Exhibit 10.2.3


 


INVESTMENT MANAGEMENT
AGREEMENT


 


WHITE MOUNTAINS ADVISORS LLC, a Delaware limited liability company (the “Advisor”),
having an address at 370 Church Street, Guilford, Connecticut 06437, and                                                                         ,
a                        
corporation (the “Client”), having an address at One Beacon Street,
Boston, Massachusetts 02108, hereby enter into this Investment Management
Agreement, dated as of                         
(this “Agreement”), and hereby agree that the Advisor shall act as
discretionary adviser with respect to the assets of the Client described below
(the “Investment Account”) on the following terms and conditions:


 


1.                                       Investment Account. The Investment Account shall consist of
cash and the securities of the Client.


 


2.                                       Services of Advisor. By execution of this Agreement, the Advisor
accepts appointment as adviser for the Investment Account with full discretion
and agrees to supervise and direct the investments of the Investment Account in
accordance with the investment objectives, policies and restrictions described
in the investment guidelines to be furnished by the Client to the Advisor from
time to time (the “Investment Guidelines”). The Investment Guidelines
are for the stated purpose of assisting the Advisor in the performance of its
investment duties. The Advisor will manage the Investment Account in accordance
with such Investment Guidelines as provided to the Advisor from time to time. In
addition, the Advisor agrees to provide treasury management advisory services
specific to the Investment Account (“Treasury Management Services”), as
directed by the Client. The Treasury Management Services include, without
limitation, (i) executing investment transactions to support short-term treasury
cash requirements, (ii) settling inter-company and dividend treasury transactions
with cash and securities, (iii) settling quarterly tax liability payments
from the Investment Account, (iv) providing preliminary valuation for
securities supporting treasury transactions, (v) assisting the Client in
evaluating securities lending programs administered by custodians designated by
the Client and acceptable to the Advisor, and (vi) collaborating with the
Client to provide treasury transaction support to custodians and accounting
servicing providers designated by the Client and acceptable to the Advisor.


 


3.                                       Discretionary Authority. Advisor shall have full discretion and
authority, without obtaining any prior approval, as the Client’s agent and attorney-in-fact:
(a) to make all investment decisions in respect of the Investment Account
on the Client’s behalf and at the Client’s sole risk; (b) to buy, sell,
exchange, convert, liquidate or otherwise trade in any stock, bond and other
securities in respect of the Investment Account; (c) to place orders with
respect to, and to arrange for, any of the foregoing; and (d) in
furtherance of the foregoing, to do anything which the Advisor shall deem
requisite, appropriate or advisable in connection therewith, including, without
limitation, the selection of such brokers, dealers, and others as the Advisor
shall determine in its absolute discretion.


 


4.                                       Liability. In the performance of its services, the Advisor will not be liable
for any error in judgment or any acts or failures to act except those resulting
from the Advisor’s gross negligence, willful misconduct or malfeasance. Nothing
herein shall in any way constitute a waiver or limitation of any right of any
person under the federal securities laws. The Advisor shall have no


 


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responsibility whatsoever for the management of any
assets of the Client other than the Investment Account.


 


5.                                       Custody. The assets of the Investment Account shall be held in one or more
separately identified accounts in the custody of one or more banks, trust
companies, brokerage firms or other entities designated by the Client and
acceptable to the Advisor. The Advisor will communicate its investment
purchase, sale and delivery instructions directly with the Client’s custodian
or other qualified depository. The Client shall be responsible for all
custodial arrangements and the payment of all custodial charges and fees, and
the Advisor shall have no responsibility or liability with respect to custody
arrangements or the acts, omissions or other conduct of the custodians.


 


6.                                       Brokerage. When placing orders for the execution of transactions for the
Investment Account, the Advisor may allocate all transactions to such
brokers or dealers, for execution on such markets, at such prices and
commission rates, as are selected by the Advisor in its sole discretion. In
selecting brokers or dealers to execute transactions, the Advisor need not
solicit competitive bids and does not have an obligation to seek the lowest
available commission cost. It is not the Advisor’s practice to negotiate “execution
only” commission rates, and, in negotiating commission rates, the Advisor shall
take into account the financial stability and reputation of brokerage firms and
brokerage and research services provided by such brokers. The Client may be
deemed to be paying for research provided or paid for by the broker which is
included in the commission rate although the Client may not, in any
particular instance, be the direct or indirect beneficiary of the research
services provided. Research furnished by brokers may include, but is not
limited to, written information and analyses concerning specific securities,
companies or sectors; market, finance and economic studies and forecasts;
financial publications; statistics and pricing services; discussions with
research personnel; and software and data bases utilized in the investment
management process. The Client acknowledges that since commission rates are
generally negotiable, selecting brokers on the basis of considerations which
are not limited to applicable commission rates may at times result in
higher transaction costs than would otherwise be obtainable. The Advisor is
hereby authorized to, and the Client acknowledges that the Advisor may,
aggregate orders on behalf of the Investment Account with orders on behalf of
other clients of the Advisor. In such event, allocation of the securities
purchased or sold, as well as expenses incurred in the transaction, shall be
made in a manner which the Advisor considers to be the most fair and equitable
to all of its clients, including the Client.


 


7.                                       Representations and Warranties.


 


(a)                                  The
Client represents, warrants, covenants and agrees that:


 


(i)                                     it has full legal power and authority to
enter into this Agreement;


 


(ii)                                  the appointment of the Advisor hereunder is
permitted by the Client’s governing documents and has been duly authorized by
all necessary corporate or other action, and


 


(iii)                               it will indemnify the Advisor and hold it
harmless against any and all  losses,
costs, claims and liabilities which the Advisor may suffer or


 


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incur
arising out of any material breach of these representations and warranties of
the Client.


 


(b)                                 The Advisor represents, warrants, covenants
and agrees that:


 


(i)                                     it has full legal power and authority to
enter into this Agreement;


 


(ii)                                  it is registered as an investment adviser
with the Securities and Exchange Commission pursuant to the Investment Advisers
Act of 1940, as amended (the “Advisers Act”);


 


(iii)                               entering into this Agreement has been duly
authorized by all necessary corporate or other action under the Advisor’s
governing document, and


 


(iv)                              it will indemnify the Client and hold it
harmless against any and all losses, costs, claims and liabilities which the
Client may suffer or incur arising out of any material breach of any
representations and warranties of the Advisor.


 


8.                                       Reports. The Advisor shall provide the Client with reports containing the
status of the Investment Account at least monthly, and will provide written
advisory report letters to the Client on a quarterly basis. The Advisor shall
also provide the Client with preliminary valuation of the Investment Account on
a monthly basis. The preliminary valuation will be determined in accordance
with the Advisor’s valuation policies and procedures, a copy of which shall be
provided to the Client at least annually. All records maintained pursuant to
this Agreement shall be subject to examination by the Client and by persons
authorized by it, or by appropriate governmental authorities, at all times upon
reasonable notice. The Advisor shall provide copies of trade tickets, custodial
reports and other records the Client reasonably requires for accounting or tax
purposes.


 


9.                                       Management Fee, Treasury Management Fee and
Expenses.


 


(a)   The Advisor will be paid a quarterly
management and treasury management fee (the “Management Fee”) for its
investment advisory and treasury management services provided hereunder,
determined in accordance with Schedule A to this Agreement. During
the term of this Agreement, the Management Fee shall be billed and payable in
arrears on a quarterly basis within 10 days after the last day of each calendar
quarter based upon the value of the Investment Account as of the last day of
the immediately preceding calendar quarter. The Management Fee shall be
pro-rated for any partial quarter. Capital inflows and outflows result in an
adjustment to the value of assets under management that serves as the base of
the Management Fee. This adjustment has the effect of time-weighting capital
flows in the account resulting in the Management Fee being properly charged for
only the period of time such assets are actually managed by the Advisor. It is
understood that, in the event that the Management Fee is to be paid by the
custodian out of the Investment Account, the Client will provide written
authorization to the custodian to pay the Management Fee directly from the
Investment Account.


 


(b)  The Client shall
be responsible for all expenses incurred directly in connection with
transactions effected on behalf of the Client pursuant to this Agreement and
shall include:  custodial fees; PAM
accounting service fees, Charles River compliance service fees, investment
expenses such as commissions; and other expenses reasonably related to the
purchase, sale or


 


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transmittal of Investment Account assets (other than
research fees and expenses with respect to the Investment Account).


 


10.                                 Confidential Relationship. All information and advice furnished by
either party to the other party pursuant to this Agreement shall be treated by
the receiving party as confidential and shall not be disclosed to third parties
except as required by law.


 


11.                                 Assignment. This agreement may not be assigned (within the meaning of the
Advisers Act) by either party without the written consent of the other party,
and any assignment without such consent shall automatically cause the
termination hereof.


 


12.                                 Directions to the Advisor. All directions by or on behalf of the
Client to the Advisor shall be in writing signed by or on behalf of the Client.
The Advisor shall be fully protected in relying upon any such writing which the
Advisor believes to be genuine and signed or presented by the proper person or
persons, shall be under no duty to make any investigation or inquiry as to any
statement contained therein and may accept the same as conclusive evidence
of the truth and accuracy of the statements therein contained.


 


13.                                 Services to Other Clients. It is understood that the Advisor acts as
investment adviser to other clients and may give advice and take action
with respect to such clients that differs from the advice given or the action
taken with respect to the Investment Account. Nothing in this Agreement shall
restrict the right of the Advisor, its members, managers, officers, employees
or affiliates to perform investment management or advisory services for
any other person or entity, and the performance of such service for others
shall not be deemed to violate or give rise to any duty or obligation to the
Client.


 


14.                                 Investment by the Advisor for Its Own Account. Nothing in this Agreement shall limit or
restrict the Advisor or any of its members, managers, officers, employees or
affiliates from buying, selling or trading any securities for its or their own
account or accounts. The Client acknowledges that the Advisor and its members,
managers, officers, employees, affiliates and other clients may at any
time have, acquire, increase, decrease or dispose of securities which are at or
about the same time acquired or disposed of for the account of the Client. The
Advisor shall have no obligation to purchase or sell for the Investment Account
or to recommend for purchase or sale by the Investment Account any security
that the Advisor or its members, managers, officers, employees or affiliates may purchase
or sell for itself or themselves or for any other client.


 


15.                                 Proxies. Subject to any other written instructions of the Client, the Advisor
is hereby appointed as the Client’s agent and attorney-in-fact in its
discretion to vote, convert or tender in an exchange or tender offer any
securities in the Investment Account, to execute proxies, waivers, consents and
other instruments with respect to such securities, to endorse, transfer or
deliver such securities and to participate in or consent to any plan of
reorganization, merger, combination, consolidation, liquidation or similar plan
with reference to such securities, and the Advisor shall not incur any
liability to the Client by reason of any exercise of, or failure to exercise,
any such discretion.


 


16.                                 Notices. All notices and instructions with respect to securities transactions
or any other matters contemplated by this Agreement shall be deemed duly given
when delivered in writing, via electronic communications or deposited by first-class mail
to the following addresses:


 


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(a) if to the Advisor, at its address set forth
above, Attention: Chief Financial Officer, or (b) if to the Client, at its
address set forth above, Attention: Chief Financial Officer. The Advisor or the
Client may change its address or specify a different manner of addressing
itself by giving notice of such change in writing to the other party.


 


17.                                 Entire Agreement; Amendment. This Agreement sets forth the entire
agreement of the parties with respect to management of the Investment Account, supersedes
any previous Investment Management Agreement between the Advisor and the Client
and shall not be amended except by an instrument in writing signed by the
parties hereto.


 


18.                                 Arbitration. Any controversy or claim arising out of or relating to this
Agreement, or the breach of the same, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrators may be entered in any
court having jurisdiction. All arbitration expenses shall be borne equally by
the Advisor and the Client.


 


19.                                 Termination. This Agreement shall continue in force in accordance with paragraph
21, Effective Date and Term of this Agreement. During such term, this
Agreement may be terminated by the Client upon written notice to the
Advisor at least sixty (60) days prior to the date upon which such termination
is to become effective only (i) for cause (including material
non-performance by the Advisor), (ii) if there is a change in control of
the Advisor (for this purpose, a change in control represents 50% or more of
voting interest of the Advisor) or (iii) if White Mountains Insurance
Group, Ltd.’s voting interest in Client falls below 50%. Following the end of
the initial fixed term and any extensions, as provided by paragraph 21, Effective
Date and Term of this Agreement, the Agreement may be terminated by
either party without penalty by written notice to the other party at least sixty
(60) days prior to the date upon which such termination is to become effective,
provided that the Client shall honor any trades executed but not settled before
the date of any such termination. Upon termination of this Agreement, any
accrued and unpaid Management Fee and Treasury Management Fee hereunder shall
be paid by the Client to the Advisor.


 


20.                                 Governing Law. To the extent that the interpretation or
effect of this Agreement shall depend on state law, this Agreement shall be
governed by and construed in accordance with the laws of the State of New York.


 


21.                                 Effective Date and Term. This Agreement shall become effective on the
first date written above for an initial fixed term of three years, which will
be extendible by the Client for an additional one year (a fourth year) at/prior
to the end of the second year of the term, and if so extended, for a second
additional year (a fifth year) at/prior to the end of the third year of the
term.


 


22.                                 Receipt of Disclosure Statement. The Client acknowledges receipt of a copy
of Part II of the Advisor’s Form ADV in compliance with Rule 204-3(b) under
the Investment Advisers Act of 1940, as amended, more than 48 hours prior to
the date of execution of this Agreement. The Advisor shall annually and without
charge, upon request by the Client, deliver to the Client the current version
of such form or a written document containing at least the information
then required to be contained in such form.


 


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23.                                 Counterparts. This Agreement may be executed in two
counterparts, each one of which shall be deemed to be an original.


 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective duly authorized
representatives as of the date first written above.


 


 


	
  ADVISOR:

  	
   

  	
  CLIENT:

  
	
   

  	
   

  	
   

  
	
  WHITE MOUNTAINS ADVISORS, LLC

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print:

  	
   

  	
   

  	
   

  	
  Print:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
												



 


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SCHEDULE A


 


FEE
SCHEDULE


 


1.                                       Investment Account.


 


	
  Assets Under Management

  	
   

  	
  Value

  	
   

  	
  Annual Fee

  	
   

  	
  Quarterly Fee

  
	
  Investment Grade Fixed Income:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  — Up to $999 million

  	
   

  	
  Market

  	
   

  	
  10.0 basis points

  (0.1% or 0.001)

  	
   

  	
  2.5 basis points

  (0.025% or 0.00025)

  
	
  — Next $1 - $1.999 billion

  	
   

  	
  Market

  	
   

  	
  8.5 basis points

  	
   

  	
  2.125 basis points

  
	
  — Amounts over $2 billion

  	
   

  	
  Market

  	
   

  	
  7.5 basis points

  	
   

  	
  1.875 basis points

  
	
  High Yield Debt

  	
   

  	
  Market

  	
   

  	
  25.0 basis points

  	
   

  	
  6.25 basis points

  
	
  Fully Funded Hedge Funds, Limited Partnerships and
  Limited Liability Companies

  	
   

  	
  Market

  	
   

  	
  100.0 basis points

  	
   

  	
  25.0 basis points

  
	
  Private Equities and Other Deferred Fundings:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  — First 2 Years of Fund’s Life

  	
   

  	
  Committed

  	
   

  	
  100.0 basis points

  	
   

  	
  25.0 basis points

  
	
  — Thereafter

  	
   

  	
  Market

  	
   

  	
  100.0 basis points

  	
   

  	
  25.0 basis points

  



 


For purposes of calculating the fee for Investment
Grade Fixed Income investments as provided above, the assets under management
of OneBeacon Insurance Group, Ltd. and all of its direct and indirect
subsidiaries will be aggregated.


 


2.                                       Treasury Management Services. The Advisor will be paid a quarterly fee
for the Treasury Management Services computed at the annual rate of 1.75 basis
points (0.0175%) of the aggregate value of the net assets of the Client’s
Investment Account on an annual basis utilizing the methodologies described in
Paragraph 1 of Exhibit A. In the first year of the Agreement, the Treasury
Management Services fee shall not exceed $500,000 on an annual basis.


 


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