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HomeMy WebLinkAboutLateef Investment Management, LP Investment Management Agreement -2007 08 24 INVESTMENT MANAGEMENT AGREEMENT .,v JOO 'f' THIS AGREEMENT, made this 2"1 day of lW~vs" ;~, by and between the BOARD OF TRUSTEES OF THE DEFINED BENEFIT PLAN AND TRUST FOR EMPLOYEES OF THE CITY OF WINTER SPRINGS, not individually, but as Trustees of the Retirement Plan referred to below (hereinafter referred to as the "Trustees"), and LATEEF INVESTMENT MANAGEMENT, LP (hereinafter referred to as the "Manager"). WHEREAS, by the terms of the DEFINED BENEFIT PLAN AND TRUST FOR EMPLOYEES OF THE CITY OF WINTER SPRINGS (hereinafter referred to as the Retirement Plan), the Trustees are charged with the duty of receiving and investing funds under the Retirement Plan; and WHEREAS, the Trustees are authorized by the terms of the Retirement Plan to appoint an investment manager for the management and investment of the trust fund held by them thereunder. NOW, THEREFORE, the Trustees and the Manager agree as follows: A. APPOINTMENT OF INVESTMENT MANAGER. The Trustees hereby appoint the Manager as the Investment Manager with respect to those assets of said Retirement Plan placed under its management, together with the income therefrom (hereinafter referred to as the "Investment Account"). The Manager shall manage, invest and reinvest the Investment Account pursuant to the provisions hereinafter set forth. Manager shall not take or have possession of the assets in the Investment Account. At no time shall any part of the corpus or income of the Investment Account be used or diverted for the purposes other than for the exclusive benefit of employees and their beneficiaries as provided in the Retirement Plan and for defraying reasonable expenses of administering the Retirement Plan, to the extent that such expenses are not borne by resources other than resources ofthe Retirement Plan. By execution of this Agreement, the Manager acknowledges that it is a fiduciary of the Plan within the meaning ofthe Employee Retirement Income Security Act of 1974 ("ERISA") and 9112.656, -1- Florida Statutes and that it has all registrations as may be required for the performance of its duties under this Agreement and is in compliance with all applicable local, state and federal laws. B. POWERS AND DUTIES OF THE MANAGER. The Manager will have the following powers and duties with respect to any and all monies and securities at any time managed by it and constituting part or all of the Investment Account, such powers to be exercised by it in its sole discretion, except as otherwise provided herein. 1. With any cash at any time in the Investment Account, to purchase or subscribe for and invest in any securities and to retain such securities in the Investment Account within the restrictions set forth in the Retirement Plan and Investment Policy Statement as amended from time to time, and be in accordance with State and federal laws. If Manager makes or invests in, or holds any investment prohibited under applicable law or the Investment Policy Statement, the Manager shall make the Fund whole for any loss incurred in the divestiture of such investment. 2. To sell, transfer, and convey, redeem, exchange for other securities, or otherwise to dispose of any securities in the Investment Account. 3. To exercise any conversion privilege and/or subscription right available in connection with any securities; to oppose or to consent to the reorganization, consolidation, merger, or readjustment of the finances of any corporation, company or association or to the sale, mortgage, pledge or lease of the property of any corporation, company or association, any of the securities of which may at any time be held in the Investment Account, and to do any act with reference thereto, including the exercise of options, the making of agreement or subscriptions, which may be deemed necessary or advisable in connection therewith, and to hold and retain any securities which it may so acquire. 4. To vote, personally or by general or limited proxy, any shares of stock which may be held by it at any time and, similarly, to exercise, personally or by general or -2- limited proxy, any right appurtenant to any security held by it in the Investment Account at any time in accordance with the Manager's Proxy Policy Voting Statement upon affirmation of such statement by the Trustees. 5. To aggregate purchases or sales of securities on behalf ofthe Investment Account with purchases or sales, as the case may be, of the same security on the same day for the accounts of one or more of its other clients. In those circumstances, (i) the prices applicable to the aggregated transaction will be averaged, and the Investment Account and each other client account participating in the transaction will be deemed to have purchased or sold its share of the security at that average price, and (ii) all transaction costs incurred in effecting the transaction will be shared on a pro rata basis among all participating accounts. 6. The term "securities" used in this Agreement shall be deemed to be restricted to include only legal investments for the Trustees under the statutes, ordinances and rules of law applicable thereto. 7. To monitor items requiring action by the Trustees with respect to the assets, such as stock dividends, rights, offerings, calls or redemptions of bonds or other items, with respect to which Manager is notified by the Custodian of the assets. Manager is authorized to direct the Custodian of the assets to take any action with respect to the assets which Manager is authorized to take hereunder. Title to the assets shall remain in the Trustees. 8. To report at each quarterly meeting the quality of corporate governance practices of all companies in the Investment Account. C. MAINTENANCE OF ACCOUNTS. The Manager shall maintain accounts showing the fiscal transactions of the Investment Account. The Manager shall prepare at least quarterly, and more often as mutually agreed, a report showing in reasonable detail the assets and liabilities of the Investment Account and giving an account of the operation of the Investment Account for the past year. Manager shall also provide a report showing proxy voting records and a report of brokerage commissions incurred. -3- D. DISCHARGE OF DUTIES. 1. The Manager shall discharge its duties under this Agreement solely in the interests of the participants in the Retirement Plan and their beneficiaries and (i) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person 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; and (ii) in accordance with the provisions of this Agreement insofar as they are consistent with the provisions ofthe Retirement Plan, Investment Policy Statement and applicable laws, as the same may be amended from time to time. Manager shall have trades executed only on a "best execution" basis within the meaning of ERISA Technical Release No. 86-1 (i.e. competitive commission cost as well as reliability and quality of the execution). Manager agrees to cooperate with the Trustees in their establishment of and participation in any reasonable and lawful commission recapture program or other similar commission rebate program. The Manager will have no liability with respect to the Investment Account's custody arrangements or any acts or omissions of the Custodian, and the Manager will not be responsible for any custody costs or expenses relating to the Investment Account. 2. Subject to paragraph D.1, the Trustees understand and agree that, in selecting brokers, dealers, banks, introducing brokers, and other intermediaries ("Transacting Parties") through or with which to effect transactions in securities for the Investment Account, the Manager is authorized to cause the Investment Account to pay for various products and services with "soft dollars" and engage in other, related activities disclosed in Schedule F of the Manager's Form ADV. In particular, in selecting Transacting Parties and in determining the terms of transactions with and compensation payable to those persons or entities (including markups and markdowns), the Manager may take into account, in addition to execution quality, other factors relating to the relationship between the Transacting Party and the Investment Account or the Manager as the Manager may consider appropriate, including, among other things: -4- historical net prices (after markups, markdowns or other transaction-related compensation) on other transactions; the execution, clearance and settlement and error correction capabilities of the Transacting Party generally and in connection with instruments of the type and in the amounts to be bought or sold; the Transacting Party's willingness to commit capital; the Transacting Party's reliability and financial stability; the size of the transaction; the market for the security; the nature, quantity and quality of research and brokerage services and products provided by the Transacting Party to the Manager, even though other persons may be able to provide transactional services to the Investment Account (without any accompanying non-execution services or products) on better terms or at lower rates of compensation. F. COMPENSATION OF MANAGER. In consideration for the services rendered by Manager, Trustees shall pay to Manager an annual fee of 100 basis points of the market value of the assets in the Investment Account. The amount shall be prorated and payable quarterly in arrears based on the value of assets in the Investment Account on the last day of the quarter. This fee is guaranteed not to increase for a period ofthree (3) years from the contract date. The fee includes all expenses and costs incurred by Manager in the performance of this Agreement including, but not limited to, termination fees, transfer fees, statement preparation and other services rendered. On September 30 of each year, the Investment Manager shall notify the Board of Trustees of any fee agreement or arrangement between the Investment Manager and any of its public sector clients that contains terms materially more favorable than those set forth in this Section E, provided that this provision will not apply as to any such more favorable terms granted to (i) a client or group of affiliated clients whose assets the Manager manages exceed the assets in the Investment Account or whose accounts are managed pursuant to an investment strategy different from the strategy pursuant to which the Investment Account is managed, (ii) any client that is a pooled investment vehicle, (iii) any subadvisory client, or (iv) any client whose fees are based (whether partly or entirely) on account performance. -5- F. REMOVAL AND RESIGNATION. The Manager may resign from its duties hereunder by filing with the Trustees a written resignation. Such resignation shall take effect within ninety (90) days after such notice to the Trustees on a date determined by the Trustees. The Manager may be removed by the Trustees at any time on at least fifteen (15) days' notice to the Manager. Such removal shall be effected by delivery of written notice of removal executed by the Trustees. Upon resignation or removal, the Manager shall relinquish control and otherwise transfer and deliver the Investment Account to the Trustees, and be paid only fees earned prorated to the effective date of resignation or removal and such payment shall be the only payment of any kind or nature due to the Manager from the Trustees. G. INSTRUCTIONS. All instructions from the Trustees to the Manager shall be in writing and shall be signed as designated by the Trustees. The Trustees agree to notify the Manager promptly of any change in the designation. H. CONSULTATION. The Manager shall attend a Board meeting annually and consult with the Trustees regarding the investment performance of the Investment Account and the financial requirements of the Retirement Plan. . I. LIABILITY. The Trustees understand that the investment activities they are engaging the Manager to pursue as to the Investment Account involve risks, including market, economic, political, and general business risks and that the Manager does not guarantee any particular level performance of the Investment Account or the success of any investment decision or strategy that the Manager may use. J. CONSTRUCTION OF AGREEMENT. This Agreement shall be construed in accordance with the laws of the State of Florida to the extent not pre-empted by federal law and the provisions hereof shall be governed by such law. K. VENUE. Any action arising under this Agreement shall be brought exclusively in Seminole County, Florida. -6- L. INVESTMENTS OF OTHERS. The Trustees understand, acknowledge and agree that the Manager and/or its affiliates are engaged in an investment advisory business apart from managing the Investment Account and that this could create conflicts of interest with the Investment Account relating to both the amount of the Manager's and its personnel's time and effort devoted to managing the Investment Account and the allocation of investment and trading opportunities among accounts (including the Investment Account) the Manager and/or its affiliates manage. The Trustees further understand that the Manager and/or its affiliates may invest and trade for their own accounts, and the Trustees agree that nothing in this Agreement will restrict the ability of the Manager or any of its affiliates to do so notwithstanding any securities positions the Investment Account may have or may later acquire. The Trustees confirm that the Manager and its affiliates may give advice and take action for any of their clients and/or their own accounts that may be similar to or differ from advice given or the timing or nature of action taken for the Investment Account so long as it is the Manager's policy, to the extent practicable, to allocate investment opportunities to the Investment Account over time on a fair and equitable basis relative to such other clients and accounts. The Trustees further acknowledge nothing in this Agreement will be deemed to obligate the Manager or any of its affiliates to effect for the Investment Account any transaction that the Manager or its affiliates or their officers, members or employees may effect for its or their own accounts or for the account of any other client, if in the Manager's judgment, it is not practical or desirable to effect a similar transaction for the Investment Account. M. OTHER REPRESENTATIONS AND AGREEMENTS. 1. Each party represents and warrants that: (i) it has duly and validly authorized, executed and delivered this Agreement and this Agreement is a legal, valid and binding agreement enforceable against it in accordance with its terms except to the extent that its enforcement is limited by bankruptcy, -7- insolvency, reorganization of other laws relating to or affecting the enforcement of creditors rights generally and by general principles of equity; (ii) it has full power and authority, and is permitted by applicable law, to enter into this Agreement; and (iii) the performance of its obligations under this Agreement will not conflict with, violate the terms of, or constitute a default under (and will be in compliance with): (1) any material agreement or instrument to which it is a party or by which it is bound, or to which any of its property or assets are subject; or (2) any material order, rule, law, regulation or other legal requirement applicable to it or its business, property, or assets. (iv) The representations and warranties set forth in this Section shall be continuing during the term of this Agreement, and if at any time any event shall occur or be discovered that is reasonably likely to make any of the foregoing materially incomplete, inaccurate, false or misleading, the party whose representation and warranty would become materially incomplete, inaccurate, false or misleading will promptly notify the other party ofthe occurrence of the event causing such incompleteness or inaccuracy. N. CONFIDENTIALITY. All information and advice furnished by either of the parties to the other will be treated as confidential and will not be disclosed to third parties except to the extent required by law or regulatory authorities, contemplated by this Agreement or as necessary or desirable to enable or assist the Manager in performing the services or fulfilling its obligations hereunder. O. INDEPENDENT CONTRACTOR. For all purposes of this Agreement, the Manager will be an independent contractor and not an employee of the Trustees. Nothing herein will be construed as making the Trustees partners or co-venturers with the Manager or any of its affiliates. -8- P. DOCUMENTS. The Manager shall provide the Trustees with the documents that comply with Rule 204-3 of the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The Trustees acknowledge that they have received a copy of Part II ofthe Manager's Form ADV at least 48 hours prior to entering into this Agreement. Q. ASSIGNMENT: CHANGE OF GENERAL PARTNER. This Agreement may not be assigned (as defined under the Advisers Act) by the Manager without the consent of the Trustees. The Manager will notify the Trustees of any change of its general partner (or other change in membership if and to the extent required under the Advisers Act) within a reasonable time after that change. R. PUBLIC ENTITY CRIMES BILL. Section 287.133, Florida Statutes, provides that a person or affiliate who has been placed on the convicted vendor list following a conviction for a public entity crime may not submit a bid on a contract to provide any goods or services to a public entity, may not submit a bid on a contract with a public entity for the construction or repair of a public building or public work, may not submit bids on leases of real property to a public entity, may not be awarded or perform work as a contractor, supplier, subcontractor, or consultant under a contract with any public entity, and may not transact business with any public entity in excess ofthe threshold amount provided in Section 287.017, Florida Statutes, for CATEGORY TWO for a period of 36 months from the date of being placed on the convicted vendor list. S. INSURANCE. The Manager acknowledges that it has and shall maintain errors and omissions coverage in the amount of ~million dollars. Attached hereto as Exhibit A is a copy of the Manager's current certificate of insurance. The Manager agrees to immediately notify the Trustees, in writing, in the event of any change in its policy and to immediately notify the Trustees if said coverage is terminated, cancelled or discontinued, in whole or in part. T. PLAN AMENDMENTS. The Trustees shall verbally notify the Manager and, when completed, shall provide copies to the Manager of amendments to the Retirement Plan that -9- are relevant to the Manager's duties hereunder and amendments to the Investment Policy Statement within a reasonable time after the effective date of the amendment. No such amendment will be effective as to the Manager until the Manager has received such notice. u. EFFECTIVE DATE. This Agreement shall become effective upon execution. IN WITNESS WHEREOF, the Trustees have signed duplicates hereof, and Lateef Investment Management, LP has its corporate name to be signed to said duplicates by its proper officers thereunto duly authorized on the day and in the year first above written. LATEEFINVESTMENT MANAGEMENT, LP BOARD OF TRUSTEES OF THE DEFINED BENEFIT PLAN AND TRUST FOR EMPLOYEES OF THE CITY OF WINTER SPRINGS By: ;fm:~ tJ. ?rl~ ltC. IheG.MPaIWIi\.s: C I 1J JHANA&. tJ",;f' -10-