INVESTMENT ADVISORY AGREEMENT (6)
INVESTMENT ADVISORY AGREEMENT BETWEEN
THE BOARD OF TRUSTEES OF THE CITY OF CLEARWATER EMPLOYEES'
PENSION FUND AND ALETHEIA RESEARCH AND MANAGEMENT, INC
...........
THIS AGREEMENT, is made and entered into this ~ day of
T~TY
2007, by and between the BOARD OF TRUSTEES OF
OF CLEARWATER EMPLOYEES' PENSION FUND, an autonomous
governmental body, hereinafter referred to as the "BOARD" and
ALETHEIA RESEARCH AND MANAGEMENT, INC, hereinafter referred to as
the "INVESTMENT ADVISOR":
WITNESSETH:
WHEREAS, Florida Statutes Chapter 112 vests the BOARD with
full authority, power and responsibility to manage and administer
the Pension Fund; and
WHEREAS, the INVESTMENT ADVISOR has expressed an interest in
serving the BOARD to manage the large cap value component of the
BOARD'S portfolio, hereinafter referred to as the "Account";
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties
agree as follows:
1. APPOINTMENT OF LARGE CAP VALUE INVESTMENT ADVISOR. The
BOARD does hereby appoint the INVESTMENT ADVISOR as the manager
for the large cap value portfolio of the Pension Fund, and any
additions thereto, including proceeds of sales, dividends and
interest. The INVESTMENT ADVISOR hereby accepts such appointment
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and agrees to manage the investment and reinvestment of such
assets of the Pension Fund.
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TERM.
This Agreement shall commence upon the date set
forth above and shall terminate as provided herein.
3. DISCRETION. The INVESTMENT ADVISOR hereby acknowledges
and agrees that it has been provided with the statement of
investment policy duly adopted by the BOARD in accordance with
its authority under state law. Consistent with that policy the
INVESTMENT ADVISOR shall, in the performance of its duties, place
orders for the purchase, sale, or exchange of large cap value
securities on behalf of the Pension Fund whenever the INVESTMENT
ADVISOR deems it to be in the best interest of the Pension Fund
to do so. The INVESTMENT ADVISOR shall diligently execute such
transactions in a method and manner and at such times as to
procure the best realized price.
The INVESTMENT ADVISOR
recognizes its continuing duty to secure best execution on behalf
of the Pension Fund, the INVESTMENT ADVISOR agrees to utilize the
recapture agents in all transactions where it is reasonable to do
so. In selecting brokers or dealers for execution, the
INVESTMENT ADVISOR will consider a number of factors including,
but not limited to, price (including commissions or mark-up), the
size and difficulty of the order, the reliability, integrity and
financial soundness of the broker or dealer, the general
operation or execution capabilities or the broker or dealer, the
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broker or dealer's expertise in particular markets and the
research services provided by the broker or dealer. The
INVESTMENT ADVISOR may pay a broker or dealer a commission in
excess of that which another broker or dealer might have charged
for executing a transaction.
If the
INVESTMENT ADVISOR
determines, in good faith, that the commission is reasonable in
relation to the value of the brokerage and/or research services
provided by such broker or dealer. Research services obtained by
brokers or dealers may be used in servicing all accounts managed
by the INVESTMENT ADVISOR and its affiliates.
4. INVESTMENT OBJECTIVE AND POLICY. The primary objective
of the large cap value portfolio is to seek as high a level of
total return that 1S consistent with prudent risk through
investments 1n a diversified portfolio of large cap value
securities and cash equivalents. Eligible cash equivalents would
generally include the following categories with maturities of
less than one year:
a. Any United States Government security which is
guaranteed by the full faith and credit of the United
States;
b. Any United States Government security which is an
obligation of, and issued by,
instrumentalities, including
Mortgage Association;
any of its agencies or
the
Federal
National
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c. Certificates of depositor money market certificates
issued and guaranteed by any commercial bank, trust
company or savings and loan association having its
principal place of business in the City;
d. Commercial paper rated A-lor P-l by a nationally
recognized rating service;
e. Bankers Acceptances of United States banks rated AAA by
a nationally recognized rating service;
f. Any other cash or equivalent security authorized under
the laws governing the Fund.
The INVESTMENT ADVISOR agrees to observe the Code of the
City of Clearwater and the investment policy as set forth by the
BOARD. In the event that the INVESTMENT ADVISOR should purchase
any security in violation of the policy of the BOARD, and as a
resul t of any sale thereof realizes a loss as measured by the
ini tial purchase price of the security, the INVESTMENT ADVISOR
shall make the Board whole for any such losses.
5.
COMPENSATION AND EXPENSES.
The BOARD shall compensate
from the Pension Fund the INVESTMENT ADVISOR for all services
actually, timely and faithfully rendered hereunder, for the
period of this Agreement to be billed and paid within 30 days of
receipt of invoice. Said fee shall be computed according to the
attached schedule A.
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A statement showing the amount of the fee payable shall be
submitted to the BOARD by the INVESTMENT ADVISOR promptly after
the start of each quarterly period. It is understood that the
INVESTMENT ADVISOR shall be responsible and liable for all
expenses incurred by it in performing its obligations hereunder,
except that any brokerage commissions, stock transfers and other
similar charges which may become due on account of transactions
for the account shall be payable from the account hereunder,
subject to the availability of funds.
6.
DELIVERY OF SECURITIES.
The INVESTMENT ADVISOR shall
direct that all securities purchased for the Pension Fund be
registered in the name of, and be delivered to, the Pension Fund
and/or the Trustee, custodian or its nominee.
7.
REPORTS.
The INVESTMENT ADVISOR shall provide the
BOARD with a monthly statement of the status of the Account. In
addition, the INVESTMENT ADVISOR shall provide quarterly written
reviews of the performance of the Account, presented via
telephone, teleconference or in person to the Board, and such
other periodic reports or information as the BOARD may reasonably
request. All performance reports reported to the Fund shall be
gross of all fees and transaction costs and shall be time
weighted. The written quarterly report shall outline the overall
position of the portfolio with a complete listing of each
security showing the cost, market value and yield at the close of
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the reporting period. The report shall also include all
portfolio transactions during the preceding quarter. The report
shall also include a listing of those transactions in which the
Commission Recapture Program was utilized and those in which it
was not and an explanation therefor. All monthly reports shall
include a listing of all trades, broker utilized and the cost of
the trade.
8.
NON-DISCRIMINATION.
The INVESTMENT ADVISOR shall not
discriminate in its employment practices during the term of this
Agreement on the basis on race, creed, color, sex, age, physical
handicap, marital status, or national origin.
9.
PROHIBITION AGAINST CONTINGENT FEES.
The INVESTMENT
ADVISOR warrants that it has not employed or retained any company
or person, other than a bona fide employee working solely for the
INVESTMENT ADVISOR, to solicit or secure this Agreement and that
it has not paid or agreed to pay any person, company,
corporation, individual, or firm other than a bona fide employee
working solely for the INVESTMENT ADVISOR, any fee, commission,
percentage, gift, or other consideration contingent upon or
resulting from the award or making of this Agreement.
10. DISCLOSURE.
The INVESTMENT ADVISOR agrees to disclose,
in writing to the BOARD within 10 business days, if the
INVESTMENT ADVISOR becomes the subject of an investigation by the
Securities and Exchange Commission for alleged breach of federal
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securi ties laws; any 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
INVESTMENT ADVISOR is named as the defendant in any civil action
alleging fraud, negligence or breach of fiduciary responsibility.
11 . GENERAL .
(a) The INVESTMENT ADVISOR warrants that it is registered
as an investment advisor under the Investment Advisers Act of
1940, and that it will maintain such registration during the term
of this Agreement. The INVESTMENT ADVISOR acknowledges that it
is a fiduciary with respect to the management of the assets of
the Fund and that it is subject to and shall be governed by the
"prudent man rule," and the "prudent investor rule" as those
terms are defined and interpreted under the provisions of the
Employee Retirement Income Security Act and under the provisions
of the law of Florida.
(b) This Agreement may be terminated by either the
INVESTMENT ADVISOR or the BOARD on thirty (30) days' written
notice, with or without cause.
(c) The INVESTMENT ADVISOR 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
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Pension Fund. The Agreement shall be performed in
wi th all applicable federal, state, and local
accordance
laws and
administrati ve regulations and shall in its interpretation be
governed by the laws of the State of Florida.
(d) In any action to enforce the provisions of this
Agreement venue shall be in Pinellas County, Florida, and should
any action be necessary to enforce the terms of this Agreement,
the prevailing party shall be entitled to any costs and legal
fees.
(e) The BOARD agrees to furnish the INVESTMENT ADVISOR with
all documents, authorizations and powers as might be reasonably
required by the INVESTMENT ADVISOR to carry out its obligations
according to the terms of this Agreement.
(f) The INVESTMENT ADVISOR shall on an annual basis provide
the BOARD with Securities and Exchange Commission form ADV and a
copy of any annual company report.
(g) The INVESTMENT ADVISOR shall for the term of this
Agreement maintain an errors and omissions insurance policy in
the amount of one million dollars.
The INVESTMENT ADVISOR shall
furnish the BOARD with proof of its errors and omissions
insurance. The Board will maintain a fidelity bond satisfying the
requirements of Section 412 of ERISA and shall include the
Investment Advisor as its agent in its coverage.
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(h) All proxy materials relating to any security held by
the INVESTMENT ADVISOR shall be voted in accordance with the
proxy voting policy adopted by the BOARD, receipt of which is
acknowledged by the INVESTMENT ADVISOR.
(i) The INVESTMENT ADVISOR must give notice to the Board of
any portfolio manager or other key personnel assigned by the
INVESTMENT ADVISOR to perform under this Agreement who is
subsequently removed.
(j) In the event of a dispute between the parties, the
parties may by mutual consent agree to submit the matter to
binding arbitration.
(k) This Agreement constitutes the entire understanding of
the BOARD and the INVESTMENT ADVISOR and may be amended only by
written instrument executed by both parties.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above written.
Attested:
BOARD OF TRUSTEES OF THE EMPLOYEES'
PENSION PLAN OF THE CITY OF
CLEARWATER, FLORIDA
By:
:j~K~
E\.r:.a'nk V. Hibbard '
Chairperson
form:
Attest:
~~[
Goud$au
ALETHEIA
INC
By:
uthorized Officer
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EXHIBIT A
City of Clearwater Employees' Pension Fund Fee Schedule
The fees payable to ALETHEIA RESEARCH AND MANAGEMENT, INC for services
under this agreement shall be calculated as follows:
Annual Fee Schedule:
Timing of fee calculation
and payment:
Source of market values:
Billing Methodology:
Exceptions:
0-$10 Million
$10 Million - $25 Million
$25 Million - $50 Million
$50 Million - $100 Million
$100 Million and up
1%
.75%
.65%
.55%
.50%
Fees shall be calculated quarterly in arrears and payable to
ALETHEIA RESEARCH AND MANAGEMENT, INC upon
receipt.
The market values used to determine fees shall be those
calculated by ALETHEIA RESEARCH AND
MANAGEMENT, INC.
ALETHEIA RESEARCH AND MANAGEMENT, INC shall
average the month-end market values in the calendar quarter
to which fees apply. The annual fee schedule, as outlined
above, shall be applied to the average market value. Cashflows
during the quarter will not be prorated for purposes of the fee
calculation.
Initial Billing Period: For the initial billing period, the fee shall be prorated based on the
number of days the assets are managed divided by a 365-day year.
Final Billing Period: For the final billing period, the fee shall be prorated based on the
number of days the assets are managed divided by the number of
days in a year.
\lIp\0030014\WAM fixed income contract
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