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INVESTMENT MANAGEMENT AGREEMENT CUSTODIAL ACCOUNT NO. 56825785 WITH SUN TRUST I I INVESTMENT MANAGEMENT AGREEMENT This is an INVESTMENT MANAGEMENT AGREEMENT (this "Agreement"), entered into on this 3~day of ll.t~ , 1997, between City of Clearwater, 100 South Myrtle Avenue, Clearwater, Florida 33756 (the "Client") and ARM Capital Advisors, Inc., 200 Park Avenue, New York, NY 10166 (the "Advisor"). WHEREAS, A. The Cli93t has al~~t~J-.or a portion of its assets to a separate custodial account (account number - . ~ j l Y.2 -5 . Y?(the "Account") maintained with SunTrust (the "Custodian"); and B. The Client desires to appoint the Advisor to manage the assets now or hereafter contained in the Account (the "Assets") and has directed the Custodian to respond to the investment instructions of the Advisor, and the Advisor agrees to serve as investment advisor to the Account. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Client and the Advisor do hereby agree as follows: 1. Appointment and Authority of the Advisor. (a) The Client hereby appoints the Advisor, and the Advisor hereby accepts its appointment, as investment advisor with respect to the Assets. The Advisor shall manage the Account with complete discretion in the investment and reinvestment of the Assets in accordance with the Advisor's best judgment based on information available to it The Client may specify general investment parameters applicable to the Account The Client agrees to provide (or to direct the Custodian to provide) the Advisor with such additional information as may be requested by the Advisor from time to time to assist it in managing the Assets. The Advisor's authority under this Agreement shall remain in effect until changed or terminated by the Client in writing as provided herein. (b) Unless the investment parameters specifically provide otherwise, the Advisor is authorized, on behalf of the Client, to subscribe for and purchase rights, warrants, or any other debt or equity securities of U.S. issuers offered to U.S. persons in private placements in reliance on Regulation D under the Securities Act of 1933, as amended (the" 1933 Act"), or other exemptions from the 1933 Act (including, without limitation, Rule 144A thereunder). The Client represents and warrants to the Advisor that it is an "accredited investor" as such term is defined in Regulation D under the 1933 Act and a "qualified institutional buyer" as that term is defined in Rule 144A of the 1933 Act and that the Client shall promptly inform the Advisor in writing should its status as such change in the future. In connection with any purchase for the Account of securities offered to "accredited investors" in reliance on Regulation D or other exemptions under the 1933 Act or offered to "qualified institutional buyers" in reliance on Rule 144A of the 1933 Act, the Client authorizes the Advisor to: /;r: /';~ / Uv' ~.,"' /.. I I (i) commit to purchaJe such securities for the Account on the terms and conditions under which securities are offered; and (ii) on behalf of the Client, execute such documents, and make such commitments, as may be required by the issuer and/or the seller of such securities, including, but not limited to, a representation that the Client is an "accredited investor" and/or a "qualified institutional buyer," and a commitment that such securities will not be offered or sold by the Client except in compliance with the registration requirements ofthe 1933 Act or an exemption therefrom. The Client understands and agrees to be bound by the terms of any commitment entered into in connection with the purchase of securities on behalf of the Client pursuant to the authority granted to the Advisor by this Agreement notwithstanding a subsequent termination of this Agreement as provided herein. The authority granted to the Advisor pursuant to this Section 1 (b) may be revoked at any time upon the Client's prior written notice to the Advisor, provided.. however, that any such revocation shall not act as a revocation of authority to purchase securities subscribed for on or prior to the date such revocation is received by the Advisor or to execute any required documents and make any required commitments with respect thereto. In addition, such revocation shall not affect of the validity of any action taken by the Advisor prior to receipt thereof. 2. Custody. All transactions with respect to assets in the Account shall be carried out through the Custodian or such other custodian(s) of the Account as the Client shall appoint and inform the Advisor of in writing. The Advisor shall not have custody or possession of any of the Assets. The Client shall be solely responsible for paying all fees or charges of the Custodian and the Advisor shall have no responsibilities or liabilities with respect to custody arrangements made by the Client, or with respect to any act, decision or other conduct of any custodian or of any other person having possession of the Client's funds or securities. The Client authorizes the Advisor to give the Custodian instructions (and directs the Custodian to follow any such instructions when given) for the purchase, sale, conversion, redemption, exchange, retention or other transactions relating to any security, cash or cash equivalent or other investment for the Account. The Client also authorizes the Advisor to instruct the Custodian (and directs the Custodian to follow any such instructions when given) to provide the Advisor with copies of all periodic statements and other reports relating to the Account, including, without limitation, any reports that the Custodian typically sends to the Client. 3. Execution of Transactions. The Advisor shall arrange for the execution of securities transactions for the Account through brokers or dealers that the Advisor reasonably believes will provide best execution. In selecting a broker or dealer, the Advisor may consider, among other things, the broker or dealer's execution capabilities, financial circumstances, reputation, access to the markets for the securities being traded, as well as the experience and skill of the firm's securities traders. The Advisor will endeavor to secure the best available price and execution for the Client. -2- I I The Advisor shall not be responsible for any acts or omissions by any broker(s) or dealer(s) selected by the Advisor, provided that the Advisor is not negligent in the selection of such blOker(s) or dealer(s). Transactions for each of the Advisor's client accounts will generally be effected independently of those in any other client account, unless the Advisor decides to purchase or sell the same securities for several clients at approximately the same time. Nonetheless, the Advisor may (but is not obligated to) combine such orders to take advantage of economies of scale and/or to provide better execution. The Client authorizes the Advisor to instruct all brokers and/or dealers executing orders for the Account to forward duplicate confirmations of those transactions to the Advisor at such place and in such manner as may be designated from time to time by the Advisor (and directs any such brokers and/or dealers to follow such instructions when given) and the Client authorizes the Advisor to give a copy of this Agreement to any broker, dealer or other party to a transaction for the Account and/or to the Custodian as needed to evidence the Advisor's authority to act on behalf of the Client with respect to investment or reinvestment of the Assets. 4. Allocation oflnvestment Qwortunities. The Client understands and agrees that the Advisor performs investment management services for various clients and may take action with respect to any of its clients which may differ from any actions taken (or from the timing or nature of actions taken) with respect to, or on behalf of, the Account. The Advisor shall not be obligated to purchase or sell for the Account securities which the Advisor may purchase or sell for itself or for the portfolios of other clients, if the Advisor in its sole discretion deems that such investment or transaction appears unsuitable, impractical, improper, ill-advised, or undesirable for the Account. 5. Investment Information. The Advisor, its affiliates, and any of their respective officers directors, employees, agents and representatives (the "Affiliated Persons"), may from time to time come into possession of material, non-public or other confidential information that, if disclosed, might affect an investor's decision to buy, sell or hold a security. Under applicable law, the Affiliated Persons cannot improperly disclose or use this information for their personal benefit or for the benefit of any person, including the Advisor's clients. If any Affiliated Person obtains non- public or other confidential material information about any issuer, the Client acknowledges and agrees that such Affiliated Person will have no obligation to disclose the information to the Client or use it for the Client's benefit. 6. Liability. The Advisor cannot and does not guarantee the future performance of the Account, the success of any investment decision or strategy that the Advisor may utilize with respect to the Assets, or the success of the Advisor's overall management of the Account. The Client understands that the investment decisions made by the Advisor with respect to the Assets are potentially subject to various market, currency, economic, political and business risks, and that such investment decisions may not always be profitable. The Advisor will manage only the securities, cash and other investments held in the Account on behalf of the Client and in making investment decisions for the Account, the Advisor will not consider any other securities, cash or other investments owned by the Client. Except as may otherwise be provided by law, none of the -3- I I Affiliated Persons shall be liable to the Client or any other party in connection with, or for: (i) any loss that the Client may suffer by reasoa of any investment deciskn made or other action taken or omitted in good faith by the Advisor with that degree of care, skill, prudence, and diligence under the circumstances that a prudent person acting in a similar capacity would use; (ii) any loss arising from the Advisor's adherence to the Client's instructions; or (iii) any act or failure to act by the Custodian, any broker(s) or dealer(s) engaging in transactions for the Account, or any other third party. The federal and state securities laws impose liabilities under certain circumstances on persons who act in good faith, and therefore nothing in this Agreement will waive or limit any rights that the Client may have under those laws. 7. Termination or Assi~ent. This Agreement shall be effective as of the date that the Client transfers immediately available funds into the Account for management hereunder. It may be terminated by either the Client or the Advisor upon thirty (30) days' prior written notice to the other. Such termination shall be effective upon the expiration of such thirty (30) day period subject, however, to the completion of any transactions initiated by the Advisor prior to receipt of such written notice. No assignment (as such term is defined in the Investment Advisers Act of 1940) of this Agreement shall be made by either party without the prior written consent of the other; provided, however, that by signing this Agreement, the Client specifically acknowledges its consent to the assignment of this Agreement from the Advisor to ARM Capital Advisor, LLC ("ARMCA LLC") which assignment shall become automatically effective upon the later to occur of (a) the effectiveness of ARMCA LLC's investment adviser registration with the SEC and (b) the transfer of 80% of ARMCA LLC from ARM Financial Group, Inc. to ARM Capital Advisors Holdings, LLC, without further action by either party hereto. ("Assignment," as used in this Section 7, includes. without limitatio~ any direct or indirect transfer or hypothecation of (i) an investment management contract by the assignor or (ii) a controlling block of the assignor's outstanding voting securities. ) 8. Compensation to Advisor. The Advisor shall be entitled to receive as compensation for services rendered a fee determined and paid as described in Exhibit A to this Agreement. Such fee shall be paid quarterly in arrears. With respect to any partial calendar quarter, the Advisor's management fee will be pro rated based upon the number of days that the Account was open during such quarter. The Client acknowledges its understanding and agreement that any Assets invested in sweep accounts, money market accounts and other investment companies will be included in calculating the value of the Account for purposes of computing the Advisor's fees and that such assets may also be subject to separate advisory and other fees and expenses charged by any such funds which fees and expenses may be additional to any fees charged by the Advisor hereunder. Except as (a) set forth on Exhibit A or otherwise agreed upon by the parties and (b) permissible under applicable law, the Advisor shall not be compensated on the basis of a share of the capital gains on, or the capital appreciation of, the securities in the Account or any portion thereof. 9. Client Brochure. The Client acknowledges receipt of the Advisor's current client disclosure brochure, Form ADV Part II. -4- I I 10. Miscellaneous a. Aoolicable Law. This Agreement shall be construed in accordance with, and governed by, the laws of the State of New York, without giving effect to the conflict of law principles thereof, except to the extent that such laws conflict with the provisions of the 1940 Act or any rules, regulations, orders or interpretations thereunder (in which case such applicable provisions shall prevail). b. Notices. All notices and other written communications specified herein shall be deemed duly given if transmitted by mail or facsimile to the Advisor at 200 Park Avenue, New York, NY 10166, facsimile number (212) 973-2201, and to the Client at 100 South Myrtle Avenue, Clearwater, Florida 33756, facsimile number (813) 562-4535, or to such other address or facsimile number as shall be specified in writing by one party to the other. All such notices shall be effective upon receipt. c. Seoarability. In case one or more of the provisions contained in this Agreement shall be found to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. d. Counterpans. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument. e. Inteeration: Amendment. This Agreement is the entire agreement between the parties hereto and supersedes and replaces any previous discussions or agreements, written or oral, between the parties hereto. No term or provision of this Agreement may be amended, supplemented, waived or modified, except pursuant to an instrument in writing signed by the party or other person against whom enforcement of such amendment, supplement, waiver or modification is sought. f. Remedies Cumulative: No Waiver. No right, power or remedy granted or reserved herein is intended to be exclusive of any other right, power or remedy, but each and every such right, power and remedy shall be cumulative and concurrent and in addition to any other right, remedy or power hereunder or under law. No delay or omission by either party to exercise any right, power or remedy in connection with a default shall exhaust or impair any such right, power or remedy or shall be construed to be a waiver of such default or acquiescence therein. The Advisor's forbearance in any particular case shall not be a waiver as to action that may be taken by the Advisor with regard to any future non-compliance. -5- I I g. Successors and Assi~ns. As permitted hereunder and under applicable law, this Agteement shall be binding on and inure to the benefit of the successors and permitted assigns of the respective parties hereto. h. Headin~s. The headings and subheadings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. i. Authorization. Each party hereto represents and warrants that this Agreement and its execution has been duly authorized by any necessary and appropriate corporate or other action. In addition, the Client shall inform the Advisor of any event or occurrence that might affect the authority or the propriety of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be entered into on the day and year first above written. ARM CAPITAL ADVISORS, INC. By/r#-~7 AvO~cR..T I'Yl A-CKe y (please Print Name Above) Title: /)\ A N A-&, N 6- D/~ EC.Tc::I~ :~WA~ l>'lichael Roberto City Manager By Rita Garvey Mayor-Commissioner Approved as to form and legal sufficiency: BY~~ John Carassas Assistant City Attorney Attest: By~2'iY..,~~ 00"-,,, C 'a R Goudeau .' City C~r~ . ,. ITJ97 Date -6- I I APPENDIX A FEE SCHEDULE ARM CAPITAL ADVISORS. INC. .40% on fIrst $25 million .25 % on next $75 million .20 % thereafter Investment management fees are computed quarterly in arrears. Custodian valuations are taken on the last day of each calendar quarter as a basis for computing fees. -7-