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INVESTMENT ADVISER AGREEMENT I I ARK ASSET MANAGEMENT CO., INC. One New York Plaza New York, New York 10004 This will confirm the agreement between Ark Asset Management Co., Inc. (the "Manager") and the undersigned client (the "Client") whereby the Manager will act as investment adviser with respect to certain of the Client's assets designated as the City of Clearwater Florida Employee Pension Fund. 1. APPOINTMENT OF THE MANAGER. (a) The Client hereby appoints the Manager and the Manager hereby accepts such appointment, with respect to the Account (as defined in paragraph (b) of this Section 1, below). The Manager shall manage the investment and reinvestment of the assets in the Account, generally in accordance with the terms and conditions of this Agreement. (b) The term "Account" shall mean only those assets of the Client designated by the Client and held at Sun Trust. The Account shall consist of such assets which, from time to time, the Client places under the supervision ofthe Manager, and which are acceptable to the Manager, and such additional assets which shall result from transactions in the Account. The Client shall have the right to make withdrawals from the Account after giving adequate written notice to the Manager in light of normal settlement procedures. 2. DISCRETIONARY AUTHORITY. The Client hereby appoints the Manager to act as the Client's agent and attorney-in-fact with respect to the investment and reinvestment of assets in the Account with full power and authority (subject to Section 7 hereof) to direct any custodian of the assets of the Account to purchase, sell or exchange any stocks, bonds, options or other securities or such other assets which are acceptable to the Manager (individually, "Security" and collectively, "Securities") and to issue directly to a broker or dealer such orders for the purchase, sale or exchange of Securities or other property, as the Manager may deem appropriate and without prior consultation with the client. 3. CLIENT REPRESENTATIONS. The Client represents and warrants to the Manager that: (a) the assets which constitute the Account, and any custodial agreements with respect thereto have been provided to the Manager~ (b) if the Client is an entity, the person( s) executing this Agreement on behalf of the Client has full power and authority to execute this Agreement on behalf of the Client and (g the Client's execution, delivery and performance of this Agreement will be binding upon the Client in accordance with the terms hereof, and will not violate any obligations by which the Client is bound, whether arising by contract, operation of law or otherwise. 4. REPRESENTATIONS OF INVESTMENT MANAGER. The Manager represents and warrants to the Client that it is registered as an investment adviser under the Investment Advisers Act of 1940. 0.... r' -f: \.:>'). ..;t";',. '1../ '.. U ""~ .....1., I I 5. ALLOCATION OF BROKERAGE. The Manager may select brokers or dealers to execute orders for the purchase, sale or exchange of Securities for the Account, so long as the Manager uses its best efforts in seeking a combination of best price and execution. Moreover, the Manager is expressly authorized to consider the fact that a broker or dealer has furnished statistical research or other information or services which enhance the Manager's investment research and portfolio management capability generally. Notwithstanding any other provision hereof, the Manager, where possible, may negotiate with and assign to a broker a commission which may exceed the commission charged by another broker, where such commission results from the Manager reasonably taking into account the quality and reliability of the brokerage and research services provided by the broker, viewed in terms of either the particular transactions or the Manager's overall responsibilities with respect to the accounts as to which it exercises investment discretion. 6. PROCEDURES WITH RESPECT TO SECURITIES. The Manager shall not act as custodian for the Account or take or have possession of any assets thereof Instructions of the Manager to the Client (or, if so directed by the Client, to any custodian of the Account) shall be in writing, or by electronic media recognized by established industry practice, or shall be made orally and confirmed in writing as soon thereafter as may be practicable. The Manager shall instruct all brokers executing orders on behalf of the Account to forward to the Client (and/or, if so directed by the Client, to any custodian for the Account) copies of all brokerage confirmations promptly after execution of all transactions. 7. INVESTMENT OBJECfIVES. The Client represents and warrants that a true and complete statement of the investment objectives of the Account is attached hereto as Exhibit A. The Manager shall be responsible only for the management of the Account in a manner generally consistent with Exhibit A, or as Exhibit A may be subsequently revised or replaced in writing by the Client, provided, however, that the Client shall not instruct the Manager as to specific Securities to be purchased, sold or exchanged. All Securities acquired for the Account and positions reflected in any periodic report furnished to the Client will be deemed to be in compliance with the investment objectives set forth on Exhibit A unless written notice from the Client to the contrary is received by the Manager within 30 days of the first notice to the Client of any such acquisition or position. 8. REPORTS TO BE FURNISHED BY THE MANAGER. Following the close of each fiscal quarter, a summary valuation of the portfolio will be submitted to the Client and a representative of the Manager will be available for personal consultation with the Client or individuals designated by the Client. The scheduling of these meetings will be at the convenience of both parties. 9. SERVICES TO OTHER CLIENTS. It is understood that the Manager, its affiliates, officers, directors and/or employees perform research and investment advisory services for clients other than the Account and may purchase and sell Securities for their own accounts. The Client agrees that the Manager may give advice and take action in the performance of its duties to other clients which may differ from advice given, or the timing or nature of action taken, with respect to the Account. Nothing in this Agreement shall be deemed to prevent the Manager or any of its affiliates, officers, directors or employees from engaging in such activities for any other client or for their own accounts, or to impose upon the Manager any obligation to purchase or sell or to recommend for purchase or sale for the Account any Security or other property which the Manager or its affiliates, officers, directors or employees may purchase or sell for their own accounts or for the account of any other client; provided, however, that no such transaction shall violate any applicable law. By reason of its research and investment advisory activities, the Manager, its affiliates, officers, directors and employees may from time to time acquire information about corporations or other entities and their Securities. The Client recognizes that the Manager may not always be free to divulge such information, or to act upon it, and the Manager shall be under no obligation to do so. -2- I I 10. LIABILITY. The Manager shall carry out its duties 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 like character and with like aims. The client understands that.risk is inherent in any investment process and that the Manager cannot guarantee profitability. 11. CONFIDENTIAL RELA TIONSHlP. All information and recommendations furnished by the Manager to the Client shall be regarded as confidential and for use only by the Client or such persons as the Client may designate, and only in connection with the Account, except for all documents covered by Florida Public Records Law chapter 119. The Manager shall regard as confidential all information furnished to it hereunder concerning the affairs of the Account and the Client. 12. PROXIES. The Manager will not be required to take any action or render any advice with respect to the voting of proxies solicited by or with respect to the issuers of securities in which. the Client's assets may be invested from time to time. However, the Manager may, at its discretion, advise the Wldersigned and/or the custodian of the manner in which to vote any particular proxy. In the absence of any contrary decision by the undersigned or contrary instruction by them to the Custodian, the undersigned or Custodian shall vote such proxy in the manner advised by the Manager. The undersigned shall instruct the Custodian of the Manager's discretionary authority as provided herein. 13. FEES. The compensation of the Manager for its services hereunder shall be calculated quarterly and paid in accordance with the Schedule of Fees attached hereto as Exhibit B. 14. TERMINATION. This Agreement shall continue in effect until terminated by either party by giving to the other party thirty days' prior written notice of such termination. Fees owed hereunder will be pro..rated to the date of termination as specified in notice of termination. No assignment, as defined in the Investment Advisers Act of 1940, of this Agreement, shall be made by the Manager without the consent of the Client. This Agreement shall be effective for a period of five (5) years commencing on the effective date of this Agreement. 15. NOTICES. All notices specified herein shall be deemed duly given if transmitted by first class mail to the Manager at the address set forth above~ and if to the Client at the address shown below~ or to such other addresses as shall be specified in each case, in a notice duly given. 16. GOVERNING LAW. Unless unenforceable due to federal or state law, any controversy arising out of or relating to the Client's account, or to transactions with the Manager for the Client or this Agreement or the breach thereof, shall be settled by a court of competent jurisdiction in Pinellas County, Florida. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida, without regard to the conflicts of law principles thereof, and the federal securities laws. 17. RECEIPT OF DISCWSURE DOCUMENT. The Client acknowledges that it received a copy of Ark Asset Management Co., Inc.'s disclosure document under Rule 204-3 of the Investment Managers Act of 1940 at least 48 hours prior to entering into this Agreement. -3- I I If the foregoing is in accordance with your understanding, please sign and return the enclosed copy of this Agreement. This Agreement shall become a binding agreement between us as of the date accepted in writing by the Manager. Countersigned: CITY OF CLEARWATER, FLORIDA I!it-~ Rita Garvey . - Mayor-Commissioner By: Eli~~~ City anager Approved as to form and legal sufficiency: Attest: ~~ Carassas c..-- Assistant City Attorney - ~ 2:. /1- Cyn . a E...a~udeaij City Clerk / - . QLO~ - - Cfdr/9t ACCEPTED: By: Dated: S. Jay Mermelstein Chief Operating Officer -4- I I EXHIBIT A 1. Stocks and bonds are restricted to corporations listed on anyone or more of the recognized national exchanges (this criterion is satisfied by OTe stocks listed by NASDAQ); 2. Not more than 9% of Fund asset value (at cost) may be invested in the stock of anyone company; ~. The Fund shall not own more than .5% of the outstanding stock of any single company. I ~ EXHmIT B SCHEDULE OF FEES Ark Asset Management Co., Inc. 's compensation for this service is at the annual rate of: .50 of 1 % on all assets The fee is computed and billed at the end of each quarter by applying one-fourth of the annual rate to the aggregate market value at the end of that quarter.