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INVESTMENT MANAGEMENT AGREEMENT (5) 09/10/2001 13:51 9413774848 CHRISTIANSEN DEHNER PAGE 02/03 ~_. ~ CAPITAL GUARDIAN TRUST COMPANY '20 S/MI'l S\ho C""eg.lllv~.. ~81. CA 92821 . HI"FI"Ooe 17141671-7027" Fax 171") 87<!.' ea4 MICHAEL A. FELIX , Vice President August 9, 2001 VIA gDERAL EXPRESS Mr. Steve Moskun Clearwater Employees' Pension Fund 100 South Myrtle Ave. Clearwater, PL 34618-4748 . Re: City of Clearwater Employees' Pension Fund (the '1'ublic Fund") Dear Mos1run: Pursuant to the agreement dated August 10,2001 (the uAgreemenf') by and bc::tween the City of Clearwater (the <<Board") on behalf of the Public Fund and capital~ Trust Company (the ''Manager''), the Manager understands that it is authorized by the~, '. 0 invest the Account' s r;:;;;) assets (as defined in the Agreement) in the Capital Guardian U.S. Equity Fund for Retirement Plans ~ (the "Fund") , &o&:\v-d The -ltfItMIY hereby acknowledges 1hat (i) assets invested in the Fund shall be 80verned solely by the guidelines as stated ill the Fund's Characteristics, as amended from time to time, a copy which is attached to the Agreement and incorporated therein. Any inconsistency between these ~ and any investment objective~ statement or guidelines provided to the Manager by the ~g 'th respect to assets that are t~ be separately managed or otherwise, shall be resolved in favor of the Fund's guidelines for the porticn of the Account's assets invested in the Fund. Please note that these guidelines do not prohibit investments in private placement securities including those eligible for resale pursuant to Rule 144A under the Securities Act of 1933. As such. the Fund may purchase such securities from time to time. The Manager intends to make the initial investment in the Fund on behalf of the Public Fund with a valuation date of September 14, 2001 (cash to be wired on September 17,2001). \ f r-nJ7n --:1r'\~.J ~MH...IT J M..,..... C~Ct)_7Clr:-171 Q~~h~ T~~r./0T/5~ 09/10/2001 13:51 9413774848 CHRISTIANSEN DEHNER PAGE 133/133 Finally, if the foregoing is in accordance with your understanding, please acknowledge your concurrence on the additional original copy of this letter enclosed. and return it in the self-addressed envelope provided. Thank you. ACKNowunGED AND ACCEPTED: BOAR]) OF TRUSTEES OF TBE CITY OF CLEARWATER EMPLOYEES' PENSION FUND By; - llA-d /h~ Name: Brian J. A gst Titl~: Mayor ~PROVED AS TO FORM: ~~~\ Tit1~: ~~t1\5LY AT TED:/! . :-~ By;, Name~ C nthia E: Goudeau Tide: ty Clerk \ E0/E0 39\1d 3:::lNtlN T -f M'~ t"'r""'r'... 7"''''' ~~I .~ INVESTMENT MANAGEMENT AGREEMENT . THIS AGREEMENT (the "Agreement"), dated this 10th day of August, 2001 by and between CAPITAL GUARDIAN TRUST COMPANY (the "Manager") and City of Clearwater (the "Board"), relates to investment management services for the CITY OF CLEARWATER EMPLOYEES' PENSION FUND (the "Public Fund") established pursuant to the laws of the City of Clearwater (the "Statutes") and for which Sun Trust, or its successor, acts as custodian (the "Custodian"). The parties agree as follows: I. ADDointment as Investment Manaeer The Manager is appointed by the Board as an investment manager for the Public Fund, and as such the Manager will establish and maintain a discretionary investment management account (the "Account") consisting of securities, funds or other assets contributed, or liabilities allocated, (i) as the Board shall initially designate for the purposes of opening this Account, (ii) as the Board may from time to time designate in writing to Manager and (iii) as the Board may substitute pursuant to this Agreement. The Manager shall invest and reinvest the assets of the Account at such times and in such securities as are believed to be in the best interest of the participants in the Public Fund. Subject to the investment objectives established in writing from time to time by the Board as administrator of the Public Fund, the Manager shall have full authority to act in regard to the Account, and shall have authority to act for the Custodian for the purpose of placing orders to effect for the Account any purchase, sale, exchange, or liquidation of assets allocated to the Account. Copies of the Statutes and other governing documents pursuant to which the Public Fund is established and maintained, have been provided to the Manager, and the Board will promptly provide the Manager with a copy of any amendments thereto. However, the Manager's responsibilities shall be limited to those set forth expressly in this Agreement. Any conflict or inconsistency between the provisions of this Agreement and those of the Public Fund or its governing documents relating to the responsibilities and liabilities of the Manager shall be resolved in favor of this Agreement. The Manager is authorized and empowered to invest and reinvest all or any part of the Account, with the written approval of the Board, through the medium of any collective or commingled investment fund now or hereafter established and maintained by the Manager, including, without limitation, those established under the Capital Guardian Employee Benefit Investment Trust or the Capital Guardian Emerging Markets Collective Trust for Employee Benefit Plans (hereinafter referred to as a "CGTC Fund") which have been established for the common investment of employee benefit trusts qualified under Section 40 1 (a) and exempt from Federal income taxation under Section 501(a) of the Internal Revenue Code of 1986, as amended from time to time (the "Code"), as well as plans or governmental units described in Section 818(a)(6) of the Code (a "Governmental Plan"). The Board shall direct the Custodian to transfer and deliver to the Manager such part of the Public Fund assets as may be specified by the Board to the extent necessary to effect any investment of the Account in any such CGTC Fund. Any assets so transferred to the custody of the Manager shall be held by the Manager CLEARWATER EMPLOYEES PENSION FUND REDLINEDOC (II as agent for the Custodian. The Manager shall be responsible for all custodial duties with respect to such assets; provided, however, that such assets shall remain a part of the Public Fund. The Custodian shall have no duty as to the safekeeping of such assets or as to the investment and reinvestment of same, except that the Manager shall provide such statements and reports to the Custodian as may be requested by the Board or the Custodian to enable it to carry out its recordkeeping and reporting responsibilities to the Public Fund or under its governing documents. The Board represents that the foregoing provisions regarding custody of Account assets invested in a CGTC Fund are consistent with the provisions of the Statutes and the governing documents of the Public Fund. To the extent the assets of the Account are invested in any such CGTC Fund: (i) The provisions of the declaration of trust pursuant to which the CGTC Fund is maintained, as amended from time to time (the "Declaration of Trust"), shall be incorporated into and be a part of this Agreement, and the Manager shall carry out its duties with respect to such investments in accordance with the Declaration of Trust; (ii) The Board represents and warrants that the Public Fund is, and at all times will be, a Governmental Plan; (iii) If the Public Fund at any time ceases to be a Governmental Plan, the Manager may, without notice or direction, remove the Public Fund assets from the CGTC Fund and reinvest the same as Manager may deem appropriate under the circumstances; (iv) Investments in the CGTC Fund shall be made solely in accordance with its Characteristics, a copy of which is attached hereto and incorporated herein; and (v) As a condition precedent to investing in any CGTC Fund, and as more fully set forth in Section IV hereunder, the Board adopts the Manager's proxy voting policy. II. ReDorts The Manager shall furnish the Custodian and the Board in a timely manner with monthly appraisals of the Account valued as of the last business day of the month, together with performance tabulations, a summary of purchases and sales and such other reports as shall be agreed upon from time to time. m. ComDensation For services hereunder, the Manager shall be compensated in accordance with the Fee Schedule attached hereto and incorporated herein. CLEARWATER EMPLOYEES PENSION FUND REDLINE.DOC 2 J'14 IV. Proxy Votine With respect to assets that are separately managed, the Manager shall, through any of its officers or employees, vote proxies as the Manager believes is in the best interest of the participants in the Public Fund, and as of the record date for voting such proxies. The Board shall take all actions necessary to effect delivery of the proxy solicitations to the Manager in a timely manner, including, but not limited to, effecting delivery of any proxy solicitation received by a third party who may hold securities on behalf of the Public Fund, and shall verify, or shall cause such third party to verify, at such time, that the number of shares of an issuer's securities indicated in a proxy solicitation equals the number of shares of such issuer's securities held by or for the benefit of the Public Fund and held in the Account as of the record date for voting the proxies. With respect to assets invested in any CGTC Fund, the Board acknowledges receipt of the Manager's proxy voting policy and the Board hereby adopts such policy. The Manager shall, through any of its officers or employees, vote proxies as the Manager believes is in the best interest of the participants in the CGTC Fund, and as of the record date for voting such proxies. V. ResDonsibilitv for Diversification Unless the Manager has sole investment authority over all assets of the Public Fund, the Manager shall have no responsibility for the manner in which the Public Fund assets, considered in the aggregate, shall be diversified; provided, however, that, subject to the guidelines and policies established by the Board or the Statutes, the Manager shall diversify the assets of the Account to the extent necessary to minimize the risk oflarge losses. VI. Other Services The Manager shall, on invitation, attend meetings with representatives of the Board to discuss the position of the Account and the immediate investment outlook, or shall submit its views in writing as the Board may reasonably suggest from time to time. VIT. ReDresentations and Warranties By entering into this Agreement, the Manager represents and warrants that: (i) it is a state-chartered trust company, authorized by the California Department of Financial Institutions to carry on a trust banking business; (ii) it has full power and authority to enter into this Agreement, and that the undersigned has full power and authority to execute this Agreement on the Manager's behalf; (iii) it is an investment manager within the meaning of Section 3(38) of the Employee Retirement Income Security Act of 1974 ("ERISA"); CLEARWATER EMPLOYEES PENSION FUND REDLINE.OOC 3 (iJ (iv) it is a "qualified professional asset manager" as defined in Section V(a) of the Department of Labor's Prohibited Transaction Exemption 84-14; and (v) it is an Investment Adviser registered under the Investment Advisers Act of 1940. The Manager acknowledges that it will be acting as a fiduciary with respect to the Public Fund and the Account, and that it will exercise its investment authority hereunder in accordance with applicable fiduciary standards [the fiduciary standards set forth in ERISA]. By entering into this Agreement, the Board represents and warrants that: (i) it has full power and authority to enter into this Agreement and that the undersigned has full power and authority to execute the Agreement on the Public Fund's behalf; (ii) all securities, funds and other assets which at any time constitute the Account are the sole property of the Public Fund and are free from any charge or encumbrance; (iii) it shall not transact in or remove from the Account any securities, funds or other assets without first giving reasonable written notice to the Manager or terminating this Agreement; and (iv) it has received a copy of Part II of the Manager's Form ADV (the "ADV"). If the Board has received the ADV less than 48 hours prior to its entering into this Agreement, the Board may terminate the Agreement without penalty within 5 (five) business days after entering into the Agreement. vm. Execution of Purchases and Sales Unless otherwise specified in writing to the Manager by the Board, all orders for the purchase and sale of securities for the Account shall be placed in such markets and through such brokers as in the Manager's best judgment shall offer the most favorable execution of each transaction in accordance with a "best execution" basis within the meaning of ERISA Technical Release No. 86-1 (i.e. competitive commission cost as well as reliability and quality of the execution). The Manager undertakes to use all reasonable care and diligence in its choice of brokers and, in the event that any broker fails on the due date, or within such reasonable period as the Manager may decide, to deliver any necessary documents or, as the case may be, to pay any amount due, the Manager will, on request, endeavor to pursue on behalf of the Public Fund all appropriate legal remedies against such broker to recover such documents or amount due or compensation in lieu thereof The costs and expenses properly incurred by the Manager in connection with the pursuit of such remedies shall be debited to the Public Fund. With respect to purchases and sales of securities made for any CGTC Fund, all orders for the purchase and sale of securities for such CGTC Fund shall be placed in such markets and through such brokers as in the Manager's best judgment shall offer the most favorable execution of each transaction in accordance with a "best execution" basis within the meaning of ERISA Technical Release No. 86-1 CLEARWATER EMPLOYEES PENSION FUND REDLINEDOC 4 ~ (i.e. competitive commission cost as well as reliability and quality of the execution). and in accordance with the policies discussed in the preceding paragraph; provided, however, in the event the Manager must pursue any appropriate legal remedies against a broker, the costs and expenses properly incurred in the pursuit of such remedies shall be borne by such CGTC Fund. IX. Custodv of Assets Except as provided in Section I above, nothing contained herein shall be deemed to authorize the Manager to take or receive physical possession of any of the assets of the Account, it being intended that sole responsibility for safekeeping thereof (in such investments as the Manager may direct) and the consummation of all purchases, sales, deliveries and investments made pursuant to the Manager's direction shall rest upon the Custodian. The Manager shall have no liability with respect to the custody arrangements or the acts, conduct or omissions of the Custodian. The Board shall instruct the Custodian to furnish such information about the Public Fund and its assets as the Manager may from time to time reasonably request in connection with the performance of its duties under this Agreement. The Board acknowledges that the Manager will be relying on the Custodian's identification of any assets contributed, or liabilities allocated, from time to time to the Account, as well as their availability for sale as applicable. The Manager may reasonably rely without further inquiry upon any information furnished to it by the Custodian hereunder, and the Manager will not be responsible for any errors or omissions arising from any inaccuracies in such information. X. Non-Exclusive Contract The Manager acts as adviser to other clients and may give advice, and take action, with respect to any such client which may differ from the advice given, or the timing or nature of action taken, with respect to the Account. The Board acknowledges that: (i) the Manager shall have no obligation to purchase or sell for the Account, or to recommend for purchase or sale by the Account, any security which the Manager, its principals, affiliates or employees may purchase or sell for themselves or for any other clients; (ii) there may be occasions when portfolio transactions are executed as part of concurrent authorizations by the Manager and its affiliates to purchase or sell the same security for other client accounts served by the Manager and its affiliates. Although such concurrent authorizations potentially could be either advantageous or disadvantageous to the Manager's client accounts, they are effected only when the Manager believes that to do so is in the interest of its respective client accounts. When such concurrent authorizations occur, the executions will be allocated in an equitable manner amongst each of the Manager's and its affiliates' client accounts; (iii) with respect to assets that are separately managed, the Manager may from time to time purchase a security from, or sell a security to, one or more other client accounts served by the Manager or its affiliates. The Manager will place a "cross trade" only if such a transaction is in the best interests of each of the client accounts; and CLEARWATER EMPLOYEES PENSION FUND REDLINEDOC 5 r/J (iv) transactions in a specific security may not be accomplished for all the Manager's or its affiliates' client accounts at the same time or at the same price. XI. Notices All notices and other communications hereunder shall be in writing and shall be deemed given if delivered in person or by any other method in which evidence of receipt is obtained, including registered mail, facsimile transmission, or reputable messenger or overnight delivery service, to the parties at the following addresses or facsimile numbers (or at such other address or number as each respective party may specify in the future): (a) if to the Manager, to: Capital Guardian Trust Company 333 South Hope Street, 55th Floor Los Angeles, California 90071 Facsimile number: (213) 486-9218 Attention: Treasurer (b) ifto the Board, to: City of Clearwater Employees' Pension Plan 100 South Myrtle Ave. Clearwater, FL 33758 Facsimile number: (727) 562-4535 Attention: Finance Director Each such notice or other communication shall be effective (i) if given by facsimile, when such facsimile is transmitted to the number specified in this section and the appropriate confirmation is received, and (ii) if given by any other means, when delivered at the address specified in this section. XII. Effective Period of A2reement and Amendments This Agreement shall become effective on the date first written above. Any amendment to this Agreement shall be written and signed by both parties to this Agreement. The Manager may be terminated at any time by written notice, subject to the Account's obligation to fulfill all transactions authorized prior to such termination, and the Manager may terminate the Agreement upon ninety days' written notice to the Board. There shall be no penalty for such termination, and the fee for the final period shall be adjusted proportionately. Any provision of this Agreement which is subsequently found to be prohibited or unenforceable shall be ineffective only to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. CLEARWATER EMPLOYEES PENSION FUND REDLINEDOC 6 r/J xm. Non-Asshmabilitv This Agreement is not to be assigned by either party without the prior written approval of the other. XIV. Force Maieure The Manager shall not be liable for any failure, delay or interruption in the performance of its obligations hereunder if such failure, delay or interruption results from the occurrence of any acts, events or circumstances beyond the Manager's reasonable control, and the Manager shall have no responsibility of any kind for any loss or damage thereby incurred or suffered by the Board. In such case, the terms of the Agreement shall continue in full force and effect and the Manager's obligations shall be performed or carried out as soon as legally and practicably possible after the cessation of such acts, events or circumstances. XV. Construction of Aereement This agreement shall be construed in accordance with the laws of the State of Florida to the extent not pre-empted by federal law and the provisions hereof shall be governed by such law. XVI. Venue Any such action arising under this Agreement shall be brought exclusively in Pinellas County. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. By: Name: Title: BOARD OF TRUSTEES OF THE CITY OF CLEARWATER EMPLOYEES' PENSION FUND jgJA--- Brian JfAungst Mayor APPRO A~ By: ~ Name: :? (f:ftt If' C"I'/'lIf/~?e- Title: '2b:7/d /ldo"",ey By: ATT By: Name: Title: TED: I: ~. ~ ~---"---- , nthia E. Goudeau , tyClerk CLEARWATER EMPLOYEES PENSION FUND REDLINE.DOC 7 {yO