INVESTMENT MANAGEMENT AGREEMENT (4)
INVESTMENT MANAGEMENT AGREEMENT
with
EARNEST Partners, LLC
THIS AGREEMENT (the "Agreement") is entered into among Board of Trustees
of the Employees' Pension Plan of the City of Clearwater, Florida, (the "Client"), and
Earnest Partners, LLC ("EARNEST").
Client, being duly authorized, hereby agrees to employ and retain EARNEST to
act as investment manager for the Client's advisory account (the "Account") pursuant to
EARNEST's International investment strategy and in accordance with the terms and
conditions of this Agreement. The Account represents only a portion of the Client's
assets, and the Client has determined that the investment strategy contemplated by this
Agreement and the investment policy and/or guidelines contained in Exhibit "A" and any
additional policy and/or guidelines as may from time to time be communicated in writing
by the Client are prudent in light of the Client's overall investment portfolio.
I. DUTIES AND POWERS OF INVESTMENT MANAGER
A. Duties
1. Subject to any restrictions and/or guidelines contained in
Exhibit "A" attached hereto and by this reference incorporated herein, and any
additional restrictions and/or guidelines as may from time to time be communicated in
writing to EARNEST by the Client, and subject to the Client timely executing the power
of attorney contained in Exhibit "C" attached hereto and by this reference incorporated
herein, and the Client's custodian timely establishing the necessary trading accounts in
foreign markets. Client authorizes EARNEST to buy, sell or otherwise trade securities
or other investments in the Account without discussing the transactions with Client in
advance. Such securities or other investments may include but are not limited to,
common or preferred stock, foreign currencies, convertible stocks or bonds, options,
warrants, rights, corporate, municipal, or government bonds, notes or bills (secured or
unsecured), mutual funds and short-term investment funds. Notwithstanding the
foregoing in this Section I(A)(1), any security or other investments prohibited from being
purchased in the Account must be specifically identified in writing to EARNEST.
2. EARNEST shall discharge its duties with respect to the
Account with the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like aims, and by
diversifying the investments under management so as to minimize the risk of large
losses, unless under the circumstances it is clearly prudent not to do so. It is agreed
that the standard set forth in the foregoing sentence constitutes the sole standard of
care imposed upon EARNEST by this Agreement.
3. EARNEST acknowledges that it is fully familiar with the laws
of the State of Florida governing public employee retirement systems (Chapter 112,
Part VII), and is fully familiar with the provisions of the Code of the City of Clearwater
relating specifically to the management of this Pension Plan Section (2.399 of the City
of Clearwater Code). EARNEST agrees to observe the laws of the State of Florida and
the Code of the City of Clearwater and the investment policy and guidelines as set forth
by Client in Exhibit A hereto. Client agrees to notify EARNEST in writing of any
applicable changes in such laws of the State of Florida and the Code of the City of
Clearwater and/or the investment policy and guidelines as set forth by Client in Exhibit
A hereto. In the event that EARNEST should purchase any security in violation of the
applicable investment policy and guidelines, and as a result of any sale thereof realizes
a loss as measured by the initial purchase price of the security, EARNEST shall make
Client whole for any such losses.
4. EARNEST will provide Client with such periodic reports as
Client and EARNEST may mutually agree; provided however, that reports as to the
status and investments in the Account shall be provided no less frequently than
quarterly.
B.
attorney-in-fact
acknowledges,
Agreement:
Powers. The Client hereby appoints EARNEST its agent and
with respect to, and hereby confers, and EARNEST hereby
the following powers in the performance of its duties under this
1. To direct the purchase or subscription for any securities,
currencies or other investments;
2. To direct the sale, exchange, conveyance, transfer or other
disposition of any stocks, bonds, currencies or other securities held in the Account by
private contract or at public auction, with or without advertising;
3. To vote any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or without power of substitution; to
exercise any conversion privileges, subscription rights or other options, and to make
any payments incidental thereto; to oppose or to consent to, or otherwise participate in,
corporate reorganizations or other changes affecting corporate securities, and to
delegate discretionary powers, and to pay any assessments or charges in connection
therewith, and generally to exercise any of the powers of an owner with respect to
stocks, bonds, or other securities in the Account; provided, that all such powers shall
be exercised by EARNEST in its sole and absolute discretion subject only to its general
fiduciary obligations to the Client as set forth in Section I(A)(2) above;
4. To direct the writing of covered call options and the
purchase or sale of put options and financial futures contracts;
5. To make, execute, acknowledge and deliver any and all
documents that may be necessary to carry out the powers of EARNEST under this
Agreement;
6. To carry out the duties set forth in Section I(A) of this
Agreement;
7. To direct the placement of brokerage orders with respect to
assets in the Account with such broker or brokers as EARNEST shall select; and
8. EARNEST may not act as a principal in any transaction with
Client, but may effect any agency cross transaction in compliance with the provisions of
applicable law. From time to time securities to be sold on behalf of another of
EARNEST'S clients may be suitable for purchase on behalf of the Account and vice
versa. In such instances, if EARNEST determines in good faith that the transaction is
in the best interest of each client, Client agrees that EARNEST may arrange for the
securities to be transferred between the Account and such other client account at the
then independently determined fair market value (a "cross trade") provided neither
EARNEST nor any broker-dealer affiliated with EARNEST shall receive a commission
directly or indirectly in connection with such cross trade, and provided such transaction
is otherwise permissible for Client under applicable law.
9. EARNEST shall not be responsible for advising or acting for
the Client in legal proceedings, including but not limited to class actions, settlements
and related proofs of claim, or bankruptcies, involving securities purchased or held in
the Account. Should EARNEST receive notices or related materials for the Account
involving securities purchased by EARNEST in the Account, EARNEST shall use
commercially reasonable efforts to transmit copies of such notices to the Client's
current Custodian. EARNEST shall not incur any liability for any delay or failure to
timely provide such notices or related materials to the Client's current Custodian.
10. Generally, to do all such acts and to execute and deliver all
such instruments as in the judgment of EARNEST may be necessary or desirable to
carry out any powers or authority of EARNEST under this Agreement, without
advertisement and without order of court, and without having to post bond or make any
returns or report of its doings to any court.
C. Investment Decisions. EARNEST shall have full power to make
and act upon all investment decisions with respect to the Account, in its sole discretion,
subject only to the terms of this Agreement, as amended from time to time. If, in the
event of Client's death or termination (as the case may be), EARNEST acts in good
faith pursuant to this grant of discretion without actual knowledge of Client's death or
termination, any action so taken, unless otherwise invalid or unenforceable, shall be
binding on Client's successors in interest.
D. Compensation. The compensation of EARNEST under this
Agreement shall be such as is set forth in EARNEST's separate published fee schedule
in effect from time to time, a current copy of which is attached hereto as Exhibit "B",
except that no increase in fees shall be effective until 90 days after notice thereof to the
Client. Unless otherwise provided in Exhibit "B", payment to EARNEST shall be made
quarterly, based on a calendar year, and the fee shall be due and payable within 15
days after the end of each quarterly period. If this Agreement commences at any time
other than at the beginning of a quarterly period, the first quarterly fee shall be prorated
to the end of such first quarterly period. EARNEST will not be compensated on the
basis of a share of capital gains or capital appreciation of the Fund except as based
upon the total value of the Account in accordance with EARNEST's aforementioned fee
schedule. However, if the Client and EARNEST agree and reflect on Exhibit B the
terms thereof, EARNEST may collect an incentive fee that provides for compensation to
EARNEST on the basis of a share of the capital gains upon, or the capital appreciation
of, the Account, in accordance with Rule 205-3 under the Investment Advisers Act of
1940 ("Advisers Act"). If this Agreement is terminated all fees due to EARNEST shall
be prorated to the date of termination.
In computing the market value of any investment of the Account, each security
listed on a national securities exchange shall be valued at the last sale price on the
valuation date. Listed stock not traded on such date and any unlisted stock regularly
traded in the over-the-counter market shall be valued at the latest available bid price
reflected by quotations furnished to EARNEST by such sources as it may deem
appropriate. Any other security shall be valued in such manner as shall be determined
in good faith by EARNEST to reflect its fair market value. Money market accounts and
bank accounts, if any, shall be valued as of the valuation date.
Client may make additions to the Account at any time, subject to EARNEST's
right to terminate an Account that falls below the minimum account size. Additional
assets received into the Account after it is opened shall be charged a pro rata fee
based upon the number of days remaining in the quarter. Client may withdraw Account
assets upon written notice to EARNEST, subject to the usual and customary securities
settlement procedures. EARNEST shall impose no start-up, closing or penalty fees in
connection with the Account.
Client may indicate by initialing one of the options below how to arrange payment
of the fees due EARNEST pursuant to this Agreement. If left blank, EARNEST will
assume that the first option is selected.
EARNEST is authorized to invoice the Custodian directly for its
fees, although it will simultaneously send a copy of its bill to Client. Client
shall be responsible for verifying the accuracy of the fee calculation - the
Custodian shall not determine whether the fee is calculated properly.
Client agrees to instruct the Custodian to pay such fees directly to
EARN EST.
P EARNEST is authorized to invoice Client directly for the payment of
its fees. Any such payment shall be made to EARNEST by separate
check, and under no circumstance shall any fee be deducted from
amounts held in the Account.
Client shall be solely responsible for all commissions and other transaction
charges, and any charge relating to the custody of securities in the Account. The fees
due EARNEST under this Agreement cover only the investment management services
provided by EARNEST and does not include costs associated with gaining access to
restricted foreign markets (e.g. China, North Korea, India, etc.), brokerage
commissions, mark-ups and mark-downs, dealer spreads or other costs associated with
the purchase and sale of securities, custodian fees, interest, taxes, or other Account
expenses. Client shall be solely responsible for these additional expenses. Client
understands that, in addition to the fees paid to EARNEST pursuant to this Agreement,
each mutual fund in which Client may invest pursuant to this Agreement also bears its
own investment advisory fees and other expenses which are disclosed in each funds'
prospectus. Client further understands that the mutual funds recommended or
purchased through this Agreement may be available directly from the funds pursuant to
the terms of their prospectuses and without paying the fees to EARNEST.
II. TRANSACTION PROCEDURES. All transactions will be consummated
by payment to, or delivery by, Client, or such other party as Client may designate in
writing (the "Custodian"), of all cash and/or securities due to or from the Account. Client
shall promptly notify EARNEST, pursuant to Section X(A) of this Agreement, of any
assets added to or removed from the Account and EARNEST shall acknowledge the
notification. EARNEST shall not act as custodian for the Account, but may issue such
instructions to the Custodian as may be appropriate in connection with the settlement of
transactions initiated by EARNEST pursuant to the terms of this Agreement.
Instructions of EARNEST to Client and/or the Custodian shall be made in writing sent
via facsimile (maintaining fax acknowledgement report as proof of receipt), by first-class
mail or, at the option of EARNEST, orally and confirmed in writing as soon as practical
thereafter, and EARNEST shall instruct all brokers and dealers executing orders on
behalf of the Account to forward to Client and/or the Custodian copies of all
confirmations promptly after execution of transactions. EARNEST shall not be
responsible for any loss incurred by reason of any act or omission of any broker or
dealer or the Custodian, including but not limited to any loss arising from, on account of
or in connection with the Custodian or similar person failing to timely notify EARNEST
of any corporate action or similar transaction; provided, however, that EARNEST will
make reasonable efforts to require that brokers and dealers selected by EARNEST
perform their obligations with respect to the Account.
III. ALLOCATION OF BROKERAGE AND AGGREGATION OF ORDERS.
Where EARNEST places orders for the execution of portfolio transactions for the
Account, EARNEST may allocate such transactions to such brokers and dealers for
execution on such markets, at such prices and at such commission rates as in the good
faith judgment of EARNEST will be in the best interest of the Account, taking into
consideration in the selection of such brokers and dealers not only the available prices
and rates of brokerage commissions, but also other relevant factors (such as, without
limitation, execution capabilities, research and other services provided by such brokers
or dealers which are expected to enhance the general portfolio management
capabilities of EARNEST, and the value of an ongoing relationship of EARNEST with
such brokers and dealers) without having to demonstrate that such factors are of a
direct benefit to the Account.
If EARNEST believes that the purchase or sale of a security is in Client's best
interest along with the best interest of its other clients, EARNEST may, but shall not be
obligated to, aggregate the securities to be sold or purchased to obtain favorable
execution or lower brokerage commissions, to the extent permitted by applicable laws
and regulations. EARNEST shall allocate securities so purchased or sold, as well as
the expense incurred in the transaction, in the manner that it considers to be equitable
and consistent with its fiduciary obligations to Client and its other clients. Client
authorizes EARNEST to assign the Account the average price resulting from such
aggregated trades and acknowledges that clients participating in an aggregate order
may be charged different commission rates.
Brokers or dealers that EARNEST selects to execute transactions may from time
to time refer clients to EARNEST. EARNEST shall not make commitments to any
broker or dealer to compensate that broker or dealer through brokerage or dealer
transactions for client referrals; however, a potential conflict of interest may arise
between Client's interests in obtaining best price and execution and EARNEST's
interest in receiving future referrals.
EARNEST may pay a broker or dealer who provides research services
commissions that are competitive but that are higher than the lowest available rate that
another broker or dealer might have charged, if EARNEST determines, in good faith,
that the commissions are reasonable in relation to the value of brokerage and research
services provided.
Client may direct EARNEST to utilize specific brokers or dealers. Client
represents that such direction shall be for the exclusive purpose of providing benefits to
participants and beneficiaries of the Account and shall not constitute, or cause the
Account to be engaged in any violation of federal or state law with regard to "prohibited
transactions" or "parties-in-interest". Client understands that if it directs EARNEST to
use the services of a specific broker or dealer such instruction will result in EARNEST
not exercising discretion in selecting other brokers or dealers on a trade-by-trade basis.
Thus, Client agrees that Client may not receive any benefit from research available
from other brokers or dealers in return for business directed to them, or any benefit
which could result from EARNEST batching orders for Client (orders combined with
those of other clients for the purpose of obtaining better price or execution from a
broker or dealer), or otherwise obtain best price and execution of transactions.
IV. SERVICES TO OTHER CLIENTS OF. EARNEST. EARNEST may
perform investment advisory services for various clients other than the Client and for
accounts other than the Account. EARNEST may give advice and take action with
respect to other clients that differs from advice given or action taken with respect to the
Account, so long as EARNEST attempts in good faith reasonably to allocate investment
opportunities to the Client and the Account over a period of time on a fair and equitable
basis compared to investment opportunities extended to other clients. EARNEST is not
obligated to initiate the purchase or sale for the Client, or the Account, of any security
that EARNEST, 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 reasonable opinion of
EARNEST, such transaction or investment appears unsuitable or undesirable for the
Client or the Account.
V. CONFIDENTIAL RELATIONSHIP. Except as otherwise provided in this
Section, all information and advice furnished by the Client or EARNEST to the other,
with respect to the Account, or other matters pertaining to this Agreement, shall be
treated as confidential and shall not be disclosed to third parties except as required by
law or as necessary to carry out responsibilities set forth in this Agreement.
VI. AUTHORITY AND STATUS OF EARNEST AS INVESTMENT MANAG-
ER. EARNEST represents and warrants: (i) that it is a registered investment adviser
under the Advisers Act; and (ii) that it has full power and authority to enter into this
Agreement. EARNEST acknowledges that as Investment Manager it is a fiduciary with
respect to the Account; provided, however, that EARNEST shall not be considered a
fiduciary to the extent that it does not have investment discretion under this Agreement
as a result of the restrictions, if any, contained in Exhibit "A",
VII. AUTHORITY OF THE CLIENT. The Client represents and warrants: (i)
that the Client has full power and authority to enter into this Agreement; (ii) that this
Agreement has been duly authorized and when executed and delivered will be binding
upon the Client; and (iii) the terms hereof do not violate any obligation by which Client is
bound, whether arising by contract, operation of law, or otherwise. Client represents
and warrants that Client has had the opportunity to consult with, and has consulted,
legal counsel in connection with the negotiation and execution of this Agreement.
VIII. DURATION OF AGREEMENT; ENTIRE AGREEMENT. This Agreement
will remain in effect until terminated by either party hereto in accordance with Section IX
hereof. This Agreement constitutes the entire agreement between EARNEST and
Client, and supersedes any prior agreements or understanding with respect to the
subject matter hereof.
IX. AMENDMENTS; TERMINATION; PROHIBITION AGAINST
ASSIGNMENT.
A. This Agreement may only be amended by mutual written consent;
provided, however, that EARNEST may unilaterally amend the Fee Schedule attached
as Exhibit B referenced in Section 1.0. hereof, effective upon ninety (90) days written
notice to the Client of such amendment. A party to this Agreement may terminate this
Agreement at any time upon notice by registered or certified mail to the other party in
accordance with this Section IX, which notice shall be given at least thirty (30) days
prior to the effective date of termination. Upon receiving or giving notice of termination,
and (if termination occurs by notice from the Client) upon receipt by EARNEST of all
fees payable to EARNEST pursuant to this Agreement which are accrued but unpaid as
of the date of such termination, EARNEST shall, if so directed by the Client, make a full
accounting to the Client with respect to all assets managed by it since its appointment
as Investment Manager. Upon termination, Client shall have the exclusive responsibility
to monitor the assets in the Account, and EARNEST shall have no further obligation to
act or advise with respect to those assets.
B. This Agreement shall be binding on Client's heirs, executors,
successors, administrators, conservators, and permitted assigns. Client may not assign
(as that term is defined under the Advisers Act) Client's rights or delegate Client's
obligations under this Agreement, in whole or in part, without the prior written consent of
EARNEST. EARNEST may not assign (as that term is defined under the Advisers Act)
this Agreement without Client's consent.
X. NOTICES.
A. All notices, requests and demands after the date of this
Agreement, and any other communications hereunder (including any restrictions and/or
guidelines made a part of this Agreement as provided in Section I(A)(1) hereof) shall be
in writing and delivered via facsimile (preceded by a phone call to the receiving party),
by courier or sent by certified or registered mail, return receipt requested, to the
appropriate address indicated below or such other address as may be given in a notice
sent by either party hereto to the other party in accordance with this Section X.
1. The effective date of this Agreement shall be the date of its
acceptance by EARNEST.
2. All paragraph headings in this Agreement are for
convenience of reference only, do not form part of this Agreement, and shall not affect
in any way the meaning or interpretation of this Agreement.
B. Client hereby acknowledges receipt of: (i) EARNEST's Form AOV,
Part II; (ii) EARNEST's Notice of Privacy Practices, if any; and (iii) EARNEST's Proxy
Voting Practices, if any. Client also acknowledges that Client has reviewed and
understands the risk factors and the fees associated with the Account. If the Client has
not received a copy of EARNEST's Form ADV, Part II at least 48 hours before entering
into this Agreement, Client has the right to terminate this Agreement without penalty
within five (5) business days after entering into this Agreement. EARNEST annually
shall deliver, or offer in writing to deliver, upon written request of the Client and without
charge, Form ADV, Part II.
XI. Investigations and Complaints. To the extent permitted by applicable
law, EARNEST shall promptly disclose to BOARD in writing any extraordinary
investigation, examination, complaint, disciplinary action or other proceeding
reasonably related to or materially affecting EARNEST'S ability to perform its duties
under this Agreement or involving any investment professional employed by EARNEST
who has performed any service with respect to BOARD'S account in the twenty-four
(24) preceding months, which is commenced by any of the following: (i) the Securities
and Exchange Commission of the United States ("SEC"), (ii) the New York Stock
Exchange, (iii) the American Stock Exchange, (iv) the National Association of Securities
Dealers, (v) any Attorney General or any regulatory agency of any state of the United
States, (vi) any U.S. Government department or agency, or (vii) any governmental
agency regulating securities of any country in which EARNEST is doing business.
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.
XII. APPLICABLE LAW. All questions arising hereunder shall be determined
according to the laws of the State of Florida (without regard to its conflict of laws
provisions) and the provisions hereof shall be binding upon the successors and assigns
of the parties. The parties hereby submit to the jurisdiction of the State Courts of
Pinellas County, Florida and/or the Federal Courts in the Middle District of Florida with
respect to any litigation relating to this agreement.
XIII. SEVERABILITY. If any part of this Agreement is found to be invalid or
unenforceable by statute, rule, regulation, decision of a tribunal, or otherwise, it shall
not affect the validity or enforceability of the remainder of this Agreement. To this
extent, the provisions of this Agreement shall be deemed to be severable.
XIV. Insurance. EARNEST 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 EARNEST 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. EARNEST, at the time of execution of this agreement and
annually thereafter and, in addition thereto, upon written request of Client, shall deliver
to Client certificates of insurance evidencing the foregoing coverages. EARNEST shall
notify Client in writing of any reduction, cancellation or substantial change of policy or
policies as soon as possible, but no later than at least fifteen (15) days prior to the
effective date of said action. EARNEST 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. EARNEST's insurance shall be primary
and Client's insurance, if any, and responsibility shall be secondary.
xv. PROXY VOTING. Client hereby delegates its proxy voting authority to
EARNEST and EARNEST will have complete discretion as to voting proxies of the
Client. EARNEST will vote the proxies of its Clients in the best interests of its clients
and in accordance with EARNEST's established policies and procedures. Client may
obtain a copy of EARNEST's complete proxy voting policies and procedures by
contacting EARNEST's Chief Compliance Officer directly. Clients may request, in
writing, information on how proxies for Client's shares were voted. Upon receipt of such
written request, EARNEST will promptly provide such information to the Client.
XVI. TITLES AND HEADINGS. Titles and headings are for convenience only
and shall not have an effect on the interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers or agents thereunto duly authorized as of the day and year
written below.
BOARD OF TRUSTEES OF THE EMPLOYEES'
PENSION PLAN OF THE CITY OF
CLEARWATER, FLORIDA
By: ...."Wf\( l\crt\tf.oJ 'r
Frank V. Hibbard
Chairperson
Cynthia E. Goudeau
City Clerk
Address
Date:
/
/
EARNEST Partners, LLC .
~ ' '
By: /---- \~tt 1\/\ ?\/If-........
Title: ( L ~-
1180 Peachtree Street NE. Suite 2300
Atlanta, Georqia 30309
Address
3 / /7
Date:
/ \~ r
EXHIBIT A
DESCRIPTION OF ANY RESTRICTION TO SECTION I(A)(1)
Date:
Initia.. Is ~
- "'" t.- c:::Y
Y1\ V'J
EXHIBIT B
COMPENSATION
In accordance with Section 1(0) the fee to be paid to EARNEST Partners, LLC shall be
computed as follows':
International Fee Schedule
0.75% on the first $25,000,000
0.65% on the next $25,000,000
0.55% thereafter
The fee provided above is the annual fee charged by EARNEST Partners, LLC for
investment management services. Fees are based on the market value of the assets
under management at the end of each calendar or fiscal quarter and are charged in
arrears. The quarterly fee is calculated by applying the annual rate above to the total
market value of the assets and then taking one-quarter of the total as the quarterly fee.
The fee payable to EARNEST may be revised from time to time but no increase in fees
shall be effective until 90 days after notice to the Client.
Initials~
,. ~,t\ .... <:::::::/
lIvt iAJ
Date:
* If an "incentive fee" is to be paid, the Client must meet the requirements of a "qualified client"
as described under Rule 205-3 of the Advisers Act.
EXHIBIT C
POWER OF ATTORNEY
To enable Manager to exercise fully its discretion and authority as provided in Section I,
Client hereby constitutes and appoints EARNEST as Client's agent and attorney-in-fact
with full power and authority for Client and on Client's behalf to open and operate any
bank, brokerage, mutual fund, custody or managed account or any other investment
related accounts in the name of the Client in connection with and in furtherance of the
services to be provided by EARNEST to Client pursuant to this Agreement; and do and
perform every act necessary and proper to be done in the exercise of the foregoing
powers as fully as Client might or could do if personally present including, but not
limited to, investing in foreign markets. This power of attorney is coupled with an
interest and shall terminate only on termination of this Agreement or on receipt by
EARNEST of written notice of the death or incapacity of Client.
Copies of related documents will be available to Client upon written request.
CLIENT:
By:
Title:
/f ~ ) F~" CY', ". LJ II
ell "J c.' . CeAF-iVr<1.7cj.~J
...qWI\f f\ Cft.\t.\o,$
.
v\l(.-~~,\ol -\- UoVI\(,\\~lIt\~(1
Date:
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Statutes & Constitution :View Statutes :->2007->ChOl12->Section 656 : Online Sunshine Page 1 of 1
Select Year: 2007 I Go I
The 2007 Florida Statutes
Title X
PUBLIC OFFICERS, EMPLOYEES,
AN D RECORDS
ChaRter 112
PUBLIC OFFICERS AND EMPLOYEES:
GENERAL PROVISIONS
View J;ntire
ChaRter
112.656 Fiduciary duties; certain officials included as fiduciaries.--
(1) A fiduciary shall discharge his or her duties with respect to a plan solely in the interest of the
participants and beneficiaries for the exclusive purpose of providing benefits to participants and their
beneficiaries and defraying reasonable expenses of administering the plan.
(2) Each retirement system or plan shall have one or more named fiduciaries with authority to control
and manage the administration and operation of the retirement system or plan. However, the plan
administrator, and any officer, trustee, and custodian, and any counsel, accountant, and actuary of the
retirement system or plan who is employed on a full-time basis, shall be included as fiduciaries of such
system or plan.
(3) A retirement system or plan may purchase insurance for its named fiduciary to cover liability or
losses incurred by reason of act or omission of the fiduciary.
History.--s. 18, ch. 79-183; s. 724, ch. 95-147.
Copyright @ 1995-2008 The Florida Legislature. Privacy Statement. Contact Us
http://www.leg.state.fl.us/Statuteslindex.cfm ? App _ mode=Display _ Statute&Search_ String...
3/19/2008
Statutes & Constitution :View Statutes :->2007->Ch0112->Section 661 : Online Sunshine Page 1 of3
Select Year: 2007 I Go I
The 2007 Florida Statutes
Title X
PUBLIC OFFICERS, EMPLOYEES,
AND RECORDS
Chapter 112
PUBLIC OFFICERS AND EMPLOYEES:
GENERAL PROVISIONS
View Entire
ChClRt~L
112.661 Investment policies.--Investment of the assets of any local retirement system or plan must be
consistent with a written investment policy adopted by the board. Such policies shall be structured to
maximize the financial return to the retirement system or plan consistent with the risks incumbent in
each investment and shall be structured to establish and maintain an appropriate diversification of the
retirement system or plan's assets.
(1) SCOPE. -- The investment policy shall apply to funds under the control of the board.
(2) INVESTMENT OBJECTIVES.--The investment policy shall describe the investment objectives of the
board.
(3) PERFORMANCE MEASUREMENT.--The investment policy shall specify performance measures as are
appropriate for the nature and size of the assets within the board's custody.
(4) INVESTMENT AND FIDUCIARY STANDARDS. -- The investment policy shall describe the level of
prudence and ethical standards to be followed by the board in carrying out its investment activities with
respect to funds described in this section. The board in performing its investment duties shall comply
with the fiduciary standards set forth in the Employee Retirement Income Security Act of 1974 at 29
U.S.c. s. 11 04(a)(1 )(A)-(C). In case of conflict with other provisions of law authorizing investments, the
investment and fiduciary standards set forth in this section shall prevail.
(5) AUTHORIZED INVESTMENTS.--
(a) The investment policy shall list investments authorized by the board. Investments not listed in the
investment policy are prohibited. Unless otherwise authorized by law or ordinance, the investment of
the assets of any local retirement system or plan covered by this part shall be subject to the limitations
and conditions set forth in s. Z15.47(1)-(8), (10), and (16).
(b) If a local retirement system or plan has investments that, on October 1, 2000, either exceed the
applicable limit or do not satisfy the applicable investment standard, such excess or investment not in
compliance with the policy may be continued until such time as it is economically feasible to dispose of
such investment. However, no additional investment may be made in the investment category which
exceeds the applicable limit, unless authorized by law or ordinance.
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(6) MATURITY AND LIQUIDITY REQUIREMENTS.--The investment policy shall require that the investment
portfolio be structured in such manner as to provide sufficient liquidity to pay obligations as they come
due. To that end, the investment policy should direct that, to the extent possible, an attempt will be
made to match investment maturities with known cash needs and anticipated cash-flow requirements.
(7) PORTFOLIO COMPOSITION.--The investment policy shall establish guidelines for investments and
limits on security issues, issuers, and maturities. Such guidelines shall be commensurate with the nature
and size of the funds within the custody of the board.
(8) RISK AND DIVERSIFICATION.--The investment policy shall provide for appropriate diversification of
the investment portfolio. Investments held should be diversified to the extent practicable to control the
risk of loss resulting from overconcentration of assets in a specific maturity, issuer, instrument, dealer,
or bank through which financial instruments are bought and sold. Diversification strategies within the
established guidelines shall be reviewed and revised periodically, as deemed necessary by the board.
(9) EXPECTED ANNUAL RATE OF RETURN.--The investment policy shall require that, for each actuarial
valuation, the board determine the total expected annual rate of return for the current year, for each
of the next several years, and for the long term thereafter. This determination must be filed promptly
with the Department of Management Services and with the plan's sponsor and the consulting actuary.
The department shall use this determination only to notify the board, the plan's sponsor, and consulting
actuary of material differences between the total expected annual rate of return and the actuarial
assumed rate of return.
(10) THIRD-PARTY CUSTODIAL AGREEMENTS.--The investment policy shall provide appropriate
arrangements for the holding of assets of the board. Securities should be held with a third party, and all
securities purchased by, and all collateral obtained by, the board should be properly designated as an
asset of the board. No withdrawal of securities, in whole or in part, shall be made from safekeeping
except by an authorized member of the board or the board's designee. Securities transactions between a
broker-dealer and the custodian involving purchase or sale of securities by transfer of money or
securities must be made on a "delivery vs. payment" basis, if applicable, to ensure that the custodian
will have the security or money, as appropriate, in hand at the conclusion of the transaction.
(11) MASTER REPURCHASE AGREEMENT. --The investment policy shall require all approved institutions
and dealers transacting repurchase agreements to execute and perform as stated in the Master
Repurchase Agreement. All repurchase agreement transactions shall adhere to the requirements of the
Master Repurchase Agreement.
(12) BID REQUIREMENT.--The investment policy shall provide that the board determine the approximate
maturity date based on cash-flow needs and market conditions, analyze and select one or more optimal
types of investment, and competitively bid the security in question when feasible and appropriate.
Except as otherwise required by law, the most economically advantageous bid must be selected.
(13) INTERNAL CONTROLS.--The investment policy shall provide for a system of internal controls and
operational procedures. The board shall establish a system of internal controls which shall be in writing
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and made a part of the board's operational procedures. The policy shall provide for review of such
controls by independent certified public accountants as part of any financial audit periodically required
of the board's unit of local government. The internal controls should be designed to prevent losses of
funds which might arise from fraud, error, misrepresentation by third parties, or imprudent actions by
the board or employees of the unit of local government.
(14) CONTINUING EDUCATION.--The investment policy shall provide for the continuing education of the
board members in matters relating to investments and the board's responsibilities.
(15) REPORTING.--The investment policy shall provide for appropriate annual or more frequent
reporting of investment activities. To that end, the board shall prepare periodic reports for submission
to the governing body of the unit of local government which shall include investments in the portfolio by
class or type, book value, income earned, and market value as of the report date. Such reports shall be
available to the public.
(16) FILING OF INVESTMENT POLlCY.--Upon adoption by the board, the investment policy shall be
promptly filed with the Department of Management Services and the plan's sponsor and consulting
actuary. The effective date of the investment policy, and any amendment thereto, shall be the 31 st
calendar day following the filing date with the plan sponsor.
(17) VALUATION OF ILLIQUID INVESTMENTS.--The investment policy shall provide for the valuation of
illiquid investments for which a generally recognized market is not available or for which there is no
consistent or generally accepted pricing mechanism. If those investments are utilized, the investment
policy must include the criteria set forth in s. 215.47(6), except that submission to the Investment
Advisory Council is not required. The investment policy shall require that, for each actuarial valuation,
the board must verify the determination of the fair market value for those investments and ascertain
that the determination complies with all applicable state and federal requirements. The investment
policy shall require that the board disclose to the Department of Management Services and the plan's
sponsor each such investment for which the fair market value is not provided.
History.--s. 2, ch. 2000-264.
Copyright <G> 1995-2008 The Florida Legislature. Privacy Statement. Cqntact Us
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Select Year: 2007 I Go I
The 2007 Florida Statutes
Title Xl\' Ch_Qpter 215 Y5fL'tL Entire Ch~(.?te~
TAXATION AND FINANCE FINANCIAL MATTERS: GENERAL PROVISIONS
215.47 Investments; authorized securities; loan of securities.--Subject to the limitations and
conditions of the State Constitution or of the trust agreement relating to a trust fund, moneys available
for investments under ss. 21j_,44-215.53 may be invested as follows:
(1) Without limitation in:
(a) Bonds, notes, or other obligations of the United States or those guaranteed by the United States or
for which the credit of the United States is pledged for the payment of the principal and interest or
dividends thereof.
(b) State bonds pledging the full faith and credit of the state and revenue bonds additionally secured by
the full faith and credit of the state.
(c) Bonds of the several counties or districts in the state containing a pledge of the full faith and credit
of the county or district involved.
(d) Bonds issued or administered by the State Board of Administration secured solely by a pledge of all
or part of the 2-cent constitutional fuel tax accruing under the provisions of s. 16, Art. IX of the State
Constitution of 1885, as amended, or of s. 9, Art. XII of the 1968 revised State Constitution.
(e) Bonds issued by the State Board of Education pursuant to ss. 18 and 19, Art. XII of the State
Constitution of 1885, as amended, or to s. 9, Art. XII of the 1968 revised State Constitution, as
amended.
(f) Bonds issued by the Florida Outdoor Recreational Development Council pursuant to s. 17, Art. IX of
the State Constitution of 1885, as amended.
(g) Bonds issued by the Florida State Improvement Commission, Florida Development Commission,
1 Division of Bond Finance of the 2Department of General Services, or Division of Bond Finance of the
State Board of Administration.
(h) Savings accounts in, or certificates of deposit of, any bank, savings bank, or savings and loan
association incorporated under the laws of this state or organized under the laws of the United States
doing business and situated in this state, the accounts of which are insured by the Federal Government
or an agency thereof and having a prime quality of the highest letter and numerical ratings as provided
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for by at least one nationally recognized statistical rating organization, provided such savings accounts
and certificates of deposit are secured in the manner prescribed in chapter 280.
(i) Notes, bonds, and other obligations of agencies of the United States.
(j) Commercial paper of prime quality of the highest letter and numerical rating as provided for by at
least one nationally recognized rating service.
(k) Time drafts or bills of exchange drawn on and accepted by a commercial bank, otherwise known as
banker's acceptances, which are accepted by a member bank of the Federal Reserve System and are of
prime quality of the highest letter and numerical ratings as provided for by at least one nationally
recognized statistical rating organization.
(I) Negotiable certificates of deposit issued by domestic or foreign financial institutions in United States
dollars of prime quality of the highest letter and numerical ratings as provided for by at least one
nationally recognized statistical rating organization.
(m) Short-term obligations not authorized elsewhere in this section to be purchased individually or in
pooled accounts or other collective investment funds, for the purpose of providing liquidity to any fund
or portfolio.
(n) Securities of, or other interests in, any open-end or closed-end management type investment
company or investment trust registered under the Investment Company Act of 1940,15 U.S.c. ss. 80a-1
et seq., as amended from time to time, provided that the portfolio of such investment company or
investment trust is limited to obligations of the United States Government or any agency or
instrumentality thereof and to repurchase agreements fully collateralized by such United States
Government obligations and provided that such investment company or investment trust takes delivery
of such collateral either directly or through an authorized custodian.
(2) With no more than 25 percent of any fund in:
(a) Bonds, notes, or obligations of any municipality or political subdivision or any agency or authority of
this state, if the obligations are rated investment grade by at least one nationally recognized statistical
rating organization.
(b) Notes secured by first mortgages, insured or guaranteed by the Federal Housing Administration or
the United States Department of Veterans Affairs.
(c) Mortgage securities which represent participation in or are collateralized by mortgage loans secured
by real property. Such securities must be issued by an agency of or enterprise sponsored by the United
States Government, including, but not limited to, the Government National Mortgage Association, the
Federal National Mortgage Association, and the Federal Home Loan Mortgage Corporation.
(d) Group annuity contracts of the pension investment type with insurers licensed to do business in this
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state which are rated investment grade by at least one nationally recognized rating service.
(e) Certain interests in real property and related personal property, including mortgages and related
instruments on commercial or industrial real property, with provisions for equity or income participation
or with provisions for convertibility to equity ownership; and interests in collective investment funds.
Associated expenditures for acquisition and operation of assets purchased under this provision or of
investments in private equity or other private investment partnerships or limited liability companies
shall be included as a part of the cost of the investment.
1. The title to real property acquired under this paragraph shall be vested in the name of the respective
fund.
2. For purposes of taxation of property owned by any fund, the provisions of s. 196,j9_~(2)(b) do not
apply.
3. Real property acquired under the provisions of this paragraph shall not be considered state lands or
public lands and property as defined in chapter 253, and the provisions of that chapter do not apply to
such real property.
(f) Fixed-income obligations not otherwise authorized by this section issued by foreign governments or
political subdivisions or agencies thereof, supranational agencies, foreign corporations, or foreign
commercial entities, if the obligations are rated investment grade by at least one nationally recognized
rating service.
(g) A portion of the funds available for investment pursuant to this subsection may be invested in rated
or unrated bonds, notes, or instruments backed by the full faith and credit of the government of Israel.
(h) Obligations of agencies of the government of the United States, provided such obligations have been
included in and authorized by the Florida Retirement System Defined Benefit Plan Investment Policy
Statement established in s. 215.475.
(i) United States dollar-denominated obligations issued by foreign governments, or political subdivisions
or agencies thereof, supranational agencies, foreign corporations, or foreign commercial entities.
(j) Asset-backed securities not otherwise authorized by this section.
(3) With no more than 80 percent of any fund in common stock, preferred stock, and interest-bearing
obligations of a corporation having an option to convert into common stock, provided:
(a) The corporation is organized under the laws of the United States, any state or organized territory of
the United States, or the District of Columbia; or
(b) The corporation is listed on anyone or more of the recognized national stock exchanges in the
United States and conforms with the periodic reporting requirements under the Securities Exchange Act
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of 1934.
(c) Not more than 75 percent of the fund may be in internally managed common stock.
The board shall not invest more than 10 percent of the equity assets of any fund in the common stock,
preferred stock, and interest-bearing obligations having an option to convert into common stock, of any
one issuing corporation; and the board shall not invest more than 3 percent of the equity assets of any
fund in such securities of anyone issuing corporation except to the extent a higher percentage of the
same issue is included in a nationally recognized market index, based on market values, at least as
broad as the Standard and Poor's Composite Index of 500 Companies, or except upon a specific finding
by the board that such higher percentage is in the best interest of the fund.
(4) With no more than 80 percent of any fund, in interest-bearing obligations with a fixed maturity of
any corporation or commercial entity within the United States.
(5) With no more than 25 percent of any fund in corporate obligations and securities of any kind of a
foreign corporation or a foreign commercial entity having its principal office located in any country
other than the United States of America or its possessions or territories, not including United States
dollar-denominated securities listed and traded on a United States exchange which are a part of the
ordinary investment strategy of the board.
(6) With no more than 5 percent of any fund to be invested as deemed appropriate by the board,
notwithstanding investment limitations otherwise expressed in this section. Prior to the board engaging
in any investment activity not otherwise authorized under ss. 215~44-215.53, excluding investments in
publicly traded securities, options, financial futures, or similar instruments, the board shall present to
the Investment Advisory Council a proposed plan for such investment. Said plan shall include, but not be
limited to, the expected benefits and potential risks of such activity; methods for monitoring and
measuring the performance of the investment; a complete description of the type, nature, extent and
purpose of the investment, including description of issuer, security in which investment is proposed to
be made, voting rights or lack thereof and control to be acquired, restrictions upon voting, transfer, and
other material rights of ownership, and the existence of any contracts, arrangements, understandings,
or relationships with any person or entity (naming the same) with respect to the proposed investment;
and assurances that sufficient investment expertise is available to the board to properly evaluate and
manage such activity. The Investment Advisory Council may obtain independent investment counsel to
provide expert advice with regard to such proposed investment activity by the board, and the board
shall defray such costs.
(7) For the purpose of determining the above investment limitations, the value of bonds shall be the par
value thereof, and the value of evidences of ownership and interest-bearing obligations having an option
to convert to ownership shall be the cost thereof.
(8) Investments in any securities authorized by this section may be under repurchase agreements or
reverse repurchase agreements.
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(9) Investments made by the State Board of Administration shall be designed to maximize the financial
return to the fund consistent with the risks incumbent in each investment and shall be designed to
preserve an appropriate diversification of the portfolio. The board shall discharge its duties with respect
to a plan solely in the interest of its participants and beneficiaries. The board in performing the above
investment duties shall comply with the fiduciary standards set forth in the Employee Retirement
Income Security Act of 1974 at 29 U.S.c. s. 1104(a)(1 )(A) through (C). In case of conflict with other
provisions of law authorizing investments, the investment and fiduciary standards set forth in this
subsection shall prevail.
(10) The board is authorized to buy and sell futures and options, provided the instruments for such
purpose are traded on a securities exchange or board of trade regulated by the Securities and Exchange
Commission or the Commodity Futures Trading Commission, unless the board by rule authorizes a
different market.
(11) The board is authorized to invest in domestic or foreign notional principal contracts.
(12) The State Board of Administration, consistent with sound investment policy, may pledge up to 2
percent of the assets of the Florida Retirement System Trust Fund as collateral for housing bonds issued
by the State of Florida or its political subdivisions under chapter 159, part V of chapter 420, or chapter
421 as a supplemental income program for the system. With regard to any collateral program, the State
Board of Administration is authorized to coordinate or retain other governmental entities of the State of
Florida or private entities to administer this program, as well as receive fees for the use of the
designated collateral.
(13) The State Board of Administration, consistent with sound investment policy, may invest the
earnings accrued and collected upon the investment of the minimum balance of funds required to be
maintained in the State Transportation Trust Fund pursuant to s. 339. U5.(6)(b). Such investment shall be
limited as provided in s. 28J3o 9607(7).
(14) With no more than 5 percent of any fund in alternative investments, as defined in s. 215.44(8)(c)
1.a., through participation in the vehicles defined in s. 215.11(8)(c)1.b.
(15) The State Board of Administration is authorized to invest in domestic and foreign group trusts.
(16) Securities or investments purchased or held under the provisions of this section may be loaned to
securities dealers or financial institutions, provided the loan is collateralized by cash or securities having
a market value of at least 100 percent of the market value of the securities loaned.
(17) The State Board of Administration may sell short any of the securities and investments authorized
under this section.
History.--s. 5, ch. 57-353; s. 1, ch. 61-462; s. 1, ch. 63-341; s. 1, ch. 63-446; s. 1, ch. 65-551; s. 2, ch.
67-354; ss. 22, 35, ch. 69-106; s. 18, ch. 69-216; s. 1, ch. 70-47; ss. 1, 2, ch. 73-183; s. 65, ch. 73-333;
s. 14, ch. 77-301; s. 2, ch. 79-262; s. 1, ch. 80-317; s. 123, ch. 81-259; s. 3, ch. 82-45; s. 35, ch. 83-3; s.
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16, ch. 83-215; s. 1, ch. 83-229; s. 2, ch. 83-270; s. 1, ch. 84-137; s. 1, ch. 84-166; s. 213, ch. 85-342; s.
54, ch. 86-152; s. 3, ch. 86-236; s. 5, ch. 88-171; s. 2, ch. 88-385; s. 2, ch. 89-299; s. 26, ch. 91-244; s.
150, ch. 92-279; s. 8, ch. 92-312; s. 55, ch. 92-326; s. 5, ch. 93-162; s. 45, ch. 93-187; s. 64, ch. 93-268;
s. 2, ch. 94-264; s. 5, ch. 94-332; s. 130, ch. 95-417; s. 5, ch. 96-177; s. 2, ch. 98-47; s. 5, ch. 2004-71;
s. 6, ch. 2005-253; s. 3, ch. 2006-205; s. 1, ch. 2007-98.
1 Note.--Transferred to the State Board of Administration by s. 2, ch. 92-279.
2Note.--Redesignated as the Department of Management Services by s. 4, ch. 92-279.
Copyright @ 1995-2008 The Florida Legislature. Privacy Statement. ContQ-,=-ill
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ARTICLE V. EMPLOYEE BENEFITS
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Any portion of any distribution which would be includable in gross income will be
an eligible rollover distribution if the distribution is made to an individual
retirement account described in Internal Revenue Code Section 408(a), to an
individual retirement annuity described in Internal Revenue Code Section 408(b)
or to a qualified defined contribution plan described in Internal Revenue Code
Section 401 (a) or 403(a) that agrees to separately account for amounts so
transferred, including separately accounting for the portion of such distribution
which is includable in gross income and the portion of such distribution which is
not so includable.
b. An "eligible retirement plan" is an individual retirement account described in
Code Section 408(a), an individual retirement annuity described in Internal
Revenue Code Section 408(b), an annuity plan described in Internal Revenue
Code Section 403(a), an eligible deferred compensation plan described in
Internal Revenue Code Section 457(b) which is maintained by an eligible
employer described in Internal Revenue Code Section 457(e)(1)(A) and which
agrees to separately account for amounts transferred into such plan from this
plan, an annuity contract described in Internal Revenue Code Section 403(b), or
a qualified trust described in Internal Revenue Code Section 401 (a), that accepts
the distributees eligible rollover distribution. This definition shall apply in the case
of an eligible rollover distribution to the surviving spouse.
c. A "distributee" includes an employee or former employee. In addition, the
employee's or former employee's surviving spouse and the employee's or former
employee's spouse or former spouse who is the alternate payee under a qualified
domestic relations order, as defined in Internal Revenue Code Section 414(p),
are distributees with regard to the interest of the spouse or former spouse.
d. A "direct rollover" is a payment by the plan to the eligible retirement plan
specified by the distributee.
(Ord. No. 5890-95, S 2, 9-7-95; Ord. No. 6563-00, S 5,6-15-00; Ord. No. 6826-01, S 2, 9-6-01; Ord. No.
7033-02, S 3, 9-19-02)
Sec. 2.399. Establishment and operation of pension fund.
(a) Establishment of fund.
(1) As part of the plan, there is hereby established the pension fund, into which shall be
deposited all of the contributions and assets whatsoever attributable to the plan.
(2) The pension fund shall be held in trust by the trustees and the trustees shall be
vested with full legal title to the pension fund; provided, further, that the actual custody
and supervision of the pension fund shall be vested in the trustees.
(3) The assets of the pension fund may be deposited by the trustees with an official
designated by the employer, acting in a ministerial capacity only, who shall be liable in
the same manner and to the same extent as he is liable for the safekeeping of funds for
the employer. However, any assets so deposited with the designated official of the
employer shall be kept in a separate fund or clearly identified as assets of the pension
fund. In lieu thereof, the trustees may deposit the funds of the pension fund in a qualified
public depository as defined in F.S. S 280.02, which depository with regard to such
assets shall conform to and be bound by all of the provisions of F.S. Ch. 280.
(b) Records. All assets attributable to the plan may be commingled in the pension fund,
provided that accurate records are maintained at all times reflecting the financial composition of
the pension fund, including accurate current accounts and entries as regards the following:
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(1) Current amounts of accumulated contributions of employees on an individual
account basis;
(2) Receipts and disbursements;
(3) Benefit payments;
(4) All interest, dividends and gains (or losses); and
(5) Such other entries as may be properly required so as to reflect a clear and complete
financial report of the pension fund.
(c) Powers and duties oftrustees. The trustees may:
(1) Invest and reinvest the assets of the pension fund in annuity (including group
annuity contracts of the pension investment type) and life insurance contracts of legal
reserve life insurance companies licensed to do business in the State of Florida, in
amounts sufficient to provide, in whole or in part, benefits to which all of the participants
shall be or become entitled under the provisions of the plan, and pay the initial and
subsequent premiums thereon.
(2) Invest and reinvest the assets of the pension fund in:
a. Time deposits, savings accounts, money market accounts, funds, certificates
of deposits, or money market certificates of a national bank, a state bank, or a
savings, building and loan association insured by the Federal Deposit Insurance
Corporation or collateralized by United States Government of Agency securities.
b. Negotiable direct obligations of, or obligations the principal and interest of
which are unconditionally guaranteed by, and which carry the full faith and credit
of the United States Government and its agencies. Investments in this category
would include but not be limited to the following: United States Treasury Bills,
Notes and Bonds, and securities issued by the Small Business Administration,
Government National Mortgage Association (Ginnie Mae), Veterans
Administration, and Federal Housing Administration.
c. Fully collateralized United States Agency obligations which carry an implied
guarantee and the implied full faith and credit of the United States government.
Investments in this category would include but not be limited to the following:
obligations of the Federal Home Loan Banks System (FHLB) or its distinct banks
and Financing Corporation (FICO).
d. Other United States Agency obligations which carry an implied guarantee
and the implied full faith and credit of the United States Government. Investments
in this category would include but not be limited to the following: obligations of
the Federal Farm Credit Bank, Federal National Mortgage Association (Fannie
Mae), Federal Home Loan Mortgage Corporation (Freddie Mac), Student Loan
Marketing Association (Sallie Mae), Financial Assistance Corporation and
Federal Agriculture Mortgage Corporation (Farmer Mac).
e. Collateralized Mortgage Obligations (CMO) and/or Real Estate Mortgage
Investment Conduits (REMIC), rated investment grade or equivalent by Standard
and Poor's, Moody's Fitch, or other recognized national rating agencies which
are backed by securities otherwise authorized in this ordinance and which are
guaranteed as to the timely payment of principal and interest by the U.S.
Government or its agencies.
f. County bonds containing a pledge of the full faith and credit of the county
involved, bonds of the Florida development commission, or of any other state
agency, which have been approved as to legal and fiscal sufficiency by the state
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board of administration.
g. Obligations of any municipal authority issued pursuant to the laws of this
state; provided, however, that for each of the five years next preceding the date
of investment, the income of such authority available for fixed charges shall have
been not less than one and one-half times its average annual fixed charge
requirements over the life of its obligations.
h. Common stocks, preferred stocks and bonds and other evidence of
indebtedness issued or guaranteed by a corporation organized under the laws of
the United States, any state, or organized territory of the United States or the
District of Columbia or any non-U.S. corporation, provided:
1. The corporation is listed on anyone or more of the recognized
national or international stock exchanges and/or in the case of bonds and
mortgage backed securities, traded among dealers and investors in a
recognized and agreed upon conventional format;
2. All corporate bonds shall carry an investment grade rating as
established either by Standard & Poor's, Moody's, Fitch or other
recognized rating agencies; and
3. Not more than five percent of the assets of the pension fund shall be
invested in the common stock or capital stock of anyone issuing
company nor shall the aggregate investment anyone issuing company
exceed five percent of the outstanding capital stock of that company; nor
shall the non-U.S. investments exceed ten percent of the pension fund's
assets at cost; nor shall the aggregate of the investments under this
subparagraph at cost exceed sixty-five percent of the pension fund's
assets at cost.
(i) Notwithstanding any limitations to the contrary contained in
this section, trustees shall have the authority to diversify the fund
by investing pension assets to the full extent permitted by Florida
law under F.S. ~~ 112.661, 175.071, 185.06, and 215.47.
(ii) Notwithstanding any provision to the contrary, direct
investments, including real estate investments, in businesses or
property located within the City of Clearwater shall be prohibited.
(3) Cause any pension fund investment in securities to be registered in or transferred
into its name as trustee or into the name of such nominee as it may direct, or it may
retain them unregistered and in form permitting transferability, but the books and records
shall at all times show that all investments are part of the pension fund.
(4) Vote upon any stocks, bonds, or securities of any corporation, association, or trust
and give general or specific proxies or powers of attorney with or without power of
substitution; participate in mergers, reorganizations, recapitalizations, consolidations,
and similar transactions with respect to such securities; deposit such stock or other
securities in any voting trust or any protective or like committee with the trustees or with
depositories designated thereby; amortize or fail to amortize any part or all of the
premium or discount resulting from the acquisition or disposition of assets; and generally
exercise any of the powers of an owner with respect to stocks, bonds, or other
investments comprising the pension fund which it may deem to be to the best interest of
the pension fund to exercise.
(5) Retain in cash and keep unproductive of income such amount of the pension fund
as it may deem advisable, having regard for the cash requirements of the plan.
(6) Retain the services of a custodian bank, an investment advisor registered under
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Investment Advisors Act of 1940 or otherwise exempt from such required registration, an
insurance company, trust company or a combination of these, for the purposes of
investment decisions and management. Such investment manager shall have discretion,
subject to any guidelines as prescribed by the trustees, in the investment of all pension
fund assets.
(d) Prudent man rule. The committee and the trustees of this plan and all other persons
occupying a fiduciary position under this plan in the administration of this plan and in investing
and reinvesting assets of the pension fund shall utilize and be governed by the prudent man
rule.
(e) Receipt of information. Where any action which the committee and/or the trustees are
required to take or any duty or function which they are required to perform either under the
terms herein or under the general law applicable to the committee and/or the trustees under this
plan can reasonably be taken or performed only after receipt from a participant, the employer, or
any other entity, of specific information, certification; direction or instructions, the committee
and/or the trustees shall be free of liability in failing to take such action or perform such duty or
function until such information, certification, direction or instruction has been received by it.
(f) Overpayments and underpayments. Any overpayments or underpayments from the
pension fund to a participant or beneficiary caused by errors of computation shall be adjusted
with interest at a rate per annum approved by the trustees. Overpayment shall be charged
against payments next succeeding the correction. Underpayments shall be made up from the
pension fund.
(g) Appointment of agents. Any of the foregoing powers and functions reposed in the trustees
may be performed or carried out by the trustees through duly authorized agents, provided that
the trustees at all times maintain continuous supervision over the acts of any such agent;
provided further, that legal title to the pension fund shall always remain in the trustees.
(h) Independent audit. An independent audit shall be performed annually by a certified public
accountant for the most recent fiscal year of the employer. Such report shall reflect items
normally included in a certified audit.
(i) Expenses of administration.
(1) a. The assets of the pension fund may be used to pay all expenses of the
administration of the plan and the pension fund, including the compensation of any
investment manager, the expense incurred by the trustees or the committee in
discharging its duties, all income or other taxes of any kind whatsoever that may be
levied or assessed under existing or future laws upon or in respect of the pension fund,
and any interest that may be payable on money borrowed by the trustees for the
purpose of the pension fund, as well as any settlements or judgments entered with
respect to the plan.
b. The employer may pay the expenses of the plan and the pension fund. Any
such payment by the employer shall not be deemed a contribution to this plan.
(2) Notwithstanding anything contained herein to the contrary, no excise tax or other
liability imposed upon the trustees or any other person for failure to comply with the
provisions of any federal law shall be subject to payment or reimbursement from the
assets of the pension fund.
(3) No individual trustee or committee member shall be entitled to compensation from
the trust (except for the reimbursement of expenses properly and actually incurred).
(Ord. No. 5890-95, ~ 2,9-7-95; Ord. No. 6217-97, ~ 1,12-4-97; Ord. No. 7466-05, ~ 1, 8-4-05/3-14-06)
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