HomeMy WebLinkAboutAGMT - PFM Asset Management INVESTMENT ADVISORY
SERVICES AGREEMENT
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City of Seal Beach
211 - 8th Street
Seal Beach, CA 90740
PFM Asset Management, L.L.0
50 California Street, Suite 2300
San Francisco, CA 94111
(415) 982-5544
This Investment Advisory Services Agreement ("Agreement") is made as May 14, 2012
("Effective Date"), by and between PFM Asset Management, L.L.C. ("Advisor"), a
Delaware limited liability company, and the City of Seal Beach ("City"), a California
charter city, (collectively, "the Parties").
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RECITALS
A. City has funds available for investment purposes (the "Initial Funds") for
which it intends to conduct an investment program.
B. City desires that its existing investment policy be reviewed and to the
extent desirable, updated, and desires that an investment strategy for the Managed
Funds be developed and implemented.
C City desires to avail itself of the experience, sources of information,
advice, assistance, and facilities available to the Advisor; to have the Advisor undertake
certain duties and responsibilities; and to perform certain services as investment advisor
on behalf of the City, as provided herein.
D Advisor is willing to provide such services on the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the Parties' performance of the
promises, covenants, and conditions stated herein, the Parties hereto agree as follows:
AGREEMENT
1.0 Scope of Services
1.1. Advisor shall provide the following services ("Services").
1.1.1. Review of Investment Policy. The City hereby engages the Advisor
to review the City's existing investment policy and to provide recommendations to the
City regarding updating and revising such policy.
1.1.2. Development of Investment Strategy. The City hereby engages the
Advisor to review the City's goals, objectives, cash flow projections, and liquidity needs.
On the basis of this review and discussions with City personnel, the Advisor will present
recommendations for a strategy for the investment of the Managed Funds.
1.1.3. Supervision of Managed Funds. The City hereby engages the
Advisor to serve as investment advisor under the terms of this Agreement with respect
to the Initial Funds and such other funds as the City may from time to time assign by
written notice to the Advisor (collectively the "Managed Funds"), and the Advisor
accepts such engagement. In connection therewith, the Advisor will provide investment
research and supervision of the City's Managed Funds investments and conduct a
continuous program of investment, evaluation and, when appropriate, sale and
reinvestment of the City's Managed Funds assets. The Advisor shall continuously
monitor investment opportunities and evaluate investments of the City's Managed
Funds. The Advisor shall furnish the City with statistical information and reports with
respect to investments of the Managed Funds. The Advisor shall place all orders for the
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purchase, sale, loan or exchange of portfolio securities for the City's account with
brokers or dealers recommended by the Advisor and/or the City, and to that end the
Advisor is authorized as agent of the City to give instructions to the depository
designated by the City as its custodian as to deliveries of securities and payments of
cash for the account of the City. In connection with the selection of such brokers and
dealers and the placing of such orders, the Advisor is directed to seek for the City the
most favorable execution and price, the determination of which may take into account,
subject to any applicable laws, rules and regulations, whether statistical, research and
other information or services have been or will be furnished to the Advisor by such
brokers and dealers. The depository designated by the City (the "Custodian") shall
have custody of cash, assets, and securities of the City. The Advisor shall not take
possession of or act as custodian for the cash, securities, or other assets in the
Managed Funds and shall have no responsibility in connection therewith. Authorized
investments shall include only those investments which are currently authorized by the
state investment statutes and the bond covenants and as supplemented by such other
written instructions as may from time to time be provided by the City to the Advisor. The
Advisor shall be entitled to rely upon the City's written advice with respect to anticipated
drawdowns of Managed Funds. The Advisor will observe the instructions of the City
with respect to broker/dealers who are approved to execute transactions involving the
City's Managed Funds and in the absence of such instructions will engage
broker/dealers who the Advisor reasonably believes to be reputable, qualified, and
financially sound.
1.2. The Advisor shall maintain appropriate records of all its activities
hereunder. The Advisor shall provide the City with a monthly statement showing
deposits, withdrawals, purchases and sales (or maturities) of investments, earnings
received, and the value of assets held on the last business day of the month. The
statement shall be in the format and manner that is mutually agreed upon by the
Advisor and the City.
1.3. Advisor shall perform all Services under this Agreement in accordance
with the standard of care generally exercised by like professionals under similar
circumstances and in a manner reasonably satisfactory to City. The Advisor hereby
represents it is a registered investment advisor under the Investment Advisers Act of
1940. The Advisor shall immediately notify the City if at any time during the term of this
Agreement it is not so registered or if its registration is suspended. The Advisor agrees
to perform its duties and responsibilities under this Agreement with reasonable care.
The federal securities laws impose penalties under certain circumstances on persons
who are required to act in good faith. Nothing herein shall in any way constitute a
waiver or limitation of any rights which the City or the Advisor may have under any
federal securities laws. The City hereby authorizes the Advisor to sign I.R.S. Form W-9
on behalf of the City and to deliver such form to broker-dealers or others from time to
time as required in connection with securities transactions pursuant to this Agreement.
1.4. In performing this Agreement, Advisor shall comply with all applicable
provisions of federal, state, and local law.
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2.0 The Advisor's Brochure
The Advisor warrants that it has delivered to the City the Advisor's current
Securities and Exchange Commission Form ADV, Part 2A (brochure) and Part 2B
(brochure supplement). The City acknowledges receipt of such brochure and brochure
supplement prior to the execution of this Agreement.
3.0 Advisor's Other Clients
The City understands that the Advisor performs investment advisory services for
various other clients which may include investment companies, commingled trust funds,
and/or individual portfolios. The City agrees that the Advisor, in the exercise of its
professional judgment, may give advice or take action with respect to any of its other
clients which may differ from advice given or the timing or nature of action taken with
respect to the City's Managed Funds accounts. The Advisor shall not have any
obligation to purchase, sell, or exchange any security for the City's Managed Funds
solely by reason of the fact that the Advisor, its principals, affiliates, or employees may
purchase, sell or exchange such security for the account of any other City or for itself or
its own accounts.
4.0 Term & Termination
4.1 This term of this Agreement shall commence as of the Effective Date and
shall continue until terminated in accordance with this Section.
4.2 This Agreement may be terminated by City, without cause, or by Advisor
based on reasonable cause, upon giving the other party written notice thereof not less
than 30 days prior to the date of termination.
4.3 This Agreement may be terminated by City upon 10 days' notice to
Advisor if Advisor fails to provide satisfactory evidence of renewal or replacement of
comprehensive general liability insurance as required by this Agreement at least 20
days before the expiration date of the previous policy.
5.0 Advisor's Compensation
5.1. For services provided by the Advisor pursuant to Section 1.1.1 of this
Agreement, the City will pay the Advisor a fee of $5,000, payable upon delivery of a
written report summarizing the Advisor's recommendations to the City's investment
policy.
5.2. For services provided by the Advisor pursuant to Section 1.1.2 of this
Agreement, the City will pay the Advisor a fee of $5,000, payable upon delivery of a
written report summarizing the Advisor's recommendations for the investment strategy
relating to the City's Managed Funds.
5.3. For services provided by the Advisor pursuant to Section 1.1.3 of this
Agreement, the City shall pay the Advisor an annual fee, in monthly installments, based
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on the daily net assets under management at an annual rate of ten basis points (0.10%)
for the amount of such net assets not exceeding $25 million and eight basis points
(0.08%) for the amount of such net assets in excess of$25 million.
5.4. The foregoing Sections 5.1, 5.2, and 5.3 notwithstanding, during the initial
12-month period of this Agreement, the fees charged for the services described in
Sections 1.1.1, 1.1.2, and 1.1.3, or any combination thereof, shall not be less than
$15,000. Thereafter, the annual fee charged for services provided in Section 1.1.3 shall
not be less than $15,000.
5.5. Assets invested by the Advisor under the terms of this Agreement may
from time to time be invested in a money market mutual fund or local government
investment pool managed by the Advisor (either, a "Pool"), or in individual securities.
Average daily net assets subject to the fees described in this section shall not take into
account any funds invested in the Pool. Expenses of the Pool, including compensation
for the Advisor and the Pool custodian, are described in the relevant prospectus or
information statement and are paid from the Pool.
5.6. If and to the extent that the City shall request the Advisor to render
services other than those to be rendered by the Advisor hereunder, such additional
services shall be compensated separately on terms to be agreed upon between the
Advisor and the City. Advisor will not be compensated for any work performed not
included in the Services unless the City authorizes such work in advance and in writing.
The City Manager may authorize payment for such work up to a cumulative maximum of
$10,000. Payment for additional work in excess of $10,000 requires prior City Council
authorization.
6.0 Expenses
6.1. The Advisor shall furnish at its own expense all necessary administrative
services, office space, equipment, clerical personnel, telephone and other
communication facilities, investment advisory facilities, and executive and supervisory
personnel for managing the Managed Funds.
6.2. Except as expressly provided otherwise herein, the City shall pay all of its
own expenses including, without limitation, taxes, commissions, fees and expenses of
the City's independent auditors and legal counsel, if any, brokerage and other expenses
connected with the execution of portfolio security transactions, insurance premiums,
fees and expenses of the Custodian of the Managed Funds including safekeeping of
funds and securities and the keeping of books and accounts.
7.0 Method of Payment
7.1. Advisor shall submit to City monthly invoices for all services rendered
pursuant to this Agreement. Such invoices shall be submitted within 15 days of the end
of the month during which the services were rendered and shall describe in detail the
services rendered during the period. City will pay Advisor within 30 days of receiving
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Advisor's invoice. City will not withhold any applicable federal or state payroll and other
required taxes, or other authorized deductions from payments made to Advisor.
7.2. Upon 24-hour notice from City, Advisor shall allow City or City's agents or
representatives to inspect at Advisor's offices during reasonable business hours all
records, invoices, time cards, cost control sheets and other records maintained by
Advisor in connection with this Agreement. City's rights under this Section 7.2 shall
survive for two years following the termination of this Agreement.
8.0 Party Representatives
8.1. The City Manager is the City's representative for purposes of this
Agreement.
8.2. Nancy Jones is the Advisor's primary representative for purposes of this
Agreement.
9.0 Notices
9.1. All notices permitted or required under this Agreement shall be deemed
made when personally delivered or when mailed 48 hours after deposit in the United
States Mail, first class postage prepaid and addressed to the party at the following
addresses:
To City: City of Seal Beach
211-8th Street
Seal Beach, California 90740
Attn: City Manager
To Advisor: PFM Asset Management LLC
50 California Street, Suite 2300
San Francisco, CA 94111
Attn: Nancy Jones
With a Copy to: PFM Asset Management LLC
Two Logan Square, Suite 1600
18th & Arch Streets
Philadelphia, PA 19103-2770
Attn: Controller
9.2. Actual notice shall be deemed adequate notice on the date actual notice
occurred, regardless of the method of service.
10.0 Independent Contractor
10.1. Advisor is an independent contractor and not an employee of the City. All
services provided pursuant to this Agreement shall be performed by Advisor or under its
. supervision. Advisor will determine the means, methods, and details of performing the
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services. Any additional personnel performing services under this Agreement on behalf
of Advisor shall also not be employees of City and shall at all times be under Advisor's
exclusive direction and control. Advisor shall pay all wages, salaries, and other
amounts due such personnel in connection with their performance of services under this
Agreement and as required by law. Advisor shall be responsible for all reports and
obligations respecting such additional personnel, including, but not limited to: social
security taxes, income tax withholding, unemployment insurance, disability insurance,
and workers' compensation insurance.
10.2. Advisor shall indemnify and hold harmless City and its elected officials,
officers, employees, servants, designated volunteers, and agents serving as
independent contractors in the role of City officials, from any and all liability, damages,
claims, costs, and expenses of any nature to the extent arising from Advisor's personnel
practices. City shall have the right to offset against the amount of any fees due to
Advisor under this Agreement any amount due to City from Advisor as a result of
Advisor's failure to promptly pay to City any reimbursement or indemnification arising
under this Section.
11.0 Subcontractors
No portion of this Agreement shall be subcontracted without the prior written
approval of the City. Advisor is fully responsible to City for the performance of any and
all subcontractors.
12.0 Assignment
Advisor shall not assign or transfer any interest in this Agreement whether by
assignment or novation, without the prior written consent of City. Any purported
assignment without such consent shall be void and without effect.
13.0 Insurance
13.1. Advisor shall not commence work under this Agreement until it has
provided evidence satisfactory to the City that Advisor has secured all insurance
required under this Section. Advisor shall furnish City with original certificates of
insurance and endorsements effecting coverage required by this Agreement on forms
satisfactory to the City. The certificates and endorsements for each insurance policy
shall be signed by a person authorized by that insurer to bind coverage on its behalf,
and shall be on forms provided by the City if requested. All certificates and
endorsements shall be received and approved by the City before work commences.
13.2. Advisor shall, at its expense, procure and maintain for the duration of the
Agreement, insurance against claims for injuries to persons or damages to property that
may arise from or in connection with the performance of this Agreement. Insurance is
to be placed with insurers with a current A.M. Best's rating no less than A:VIII, licensed
to do business in California, and satisfactory to the City. Coverage shall be at least as
broad as the latest version of the following: (1) General Liability: Insurance Services
Office Commercial General Liability coverage (occurrence form CG 0001);
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(2) Automobile Liability: Insurance Services Office Business Auto Coverage form
number CA 0001, code 1 (any auto); and, if required by the City, (3) Professional
Liability. Advisor shall maintain limits no less than: (1) General Liability: $2,000,000 per
occurrence for bodily injury, personal injury and property damage and if Commercial
General Liability Insurance or other form with a general aggregate limit is used, either
the general aggregate limit shall apply separately to this Agreement/location or the
general aggregate limit shall be twice the required occurrence limit; (2) Automobile
Liability: $1,000,000 per accident for bodily injury and property damage; and
(3) Professional Liability: $1,000,000 per claim/aggregate. The City reserves the right to
require complete, certified copies of all required insurance policies, at any time. Advisor
shall not reduce any coverages below the limits required by this Section during the term
of this Agreement.
13.3. The insurance policies shall contain the following provisions, or Advisor
shall provide endorsements on forms supplied or approved by the City to state:
(1) coverage shall not be suspended, voided or canceled except after 30 days prior
written notice by certified mail, return receipt requested, has been given to the City;
(2) any failure to comply with reporting or other provisions of the policies, including
breaches of warranties, shall not affect coverage provided to the City, its directors,
officials, officers, (3) coverage shall be primary insurance as respects the City, its
directors, officials, officers, employees, agents and volunteers, or if excess, shall stand
in an unbroken chain of coverage excess of the Advisor's scheduled underlying
coverage and that any insurance or self-insurance maintained by the City, its directors,
officials, officers, employees, agents and volunteers shall be excess of the Advisor's
insurance and shall not be called upon to contribute with it; (4) for general liability
insurance, that the City, its directors, officials, officers, employees, agents and
volunteers shall be covered as additional insureds with respect to the services or
operations performed by or on behalf of the Advisor, including materials, parts or
equipment furnished in connection with such work; and (5) for automobile liability, that
the City, its directors, officials, officers, employees, agents and volunteers shall be
covered as additional insureds with respect to the ownership, operation, maintenance,
use, loading or unloading of any auto owned, leased, hired or borrowed by the Advisor
or for which the Advisor is responsible.
13.4. All insurance required by this Section shall contain standard separation of
insureds provisions and shall not contain any special limitations on the scope of
protection afforded to the City, its directors, officials, officers, employees, agents, and
volunteers.
13.5. Any deductibles or self-insured retentions shall be declared to and
approved by the City. Advisor guarantees that, at the option of the City, either: (1) the
insurer shall reduce or eliminate such deductibles or self-insured retentions as respects
the City, its directors, officials, officers, employees, agents, and volunteers; or (2) the
Advisor shall procure a bond guaranteeing payment of losses and related investigation
costs, claims and administrative and defense expenses.
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14.0 Indemnification, Hold Harmless, and Duty to Defend
Advisor shall defend, indemnify, and hold the City, its officials, officers,
employees, volunteers and agents serving as independent contractors in the role of city
officials (collectively "Indemnities") free and harmless from any and all claims, demands,
causes of action, costs, expenses, liability, loss, damage or injury, in law or equity, to
property or persons, including wrongful death, in any manner arising out of or incident to
any acts or omissions of Advisor, its employees, or its agents in connection with its
negligent or intentionally wrongful performance of this Agreement, including without
limitation the payment of all consequential damages and attorneys' fees and other
related costs and expenses, except for such loss or damage arising from the sole
negligence or willful misconduct of the City. With respect to any and all such aforesaid
suits, actions, or other legal proceedings of every kind that may be brought or instituted
against Indemnitees, Advisor shall defend Indemnitees, at Advisor's own cost, expense,
and risk, and shall pay and satisfy any judgment, award, or decree that may be
rendered against Indemnitees. Advisor shall reimburse City and its directors, officials,
officers, employees, agents and/or volunteers, for any and all legal expenses and costs
incurred by each of them in connection therewith or in enforcing the indemnity herein
provided. Advisor's obligation to indemnify shall not be restricted to insurance
proceeds, if any, received by Advisor, the City, its directors, officials, officers,
employees, agents or volunteers. All duties of Advisor under this Section shall survive
termination of this Agreement.
15.0 Disciplinary Actions
The Advisor shall promptly give notice to the City if the Advisor shall have been
found to have violated any state or federal securities law or regulation in any criminal
action or civil suit in any state or federal court or in any disciplinary proceeding before
the Securities and Exchange Commission or any other agency or department of the
United States, any registered securities exchange, FINRA, or any regulatory authority of
any State based upon the performance of services as an investment advisor.
16.0 Force Majeure
The Advisor shall have no liability for any losses arising out of the delays in
performing or inability to perform the services which it renders under this Agreement
which result from events beyond its control, including interruption of the business
activities of the Advisor or other financial institutions due to acts of God, acts of
governmental authority, acts of war, terrorism, civil insurrection, riots, labor difficulties,
or any action or inaction of any carrier or utility, or mechanical or other malfunction.
17.0 Equal Opportunity
Advisor affirmatively represents that it is an equal opportunity employer. Advisor
shall not discriminate against any subcontractor, employee, or applicant for employment
because of race, religion, color, national origin, handicap, ancestry, sex, sexual
orientation, or age. Such non-discrimination includes, but is not limited to, all activities
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related to initial employment, upgrading, demotion, transfer, recruitment or recruitment
advertising, layoff, or termination.
18.0 Labor Certification
By its signature hereunder, Advisor certifies that it is aware of the provisions of
Section 3700 of the California Labor Code that require every employer to be insured
against liability for Workers' Compensation or to undertake self-insurance in accordance
with the provisions of that Code, and agrees to comply with such provisions before
commencing the performance of the Services.
19.0 Entire Agreement
This Agreement contains the entire agreement of the parties with respect to the
subject matter hereof, and supersedes all prior negotiations, understandings, or
agreements. This Agreement may only be modified by a writing signed by both parties.
20.0 Severability
The invalidity in whole or in part of any provisions of this Agreement shall not
void or affect the validity of the other provisions of this Agreement.
21.0 Governing Law
This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
22.0 No Third Party Rights
No third party shall be deemed to have any rights hereunder against either party
as a result of this Agreement.
23.0 Waiver
No waiver of any default shall constitute a waiver of any other default or breach,
whether of the same or other covenant or condition. No waiver, benefit, privilege, or
service voluntarily given or performed by a party shall give the other party any
contractual rights by custom, estoppel, or otherwise.
24.0 Prohibited Interests; Conflict of Interest
24.1. Advisor covenants that it presently has no interest and shall not acquire
any interest, direct or indirect, which may be affected by the Services, or which would
conflict in any manner with the performance of the Services. Advisor further covenants
that, in performance of this Agreement, no person having any such interest shall be
employed by it. Furthermore, Advisor shall avoid the appearance of having any interest,
which would conflict in any manner with the performance of the Services. Advisor shall
not accept any employment or representation during the term of this Agreement which
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is or may likely make Advisor "financially interested" (as provided in California
Government Code §§1090 and 87100) in any decision made by City on any matter in
connection with which Advisor has been retained.
24.2. Advisor further warrants and maintains that it has not employed or
retained any person or entity, other than a bona fide employee working exclusively for
Advisor, to solicit or obtain this Agreement. Nor has Advisor paid or agreed to pay any
person or entity, other than a bona fide employee working exclusively for Advisor, any
fee, commission, gift, percentage, or any other consideration contingent upon the
execution of this Agreement. Upon any breach or violation of this warranty, City shall
have the right, at its sole and absolute discretion, to terminate this Agreement without
further liability, or to deduct from any sums payable to Advisor hereunder the full
amount or value of any such fee, commission, percentage, or gift.
24.3. Advisor warrants and maintains that it has no knowledge that any officer
or employee of City has any interest, whether contractual, noncontractual, financial,
proprietary, or otherwise, in this transaction or in the business of Advisor, and that if any
such interest comes to the knowledge of Advisor at any time during the term of this
Agreement, Advisor shall immediately make a complete, written disclosure of such
interest to City, even if such interest would not be deemed a prohibited "conflict of
interest" under applicable laws as described in this subsection.
25.0 Attorneys' Fees
If either party commences any legal, administrative, or other action against the
other party arising out of or in connection with this Agreement, the prevailing party in
such action shall be entitled to have and recover from the losing party all of its
attorneys' fees and other costs incurred in connection therewith.
26.0 Exhibits
All exhibits referenced in this Agreement are hereby incorporated into the
Agreement as if set forth in full herein. In the event of any material discrepancy
between the terms of any exhibit so incorporated and the terms of this Agreement, the
terms of this Agreement shall control.
27.0 Corporate Authority
The person executing this Agreement on behalf of Advisor warrants that he or
she is duly authorized to execute this Agreement on behalf of said Party and that by his
or her execution, the Advisor is formally bound to the provisions of this Agreement.
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IN WITNESS WHEREOF, the Parties hereto, through their respective authorized
representatives have executed this Agreement as of the date and year first above
written.
CITY OF SEAL BEACH PMT ASSET MANAGEMENT L.L.C.
By: 0 #
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$. Ingram, City itger
Name: Nancy Jones
Its:
Attest:
By:
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4nda DeviOnti;ni
ity Clerk Name:
Its: S'ef- ✓ c.9 /)'lam
Approved as to Form:
By: Gtr .., G ,
Quinn Barrow, City Attorney
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