CONTRACT FOR INVESTMENT CONSULTING SERVICES TO MANAGE AND ADMINISTRATE THE RETIREMENT PLAN
CONTRACT FOR
INVESTMENT CONSULTING SERVICES
CALLAN ASSOCIATES INC.
AND
CITY OF CLEARWATER
This agreement (the "Agreement") is made and entered into by and between CALLAN
ASSOCIATES INC., a California corporation (hereinafter referred to as Callan), and the CITypF
CLEARWATER (hereinafter referred to as Clearwater), this /7"""" of ~cJA...., 200~, to
provide investment consulting services in accordance with this Agreement with respect to [NAMES
OF PLANS] (collectively, the "Plan" and the assets of the Plan, the "Fund").
1. SCOPE OF WORK
Callan will provide the services under this Agreement with respect to the Plan and its Fund as
described in Attachment A. During the performance of such services by Callan, Clearwater
will retain and exercise all decision-making authority with respect to the management and
administration of the retirement planes).
Callan certifies that it is professionally qualified as an independent consultant to evaluate the
performance of professional money managers investing the assets of the Fund.
2. ADDITIONAL WORK
Consulting projects beyond the scope of services included in Attachment A may be conducted
by Callan at the direction and request of Clearwater. The fee for each project shall be
mutually agreed upon in writing between Clearwater and Callan.
3. TERMS OF AGREEMENT
This Agreement shall be in effect for three (3) years upon execution of this signed document.
This Agreement may, however, be extended for additional periods subject to approval of
Callan and Clearwater. This Agreement constitutes the entire Agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all prior agreements,
undertakings, negotiations and discussions, both written and oral.
4. CANCELLATION
Clearwater may cancel this Agreement upon thirty (30) calendar days written notice. Callan
may cancel this Agreement upon ninety (90) calendar days written notice.
5. FEES
Callan's fee for performance of the work as referenced in "Scope of Work" in Attachment A
is set forth in Attachment B.
]
6. TRAVEL AND EXPENSES
Callan shall get authorization from Clearwater prior to incurring any travel or other expenses
other than Paul Troup's expenses related to attendance at meetings.
7. PAYMENTS
All fees are quoted on a cash basis. Clearwater will be invoiced quarterly in arrears.
Clearwater shall make cash payments within thirty (30) days of receipt of billing from Callan.
Interest of 1 % per month will be charged on all overdue balances. Clearwater has the option
to form a directed broker arrangement with Alpha/BNY ESI, Callan's preferred agent for
directed commission payments, as a means of paying all or part of Callan's fees.
8. APPliCABLE LAWS
This Agreement shall be governed by the laws of the State of Florida. Venue for resolution of
any dispute under the terms of this Agreement shall be in Pinellas County, Florida. In the
event of any legal action arising out of the enforcement or interpretation of this Agreement,
the prevailing party shall be entitled to recover its costs and attorneys' fees.
9. LIABILITIES AND THE INDEMNIFICA nON OF CALLAN
The parties to this Agreement recognize that the Fund is not governed by ERISA.
Nevertheless, in all of its activities on behalf of the Fund, Callan will utilize the skill, care,
prudence and diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of an activity of a
like character and with like aims. Callan recognizes that its primary obligation under this
Agreement is to the Fund, and that it will place the interest of the Fund and the members of
the Plan above all others and will not enter into any agreement or take any action contrary to
that obligation. Callan shall be governed in all of its activities by Chapter 112, Part VII,
Florida Statutes, including, but not limited to, the standards applicable to providers of services
to retirement plans in Section 112.656, Florida Statutes as they relate to consultant services.
While no guarantee of investment results is made, Callan shall make the Fund whole for any
loss caused solely by its gross negligence or material breach of this Agreement; provided, that
in any case where any part of an investment loss is caused by, or is alleged to have been
caused by, a breach of duty of any nature by an investment manager or advisor, the Fund will
not make any claim or take any action in any court against Callan unless it shall also make a
claim against the investment manager or advisor in that same court.
Notwithstanding the above, Clearwater acknowledges and agrees that Callan's obligation
under this Agreement is to act as a consultant to assist the fiduciaries of the Fund in obtaining
the level of expertise they need to prudently fulfill their fiduciary duties. Clearwater retains
the absolute and unrestricted fiduciary responsibility for making all investment decisions with
respect to the Fund but, in making those decisions, may draw upon the resources and
expertise of Callan to the extent it deems necessary to perform its responsibilities consistent
with the standard of care applicable to its employees as fiduciaries under the relevant state
statutes.
Callan shall also be responsible for reasonably measuring the performance by managers
relative to the performance measurement standards as outlined in the Investment Objectives,
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Guidelines and Procedures (as referenced in Attachment A hereto) on a quarterly basis and
shall report to Clearwater on a quarterly basis such performance measurement. However,
Callan is not responsible for buy, sell or hold decisions of the investment managers and
advisors for the Fund and shall have no duty to affirmatively inquire into the adequacy of any
investment manager's or advisor's due diligence or prudence in making its buy, sell or hold
decisions, such duty belonging solely to the investment managers. Nor shall Callan be
responsible for reviewing the risks of individual securities or the compliance/non-compliance
of individual security holdings with the Fund's Investment Objectives, Guidelines and
Procedures. Clearwater acknowledges and agrees that Callan's expertise is in reviewing and
commenting on the investment results achieved by investment managers and advisors and not
in actual management of the assets of the Fund. Callan shall utilize its expertise in making its
recommendations to the Fund, but shall have no authority or duty to direct, hire or fire
investment managers and advisors of the Fund. Callan shall not be liable for good faith
reliance on any written or oral representation of such investment managers and advisors in
making its reports and recommendations to Clearwater. Callan does not waive any rights it
may have for indemnity or contribution from investment managers and advisors in the event
of any claim against, or liability of, Callan. Clearwater will not release, or attempt to release,
any investment manager, investment advisor or mutual fund from any claim or liability
arising from investment activities subject to performance measurement by Callan without also
releasing Callan, and a release of an investment manager, investment advisor or mutual fund
from liability arising from losses attributable to investment decisions of such person or entity
shall constitute by that fact alone a release of Callan.
Callan agrees to disclose, in writing, to the Clearwater, within seven (7) business days if
Callan becomes the subject of an investigation by the Securities and Exchange Commission
for alleged breach of federal securities laws; an investigation by the U.S. Department of
Justice for allegations relating to violation of federal securities laws or related allegations of
fraud; or if the Callan is named as the defendant in any civil action alleging fraud, negligence
or breach of fiduciary responsibility in connection with its consulting duties.
Callan and its employees will not render any legal, accounting or actuarial advice, and will
not prepare any legal, accounting or actuarial documents. Callan encourages Clearwater to
obtain such services from competent professionals.
Callan will treat confidentially, by not disclosing to unaffiliated persons, information
furnished by the Fund to Callan hereunder without Clearwater's consent except: (i) incident
to a subcontract or service contract entered into by Callan to assist in performing services
hereunder, (ii) in connection with an audit or regulatory examination, or (iii) as may otherwise
be legally required.
10. REGISTERED INVESTMENT ADVISER
Callan is a registered investment adviser under the Investment Advisers Act of 1940.
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11. CHANGES IN THE AGREEMENT
Any change to this Agreement shall be in writing in the form of an amendment mutually
agreed upon and duly executed by both parties. Callan's named representative shall be the
point of contact with regard to contractual matters.
12. ASSIGNMENT
No assignment in whole or in part of this Agreement and no delegation except as
contemplated herein of any part or all of the performance of its duties hereunder may be
made by Callan without the prior written consent of Clearwater, and any attempted
assignment or delegation without such consent will be void.
13. FORM ADV
Clearwater acknowledges receipt of Callan's disclosure statement, Form ADV, Part II,
more than 48 hours prior to the date of the execution of this Agreement.
14. PROFESSIONAL LIABILITY INSURANCE
Professional liability insurance shall be maintained by the Advisor during the life of this
Agreement, with the following limit of liability:
Professional Liability
$1,000,000.00
The Advisor shall provide the Trustees with proof of insurance within seven (7) business
days of execution of this Agreement and annually thereafter during the first week of
January of each year.
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BY THE SIGNATURES affixed below, the above Agreement is hereby accepted as to all the terms
and conditions.
~~(&~
CALLAN ASSOCIATES INC.
~llY!V"')
Date
Countersigned:
CITY OF CLEARWATER, FLORIDA
4,...e t/ ~
'~ '
,Frank V. Hibbard
Mayor-
Approved as to form:
By: dJ~ 73.~-Y
William B. Ho~II
City Manager
Attest:
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Attachment A
SCOPE OF WORK
1. INVESTMENT POUCIES AND GUlDEUNES
Upon the written request of Clearwater, Callan shall conduct an annual review of the Fund's
Investment Objectives, Guidelines and Procedures and, if necessary, make recommendations
for amendments thereto.
2. PERFORMANCE EVALUATION
Callan shall review and evaluate the performance of the investment managers and advisors for
the Fund and shall provide written quarterly reports to Clearwater.
Callan shall attend quarterly meetings and make oral presentations regarding the investment
managers' performance for up to five (5) meetings in each year of the term of this Agreement.
Clearwater agrees that the timing of these meetings shall be established ninety (90) days in
advance of the event.
If additional investment managers/accounts are added or deleted, the charge for the
Investment Measurement Service Reports referenced in Attachment B shall then be mutually
agreed upon in writing between Callan and Clearwater in the form of an amendment to this
Agreement duly executed by both parties.
3. ASSET ALLOCATIONILIABILITY ANALYSIS
Upon the written request of Clearwater, Callan will conduct a study comparing the Fund's
current asset allocation, actuarial assumptions and investment structure to alternate asset
mixes and structures. Callan will examine the impact of these alternatives on the Fund's
projected return and liabilities over time. At the conclusion of the study, Callan will provide a
written report defining alternative asset allocation strategies and comparing the advantages
and disadvantages to that of other available strategies.
4. MANAGER STRUCTURE REVIEW
On a per asset class basis, if requested by Clearwater, Callan will analyze the Fund's existing
investment manager structure to determine a range of optimal mixes by style and
capitalization, as applicable. At the conclusion of the review, Callan will provide a written
report defining alternative manager structures and compare the advantages and disadvantages
to that of other available structures.
5. INVESTMENT MANAGER SEARCH
The investment manager search process assumes Callan's normal process, which is tailored to
individual client guidelines and results in a group of candidates named for possible selection
by Clearwater. At the conclusion of the review, Callan will provide a written report defining
alternative manager candidates and compare the advantages and disadvantages of each. The
Callan consultant shall also be available to attend finalist interviews to provide additional
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discussion as necessary to aid in Clearwater's manager selection decision, which decision is
the sole responsibility of Clearwater.
6. CALLAN INVESTMENTS INSTITUTE
During the term of this Agreement, Clearwater will be a member of the Callan Investments
Institute (CII.) CII is a continuing education and research facility in the pensions and
investments industry. A division of Callan, the Institute was established in 1980 and its
membership has steadily grown to over 400 leading corporate, public, endowment/foundation
and multi-employer fund sponsor and investment management. The Institute provides
research and educational assistance through periodic surveys, monthly and quarterly market
index summaries, and research papers. In addition, trustees and staff designated by trustees
may attend regional and national Institute conferences without payment of a registration fee.
7. ADDITIONAL CONSULTING SERVICES
To be mutually agreed upon in writing by Callan and Clearwater.
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Attachment B
FEES
1.) Revision and/or establishment of written investment policy objectives and
guidelines: $10,000
2.) Quarterly performance evaluation
Five meetings per year in Clearwater are included in this fee.
3.) Asset AllocationlLiability Analysis:
4.) Manager Structure Review, per asset class:
5.) Re-evaluation and selection of money managers/mutual funds:
Domestic Manager Search:
International Manager Search:
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$72,000
$45,000
$25,000
$30,000
$35,000