EXHIBIT 10.7
INVESTMENT ADVISORY AGREEMENT
The undersigned Scottish Life Assurance (Cayman) Limited (an insurance company
hereafter referred to as "the Client" and Cambridge Capital Advisors, Inc. (a
Massachusetts corporation hereafter referred to as "the Advisor") agree as
follows:
1. INVESTMENT ADVICE TO THE CLIENT
The Client hereby appoints the Advisor to advise and monitor the Client's funds
with respect to investment and reinvestment of assets in the Marketable
Alternative Investment Program ("the Program") as amended from time to time.
The initial size of the Program is anticipated to be $100 million.
2. DUTIES OF ADVISOR
During the period prior to the Initial Public Offering of the Client's
securities, the Advisor shall:
(a) Develop materials describing the proposed Program, its potential risk and
return characteristics and such other material as may be important to
rating agencies in evaluating the securities and insurance rating of the
Client.
(b) Meet with rating agencies as needed to explain the scope, objectives, and
expectations of the Program.
Upon completion of the Initial Public Offering and funds being made available
for investment, the Advisor shall:
(c) Provide comprehensive investment planning and oversight services with
regard to the Marketable Alternative Investment Program, including:
o assistance in developing the financial objectives, investment
guidelines, asset allocation, and selection criteria for the Program.
o reviewing and evaluating objectives, guidelines, and asset allocation on
a periodic basis based on then existing market conditions.
o assistance in developing a manager and investment structure for the
Program and evaluating, qualifying, selecting and recommending
individual managers or investments. This will take into account
correlations with and complementary styles to the Maverick investment
currently intended.
o providing recommendations on proposed investments or investment managers
referred by the Client.
o monitoring the performance of investments and individual investment
managers within the Program and making recommendations for modifying a
relationship with or terminating an existing manager, or liquidating an
investment.
(d) Provide quarterly and annual investment performance measurement and
evaluation of investments and investment managers of the Marketable
Alternative Investment Program.
Upon request, the Advisor will in addition provide separate reports for
separate pools of assets. The provision of such separate reports will be
considered Additional Performance Measurement Services and will be
compensated under the provisions of Paragraph 7.
(e) Provide written reports on various topics related to alternative investment
assets.
(f) Provide access to investment and financial data drawn from the Cambridge
Capital Advisors databases.
(g) Upon request by the Client and at the sole discretion of the Advisor, the
Advisor may provide consulting services with respect to investment of
assets other than the Marketable Alternative Investment Program. Such
services will be considered Additional Consulting Services and will be
compensated under the provisions of Paragraph 7.
In performing its obligations under this Agreement, the Advisor shall discharge
its duties and exercise its powers hereunder with the care, skill, prudence and
diligence that, under the circumstances then prevailing, a prudent person acting
in a like capacity would use. The Advisor shall only act in an advisory
capacity.
3. RESTRICTIONS ON THE ADVISOR AND EXCLUSIONS FROM SERVICES
The Advisor may not enter into any transaction on behalf of the Client or bind
the Client in any way without the prior written consent of the Client.
The Advisor shall at no time have custody, possession, or control of any of the
assets of the Marketable Alternative Investment Program or any cash, securities,
or other assets of the Client.
The Advisor shall not provide or otherwise be responsible for the provision of
tax advice or legal counsel. The Client shall obtain legal counsel as it deems
necessary.
4. EFFECTIVE PERIOD OF AGREEMENT AND TERMINATION
The initial term of this Agreement shall be from June 15, 1998 through June 14,
1999 and shall renew thereafter on an annual basis unless terminated by either
party. The Agreement may be terminated at any time by either party upon 30 days
written notice. If this Agreement is terminated, fees payable to the Advisor
shall be adjusted on a pro rata basis. Notwithstanding the foregoing, if the
Initial Public Offering of the Client's securities is not successful and no
funds become available for investment, this Agreement will terminate and there
will be no further obligations by either party under this Agreement.
5. CONFIDENTIALITY AND EXCLUSIVE USE
The Advisor shall regard as confidential all information concerning the affairs
of the Client, but shall be permitted to disclose to third parties the fact that
the Advisor is performing advisory activities on the Client's behalf. The
information and recommendations furnished by the Advisor are for the use of the
Client solely in relation to the investment and reinvestment of the assets of
the Alternative Investment Program and may not be used for any other purpose.
The Client, its officers and employees, and other affiliated parties shall
regard as confidential all information and recommendations furnished by the
Advisor to the Client subject to disclosure as may be required by law. No data
or research may be distributed to anyone beyond the Client's staff and directors
or trustees without the prior permission of the Advisor.
6. SERVICES TO OTHER CLIENTS
The Advisor and its affiliates may act and continue to act as investment
advisors for others, and nothing in this Agreement shall in any way be deemed to
restrict the right of the Advisor or its affiliates to perform investment
advisory or other services for any other person or entity, and the performance
of such services for others shall not be deemed to violate or give rise to any
duty or obligation to the Client.
The Advisor shall maintain such policies and practices as may be necessary so as
not to favor or disfavor consistently or consciously any client or class of
clients, and shall to the extent practical allocate investment opportunities
among clients over a period of time on a fair and equitable basis.
7. FEES
The Advisor's compensation shall be determined as follows:
Initial Retainer
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Upon the commencement of this Agreement and as full compensation for
services prior to the Initial Public Offering of the Client's securities,
Client shall pay a one-time non-refundable retainer fee of $50,000.
Annual fee
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As full compensation for all services and expenses assumed by the Advisor
hereunder after the initial Public Offering, except for those services that
are explicitly defined as Additional Services, the Client shall pay an
Annual Fee equal to the greater of $150,000 or an amount based on
Marketable Alternative Investment Assets calculated as the sum of:
45 basis points for the first $100 million in Marketable
Alternative Assets
30 basis points of amounts above $100 million in Marketable
Alternative Assets
The Initial Retainer payment will be credited against the first quarterly
payment of the Annual Fee as noted below. Twenty-five percent (25%) of the
Annual Fee as determined above shall be billed and paid in advance at the
beginning of each quarter of this Agreement. The Annual Fee will be
adjusted each quarter based on the market value of the Marketable
Alternative Assets on the last day of the most recently ended calendar
quarter.
Additional services
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The Advisor will be compensated for any Additional Performance Measurement
Services provided under Paragraph 2(d) in accordance with its then current
fee schedule for performance measurement services.
The Advisor will be compensated for any Additional Consulting Services
provided under Paragraph 2(g) in accordance with its then current hourly
rates.
8. ASSIGNMENT
Neither the Client nor the Advisor shall assign this agreement or any of its
rights or obligations hereunder without the prior written consent of the other.
Not withstanding this paragraph, notice is hereby provided and the Institution
hereby agrees that certain research, data collection, and other services to be
provided under this contract may be performed by Cambridge Associates (UK)
Limited ("CA-UK"), and/or Cambridge Associates, Inc. ("CA"). Both CA-UK and CA
are registered as investment advisors under the Investment Advisers Act of 1940
as amended and are under common ownership and control with the Advisor.
9. WARRANTY AND REPRESENTATIONS
The Advisor represents and warrants that it is a registered investment advisor
under the Investment Advisers Act of 1940, as amended, and that such
registration is currently effective. The Client acknowledges receipt, at least
48 hours prior to entering into this agreement, of a copy of Part II of the
Advisor's current filing with the Securities and Exchange Commission on Form
ADV. Cambridge Capital Advisors' employees and other associated persons may
purchase securities that are owned by one or more of the Advisor's clients
provided that such activities do not conflict with securities laws, the firm's
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ policies, Code of Ethics, or any other company policies with
respect to personal trading.
10. AUTHORIZED SIGNERS
The Client shall provide the Advisor with a list of Authorized Signers and their
specimen signatures from whom the Advisor may accept signed written day to day
instructions, confirmations or authority under this agreement. The Advisor
shall not be liable for acting in good faith upon any instruction, confirmation
or authority purporting to have been signed by an Authorized Signer, which
signature the Advisor reasonably believes to be genuine, notwithstanding the
fact that it shall subsequently be shown that such instruction, confirmation or
authority was not in fact signed by an Authorized Signer.
11. NOTICES
Except as otherwise expressly provided in this Agreement, whenever any notice is
required or permitted to be given under any provision of this Agreement, such
notice shall be in writing, shall be signed by or on behalf of the party giving
the notice and shall be mailed by first class mail or sent by courier or telefax
with confirmation of transmission to the other party at the address set forth
below or to such other address as a party may from time to time specify. Any
such notice shall be deemed duly given when delivered at such address.
12. AMENDMENTS
Any amendments to this Agreement shall be effective only if in writing and
signed by an authorized officer on behalf of the Advisor and by an Authorized
Signer of the Client.
13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
Massachusetts law, without regard to its principles of conflicts of law.
14. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the parties concerning
the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, between them regarding such subject matter.
CAMBRIDGE CAPITAL ADVISORS, INC. SCOTTISH LIFE ASSURANCE (CAYMAN) LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Controller Chairman
Date: 6/11/98 Date: 6/15/98
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Address: One Winthrop Square Address: ▇.▇. ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ Cayman
Cayman Islands
British West Indies