5
CONSULTING GROUP CAPITAL MARKETS FUNDS
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, effective as of the 4th day
of October, 2006, between the Consulting Group, a division of
Citigroup Investment Advisory Services, Inc. (the "Manager"), a
corporation organized and existing under the laws of the State of
Delaware, and Penn Capital Management Co., Inc. (the "Adviser").
WHEREAS, the Manager has entered into a Management Agreement
dated as of the 1st day of December, 2005 (the "Management
Agreement") with Consulting Group Capital Markets Funds, a
Massachusetts business trust (the "Trust"), which is engaged in
business as an open-end management investment company registered
under the Investment Company Act of 1940, as amended, ("1940
Act"); and
WHEREAS, the Trust is and will continue to be a series fund
having two or more investment portfolios, each with its own
assets, investment objectives, policies and restrictions (each a
"Portfolio"); and
WHEREAS, the Adviser is engaged principally in the business
of rendering investment advisory services and is registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended, ("Advisers Act"); and
WHEREAS, the Manager desires to retain the Adviser to assist
it in the provision of a continuous investment program for that
portion of the assets of the Portfolio listed on Appendix "A,"
which the Manager may from time to time assign to the Adviser
(the "Allocated Assets") and the Adviser is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual
promises herein set forth, the parties hereto agree as follows:
1. APPOINTMENT. Manager hereby retains the Adviser to act as
investment adviser for and to manage the Allocated Assets for the
period and on the terms set forth in this Agreement. The Adviser
accepts such employment and agrees to render the services herein
set forth, for the compensation herein provided.
2. DUTIES OF THE ADVISER.
A. INVESTMENT ADVISORY SERVICES. Subject to the supervision of
the Trust's Board of Trustees (the "Board") and the Manager, the
Adviser shall manage the investments of the Allocated Assets in
accordance with the Portfolio's investment objective, policies,
and restrictions as provided in the Trust's Prospectus and
Statement of Additional Information, as currently in effect and
as amended or supplemented from time to time (hereinafter
referred to as the "Prospectus"), and in compliance with the
requirements applicable to registered investment companies under
applicable laws and those requirements applicable to regulated
investment companies under Subchapter M of the Internal Revenue
Code of 1986, as amended ("Code") and such other limitations as
the Manager may institute. The Adviser shall (a) make investment
decisions for the Allocated Assets; (b) place purchase and sale
orders for portfolio transactions for the Allocated Assets; and
(c) employ portfolio managers and securities analysts to provide
research services to the Allocated Assets. In providing these
services, the Adviser will conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment
of the Allocated Assets.
B. ADVISER UNDERTAKINGS. In all matters relating to the
performance of this Agreement, the Adviser shall act in
conformity with the Trust's Master Trust Agreement dated April
12, 1991, as amended from time to time (the "Trust Agreement")
and Prospectus and with the written instructions and directions
of the Board and the Manager. The Adviser hereby agrees to:
(i) regularly report to the Board and the Manager (in such form
and frequency as the Manager and Adviser mutually agree) with
respect to the implementation of the investment program,
compliance of the Allocated Assets with the Prospectus, the 1940
Act and the Code, and on other topics as may reasonably be
requested by the Board or the Manager, including attendance at
Board meetings, as reasonably requested, to present such reports
to the Board;
(ii) comply with valuation procedures adopted by the Board,
including any amendments thereto, and consult with the Trust's
pricing agent regarding the valuation of securities that are not
registered for public sale, not traded on any securities markets,
or otherwise may require fair valuation;
(iii) provide, subject to the Adviser's compliance policies
and procedures any obligations or undertakings reasonably
necessary to maintain the confidentiality of the Adviser's non-
public information, any and all information, records and
supporting documentation about the composite of accounts and the
portfolios the Adviser manages that have investment objectives,
policies, and strategies substantially similar to those employed
by the Adviser in managing the Allocated Assets which may be
reasonably necessary, under applicable laws, to allow the Trust
or its agent to present historical performance information
concerning the Adviser's similarly managed accounts and
portfolios, for inclusion in the Trust's Prospectus and any other
reports and materials prepared by the Trust or its agent, in
accordance with regulatory requirements or as requested by
applicable federal or state regulatory authorities; and
(iv) review schedules of the Allocated Assets periodically
provided to the Adviser by the Manager and promptly confirm to
the Manager the concurrence of the Adviser's records with such
schedules.
C. EXPENSES. The Adviser will bear all of its expenses in
connection with the performance of its services under this
Agreement. All other expenses to be incurred in the operation of
the Portfolio will be borne by the Trust, except to the extent
specifically assumed by the Adviser. The expenses to be borne by
the Trust include, without limitation, the following:
organizational costs, taxes, interest, brokerage fees and
commissions, Trustees' fees, Securities and Exchange Commission
("SEC") fees and state Blue Sky qualification fees, advisory
fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association
fees, outside auditing and legal expenses, costs of independent
pricing services, costs of maintaining existence, costs
attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of preparing and
printing prospectuses and statements of additional information
for regulatory purposes and for distribution to existing
shareholders, costs of shareholders' reports and meetings, and
any extraordinary expenses.
D. BROKERAGE. The Adviser will select brokers and dealers to
effect all orders for the purchase and sale of Allocated Assets.
In selecting brokers or dealers to execute transactions on behalf
of the Allocated Assets of the Portfolio, the Adviser will use
its best efforts to seek the best overall terms available. In
assessing the best overall terms available for any transaction,
the Adviser will consider factors it deems relevant, including,
without limitation, the breadth of the market in the security or
commodity interest, the price of the security or commodity
interest, the financial condition and execution capability of the
broker or dealer and the reasonableness of the commission, if
any, for the specific transaction and on a continuing basis. In
selecting brokers or dealers to execute a particular transaction,
and in evaluating the best overall terms available, the Adviser
is authorized to consider the brokerage and research services
(within the meaning of Section 28(e) of the Securities Exchange
Act of 1934, as amended) provided to the Portfolio and/or other
accounts over which the Adviser exercises investment discretion.
In connection with agency transactions, the Adviser may cause the
Portfolio to pay to a broker-dealer a commission in excess of
what another broker-dealer may charge for the same transaction,
if the Adviser determines in good faith that the commission
charged is reasonable in relation to the value of brokerage and
research services provided by such broker, viewed either in terms
of the particular transaction or the Adviser's overall
responsibilities with respect to accounts over which the Adviser
exercises investment discretion. Except as permitted by Rule 17a-
10 under the 1940 Act, Adviser will not engage in principal
transactions with respect to the Allocated Assets with any broker-
dealer affiliated with the Manager or with any other adviser to
the Portfolio, and will engage in agency transactions with
respect to the Allocated Assets with such affiliated broker-
dealers only in accordance with all applicable rules and
regulations. Adviser will provide a list of its affiliated
broker-dealers to Manager, as such may be amended from time to
time. Manager will provide to Adviser a list of its affiliated
broker-dealers and of those of each other adviser to the
Portfolio.
E. AGGREGATION OF ORDERS. On occasions when the Adviser deems
the purchase or sale of a security to be in the best interest of
the Allocated Assets as well as other clients of the Adviser, the
Adviser may, to the extent permitted by applicable laws and
regulations, but shall be under no obligation to, aggregate the
orders for securities to be purchased or sold. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser
in the manner the Adviser considers to be the most equitable and
consistent with its fiduciary obligations to the Portfolio and to
its other clients. The Manager recognizes that, in some cases,
the Adviser's allocation procedure may limit the size of the
position that may be acquired or sold for the Allocated Assets.
F. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Adviser hereby agrees that all
records which it maintains for the Allocated Assets of the
Portfolio are the property of the Trust and further agrees to
surrender promptly to the Trust copies of any of such records
upon the Portfolio's or the Manager's request, provided, however,
that the Adviser may retain copies of any records to the extent
required for it to comply with applicable laws. The Adviser
further agrees to preserve for the periods prescribed by Rule 31a-
2 under the 1940 Act the records relating to its activities
hereunder required to be maintained by Rule 31a-1 under the 1940
Act and to preserve the records relating to its activities
hereunder required by Rule 204-2 under the Advisers Act for the
period specified in said Rule. Notwithstanding the foregoing,
the Adviser has no responsibility for the maintenance of the
records of the Portfolio, except for those related to the
Allocated Assets.
G. ADVISER COMPLIANCE RESPONSIBILITIES. The Adviser and the
Manager acknowledge that the Adviser is not the compliance agent
for the Portfolio, and does not have access to all of the Trust's
books and records necessary to perform certain compliance
testing. However, to the extent that the Adviser has agreed to
perform the services specified in this Agreement, the Adviser
shall perform compliance testing with respect to the Allocated
Assets based upon information in its possession and upon
information and written instructions received from the Manager or
the Trust's Administrator and shall not be held in breach of this
Agreement so long as it performs in accordance with such
information and instructions. Specifically, the Adviser shall
not be responsible for the Portfolio being in violation of any
applicable law or regulation or investment policy or restriction
applicable to the Portfolio as a whole or for the Portfolio's
failure to qualify as a regulated investment company under the
Code if the securities and other holdings of the Allocated Assets
would not be in such violation or failing to so qualify if the
Allocated Assets were deemed a separate series of the Trust or a
separate regulated investment company under the Code. The
Manager or Trust's Administrator shall promptly provide the
Adviser with copies of the Trust Agreement, the Trust's By-Laws,
the Prospectus and any written policies or procedures adopted by
the Board applicable to the Allocated Assets and any amendments
or revisions thereto. The Adviser shall supply such reports or
other documentation as reasonably requested from time to time by
the Manager to evidence the Adviser's compliance with such
Prospectus, policies or procedures.
H. PROXY VOTING. The Adviser shall use its good faith judgment
in a manner that it reasonably believes best serves the interests
of the Portfolio's shareholders to vote or abstain from voting
all proxies solicited by or with respect to the issuers of
securities in the Allocated Assets. The Manager shall cause to
be forwarded to the Adviser all proxy solicitation materials that
the Manager receives. The Adviser agrees that it has adopted
written proxy voting procedures that comply with the requirements
of the 1940 Act and the Advisers Act. The Adviser further agrees
that it will provide the Board, as the Board may reasonably
request, with a written report of the proxies voted for the
Allocated Assets during the most recent 12-month period or such
other period as the Board may designate, in a format that shall
comply with the 1940 Act. Upon reasonable request, the Adviser
shall provide the Manager with all proxy voting records relating
to the Allocated Assets, including but not limited to those
required by Form N-PX. The Adviser will also provide an annual
certification, in a form reasonably acceptable to the Manager,
attesting to the accuracy and completeness of such proxy voting
records.
I. USE OF NAMES. The Adviser shall not use the name, logo,
insignia, or other identifying xxxx of the Trust or the Manager
or any of their affiliates or any derivative or logo or trade or
service xxxx thereof, or disclose information related to the
business of the Manager or any of its affiliates in material
relating to the Adviser in any manner not approved prior thereto
by the Manager; provided, however, that the Manager shall approve
all uses of its or the Trust's name and that of their affiliates
which merely refer in accurate terms to the appointment of the
Adviser hereunder or which are required by the SEC or a state
securities commission; and provided, further, that in no event
shall such approval be unreasonably withheld. The Manager shall
not use the name, logo, insignia, or other identifying xxxx of
the Adviser or any of its affiliates in any prospectus, sales
literature or other material relating to the Trust in any manner
not approved prior thereto by the Adviser; provided, however,
that the Adviser shall approve all uses of its name which merely
refer in accurate terms to the appointment of the Adviser
hereunder or which are required by the SEC or a state securities
commission; and provided, further that in no event shall such
approval be unreasonably withheld.
J. OTHER ADVISERS. With respect to any Portfolio, (i) the
Adviser will not consult with any other adviser to that Portfolio
(including, in the case of an offering of securities subject to
Section 10(f) of the 1940 Act, any adviser that is a principal
underwriter or an affiliated person of a principal underwriter of
such offering) concerning transactions for that Portfolio in
securities or other assets, except, in the case of transactions
involving securities of persons engaged in securities-related
businesses, for purposes of complying with the conditions of
paragraphs (a) and (b) of Rule 12d3-1 under the 1940 Act; and
(ii) the Adviser will provide advice and otherwise perform
services hereunder exclusively with respect to the Allocated
Assets of that Portfolio.
K. PORTFOLIO HOLDINGS. The Adviser will not disclose, in any
manner whatsoever, any list of securities held by the Portfolio,
except in accordance with the Portfolio's portfolio holdings
disclosure policy, unless required by court or regulatory order.
3. COMPENSATION OF ADVISER. The Manager will pay the Adviser,
with respect to each Portfolio on Appendix "A" attached hereto,
the compensation specified in Appendix "A". Such fees will be
computed daily and paid monthly, calculated at an annual rate
based on the Allocated Assets' average daily net assets as
determined by the Trust's accounting agent. Compensation for any
partial period shall be pro-rated based on the length of the
period.
4. STANDARD OF CARE. The Adviser shall exercise its best
judgment in rendering its services described in this Agreement.
Except as may otherwise be required by the 1940 Act or the rules
thereunder or other applicable law, the Adviser shall not be
liable for any error of judgment or mistake of law or for any
loss suffered by the Portfolio or the Manager in connection with
the matters to which this Agreement relates, except a loss
resulting from Adviser's willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties hereunder
or from reckless disregard by it of its obligations and duties
under this Agreement. The Adviser shall be responsible solely
for the management of the Allocated Assets, and the Adviser's
compliance with the Act, rules and regulations thereunder, other
federal and state laws, and written procedures of the Board will
be determined solely by reference to the Allocated Assets. The
Adviser shall have no liability with respect to the actions of
any other investment adviser to the Portfolio and shall not be
charged with knowledge of the holdings or transactions of any
position of the Portfolio other than the Allocated Assets.
5. INDEMNIFICATION.
A. The Manager agrees to indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities
or damages (including reasonable attorneys' fees and other
related expenses) ("Losses"), howsoever arising, from or in
connection with this Agreement or the performance by the Adviser
of its duties hereunder; provided however that the Manager will
not indemnify the Adviser for Losses resulting from the Adviser's
willful misfeasance, bad faith or gross negligence in the
performance of its duties or from the Adviser's reckless
disregard of its obligations and duties under this Agreement.
B. The Adviser agrees to indemnify and hold harmless the
Manager from and against any and all Losses resulting from the
Adviser's willful misfeasance, bad faith, or gross negligence in
the performance of, or from reckless disregard of, the Adviser's
obligations and duties under this Agreement; provided however
that the Adviser will not indemnify the Manager for Losses
resulting from the Manager's willful misfeasance, bad faith or
gross negligence in the performance of its duties or from the
Manager's reckless disregard of its obligations and duties under
this Agreement.
6. NON-EXCLUSIVITY. The services of the Adviser to the Manager
with respect to the Allocated Assets are not to be deemed to be
exclusive, and the Adviser and its affiliates shall be free to
render investment advisory or other services to others (including
other investment companies) and to engage in other activities.
It is understood and agreed that the directors, trustees,
officers, and employees of the Adviser are not prohibited from
engaging in any other business activity or from rendering
services to any other person, or from serving as partners,
officers, directors, trustees, or employees of any other firm or
corporation, including other investment companies. The Manager
acknowledges that the Adviser or its affiliates may give advice
and take actions in the performance of its duties to clients
which differ from the advice, or the timing and nature of actions
taken, with respect to other clients' accounts (including the
Allocated Assets) or employee accounts which may invest in some
of the same securities recommended to advisory clients. In
addition, advice provided by the Adviser may differ from advice
given by its affiliates.
7. MAINTENANCE OF INSURANCE. During the term of this Agreement
and for such time as the Adviser is registered as an investment
adviser under the Advisers Act, the Adviser will maintain
comprehensive general liability coverage and will carry a
fidelity bond covering it and each of its employees and
authorized agents with limits of not less than those considered
commercially reasonable and appropriate under current industry
practices. The Adviser shall promptly notify the Manager of any
termination of said coverage.
8. CONFIDENTIALITY. Each party to this Agreement shall keep
confidential any nonpublic information concerning the other party
and will not use or disclose such information for any purpose
other than the performance of its responsibilities and duties
hereunder, unless the non-disclosing party has authorized such
disclosure or if such disclosure is expressly required or
requested by applicable federal or state regulatory authorities.
Nonpublic information shall not include information a party to
this Agreement can clearly establish was (a) known to the party
prior to this Agreement; (b) rightfully acquired by the party
from third parties whom the party reasonably believes are not
under an obligation of confidentiality to the other party to this
Agreement; (c) placed in public domain without fault of the party
or its affiliates; or (d) independently developed by the party
without reference or reliance upon the nonpublic information.
9. TERM OF AGREEMENT. This Agreement shall become effective as
of the date of its execution and shall continue in effect for a
period of two years from the date of execution. Thereafter, this
Agreement shall continue automatically for successive annual
periods, provided such continuance is specifically approved at
least annually by (i) the Board or (ii) a vote of a "majority"
(as defined in the 0000 Xxx) of the Portfolio's outstanding
voting securities, provided that in either event the continuance
also is approved by a majority of the Board who are not
"interested persons" (as defined in the 0000 Xxx) of any party to
this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This Agreement is
terminable, without penalty, at any time, by the Manager, by the
Board, or by vote of holders of a majority of the Portfolio's
shares; or on 60 days' written notice to the Trust and Manager by
the Adviser, and will automatically terminate after the Adviser
receives written notice of the termination of the Management
Agreement between the Trust and the Manager. This Agreement also
will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
10. REPRESENTATIONS OF ADVISER. The Adviser represents,
warrants, and agrees as follows:
A. The Adviser: (i) is registered as an investment adviser
under the Advisers Act and will continue to be so registered for
so long as this Agreement remains in effect; (ii) is not
prohibited by the 1940 Act or the Advisers Act from performing
the services contemplated by this Agreement; (iii) to the best of
its knowledge, has met, and will continue to meet for so long as
this Agreement remains in effect, any other applicable federal or
state requirements, or the applicable requirements of any
regulatory or industry self-regulatory organization, necessary to
be met in order to perform the services contemplated by this
Agreement; (iv) has the authority to enter into and perform the
services contemplated by this Agreement; and (v) will promptly
notify the Manager of the occurrence of any event that would
disqualify the Adviser from serving as an investment adviser of
an investment company pursuant to Section 9(a) of the 1940 Act or
otherwise. The Adviser has provided the information about itself
set forth in the Prospectus and has reviewed the description of
its operations, duties and responsibilities as set forth therein
and acknowledges that they are true and correct and contain no
material misstatement or omission, and it further agrees to
inform the Manager and the Trust's Administrator promptly of any
material fact known to the Adviser respecting or relating to the
Adviser that is not contained in the Prospectus, or of any
statement contained therein which becomes untrue in any material
respect.
B. The Adviser has adopted a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act and, if it
has not already done so, will provide the Manager and the Trust
with a copy of such code of ethics. On at least an annual basis,
the Adviser will comply with the reporting requirements of Rule
17j-1, which may include (i) certifying to the Manager that the
Adviser and its Access Persons have complied with the Adviser's
Code of Ethics with respect to the Allocated Assets and (ii)
identifying any material violations which have occurred with
respect to the Allocated Assets. Upon the reasonable request of
the Manager, the Adviser shall permit the Manager, its employees
or its agents to examine the reports required to be made by the
Adviser pursuant to Rule 17j-1 and all other records relevant to
the Adviser's code of ethics, as they pertain to the Allocated
Assets.
C. The Adviser has adopted and implemented written policies and
procedures, as required by Rule 206(4)-7 under the Advisers Act,
which are reasonably designed to prevent violations of federal
securities laws by the Adviser, its employees, officers and
agents. Upon reasonable request, the Adviser shall provide the
Manager with reasonable reports relating to such policies and
procedures as they relate to the Allocated Assets. The Adviser
will also provide, at the reasonable request of the Manager,
periodic certifications, in a form reasonably acceptable to the
Manager, attesting to such written policies and procedures.
D. The Adviser has provided the Manager and the Trust with a
copy of its registration under the Advisers Act on Form ADV as
most recently filed with the SEC and hereafter will furnish a
copy of its annual amendment to the Manager. The statements
contained in the Adviser's registration on Form ADV are true and
correct in all material respects and do not omit to state any
material fact required to be stated therein or necessary in order
to make the statements therein not misleading. The Adviser
agrees to maintain the completeness and accuracy of its
registration on Form ADV in accordance with the Advisers Act.
The Adviser acknowledges that it is an "investment adviser" to
the Fund with respect to the Allocated Assets within the meaning
of the 1940 Act and the Advisers Act.
E. The Adviser confirms, to the best of its knowledge, that
neither it nor any of its "affiliated persons," as defined in the
1940 Act, are affiliated persons of: (i) the Manager; (ii) any
other adviser to the Portfolio or any affiliated person of such
adviser; (iii) Citigroup Global Markets Inc., the distributor of
the Trust; or (iv) any trustee or officer of the Trust.
11. PROVISION OF CERTAIN INFORMATION BY ADVISER. The Adviser
will promptly notify the Manager (1) in the event the SEC or
other governmental authority has censured the Adviser; placed
limitations upon its activities, functions or operations;
suspended or revoked its registration, if any, as an investment
adviser; or has commenced proceedings or an investigation that
may result in any of these actions; provided that any such action
affects the Adviser's ability to provide services under this
Agreement and does not violate any confidentiality agreement with
the SEC or other governmental authority or (2) upon having a
reasonable basis for believing that the Portfolio has ceased to
qualify or might not qualify as a regulated investment company
under Subchapter M of the Code. The Adviser further agrees to
notify the Manager promptly of any material fact known to the
Adviser respecting or relating to the Adviser that is not
contained in the Prospectus, and is required to be stated therein
or necessary to make the statements therein not misleading, or of
any statement contained therein that becomes untrue in any
material respect. As reasonably requested by the Trust on behalf
of the Trust's officers and in accordance with the scope of the
Adviser's obligations and responsibilities contained in this
Agreement, the Adviser will provide reasonable assistance to the
Trust in connection with the Trusts's compliance with the
Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated by
the SEC thereunder, and Rule 38a-1 of the 1940 Act. Such
assistance shall include, but not be limited to, (i) certifying
periodically, upon the reasonable request of the Trust, that the
Adviser is in compliance with Rule 206(4)-7 under the Advisers
Act; (ii) facilitating and cooperating with third-party audits
arranged by the Trust to evaluate the effectiveness of its
compliance controls; (iii) providing the Trust's chief compliance
officer with direct access to its compliance personnel; (iv)
providing the Trust's chief compliance officer with periodic
reports and (v) promptly providing special reports in the event
of compliance problems. Further, the Adviser is aware that: (i)
the Chief Executive Officer (Principal Executive Officer) and
Treasurer/Chief Financial Officer (Principal Financial Officer)
of the Trust (collectively, "Certifying Officers") are required
to certify the Trust's periodic reports on Form N-CSR pursuant to
Rule 30a-2 under the 1940 Act; and (ii) the Certifying Officers
must rely upon certain matters of fact generated by the Adviser
of which they do not have firsthand knowledge (such as the
management discussion of performance for the Allocated Assets but
not the Portfolio's financial statements) and the Adviser, upon
reasonable request, shall provide certifications to the Trust to
be relied upon by the Certifying Officers in certifying the
Trust's periodic reports on Form N-CSR, in a form reasonably
satisfactory to the Trust.
12. PROVISION OF CERTAIN INFORMATION BY THE MANAGER. The
Manager will promptly notify the Adviser (1) in the event that
the SEC has censured the Manager or the Trust; placed limitations
upon either of their activities, functions, or operations;
suspended or revoked the Manager's registration as an investment
adviser; or has commenced proceedings or an investigation that
may result in any of these actions and (2) upon having a
reasonable basis for believing that the Portfolio has ceased to
qualify or might not qualify as a regulated investment company
under Subchapter M of the Code. The Manager further agrees to
notify the Adviser promptly of any material fact known to the
Manager respecting or relating to the Manager that is not
contained in the Prospectus, and is required to be stated therein
or necessary to make the statements therein not misleading, or of
any statement contained therein that becomes untrue in any
material respect.
13. AMENDMENT OF AGREEMENT. No provision of this Agreement may
be changed, waived, discharged, or terminated orally, but only by
an instrument in writing signed by both parties. In addition, no
amendment to this Agreement shall be effective unless approved in
the manner required by the 1940 Act and the rules thereunder or
in accordance with exemptive or other relief granted by the SEC
or its staff.
14. LIMITATION OF LIABILITY. The Manager and the Adviser agree
that the obligations of the Trust under this Agreement shall not
be binding upon any of the Board members, shareholders, nominees,
officers, employees or agents; whether past, present or future,
of the Trust individually, but are binding only upon the assets
and property of the Portfolio, as provided in the Trust
Agreement. The execution and delivery of this Agreement have
been duly authorized by the Manager and the Adviser, and signed
by an authorized officer of each acting as such.
15. MISCELLANEOUS.
A. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York, without giving
effect to the conflicts of laws principles thereof, and with the
1940 Act. To the extent that the applicable laws of the State of
New York conflict with the applicable provisions of the 1940 Act,
the latter shall control.
B. CHANGE IN CONTROL. The Adviser will notify the Manager of
any change of control of the Adviser, including any change of its
general partners or 25% shareholders or 25% limited partners or
25% members, as applicable, in each case prior to or promptly
after such change. In addition the Adviser will notify the
Manager of any changes in the key personnel who are either the
portfolio manager(s) of the Allocated Assets or senior management
of the Adviser as soon as practicable after such change.
C. CAPTIONS. The captions contained in this Agreement are
included for convenience of reference only and in no way define
or delimit any of the provisions hereof or otherwise affect their
construction or effect.
D. ENTIRE AGREEMENT. This Agreement represents the entire
agreement and understanding of the parties hereto and shall
supersede any prior agreements between the parties relating to
the subject matter hereof.
E. DEFINITIONS. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act
and to interpretations thereof, if any, by the United States
courts or, in the absence of any controlling decision of any such
court, by rules, releases or orders of the SEC validly issued
pursuant to the 1940 Act. As used in this Agreement, the terms
"majority of the outstanding voting securities," "affiliated
person," "interested person," "assignment," "broker," "investment
adviser," "net assets," "sale," "sell," and "security" shall have
the same meaning as such terms have in the 1940 Act, subject to
such exemptions as may be granted by the SEC by any rule, release
or order. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Agreement is
made less restrictive by a rule, release, or order of the SEC,
whether of special or general application, such provision shall
be deemed to incorporate the effect of such rule, release, or
order.
F. NOTICES. Any notice herein required is to be in writing and
is deemed to have been given to the Adviser or the Manager upon
receipt of the same at their respective addresses set forth
below. All written notices required or permitted to be given
under this Agreement will be delivered by personal service, by
postage mail return receipt requested, recognized air courier or
by facsimile machine.
All notices to Manager shall be sent to:
The Consulting Group
c/o Citigroup Investment Advisory Services
Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Title: Managing Director
All notices to Adviser shall be sent to:
Penn Capital Management Co., Inc.
000 Xxxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxx Xxxx, XX 00000
Fax: ( ) ___-____
Attention: __________________________
G. DELIVERY OF FORM ADV. The Manager acknowledges
receipt of the Adviser's Form ADV more than 48 hours prior to the
execution of this Agreement.
If the terms and conditions described above are in
accordance with your understanding, kindly indicate your
acceptance of this Agreement by signing and returning to us the
enclosed copy of this Agreement.
THE CONSULTING GROUP, A DIVISION OF
CITIGROUP INVESTMENT ADVISORY
SERVICES, INC.
By:
Name: Xxxxx X. Xxxxx
Title: Executive Vice
President
Accepted:
Penn Capital Management Co., Inc.
By:
Name:
Title:
APPENDIX A
FEE SCHEDULE
For the services provided by Adviser to the Allocated
Assets, pursuant to the attached Investment Advisory Agreement,
the Manager will pay the Adviser a fee, computed daily and
payable monthly, based on the average daily net assets of the
Allocated Assets at the following annual rates of the average
daily net assets of the Allocated Assets as determined by the
Trust's accounting agent:
PORTFOLIO RATE
High Yield Investments 0.30%
