this Section 17 shall be
void and not merely voidable. The Agreement otherwise shall bind and inure to the
benefit of and be enforceable by the parties and their respective permitted
successors and assigns.
18. Arbitration.
The parties waive their right to seek remedies in court,
including any right to a jury trial. In the event of any dispute between the
parties, such dispute shall be resolved exclusively by arbitration to be conducted only
in the county and state of the principal office of Manager at the time of such dispute
in accordance with the rules of the Judicial Arbitration and Mediation Service
("JAMS") applying the laws of the State of as applied to agreements
between residents entered into and performed entirely within the state of
. Disputes will not be resolved in any other forum or venue.
Such
arbitration shall be conducted by one or more retired judges who are experienced in
dispute resolution regarding the securities industry, pre-arbitration discovery shall be
limited to the greatest extent provided by the rules of JAMS, the arbitration award
shall not include factual findings or conclusions of law, and no punitive damages shall
be awarded. The parties understand that any party's right to appeal or to
seek modification of rulings in an arbitration is severely limited. Any award
rendered by the arbitrators shall be final and binding and judgment may be entered
upon it in any court of competent jurisdiction in the county and state of the principal
office of Manager at the time such award is rendered.
19. Governing Law.
THE AGREEMENT, INCLUDING WITHOUT LIMITATION EACH
PROGRAM SUPPLEMENT, SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF AS
APPLIED TO AGREEMENTS BETWEEN RESIDENTS ENTERED INTO AND
PERFORMED ENTIRELY WITHIN THE STATE OF .
20. Severability.
The invalidity or unenforceability of any provision of the Agreement
shall in no way affect the validity or enforceability of any and all other provisions
hereof.
21. Entire Agreement.
The Agreement, including without limitation each Program
Supplement, is the entire agreement of the parties regarding the subject hereof, and
Supersedes all prior or contemporaneous written or oral negotiations,
correspondence, agreements and understandings (including but not limited to any
and all preexisting investment management agreements, which hereby are
canceled), regarding the subject matter hereof.
22. Counterparts.
The Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
23. No Third-Party Beneficiaries.
Neither party intends for the Agreement to benefit
any third-party not expressly named in the Agreement.
24. Changes. No provision of the Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed and delivered by the
party against which enforcement of the change, waiver, discharge or termination is
sought.
MANAGED ACCOUNT AGREEMENT
GENERAL TERMS AND CONDITIONS
The following terms and conditions shall apply to all services rendered by Manager to Client
pursuant to the Agreement except to the extent otherwise expressly provided by a Program
Supplement.
Each Program Supplement shall pertain solely to the specific program of
services described therein (each a “Program”). The provisions of each Program Supplement
shall control with respect to the Program over the General Terms to the extent inconsistent
therewith except to the extent otherwise expressly provided.
1.
Services. As of the Effective Date (as defined in Section 14 below), Client hereby
retains Manager to render investment management services and to manage Client's
separately managed securities investment account (the "Account") as set forth in
each Program Supplement with respect to the Account’s assets to be managed in
accordance with such Program Supplement (for each Program, the “Program
Assets”). Subject to each Program Supplement and its Investment Guidelines (as
defined therein), Client grants to Manager full discretion as to all investment
decisions regarding the Account, including but not limited to, authority to buy, invest
in, hold for investment, own, assign, transfer, sell exchange, trade in, lend, pledge,
deliver and otherwise deal in (on margin or otherwise) stocks, bonds, options, shares
of investment companies and exchange traded funds, repurchase agreements and all
other securities and intangible investment instruments and vehicles of every kind
and nature ("Securities") for the Account, and to exercise in Manager's discretion all
rights, powers, privileges and other incidents of ownership with respect to Securities
and funds in the Account. In connection therewith, Manager is authorized to select
and engage for the Account one or more banks, trust companies and brokerage firms
as custodians or brokers for funds and Securities held in the Account and to instruct
such custodians and brokers with respect to the purchase, sale, exchange, delivery
or other disposition of such Securities, funds and disbursements relating thereto.
A. Notwithstanding anything in the Agreement, including without limitation any
Program Supplement, to the contrary, Manager shall have no authority
hereunder to take or have possession of any assets in the Account or to direct
delivery of any Securities or payment of any funds held in the Account to
itself or to direct any disposition of such Securities or funds except (i) to
Client, (ii) for counter value or (iii) as provided in Section 4 below.
B. Notwithstanding any other provision of the Agreement, if Client is subject to
the provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), Client retains all authority to exercise voting rights with
respect to Securities in the Account, and Manager is expressly precluded from
exercising voting rights with respect to such Securities.
C. Manager does not and shall not have any duty or obligation to advise or take
any action on behalf of Client in any proceeding, including without limitation
bankruptcies or class actions, involving Securities held in or formerly held in
the Account or the issuers of Securities.
D. Notwithstanding any other provision of the Agreement, as between Manager
and Client, Client retains, with respect to all Securities and funds in the
Account, to the same extent as if Client held the Securities and funds outside
the Account, the right to:
i. Withdraw Securities or funds;
ii. Vote Securities, or delegate the authority to vote Securities to another person;
iii. Be provided in a timely manner with a written confirmation or other notification of each securities transaction, and all other documents required by law to be provided to security holders; and
iv. Proceed directly as a security holder against the issuer of any security in the Account and not be obligated to join any person involved in the operation of the Program, or any other client of the program, as a condition precedent to initiating such proceeding.
2. Limited Power of Attorney.
To enable Manager to exercise fully its discretion and
authority hereunder, including without limitation as provided in Sections 1 and 3
hereof, Client has constituted and appointed Manager as Client's agent and
attorney-in-fact with full power and authority for Client and on Client's behalf to buy,
sell and otherwise deal in Securities and contracts relating to same for the Account,
pursuant to the Limited Power of Attorney with Trading Authorization which is expressly is incorporated by reference in the Agreement and made a part thereof.
3. Brokers to be Used.
A. Manager shall select the brokers effecting transactions for the Account. Such
brokers will be paid brokerage commissions by the Account (not to exceed the
rate the brokers currently charge to their retail customers) at levels to be
determined by Manager.
i. Manager's allocation of brokerage business in effecting transactions for
the Account shall not be based solely on a desire to get the best price
possible; rather Manager shall select brokers in part on the basis of
certain non-monetary benefits offered by those firms, which may
include, among other things, research services, special execution
capabilities, clearance, settlement, reputation, financial strength and
stability, efficiency of execution and error resolution, block trading and
block positioning capabilities, willingness to execute related or
unrelated difficult transactions in the future, order of call, on-line
access to computerized data regarding its clients' accounts, availability
of Securities to be sold short, referrals of prospective investment
advisory clients and other matters involved in the receipt of brokerage
services generally.
ii. Manager also shall be entitled to purchase from a broker, or allow a
broker to pay for, certain research services, economic and market
information, portfolio strategy advice, industry and company comments, technical data, recommendations, costs of research
conferences, general reports, periodical subscription fees,
consultations, performance measurement data, on-line pricing and
charges for news wire and market data services, quotation services,
certain computer software, and the like.
iii. Client may pay brokerage commissions in excess of those that other
brokers might charge for effecting the same transactions in recognition
of the value of the brokerage, research and other services provided. In
such cases, however, Manager will determine in good faith that the
commissions are reasonable in relation to the value of brokerage,
research and other services provided by such broker (“soft dollar
credits”), viewed in terms of either the specific transaction or
Manager's overall responsibilities to the portfolios over which Manager
exercises investment authority.
iv. Regarding certain products or services used for both research and
non-research purposes, Manager may allocate the costs of such
products or services between their research and non-research uses,
and use soft dollar credits to pay only for the portion allocated to
research uses.
v. Brokerage, research and other services furnished by brokers through
whom Manager intends to effect securities transactions may be used in
servicing any or all of Manager's accounts (including the Account), but
not all of such services may be used by Manager in connection with
the Account. Manager may receive soft dollar credits based on
principal, as well as agency, securities transactions with broker or
dealers or direct a broker that executes transactions to share some of
its commissions with a broker that provides soft dollar benefits to
Manager.
B. Manager shall be entitled to aggregate Securities sale and purchase orders for
the Account with similar orders being made contemporaneously for other
accounts managed by Manager or with accounts of affiliates of Manager if, in
Manager's reasonable judgment, such aggregation is reasonably likely to
result in an overall economic benefit to the Account, based on an evaluation
that the Account is benefited by relatively better purchase or sale prices,
lower commission expenses or beneficial timing of transactions, or a
combination of these and other factors. In many instances, the purchase or
sale of Securities for the Account will be effected substantially simultaneously
with the purchase or sale of like Securities for the accounts of other clients of
Manager and its affiliates. Such transactions may be made at slightly different
prices, due to the volume of Securities purchased or sold. In such event, the
average price of all Securities purchased or sold in such transactions may be
determined, and Client may be charged or credited, as the case may be, the
average transaction price.
C. Notwithstanding any of the foregoing provisions Section 3.A or 3.B above to
the contrary, if (i) because of a prior relationship between Client and one or
more brokers or (ii) for other reasons or no reasons, Client has instructed
Manager to execute any or all Securities transactions for the Account with or
through one or more brokers designated by Client, Client represents and
warrants that Client has negotiated the terms and conditions (including but
not limited to, commission rates, other fees, costs and expenses) relating to
all services to be provided by such brokers and that Client is satisfied with
such terms and conditions. Manager shall not have any responsibility for
obtaining for the Account from any such broker the best prices or any
particular commission rates for transactions with or through any such broker.
Client recognizes that Client may not obtain rates as low as it might otherwise
obtain if Manager had discretion to select broker-dealers other than those
chosen by Client. Client agrees that if Manager believes, in its exclusive
discretion, that Manager cannot satisfy its fiduciary duty of best execution by
executing a Securities transaction for the Account with a broker designated by
Client, Manager may execute that Securities transaction with a different
broker. Client shall promptly inform Manager in writing if Client desires that
Manager cease executing transactions with or through any such broker.
4. Manager’s Fees and Payment.
Client shall pay the fees to Manager for the
services to be rendered by Manager under the Agreement in accordance with each
Program Supplement relating to the Program Assets there under (“Manager’s Fees”).
5. Responsibility for Expenses.
The Account shall be responsible for all expenses
related to the Account or the trading the assets of the Account, including, but not
limited to, interest on margin borrowing, dividends payable with respect to securities
sold short, custodial fees, brokerage commissions, broker and bank service and
account fees, charges and expenses, interest on Account-related loans and debit
balances and legal fees and expenses incurred in attempting to protect or enhance
the value of the Securities in the Account.
6. Client Information, Consultations and Instructions.
A. With respect to each Program Supplement and the related Program Assets,
Client shall promptly advise Manager of (i) Client’s financial situation insofar
as it relates to the Account, the Program Supplement and the Program
Assets, (ii) the Investment Guidelines thereof (including without limitation the
investment objectives and restrictions thereof), and (ii) any changes or
modifications to the Client’s financial condition and those respective
Investment Guidelines.
Client promptly shall notify Manager in writing if
Client considers any investments recommended or made for the Account and
any Program Supplement to violate or to be otherwise inconsistent with such
Investment Guidelines.
B. Client promptly shall furnish, or shall cause Client's custodian, including any
broker acting as such, or agent thereof, to furnish, to Manager all data and
information Manager reasonably may request or require to render the
investment management services pursuant to the Agreement. Client shall be
solely responsible for the completeness and accuracy of the data and
information so furnished to Manager.
C. Subject to the Program Supplement, Client and Manager shall consult on a
periodic basis (not less than annually) regarding each Program Supplement
and the Program Assets, including without limitation Client's Investment
Guidelines in connection therewith.
D. Subject to the terms of the Agreement, including without limitation each
Program Supplement, Client may at any time direct Manager to sell such
Securities or take such other lawful actions as Client may specify to effect
compliance of the Account with Client's respective Investment Guidelines with
respect to the related Program Assets. In addition, Client may notify Manager
at any time not to invest any Account assets in specific Securities or specific
categories of Securities, and Manager will follow Client’s instructions in
respect thereof in the ordinary course of business as set forth in the Program
Supplement.
7.Account Statements.
To the extent not otherwise provided pursuant the Program
Supplement(s), Manager shall furnish to Client an account statement no less
frequently than at the end of each calendar quarter describing all activity in the
Account during the quarter, including all transactions made on behalf of the Account,
the aggregate market value of all Securities and funds in the Account at the
beginning and at the end of the quarter, Client's additions of funds and Securities to
and withdrawals of funds and Securities from the Account during such quarter and
the calculation of the Manager’s Fees paid or accrued during such quarter.
If, however, when considered together, the account statements provided pursuant to all
Program Supplements provide such information, Manager need not provide a
separate account statement for the Account pursuant to this Section 7. Manager
may prepare all account statements required by this Section 7 without the assistance
of outside accountants.
8. Representations and Warranties.
A. Client represents and warrants to Manager and agrees with Manager as
follows:
(i)Client has the requisite legal capacity and authority to execute, deliver
and perform its obligations under the Agreement. The Agreement has
been duly authorized, executed and delivered by Client and is the
legal, valid and binding agreement of Client, enforceable against Client
in accordance with its terms. Client's execution of the Agreement and
the performance of its obligations hereunder do not conflict with or
violate any provisions of the governing documents (if any) of Client or
any obligations by which Client is bound, whether arising by contract,
operation of law or otherwise. Client will deliver to Manager evidence
of Client's authority and compliance with its governing documents on
Manager's request.
(ii) Client is the owner of all funds and Securities in the Account, and,
except as have been or may be disclosed by Client to Manager in
writing as contemplated by Section 3 above, there are no restrictions
on the pledge, hypothecation, transfer, sale or public distribution of
such funds or Securities.
(iii) Client is knowledgeable regarding the engagement of investment
advisers and is aware of the risks associated with such engagements,
including but not limited to the risk that the Account could suffer
substantial diminution in value.
(iv) If Client is not subject to the provisions of ERISA, as of the Effective
Date, and at all times during the term of the Agreement, less than
twenty-five percent (25%) of the Account's assets are and will be
assets of "employee benefit plans" within the meaning of ERISA.
(v) If Client is (or in the future becomes) subject to the provisions of
ERISA:
a. Client will obtain and maintain for the period of the Agreement
any bond for fiduciaries required by Section 412 of ERISA, and
will include Manager among those covered by such bond.
b.
Client has independently determined that the retention of
Manager by Client satisfies all requirements of Section
404(a)(1) of ERISA, specifically including the "prudent man"
standards of Section 404(a)(1)(B) and the "diversification"
standard of Section 404(a)(1)(C), and will not be prohibited
under any of the provisions of Section 406 of ERISA or Section
4975(c)(1) of the Internal Revenue Code of 1986, as amended.
The undersigned authorized signatory for Client has requested
And received All information from Manager that the
undersigned, after due inquiry, considered relevant to such
determinations. In determining that the requirements of
Section 404(a)(1) are satisfied, the undersigned has taken into
account that 1) there is a risk of a loss of the Account, 2) the
Account may be relatively illiquid, and 3) funds so invested may
not be readily available for the payment of employee benefits.
Taking into account these and all other factors relating to
retention of Manager by Client, the undersigned has concluded
that the retention of Manager by Client constitutes an
appropriate part of Client's overall investment program.
b. Client will notify Manager, in writing, of (1) any termination,
substantial contraction, merger or consolidation of Client, or
transfer of its assets to any other employee benefit plan, (2)
any amendment to the organizing documents of Client or any
related instrument that materially affects the activities of
Manager contemplated hereunder or the authority of any
named fiduciary or investment manager to authorize Client
investments or retention of investment advisers, and (3) any
alteration in the identity of any named fiduciary or investment
manager, including itself, who has the authority to approve
Client investments.
c. In accordance with Sections 405(b)(1), 405(c)(2) and 405(d) of
ERISA, the fiduciary responsibilities of Manager and any
partner, employee or agent of Manager shall be limited to his,
her or its duties in managing the Account, and Manager shall
not be responsible for any other duties with respect to Client
(specifically including evaluating the initial or continued
appropriateness of Client's retention of Manager under Section
404(a)(1) of ERISA).
B.Manager represents and warrants to Client and agrees with Client as follows:
(i) Manager is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the “Advisers Act”).
(ii) To the extent required by applicable federal and California state law,
rules and regulations, Manager has registered those of its members,
officers, managers, employees or agents as “investment adviser
representatives” in the State of .
(iii) If Client is subject to the provisions of ERISA, Manager understands
that Manager shall be a "fiduciary" of Client, as that term is defined in
section 3(21)(A) of ERISA.
9. Conflicts of Interest.
A. Client acknowledges, understands and agrees that Manager engages in an
investment advisory business apart from managing the Account, including
without limitation managing mutual and hedge funds and other separately
managed accounts, and that this other business will create conflicts of
interest with the Account over Manager's time devoted to managing the
Account and the allocation of investment opportunities among accounts
(including the Account) managed by Manager. Manager will attempt to
resolve all such conflicts in a manner that is generally fair to all of its clients.
B. Client confirms that Manager is entitled to give advice and take action with
respect to any of its other clients that may differ from advice given or the
timing or nature of action taken with respect to Client so long as it is
Manager's policy, to the extent practicable, to allocate investment
opportunities to Client over a period of time on a fair and equitable basis
relative to other clients.
C. Nothing in the Agreement shall be deemed to obligate Manager to acquire for
the Account any Security that Manager or its officers or employees may
acquire for its or their own accounts or for the account of any other client, if
in the absolute discretion of Manager, it is not practical or desirable to acquire
a position in such Security for the Account.
10. Account Losses; Indemnification.
A. To the fullest extent permitted under applicable law, Manager shall not be
liable to Client for any losses incurred by Client that arise out of or are in any
way connected with any recommendation or other act or failure to act of
Manager under the Agreement, including, but not limited to, any error in
judgment with respect to the Account, so long as such recommendation or
other act or failure to act does not constitute a breach of Manager's fiduciary
duty to Client.
B. Client shall indemnify and defend Manager and each of its members, officers,
employees agents and hold each harmless from and against any and all
claims, losses, damages, liabilities and expenses, as they are incurred, by
reason of any act or omission of Client or any custodian, broker, agent or
other third party selected by Manager in a commercially reasonable manner
or selected by Client, including without limitation all expenses related to the
Account and the trading of the assets in the Account, including but not limited
to expenses referenced in Section 5 above, except solely to the extent such
as arise from Manager's breach of fiduciary duty to Client.
C. Anything in this Section 10 or otherwise in the Agreement to the contrary
notwithstanding, however, nothing herein shall constitute a waiver or
limitation of any rights that Client may have under any Federal or state
securities laws.
11. Confidentiality. Except as required by law, (A) Manager agrees to maintain in strict
confidence all personal financial information regarding Client that is furnished to
Manager by Client (except that if such Client is an institutional investor, Client
consents to disclosure of Client's identity as a client of Manager), and (B) Client
agrees to maintain in strict confidence all investment advice and information
furnished to Client by Manager.
12. Delivery of Information.
A. Client acknowledges that Client has received Manager's brochure required to
be delivered under the Advisers Act, including but not limited to the
information in Part II of Manager's Form ADV required by the Advisers Act
(the “Brochure”). Upon written request by Client, Manager shall deliver annually, without charge, Manager's Brochure to
Client.
B. If Client received the Brochure less than forty-eight (4Cool hours prior to
signing and causing the Agreement to be delivered, the Agreement may be
terminated by Client without penalty within five (5) business days from the
Effective Date.
13. Notices.
A. Client shall not give Manager any instructions orally with respect to the
Account, including without limitation with respect to any Securities or funds
transactions.
B. A party shall make all communications under the Agreement to any other
party hereto, including without limitation any notices or instructions by Client
with respect to any Securities or funds transactions or otherwise, only in
writing.
i. “In writing” means a party must deliver the communication in English
to the other party (a) physically via a tangible and easily legible media
(e.g., a letter or other physical document) or (b) electronically via 1) a
standard facsimile device, or 2) standard Internet electronic mail
(including without limitation as a document in customary electronic
form attached thereto.
ii. Such communication will be deemed duly given and received if
properly addressed to a person authorized by the other party to
receive such communication and (a) if via a tangible and easily legible
media 1) when delivered personally, 2) three (3) business days after
being duly sent by first class U.S. mail, or 3) one (1) business day
after being deposited for next-day delivery with Federal Express or
another nationally recognized overnight delivery service providing for
signed receipt upon delivery, in each case all charges or postage
prepaid, to the other party’s authorized mailing address, and (b) if
electronically via 1) facsimile, to a phone number or 2) Internet
electronic mail, to an Internet electronic mail address, each address as
authorized by the other party as indicated below that party's signature
on the Agreement, or at any other address that either party may
authorize and designate by notice to the other in writing.
14. Effective Date and Term of Agreement. Notwithstanding the date that the
Agreement is signed or delivered by either party, the "Effective Date" shall be
deemed to be the date Client first furnished funds or Securities to be managed by
Manager in the Account.
The term of the Agreement shall commence on the
Effective Date and shall continue until the Agreement is terminated in accordance
with Section 15 below.
15.Termination: Withdrawals.
A. The Agreement, or any Program Supplement, may be terminated by either
party with or without cause or for any reason or no reason, by notice in
writing to the other party, effective when given and received in accordance
with Section 13.B.ii above or such later date as may be specified in such
notice.
Termination of the Agreement shall simultaneously terminate all
Program Supplements, but termination of a Program Supplement shall not
terminate the Agreement in its entirety but shall terminate only that portion
of the Agreement to the extent relating to such Program Supplement, and the
remainder of the Agreement, including without limitation all other Program
Supplement then in effect, shall continue in full force and effect until
terminated as provided by this Section 15. Notwithstanding any other
provision of the Agreement to the contrary, Sections 10 and 11 above shall
survive the termination of the Agreement.
B. If Client terminates the Agreement within five (5) days of the Effective Date
pursuant to Section 12.B above, Manager shall not charge Client any
Manager’s Fees.
C. Subject to the Program Supplement, Client may withdraw part of the funds or
Securities in the Account by notifying Manager in writing as provided in the
Program Supplement for such funds or Securities at least five (5) days prior
to the withdrawal date, stating the amount of funds or the Securities to be
withdrawn and the date of the withdrawal; provided that no partial withdrawal
shall be permitted without Manager's consent if, after effecting the
withdrawal, the net market value of the Account would be less than ten
thousand dollars ($10,000) or such other minimum as Manager shall establish
from time to time upon notice to Client in writing.
16. Independent Contractor.
Manager is and will hereafter act as an independent
contractor and not as an employee of Client, and nothing in the Agreement may be
interpreted or construed to create any employment, partnership, joint venture or
other relationship between Manager and Client.
17. Assignment.
Neither party shall assign the Agreement without the prior consent of
Client, and an purported assignment not in accordance with this Section 17 shall be
void and not merely voidable. The Agreement otherwise shall bind and inure to the
benefit of and be enforceable by the parties and their respective permitted
successors and assigns.
18. Arbitration.
The parties waive their right to seek remedies in court,
including any right to a jury trial. In the event of any dispute between the
parties, such dispute shall be resolved exclusively by arbitration to be conducted only
in the county and state of the principal office of Manager at the time of such dispute
in accordance with the rules of the Judicial Arbitration and Mediation Service
("JAMS") applying the laws of the State of as applied to agreements
between residents entered into and performed entirely within the state of
. Disputes will not be resolved in any other forum or venue.
Such
arbitration shall be conducted by one or more retired judges who are experienced in
dispute resolution regarding the securities industry, pre-arbitration discovery shall be
limited to the greatest extent provided by the rules of JAMS, the arbitration award
shall not include factual findings or conclusions of law, and no punitive damages shall
be awarded. The parties understand that any party's right to appeal or to
seek modification of rulings in an arbitration is severely limited. Any award
rendered by the arbitrators shall be final and binding and judgment may be entered
upon it in any court of competent jurisdiction in the county and state of the principal
office of Manager at the time such award is rendered.
19. Governing Law.
THE AGREEMENT, INCLUDING WITHOUT LIMITATION EACH
PROGRAM SUPPLEMENT, SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF AS
APPLIED TO AGREEMENTS BETWEEN RESIDENTS ENTERED INTO AND
PERFORMED ENTIRELY WITHIN THE STATE OF .
20. Severability.
The invalidity or unenforceability of any provision of the Agreement
shall in no way affect the validity or enforceability of any and all other provisions
hereof.
21. Entire Agreement.
The Agreement, including without limitation each Program
Supplement, is the entire agreement of the parties regarding the subject hereof, and
Supersedes all prior or contemporaneous written or oral negotiations,
correspondence, agreements and understandings (including but not limited to any
and all preexisting investment management agreements, which hereby are
canceled), regarding the subject matter hereof.
22. Counterparts.
The Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
23. No Third-Party Beneficiaries.
Neither party intends for the Agreement to benefit
any third-party not expressly named in the Agreement.
24. Changes. No provision of the Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed and delivered by the
party against which enforcement of the change, waiver, discharge or termination is
sought.