INVESTMENT MANAGEMENT AGREEMENT (3)
niDI
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SECURITY CAPITAL RESEARCH &
MANAGEMENT INCORPORATED
INVESTMENT MANAGEMENT AGREEMENT
This Investment Management Agreement ("Agreement") dated as of Feb. 19, 2008 is entered
into by and between Security Capital Research & Management Incorporated ("Investment Advisor")
and City of Clearwater, Florida (the "Client") and sets forth the
terms on which Investment Advisor will act as investment manager of the assets of
City of Clearwater Employees Pension Plc(tIne"Plan")placedwithlnvestment
Advisor for management hereunder (the "Account").
1. Appointment ofInvestment Advisor. Client hereby appoints Investment Advisor as
investment manager with respect to the Account with full investment authority, subject to the
Investment Guidelines (as defined and described in Section 3 below), and Investment Advisor
accepts such appointment and agrees to open and maintain the Account as Client's agent and
investment manager.
2. Composition of Account; Custodv.
(a) The Account shall consist of such cash and securities as shall be agreed upon by
Client and Investment Advisor that Client from time to time places under the supervision of
Investment Advisor and/or which shall become part ofthe Account as a result oftransactions therein
or otherwise.
(b) Client has appointed Northern Tn{~ "Custodian") to be the custodian of
the cash, securities and other property in the Account and Investment Advisor will execute all
investment transactions for settlement with the Custodian under custodial account number
Client will provide Investment Advisor with at least five (5) business days'
notice of any contributions to or withdrawals from the Account as they may occur from time to time.
Client shall direct the Custodian to comply with all investment instructions given by Investment
Advisor with respect to the Account. Client shall provide Investment Advisor with reasonable
advance notice of any subsequent changes in the Custodian.
(c) Client agrees that: (i) unless Client gives written instructions to the contrary all
dividend and interest income received in respect ofthe Account will be retained by the Custodian for
reinvestment as part of the Account, and (ii) Client shall have full responsibility for the payment of
all taxes due on capital or income held or collected for the Account and the filing of any returns in
connection therewith or otherwise required by law.
3. Investment Guidelines. Client is responsible for informing Investment Advisor, in
advance and in writing, ofthe investment policies, guidelines, objectives, restrictions, conditions,
limitations or directions applicable to, as well as any cash needs of, the Account (the "Investment
Guidelines"), and Investment Advisor shall invest, reinvest and manage the securities, cash and any
other property in the Account subject to such Investment Guidelines as in effect from time to time.
The initial Investment Guidelines are attached hereto as Exhibit A and made a part hereof. Client
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may amend the Investment Guidelines upon written notice to Investment Advisor; provided such
amendment becomes effective only upon Investment Advisor's written acknowledgment of its
receipt of such amendment, and Investment Advisor shall be provided a reasonable time to comply
with such amendment.
4. Discretionary Authority.
(a) Client requests Investment Advisor to review the assets held in the Account, and,
subject to and in accordance with the Investment Guidelines, Investment Advisor shall have
complete discretion and authority, without obtaining Client's instructions, to make such sales,
exchanges, investments or reinvestments or to take any action that it deems necessary or desirable in
connection with the assets in the Account, and in connection therewith to execute or cause to be
executed any and all required documents. In exercising its investment discretion Investment Advisor
is not limited to investing in securities and other property of the type normally deemed appropriate
for trust funds.
(b) Client authorizes Investment Advisor, in its discretion, to aggregate purchases
and sales of securities for the Account with purchases and sales of securities of the same issuer for
other cl ients ofInvestment Advisor occurring on the same day. When transactions are so aggregated,
the actual prices applicable to the aggregated transaction will be averaged, and the Account and the
accounts of other participating clients of Investment Advisor will be deemed to have purchased or
sold their proportionate share ofthe securities involved at the average price so obtained.
(c) Subject to the Investment Guidelines, investments may be made in, but are not
limited to, securities of any kind including common or preferred stocks, warrants, rights, corporate
or government bonds or notes, repurchase agreements, securities of any open-end or closed-end
management type investment company or investment trust registered under the Investment Company
Act of 1940, limited liability legal entities and non-registered pooled funds. The fact that any bank
or non-bank subsidiary of jPMorgan Chase & Co. is selling or providing services to and receiving
remuneration from the foregoing repurchase agreement, investment company, investment trust or
other investment product as counterparty, investment advisor, custodian, transfer agent, registrar, or
otherwise shall not preclude Investment Advisor from investing the Account in the security.
5. Brokerage and Execution Services. In accordance with the terms of Exhibit B
attached hereto and made a part hereof, the Client acknowledges that Investment Advisor will effect
securities and other investment transactions through brokers of its choosing. To the extent that any
market counterparty with whom the Investment Adviser deals requires information relating to the
Account (including, but not limited to, the identity of the Client and market value ofthe Account),
the Investment Adviser shall be permitted to disclose such information to the extent necessary to
effect transactions on behalf of the Client in accordance with the terms of this Agreement.
6. Proxies and Legal Proceedings.
(a) Investment Advisor shall vote all proxies with respect to securities held in the
Account in accordance with Investment Advisor's proxy voting guidelines and procedures in effect
from time to time. Client agrees to instruct Custodian to forward all proxy materials and related
shareholder communications to the designee provided by Investment Advisor promptly upon receipt.
Investment Advisor shall not be liable with regard to voting of proxies or other corporate actions if
the proxy materials and related communications are not received in a timely manner.
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(b) Client acknowledges and agrees that (i) the Custodian is responsible for advising
or taking action, including filing proof of claim forms, on behalf of Client in any legal proceedings,
including bankruptcies or class actions, involving securities held in or formerly held in the Account
or the issuers of those securities and (ii) Investment Advisor will not be required to advise or take
any action on behalf of Client in any such legal proceedings.
7. Information and Statements.
(a) Investment Advisor shall cause to be rendered to Client, no less frequently than
quarterly, statements setting forth the property in the Account and transactions therein and advices
of changes as they are made in the Account in accordance with Investment Advisor's normal
procedures. Client agrees to review promptly all statements and advices. Client acknowledges that
Custodian will furnish the official confirmations of Account transactions and periodic Account
statements detailing positions and activity.
(b) Except with respect to any act or transaction ofInvestment Advisor as to which
Client shall object in writing to Investment Advisor within a period of ninety (90) days from the date
of receipt of any statement from Investment Advisor, Investment Advisor and all of its employees,
representatives, directors, officers, shareholders, fiduciaries, employee benefit plans, or any affiliate
thereof (collectively, the "JPMC Entities and Persons") shall upon the expiration of such period be
released and discharged from any liability or accountability to Client and any of its agents or
representatives as respects the propriety of acts, omissions, and transactions to the extent shown in
such statement.
8. Delegation to Third Parties. Investment Advisor may employ an affiliate or a third
party to perform any accounting, administrative, reporting and ancillary services required to enable
Investment Advisor to perform its functions under this Agreement. Notwithstanding any other
provision of the Agreement, Investment Advisor may provide information about Client and the
Account to any such affiliate or other third party for the purpose of providing the services
contemplated under this clause. Investment Advisor will act in good faith in the selection, use and
monitoring of affiliates and other third parties, and any delegation or appointment hereunder shall
not relieve Investment Advisor of any of its obligations under this Agreement.
9. Publicity. Client grants Investment Advisor the right to: (a) use the name, trademark,
logo or other identifying marks of Client in any sales, marketing or publicity activities or materials,
including lists of representative clients, and (b) identify the investment style(s) managed by
Investment Advisor for Client's Account in such publicity activities.
10. Fees and Expenses. For all services provided hereunder, Client shall pay Investment
Advisor the fees set forth in Exhibit C attached hereto. Such fees may be changed by written
agreement of the parties hereto. It is understood that, in the event such fees are to be paid by the
Custodian, Client will provide written authorization to the Custodian to pay Investment Advisor's
fees directly from the Account. If Investment Advisor sends Client an invoice, then Client agrees
that the fees are due no later than 30 days following receipt ofthe invoice. In addition, it is agreed
that all brokerage commissions, taxes, charges and other costs incident to the purchase and sale of
securities shall be charged to and paid from the Account. Client shall also be responsible for, and
shall reimburse Investment Advisor with respect to, any out-of-pocket expenses (including attorneys
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fees) incurred by any of the JPMC Entities and Persons with respect to any litigation or required
responses to third parties arising out oflnvestment Advisor's management ofthe Account, except to
the extent it is judicially determined that Investment Advisor acted with gross negligence or willful
misconduct.
11. Service to Other Clients. It is understood that Investment Advisor and its affiliates
perform investment advisory services for various clients. Client agrees that Investment Advisor may
give advice and take action with respect to any of its other clients, which may differ from advice
given or the timing or nature of action taken with respect to the Account. It is Investment Advisor's
policy, to the extent practicable, to allocate investment opportunities among clients over a period of
time on a fair and equitable basis. It is understood that Investment Advisor shall not have any
obligations to purchase or sell, or to recommend for purchase or sale, for the Account any security
which Investment Advisor, its principals, affiliates or employees may purchase or sell for its or their
own accounts or for the account of any other client, if in the opinion of Investment Advisor such
transaction or investment appears unsuitable, impractical or undesirable for the Account. Client
acknowledges that Investment Advisor may make different investment decisions with respect to each
of its clients, and that such fact shall not be relied upon by Client or any of its agents or
representatives as evidence ofa breach ofInvestment Advisor's duties hereunder.
12. Insider Information. If, by reason of its investment management activities,
Investment Advisor obtains material non-public information, Client acknowledges that Investment
Advisor will not make any investment decisions based upon such information.
13. Notices.
(a) With regard to any contributions to, or withdrawals from the Account, notice
shall be communicated to Investment Advisor both telephonically and via facsimile to the following
individuals:
Telephone:
Attention:
Facsimile:
Attention:
(312) 385-8300
Mr. Robert W. Culver (or current relationship manager)
(312) 385-8326
Mr. Robert W. Culver (or current relationship manager)
Mr. Anthony R. Manno Jr.
Mr. Michael J. Heller
(b) All other notices and written communications specified herein shall be deemed
duly given if delivered personally, if mailed (by registered or certified mail, return receipt requested
and postage prepaid), if sent by overnight courier service for next business day delivery, by facsimile
transmission, or by electronic transmittal with return receipt, to the appropriate address for each
party as set forth below. Such communications shall be effective immediately (if delivered in person
or by confirmed facsimile), upon the date acknowledged to have been received in return receipt, or
upon the next business day (if sent by overnight courier service).
Notices shall be sent to Investment Advisor at the following address:
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Address:
Facsimile:
Attention:
Security Capital Research & Management Incorporated
10 South Dearborn Street, Suite 1400
Chicago, Illinois 60603
(312) 385-8326
Mr. Robert W. Culver, Mr. Anthony R. Manno Jr., Mr. Michael J. Heller
A copy of all legal notices shall also be delivered to Investment Advisor at the following
address:
Address:
Facsimile:
Attention:
Security Capital Research & Management Incorporated
1111 Polaris Parkway, Suite 4P, Mail Code OHI-O 152
Columbus, Ohio 43240
(6]4) 248-4189
JPMorgan Chase Legal Department
Notices shall be sent to Custodian at the following address: Northern Trust
Address: 50 South Lasalle B-8
Chicago, IL 60603
Facsimile:
Attention:
Mike Peska
Notices shall be sent to Client at the following address:
Address:
Facsimile:
Attention:
P.O. Box 4748
Clearwater, FL 33758-4748
(727)562-4535
Margie Simmons
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14. Discharge ofLiabilitv.
(a) Investment Advisor does not guarantee the future performance ofthe Account or
any specific level of performance, the success of any investment decision or strategy that Investment
Advisor may use, or the success ofInvestment Advisor's overall management of the Account. Client
understands that investment decisions made for the Account by Investment Advisor are subject to
various market, currency, economic, political and business risks, and that those investment decisions
will not always be profitable. Investment Advisor will manage only the securities, cash and other
investments held in the Account and in making investment decisions for the Account, Investment
Advisor will not consider any other securities, cash or other investments owned or managed by
Client.
(b) The JPMC Entities and Persons shall have no liability for any expenses, losses,
damages, liabilities, charges and claims of any kind or nature whatsoever ("Losses") incurred by or
threatened against Investment Advisor as the result of any actions it takes based on instructions it
receives from authorized persons ("Authorized Persons") of the Client and reasonably believed by
the JPMC Entities and Persons to be genuine. A list of such Authorized Persons is listed on Exhibit
D. The JPMC Entities and Persons shall not be liable to the Plan, the Client or their representatives
for any Losses suffered by Client arising from any depreciation in the value of the Account or from
the income derived from it (including, without limitation, where such depreciation results from
capital loss or taxation liability) or other Losses that result from Investment Advisor's actions
hereunder, except to the extent such Losses are judicially determined to be proximately caused by
the negligence or misconduct of Investment Advisor. Under no circumstances shall the JPMC
Entities and Persons be liable for any special consequential, or indirect damages. The JPMC Entities
and Persons shall have no responsibility and shall have no liability on account of (a) the selection of
the Investment Guidelines, including that the Investment Guidelines are consistent with applicable
state law, (b) the management of any assets of the Plan outside of the Account, and (c) the
administration of the Plan.
ill Notwithstanding the foregoing, no provision ofthis Agreement shall constitute a
waiver or limitation of any right of Client or the Plan that may exist under Federal or state securities
law.
15. Force Majeure.
(a) Neither party to this Agreement shall be liable for damages resulting from
delayed or defective performance when such delays arise out of causes beyond the control and
without the fault or negligence of the offending party. Such causes may include, but are not
restricted to, Acts of God or of the public enemy, terrorism, acts of the State in its sovereign
capacity, fires, floods, earthquakes, power failure, disabling strikes, epidemics, quarantine
restrictions, and freight embargoes.
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(b) If at any time due to major fluctuations in market prices, abnormal market
conditions or any other reason outside the control oflnvestment Advisor, there shall be a deviation
from the specific instructions set out in the Investment Guidelines: (i) Investment Advisor shall not
be in breach of the Investment Guidelines provided it takes such steps as may be necessary to ensure
compliance within 14 days after such deviation occurs; and (ii) If, in the judgment ofInvestment
Advisor, the actions described in (i) above are not in the best interests of Client, Investment Advisor
may, prior to the expiration of the 14 day period referred to in (i) above, make a written
recommendation to Client on the most appropriate way to deal with the deviation which shall toll the
deadline in (i) above. Unless Client directs Investment Advisor to the contrary within 14 days of the
receipt by Client of the recommendation, Investment Advisor shall be entitled to implement its
recommendation and shall not be in breach ofthe Investment Guidelines. Investment Advisor does
not provide any express or implied warranty as to the performance or profitability ofthe Account or
any part thereof or that any specific investment objectives will be successfully met.
16. Client Representations. Client represents and warrants to Investment Advisor that: (i)
Client has full power and authority to appoint Investment Advisor to deal with the Account in
accordance with the terms of this Agreement, this Agreement is valid and has been duly authorized,
does not violate any obligation by which Client is bound, and when so executed and delivered, will
be binding upon Client in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and general principles of equity
(and Client agrees to provide Investment Advisor with evidence of such authority as may be
reasonably requested by Investment Advisor); (ii) Client is not an investment company as defined by
the "Investment Company Act of 1940" and registration of the Account under such Act is not
required; (iii) a copy of the statutes and other governing documents of the Plans (the "Governing
Documents") as amended to date have been provided to Investment Advisor and Client will provide
Investment Advisor with copies of all future amendments to the Governing Documents promptly
after their adoption; (iv) Client has executed and delivered to Investment Advisor a Qualified
Institutional Buyer Certification (Annex A), and Client will immediately advise Investment Advisor
in writing of any change in status affecting such documents; (v) Client acknowledges that it has
received from Investment Advisor a copy of Part n oflnvestment Advisor's Form ADV more than
forty-eight (48) hours prior to entering into this Agreement; (vi) Client shall furnish to Investment
Advisor certified copies of appointments or designations setting forth the names, titles and
authorities of the individuals who are authorized to act on behalf of Client with respect to the
Account and this Agreement, and Investment Advisor shall be entitled to rely upon such information
until it receives written notice of a change in such appointments or designations; (vii) Client has
authority under the Governing Documents to enter into this Agreement and to appoint Investment
Advisor as investment manager with authority to manage (including the power to acquire and
dispose of) the assets of the Account upon the terms and conditions set forth in this Agreement; (viii)
all property deposited in the Account is that ofthe Plan and that no restrictions on disposition exist
as to any such property; and (ix) at all times that Investment Advisor is acting as investment
manager hereunder, Client represents and covenants that the Plan is a "governmental plan" as
defined in section 4 I 4( d) ofthe Code and Client will promptly notify Investment Advisor if of any
change to the Plan's status as a governmental plan.
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17. Investment Advisor Representations. Investment Advisor represents and warrants to
Client that: (i) this Agreement is valid and has been duly authorized, does not violate any obligation
by which Investment Advisor is bound, and when so executed and delivered, will be binding upon
Investment Advisor in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and general principles of equity;
and (ii) it is and at all times during the term of this Agreement will be registered as an investment
adviser under the Investment Adviser's Act of 1940 and it shall promptly notify Client in writing of
the revocation, restriction or suspension of such registration or of Investment Advisor's failure to
maintain such registration or of any material failure to comply with any applicable provision ofthe
Advisers Act with respect to the Account; (iii) it is a "fiduciary" for the Plan with respect to the
Plan's assets comprising the Account, and shall carry out its investment management responsibilities
in accordance with the fiduciary standards set forth in Florida Statutes, Sections 112.656( 1) and
112.661(4) of the Florida Protection of Public Employee Retirement Benefits Act. Investment
Advisor acknowledges that it is familiar with the laws of the State of Florida governing public
employee retirement systems (Chapter 112, Part VII), and is familiar with the provisions ofthe Code
ofthe City of Clearwater that Client has provided to it relating specifically to the management ofthis
Pension Plan. Investment Advisor agrees to observe the laws of the State of Florida and the Code of
the City of Clearwater and the investment policy and Investment Guidelines as set forth by Client in
Exhibit A hereto.
18. Aoolicable Law. All questions arising hereunder shall be determined according to the
laws of the State of Florida (without regard to its contlict of laws provisions) and the provisions
hereof shall be binding upon the successors and assigns of the parties. The Investment Advisor
hereby submits to jurisdiction of the federal courts in the Middle District of Florida, and to the
applicable state courts of Florida in the event federal diversity jurisdiction requirements are not met,
with respect to any litigation relating to this Agreement. The parties hereby waive trial by jury in any
judicial proceeding involving any dispute, controversy or claim arising out of or relating to this
Agreement. Client hereby irrevocably waives any immunity to which it might otherwise be entitled
in any arbitration, action at law, suit in equity or any other proceedings arising out of or based on
this Agreement or any transaction in connection herewith.
19. Assignment. This Agreement may not be assigned, as defined in the Investment
Advisers Act of 1940, as amended, and the rules thereunder without the written consent of the other
party.
20. Termination and Survival. This Agreement may be terminated with respect to all or a
portion of the cash, securities or other property constituting the Account by either party as to its
responsibilities hereunder at any time by giving to the other party written notice at least thirty (30)
days prior to the date on which such termination is to become effective. Termination of this
Agreement shall be without prejudice to the completion of any commitments to purchase or dispose
of any securities or other property made by Investment Advisor prior to giving or receipt of notice to
terminate this Agreement. The provisions relating to the following rights and obligations of the
parties shall survive the termination, cancellation, expiration and/or rescission of this Agreement:
Discharge of Liability, Applicable Law, and Termination and Survival.
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21. Counterparts: Severability. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. In the event that one or more provisions of this Agreement shall be
held by any court to be invalid, void or unenforceable, the remaining provisions shall nevertheless
remain and continue in full force and effect.
22. Amendment. This Agreement may be amended by mutual consent of the parties.
Except as provided herein, no alteration or variation of the terms of this Agreement shall be valid
unless made in writing and signed by the parties hereto.
23. Customer Identification Program. To help the government fight the funding of
terrorism and money laundering activities, Investment Advisor has adopted a Customer
Identification Program, ("CIP") pursuant to which Investment Advisor is required to obtain, verifY
and maintain records of certain information relating to its clients. In order to facilitate Investment
Advisor's compliance with its CIP, Client hereby represents and warrants that (i) Client's taxpayer
identification number or other government issued identification number is 596000289 , (ii) all
documents provided to Investment Advisor are true and accurate as of the date hereof, and (iii)
Client agrees to provide to Investment Advisor such other information and documents that
Investment Advisor requests in order to comply with Investment Advisor's CIP.
24. Investigations and Complaints. To the extent permitted by applicable law,
Investment Advisor shall promptly disclose to Client in writing any extraordinary investigation,
examination, complaint, disciplinary action or other proceeding materially affecting Investment
Advisor's ability to perform its duties under this Agreement or involving any investment
professional employed by Investment Advisor who has performed substantial service with respect to
the Account in the twenty-four (24) preceding months, which is commenced by any regulatory body
having proper jurisdiction over Investment Advisor. Except as otherwise required by law, Client
shall maintain the confidentiality of all such information (including refraining from trading in any
security based on such information) until the investigating entity makes the information public.
25. Insurance. Investment Advisor presently has in effect, and will maintain during the
term of this Agreement, fiduciary liability insurance in an amount at least equal to the greater of
$10,000,000 or the maximum currently provided by Investment Advisor to any other client, which
provides coverage with respect to any loss resulting from a breach of its fiduciary duties and
including coverage in the event of recourse against it by, or on behalf of, its clients. Investment
Advisor, at the time of execution of this agreement and annually thereafter upon written request of
Client, shall deliver to Client certificates of insurance evidencing the foregoing coverages.
Investment Advisor shall name Client as a certificate holder on the aforesaid professional liability
insurance policy and furnish Client evidence of such designation of Client as a certificate holder.
Investment Advisor's insurance shall be primary and Client's insurance, if any, shall be secondary.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf ofthe parties
on the day and year first above written.
Client: BOARD OF TRUSTEES OF THE EMPLOYEES'
PENSION PLAN OF THE CITY OF L RWATER FL
BY:~~'~ p:ffi
Tit~ank V. H" , Chairperson
search & Management Incorporated 6/
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EXHIBIT A
diD I
~.'
SECURITY CAPITAL RESEARCH & MANAGEMENT INCORPORATED
GROWTH & INCOME INVESTMENT OBJECTIVES & GUIDELINES
Performance Benchmark
The performance benchmark for the Account shall be the Dow Jones Wilshire Real Estate
Securities Index ("W ARES I"). The W ARESI is a market capitalization-weighted index comprised
of publicly traded real estate investment trusts ("REITs") and real estate operating companies and
does not include any special purpose or health care REITs.
Investment Guidelines
1. Account assets may be invested in all REITs and other real estate companies focused on
owning, operating and/or developing real estate in the U.S. and other primary North
American markets.
2. At any given time, at least 85% of Account assets will be invested in equity securities of real
estate companies. Such equity securities include (i) common stocks, and (ii) preferred
stocks. For purposes of investment policies, a "real estate company" is one that derives at
least 50% of its revenues from ownership, construction, financing management or sale of
commercial, industrial, or residential real estate or that has at least 50% ofits assets invested
in such real estate.
3. Investment diversification will be achieved through generally holding a minimum of 20
investments. If holdings fall below 20 as of the end of any month the client will be
contacted.
4. No more than 10% of assets generally will be held in the securities of any single issuer. If
holdings of a single issuer exceed 10% as of the end of any month the client will be
contacted.
5. No assets will be invested in securities that constitute illiquid securities at the time of
purchase. For this purpose, illiquid securities include, among others, securities that are
illiquid by virtue of the absence of a readily available market of the existence oflegal or
contractual restrictions of resale.
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6. In general, the Account will not have more than two times the weighting by property type
versus the WARES!.
7. Account assets will not be used to purchase or sell real estate, though assets will be invested
in securities issued by companies in the real estate industry and will, as a matter of
fundamental policy, concentrate investments in such securities.
Acknowledged and Agreed to:
Client: BOARD OF TRUSTEES OF THE EMPLOYEES'
PENSION PLAN OF THE CITY OF CLEAR WATER. FL
,/ ~/::~. . /
~~~/
By:
Ti
Date:
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EXHIBIT B
Brokera2e and Execution Services
(a) Investment Advisor will use the execution services of such broker-dealers as it
may select from time to time, which will be entitled to compensation for their services, to effect
transactions for the purchase and/or sale of securities and other investments by the Account. In
connection with transactions effected for the Account, Client authorizes Investment Advisor to
establish and trade in accounts in its or the name of the Account with members of national or
regional securities exchanges and the National Association of Securities Dealers Inc., including
"omnibus" accounts established for the purpose of combining orders for more than one client.
(b) To the extent permitted by applicable law, Client hereby authorizes Investment
Advisor to effect transactions for the Account through affiliated broker-dealers (" Affil iated Broker-
Dealers") and the Affiliated Broker-Dealers may retain commissions in connection with effecting
such agency transactions for the Account. Client understands that other broker-dealers may be
willing to effect transactions for Client at lower commission rates than those charged by Affiliated
Broker-Dealers. When executing trades through Affiliated Broker-Dealers, Investment Advisor shall
seek to obtain the most favorable terms for Client transactions that are reasonably available under
the circumstances. If Client's Account is subject to Section I I (a) of the Securities Exchange Act of
1934, as amended ("Exchange Act") and Rule 11a2-2(T) thereunder, Client authorizes the Affiliated
Broker-Dealers that may be members of a U.S. securities exchange, or have the right to trade on
such an exchange, to execute transactions on such exchange for the Account.
(c) In selecting brokers through which transactions for client accounts will be
executed, Investment Advisor's primary consideration will be the broker's ability to provide best
execution of trades. In making a decision about best execution (and subject to section 28(e) of the
Exchange Act), Investment Advisor may consider a number offactors including, but not limited to,
trade price and commission and quality of research services the broker may provide. The
commission rates paid to any broker for execution of transactions will be determined through
negotiations with the broker, taking into account industry norms for the size and type oftransaction,
and the nature of brokerage and research services provided. Such research services may include, but
not be limited to, analysis and reports concerning economic factors and trends, industries, specific
securities, and portfolio strategies. Research services furnished by brokers will generally be used in
connection with all Investment Advisor's advisory accounts, although not all such services may be
used with any particular account that paid commissions to the brokers providing such services.
(d) To the extent permitted by applicable law, Investment Advisor is also hereby
authorized to effect "agency cross transactions" (as defined in Rule 206(3)-2 promulgated by the
Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended) with
its Affiliated Broker-Dealers whereby they will act as agent for, and receive commissions from, the
Account and the party on the other side of the transaction. Client understands that in addition to
receiving commissions from both parties, the Affiliated Broker-Dealers may have a potentially
conflicting division of loyalties and responsibilities to both parties to the transaction. Client's
consent to execute "agency-cross transactions" may be revoked at any time by written notice from
Client to Investment Advisor.
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EXHIBIT C
Fee Ae:reement
Account Name: City of Clearwater Employees' Pension Plan
Account #:
1. This Schedule C may be amended from time to time by SC-R&M upon 30 days' written
notice to the Client.
2. Fee Schedule
The Client shall payor cause to be paid to SC-R&M as remuneration for its services under this
Agreement an annual investment management fee equal to 0.65% per annum on all assets under
management (the "Base Fee"). In addition, the Client will be responsible for all fees and charges
as described in Section 10 of the Agreement.
The Base Fee will be billed in arrears for each calendar quarter and, except as provided in
Paragraph 3 below, payable within 10 days of receipt of a statement that sets forth the amount of
the Base Fee. The Base Fee will be computed using the average month-end values for the three
month-ends during a quarter and the month-end ofthe prior quarter (e.g. in computing the
average for the second quarter the month-end values for March 31, April 30, May 3 I and June 30
will be added together and divided by four). The Base Fee will be adjusted by the amount of
new material (as defined below) contributions or withdrawals occurring during the quarter and
by the number of calendar days in the quarter that such assets were not under management (in
the case oftermination ofthe Agreement). For purposes ofthis Agreement, "material" shall
mean any contribution or withdrawal in excess of 3% of the Account value at the time it is made.
In addition to the Base Fee, SC-R&M will earn a performance based fee (the "Performance
Fee") if the rate of return for the Account in any calendar year (or partial calendar year in the
case ofthe year the Agreement is executed or the year in which the Agreement is terminated)
exceeds the Wilshire Real Estate Securities Index ("W ARESI") over the same period, net of the
Base Fee (the "W ARESI Out Performance") I. The Performance Fee will be measured from the
date the Account is deemed fully invested by SC-R&M, which date will be provided to the
Client in writing.
The Performance Fee will be equal to 5% multiplied by the W ARESI Out Performance for the
period in question (e.g., if W ARESI Out Performance is 2.00% for the period in question, SC-
R&M would be entitled to a Performance Fee of 0.1 0%.). As an example, if the Account's
average value for the year was $60,000,000 and it out performed the W ARESI by 2.00%, SC-
R&M would be entitled to a Performance Fee equal to $60,000.
I For any partial calendar year (the year in which the Agreement is executed or terminated) the Performance Fee will
be reduced pro rata.
14
The Performance Fee will be billed after the end of the calendar year (or the relevant period
during the year in which the Account is terminated) and will be payable within 10 days of receipt
of a statement which sets forth the amount of the Performance Fee.
3. The following provision shall apply ifand to the extent required bv applicable law. If the
fair value of any security or other asset in the Account at the time of calculation of any
Performance Fee or Base Fee is based only on a good faith determination of value by SC-R&M,
the value of such security or asset will be deemed to be zero solely for the purpose of calculating
the Performance Fee or Base Fee.
LClient acknowledges that:
. Unrealized appreciation on securities held in a portfolio, as well as realized gains, may
increase the investment manager's compensation.
. The index to be used as a performance benchmark is appropriate since it represents the
normal portfolio an investment manager might hold in the absence of any active
management decisions and the index is widely recognized and is generally used to
measure security price appreciation and depreciation for the asset class.
. The performance-based fee arrangement may create an incentive for the investment
manager to make investments that are riskier or more speculative than would be the case
in the absence of a performance-based fee.
Agreed to and accepted:
Client: BOARD OF TRUSTEES OF THE EMPLOYEES'
PENSION PLAN OF THE CITY OF CLEARWATER, FL
By:~~K~ ~/~v~'
Tit~k V. Hibbard, Chairpe'rson
Date:
By:
Title:
15
EXHIBIT D
Authorized Sienature List
Margaret L. Simmons, Finance Director ~ I. JA/vn~
/1 - 4' J -
Brian J. Ravins, Finance Asst. Director I$,,~ C- b... ~ /\~
Steve Moskun, Cash & Investment Manager ~~~
16
ANNEX A
Qualified Institutional Buyer Certification
To: Security Capital Research & Management Incorporated (the "Agent")
Dear Ladies and Gentlemen:
The undersigned has retained Agent to manage the assets in the undersigned's account (the
"Account") pursuant to an agreement with the Agent (the "Agreement"). Pursuant to the
Agreement, the Agent is authorized to invest the Account in restricted securities under Rule
144A of the Securities Act of 1933 ("Rule 144A") that are issued by various issuers (the
"Issuers") and purchased from various Broker-Dealers (the "Brokers"). In order to establish that
it is a "Qualified Institutional Buyer" under Rule I 44A, the undersigned hereby makes the
certifications set forth below to the Agent, the Issuers, and the Brokers. The undersigned
acknowledges that the Agent, the Issuers, and the Brokers will rely on this certification for
purposes of Rule 144A. The Agent is hereby authorized to certifY to the Issuers and Brokers
from time to time that the undersigned is a Qualified Institutional Buyer within the meaning of
Rule 144A. Such Issuers and Brokers may rely on a certification from the Agent as to the
undersigned's status as a Qualified Institutional Buyer as if such certification were delivered
directly from the undersigned. The undersigned agrees to notifY the Agent of any change in the
certifications set forth below. This certification shall be deemed to be a continuing certification
until such time as Agent is notified in writing that the undersigned is no longer a Qualified
Institutional Buyer for purposes of Rule 144A.
The undersigned hereby certifies that it is familiar with the requirements of Rule 144A and
further certifies, represents and warrants that:
I. The undersigned is a "Qualified Institutional Buyer" as described in Attachment A hereto.
2. As of *, the undersigned owned and invested on a discretionary basis an
aggregate of $ * * of eligible securities as defined and calculated as set forth in
Attachment A.
3. Fiscal year end:
4. The undersigned is acting for its own account or the accounts of other Qualified Institutional
Buyers.
5. The person signing this certification is the chief financial officer, a person fulfilling an
equivalent function, or other executive officer ofthe undersigned duly authorized to execute this
certification. If the undersigned is a "family of investment companies" as defined in Rule 144A,
the person executing this certification is an executive officer of the investment adviser.
Company:
By:
Printed Name:
Title:
Date:
* Insert a specific date on or since the end ofthe undersigned's most recent fiscal year.
** The amount can be an approximation but must be a specific amount in excess of$IOO million
or such lesser amount applicable to the entity as contemplated by Attachment A. The aggregate
investable amount should include all eligible securities, not just those managed by agent.
17
Attachment A
Definition of "QUALIFIED INSTITUTIONAL BUYER"
Any of the following entities, acting for its own account or the account of other Qualified
Institutional Buyers, that in the aggregate owns and invests on a discretionary basis at least $100
million in securities:
A company organized as an insurance company, whose primary and predominant
business activity is the writing of insurance or the reinsuring of risk underwritten by
insurance companies, and which is subject to supervision by the insurance commissioner,
or similar official or agency, of a state or territory or the District of Columbia; or any
receiver or similar official or any liquidating agent for an insurance company, in his
capacity as such.
An investment company registered under the Investment Company Act of 1940.
A business development company as defined in Section 2(a)(48) of the Investment
Company Act of 1940.
A small business investment company licensed by the U.S. Small Business
Administration under Section 30 I (c) or (d) of the Small Business Investment Act of
1958.
A plan established and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its employees.
An employee benefit plan within the meaning of Title I ofthe Employment Retirement
Income Security Act of 1974 ("ERISA").
A trust fund whose trustee is a bank or trust company and whose participants are
exclusively (i) plans established and maintained by a state, its political subdivisions, or
any agency or instrumentality of a state or its political subdivisions, for the benefit of its
employees, or (ii) employee benefit plans within the meaning of Title I of the ERISA,
except trust funds that include as participants individual retirement accounts or H.R. 10
plans.
A business development company as defined in Section 202(a)(22) of the Investment
Advisers Act of 1940.
An organization described in Section 501(c)(3) of the Internal Revenue Code.
A corporation (other than a bank as defined in Section 3(a)(2) ofthe Securities Act of
1933 or a savings and loan association or other institution referenced in Section
3(a)(5)(A) of the Securities Act of 1933 or a foreign bank or savings and loan association
or equivalent institution).
A partnership.
A Massachusetts or similar business trust.
An investment adviser registered under the Investment Advisers Act of 1940.
A bank as defined in Section 3(a)(2) of the Securities Act of 1933 that has an audited net
worth of at least $25 million as demonstrated in its latest annual financial statements, as
of a date not more than 16 months preceding the date of sale under the rule.
18
A savings and loan association or other institution as referenced in Section 3(a)(5)(A)
of the Securities Act of 1933 that has an audited net worth of at least $25 million as
demonstrated in its latest annual financial statements, as of a date not more than 16
months preceding the date of sale under the rule.
A foreign bank or savings and loan association or equivalent institution that has an
audited net worth of at least $25 million as demonstrated in its latest annual financial
statements, as of a date not more than 18 months preceding such date of sale for a foreign
bank or savings and loan association or equivalent institution.
A dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended
("Exchange Act"), that in the aggregate owns and invests on a discretionary basis at least $10
million in securities.
A dealer registered pursuant to Section 15 of the Exchange Act, acting in a riskless principal
transaction on behalf of a Qualified Institutional Buyer.
An investment company registered under the Investment Company Act of 1940 that is part of a
family of investment companies (as defined in Rule 144A(a)(1)(iv)) which own in the aggregate
at least $100 million in securities.
An entity, all ofthe equity owners of which are Qualified Institutional Buyers.
Calculation of the Aggregate Amount of Securities owned and invested
on a discretionary basis
Exclusions. In determining the aggregate amount of eligible "securities" owned and invested on
a discretionary basis, the following instruments and interests shall be excluded: securities issued
by affiliates of the entity, bank deposit notes and certificates of deposits, loan participations;
repurchase agreements; securities owned but subject to a repurchase agreement; and currency,
interest rate and commodity swaps.
Valuation. The aggregate value of securities owned and invested on a discretionary basis by an
entity shall be the cost of such securities, except that they may be valued at market if the entity
reports its securities holdings in its financial statements on the basis of their market value, and no
current information with respect to the cost of those securities has been published.
Subsidiaries. Securities owned by subsidiaries of the entity that are consolidated with the entity
in its financial statements prepared in accordance with generally accepted accounting principles
may be included if the investments of such subsidiaries are managed under the direction of the
entity, except that, unless the entity is a reporting company under section 13 or 15(d) of the
Exchange Act, securities owned by such subsidiaries may not be included ifthe entity itself is a
majority-owned subsidiary that would be included in the consolidated financial statements of
another enterprise.
19