Exhibit 10.21
INVESTMENT SERVICES AGREEMENT
THIS AGREEMENT is between SIERRA INSURANCE COMPANY OF TEXAS
(hereafter "Company"), and SIERRA HEALTH SERVICES, Inc., a Nevada corporation
(hereafter "Investment Manager") and is effective as of January 1, 1999.
Whereas, Company is an insurance company with substantial investments; and
Whereas, it would be beneficial for Company to obtain investment services set
forth herein subject to the review and ultimate control of its Board of
Directors and its appropriate officers; and
Whereas, Investment Manager can supply investment services to Company as
described in this Agreement.
Now, therefore, the parties agree as follows:
1. INVESTMENT SERVICES
(a) Investment Manager shall furnish to Company investment services for
the Investment Assets (as hereinafter defined) of Company, such
services to include the following:
1. to counsel and advise Company and its Board of Directors in connection
with the formulation of investment programs designed to accomplish its
investment objectives; and
2. to manage the Investment Assets in accordance with the laws applicable
to Company and with the investment policies, objectives, directions and
guidelines established by the Board of Directors and officers of Company; and
3. subject to other provisions of this Agreement including but not limited
to Section 1(c) of this Agreement, to have full discretion and authority,
without prior consultation or prior approval, to buy, sell and otherwise trade
in stocks, bonds and other securities and take such other actions which
Investment Manager shall deem requisite, appropriate or advisable.
However, Investment Manager shall not act as custodian of the
Investment Assets.
(b) Investment Manager agrees that it will maintain adequate records
relating to the furnishing of investment services under this
Agreement, including those with respect to the acquisition and
disposition of securities for Company.
(c) Investment Manager agrees that the investment services it furnishes
will be in accordance with (1) Company's general investment policies,
objectives and guidelines established from time to time by its Board
of Directors and (2) any written instructions given by the Chief
Executive Officer or Chief Financial Officer of Company or persons
designated by either of them in writing as such written instructions
shall be sent from time to time in writing by Company to Investment
Manager.
(d) Investment Assets shall mean all bonds, stocks (exclusive of those of
affiliates and subsidiaries), short-term investments and other
invested assets (i) reportable as held by Company on Schedules B, BA,
C and D in the Investment Reporting System of Company and (ii) any
other assets of the Company as Investment Manager and Company may
from time to time agree.
2. PURCHASE AND SALE OF SECURITIES
(a) Investment Manager shall place all orders for the purchase and sale of
portfolio securities for Company's account with brokers or dealers selected by
Investment Manager, which may include a person affiliated with Investment
Manager, as the term affiliated person is defined in the Investment Company Act
of 1940 (hereafter "Affiliate"). Investment Manager shall seek to execute
portfolio transactions on terms which are advantageous to Company. In selecting
brokers or dealers to execute transactions, Investment Manager shall use its
best efforts to obtain the best price and execution for Company; provided
however, with respect to an Affiliate, Investment Manager shall comply with the
additional requirements set forth in paragraph 2 (b) below. In evaluating the
terms available for executing particular transactions for Company and in
selecting brokers and dealers to execute such transactions, Investment Manager
may consider, in addition to commission cost, the financial stability and
reputation and execution capability of brokers and dealers and the brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided by brokers and dealers for the
account of Company. Subject to paragraph 2(b) below, Investment Manager is
authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a Company portfolio transaction which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if Investment Manager determines that such
commission is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer. This determination may be made in
terms of either a particular transaction or the overall responsibilities which
Investment Manager has with respect to all of the accounts over which it
exercises investment discretion.
(b) Should an Affiliate engage in "agency cross transactions" (as defined
in Section 275.206(3)-2 of the Investment Advisers Act of 1940) in which the
Affiliate acts as broker for both sides of a transaction and may receive
commissions from, and have a potentially conflicting division of loyalties and
responsibilities regarding, both parties, or act as principal for its own
account coming within the provisions of Section 206 of the Investment Advisers
Act of 1940, Company for itself and its subsidiaries and affiliates which are
furnished services under this Agreement consent to: (1) such agency cross
transactions with such Affiliate, and (2) transactions in which such Affiliate
is acting as principal for its own account, so long as more favorable terms are
not practically available from another broker or seller as the case may be or so
long as the specific transaction is consented to by Company. Company may revoke
this consent at any time by giving notice to Investment Manager. In transactions
other than agency cross transactions and principal transactions specified above,
Investment Manager may select an Affiliate as a broker or dealer to place or
execute orders for the purchase or sale of securities pursuant to Investment
Manager's authority under this Agreement, so long as the commission rate charged
by the Affiliate for such sale or purchase conforms to the requirements of
paragraph 2(a) above and is equal to or lower than that charged any of its other
customers for like sales or purchases.
(c) Provided the investment objectives of this Agreement are adhered to,
Company agrees that Investment Manager may aggregate sales and purchase orders
of Investment Assets with similar orders being made simultaneously for other
accounts managed by Investment Manager, if in Investment Manager's reasonable
judgment such aggregation shall result in an overall economic benefit to the
Investment Assets taking into consideration the advantageous selling or purchase
price, brokerage commission and other expenses. Company acknowledges that the
determination of such economic benefit to Company by Investment Manager
represents Investment Manager's evaluation that Company is benefited by
relatively better purchase or sales prices, lower commission expenses and
beneficial timing of transactions or a combination of these and other factors.
3. INVESTMENT FEES; EXPENSES
(a) Company shall pay to Investment Manager a fee equal to the Investment
Manager's allocated costs in rendering the services in this Agreement.
Allocation shall be made at the end of each calendar quarter and shall be
derived from the Investment Manager's costs for such quarter allocated on the
basis of the Fair Market Value of the Investment Assets for which services are
rendered under this Agreement to the Fair Market Value of all Investment Assets
the Investment Manager managed or for which services similar to the services
under this Agreement were rendered during such Quarter. The fee shall be payable
in arrears 30 days after the end of each calendar quarter in which the
Investment Services Agreement is in force.
(b) Fair Market Value on any date shall mean the fair market value of the
Investment Assets as reported in the Company or Investment Manager Investment
Reporting System for such date in accordance with the procedures and rules for
such Reporting System as audited by the auditors of Company. Quarterly Ending
Fair Market Value shall be the Fair Market Value on the last day of any calendar
quarter.
(c) If services rendered hereunder shall commence on a day other than the
first day of a calendar quarter or terminate other than on the last
day of a calendar quarter, the above fee shall be fairly and
equitably prorated.
(d) Investment Manager shall furnish at its own expense all facilities
and administrative, accounting, clerical, statistical, correspondence
and other services necessary to supply the investment services
required under this Agreement. However, Company shall be responsible
for the expenses of: (1) brokerage commissions, issue and transfer
taxes and other costs in connection with securities transactions to
which Company is a party, including any portion of such commissions
attributable to research and brokerage services; (2) taxes payable by
Company to federal, state and other governmental agencies, (3)
primary record keeping and (4) custodial fees and expenses.
4. ULTIMATE CONTROL
All services furnished under this Agreement shall always be subject
to the direction and control of the Board of Directors and the
authorized Officers of Company. The Board shall act to approve the
investments made in accordance with this Agreement; if the Board acts
not to approve any investment made under this Agreement the
investment shall be disposed of in as prompt a manner as reasonable.
Notwithstanding any other provision of this Agreement, it is
understood and agreed that Company reserves the right to direct any
action to be taken hereunder on its behalf by Investment Manager.
5. NON-EXCLUSIVITY OF SERVICES
The services of Investment Manager to be provided to Company
hereunder are not to be deemed exclusive and Investment Manager shall
be free to provide similar services for its own account and the
accounts of other persons provided that such services do not
materially interfere with its services hereunder.
6. LIABILITY; INDEMNIFICATION
Investment Manager shall be liable to Company for any liability,
damages or expenses of Company arising out of the negligence, gross
negligence or willful misfeasance of Investment Manager or any of its
directors, officers, employees or Affiliates in providing services
under this Agreement.
7. TERMINATION
This Agreement may be terminated by either Company or Investment
Manager upon notice to the other party sent at least thirty days
prior to the date set for termination in such notice; provided
further, that in the event of a material breach of this Agreement by
the other party, this Agreement may be terminated by Company or
Investment Manager upon notice in writing sent at least 10 days prior
to the date set for termination in such notice. Company shall pay any
investment fees due hereunder, prorated to the date of termination,
within ten days following the date of termination.
8. NOTICES
Notices or other writings given or sent under or pursuant to this
Agreement shall be in writing and be deemed to have been given or
sent if delivered to the party at its address listed below in person
or by telex or telecopy or within 2 days of mailing if mailed postage
prepaid to such address. The addresses of the parties are:
Sierra Insurance Company of Texas
0000 Xxxxx Xxxxxx Xxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Chief Financial Officer
Telecopy :000 000 0000
Sierra Health Services, Inc.
0000 Xxxxx Xxxxxx Xxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Chief Financial Officer
Telecopy :000 000 0000
Each party may change its address by giving notice as herein
required.
9. SOLE INSTRUMENT
This instrument constitutes the sole and only agreement of the
parties to it relating to its object and correctly sets forth the
rights, duties, and obligations of each party to the other as of its
date. Any prior agreements, promises, negotiations or representations
not expressly set forth in this Agreement are of no force or effect.
10. WAIVER OR MODIFICATION
No waiver or modification of this Agreement shall be effective unless
reduced to a written document signed by the party to be charged.
11. LAW OF TEXAS
This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas.
12. ASSIGNMENT AND DELEGATION
No party to this Agreement shall have the right to sell, transfer,
delegate, or assign this Agreement, its rights or duties to any
person, firm, or corporation at any time during its term and any
proposed assignee shall acquire no rights nor be able to assume any
obligations unless the written consent of the other party to this
Agreement is given before such assignment or delegation takes place.
Nevertheless, Investment Manager may appoint other investment
advisers as sub advisers for the Investment Assets.
13. REPORTS AND RECORDS
Investment Manager shall provide to Company such oral or written
reports as to its services provided under this Agreement as Company
shall reasonably require. All records maintained pursuant to this
Agreement shall be deemed the property of Company and shall be
subject to examination by Company and by persons authorized by it, or
by governmental authorities, at all times upon reasonable notice.
Except as expressly authorized in this Agreement or directed by the
other party in writing, Investment Manager and Company shall keep
confidential the records and other information obtained by reason of
this Agreement (including, with respect to Company, the investment
information and recommendations provided to it by Investment
Manager). Upon termination of this Agreement, Investment Manager
shall promptly upon demand return to Company all such records, except
that Investment Manager may retain one copy in the files of its legal
counsel.
14. All references in this Agreement to "days" shall mean calendar not
business days.
IN WITNESS WHEREOF the parties hereto execute this Agreement and make it
effective on the date set forth above.
SIERRA INSURANCE COMPANY OF TEXAS
by__________________________________
X. Xxxxx
Chief Financial Officer
SIERRA HEALTH SERVICES, INC.
by__________________________________
X. Xxxxxx
Chief Financial Officer
