1996-41
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'I.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, entered into as of the 1 day of August in the year of 1996, by and between the
City of Clermont, a public agency (hereinafter the "CITY"), and PUBLIC FINANCIAL MANAGEMENT,
INc., a Pennsylvania corporation with an office in Harrisburg, Dauphin County, Pennsylvania, (hereinafter
"PFM" or the "Investment Advisor").
WITNESSETH
WHEREAS, the City has issued its Water and Sewer Revenue and Refunding Bond Anticipation
Notes, Series 1996 in the amount of $7,990,000, and will deposit certain proceeds and other available funds
in a construction fund and capitalized interest fund (hereinafter the "Initial Funds") for the purpose of funding
the construction of a water and wastewater treatment plant; and
WHEREAS, the City mtends to conduct a temporary investment program with the Initial Funds in
compliance with the arbitrage rebate requirements of the Internal Revenue Code of 1986 as amended and
related regulations; and
WHEREAS, the earnings from such temporary investments constitute a vital component of the overall
financial plan; and
WHEREAS, m addition to the Initial Funds the City desires to have PFM manage other funds that are
not debt proceeds; and
WHEREAS, the City desires to avail itself of the experience, sources of information, advice, assistance
and facilities available to PFM; to have PFM undertake certain duties and responsibilities; and to perform
certain services as investment advisor on behalf of the City, as provided herein; and
WHEREAS, PFM is willing to provide such services on the tenus and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants herem contained, it is
agreed as follows:
1.
SERVICES OF ADVISOR.
PFM will provide investment management of the Initial Funds and such other funds as the City may
from time to time assign by written notice to PFM (collectively the "Managed Funds"). In connection
therewith, PFM 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.
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PFM shall continuously monitor investment opportunities and evaluate investments of the Managed Funds
or available to them. PFM shall furnish the City with statistical information and repons with respect to
investments of the Managed Funds. PFM shall place all orders for the purchase, sale, loan or exchange of
ponfolio securities for the City's account with brokers or dealers recommended by PFM and/or the City,
and to that end PFM is authori~ed us agent of the City to give instructions to the depository debignatcd by
the City as its custodian as to deliveries of securities for the account of the City. In connection with the
selection of such brokers and dealers and the placing of such orders, PFM is directed to seek for the City
the most favorable execution and price, the detennination of which may take into account, subject to any
applicable laws, rules and regulations, whether statistical, research and other infonnation or services have
been or will be furnished to PFM by such brokers and dealers. The depository designated by the City shall
have custody of cash, assets and securities of the City. PFM 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
Florida Statutes and bond covenants and as supplemented by such other written instructions as may from
time to time be provided by the City to PFM. PFM shall be entitled to rely upon the City's written advice
with respect to anticipated drawdowns of Managed Funds. PFM 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 which PFM reasonably believes to
be reputable, qualified and fmanciallx sound.
2,
COMPLIANCE WITH ARBITRAGE AND REBATE REQumEMENTS,
PFM shall conduct the investment management program in compliance with the arbitrage and rebate
requirements of the United States Treasury, currently described in Section 148 of the Internal Revenue
Code of 1986 as amended and of the related Code of Federal Regulations as said requirements apply to the
Initial Funds and any other proceeds of tax-exempt debt. PFM shall place orders for the purchase and sale
of securities at market prices as determined in accordance with said regulations and rulings, shall maintain
records of all such transactions which shall include documentation of the market price of each purchase
and sale, shall, during the term of this Agreement, prepare on behalf of the City all arbitrage and rebate
reports required by the U.S. Treasury and Internal Revenue Code, and shall, during the term of this
Agreement, monitor the City's adherence to expenditure schedules which relate to exceptions from the
rebate requirements of the Internal Revenue Code.
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3. COMPENSATION,
(a) For services provided by PFM pursuant to this Agreement, the City shall pay PFM an annual
fee, m monthly installments, based on the daily net assets under management at an annual rate of 0.10% of
Managed Funds assets.
(b) PFM will bill the City monthly for service performed under this Agreement, said bill to include a
statement indicating the basis upon which the fee was calculated. The City shall pay to PFM the amount
payable pursuant to this Agreement not later than on the 15th day of the month following the month durmg
which PFM's statement was rendered.
(c) If and to the extent that the City shall request PFM to render services other than those to be
rendered by PFM hereunder, such additional services shall be compensated separately on terms to be
agreed upon between PFM and the City.
4. EXPENSES.
(a) PFM 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 investments.
(b) 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.
s.
RESPONSffiILITY OF PFM.
PFM hereby represents it is a registered investment advisor under the Investment Advisors Act of
1940. PFM 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. PFM agrees to perform its duties and responsibilities under
this Agreement with reasonable care.
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6.
CONFLICT OF INTEREST,
The City understands that PFM performs investment advisory services for various other clients which
may include investment companies and/or commingled trust funds. The City agrees that PFM 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, so long as It IS the
policy of PFM, to the extent practical, to allocate investment opportunities to this account over a period of
time on a faIT and equitable basis relative to other clients. PFM 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 PFM, its
principals, affiliates, or employees may purchase, sell or exchange such security for the account of any
other client or for itself or its own accounts.
7,
TERM.
This Agreement may be terminated by the City in the event of any material breach of its terms
immediately upon notice by certified mail, return receipt requested. This Agreement may be terminated by
the City, on not less than thirty (30) days written notice to PFM, PFM may terminate this Agreement
immediately upon any material breach of its terms by the City, or at any time after one year upon thirty
(30) days written notice.
8.
SUSPENSIONS, COMPLAINTS.
PFM shall promptly notify the City in writing of any complaints or disciplinary actions filed against
it, or any subsidiary or affiliate, or any investment professional employed by it, who has performed any
service with respect to the City's account in the 24 preceding months, by the Securities and Exchange
Commission of the United States, the New York Stock Exchange, the American Stock Exchange, the
National Association of Securities Dealers, any Attorney General or any regulatory agency or authority of
any state of the United States, any department or agency or authority of the Government of the United
States, or any governmental agency or authority regulating securities of any country in which PFM is doing
business.
9.
INDEPENDENT CONTRACTOR.
Except as described in Paragraph I, PFM, its employees, officers and representatives, shall not be
deemed to be employees, agents, partners, servants, and/or joint ventures of the City by virtue of this
Agreement or any actions or services rendered under this Agreement.
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10, BOOKS.
PFM shall maintain appropriate records of all its activities hereunder. PFM 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 PFM and the City.
11. PFM'S DISCLOSURE STATEMENT.
PFM warrants that it has delivered to the City, at least five business days prior to the execution of this
Agreement, PFM's current Securities and Exchange Commission Form ADV, Part II (pFM's disclosure
statement). The City acknowledges receipt of such disclosure statement at least five business days prior to
the execution of this Agreement.
12, MODIFICA TION.
This Agreement shall not be changed, modified, terminated or discharged in whole or in part, except
by an instrument in writing signed by both parties hereto, or their respective successors or assigns.
13. SUCCESSORS AND ASSIGNS,
The provisions of this Agreement shall be binding on PFM and its respective successors and assigns,
provided, however, that the rights and obligations of PFM may not be assigned without the prior written
consent of the City.
14. APPLICABLE LAW.
This Agreement shall be construed, enforced, and administered according to the laws of the State of
Florida, PFM and the City agree that, should a disagreement arise as to the terms or enforcement of any
provision of this Agreement, each party will in good faith attempt to resolve said disagreement prior to
filing a lawsuit.
15. VALIDITY.
The invalidity in whole or in part of any provision of this Agreement shall not void or affect the
validity of any other provision.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
authorized representatives as of the date set forth in the first paragraph of this Agreement.
Witness
PUBLIC FINANCIAL MANAGEMENT, INe.
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BY:~
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Managing Director
Witness
9~~rector
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Title: Robert A. Pool, Mayor, City of Clermont
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