MODEL AGREEMENT                                                                  (Revised July7, 2000)

 

INVESTMENT MANAGEMENT AGREEMENT BETWEEN
PENSION FUND AND INVESTMENT MANAGER 

AGREEMENT, made this __ day of ___, 2000, between the Pension Fund and ____________________ , ("Investment Manager"). 

WITNESSETH 

WHEREAS, under the (Governing Statute), the Pension Fund is vested with exclusive authority to manage and control the assets of the Retirement Fund(s), and  

WHEREAS, the Pension Fund is authorized to engage the services of competent investment counsel registered under the Investment Advisers Act of 1940 (15 U.S.C. § 80b-1 et seq.) (the "Advisers Act"), or a bank or trust company exempt from such registration, to assist it in managing the assets of the Retirement Funds, and desires to retain the services of the Investment Manager in regard to the management of a portion of the assets of the Retirement Funds, and 

WHEREAS, the Pension Fund has engaged in the evaluation of firms offering the investment management services to be provided by the Investment Manager and has determined that: (i) Investment Manager is qualified and capable of providing the investment management services required, (ii) Investment Manager’s fee for services is competitive, fair and reasonable, and (iii) engaging Investment Manager for the purposes stated herein is in the best interest of the participants and beneficiaries of the Retirement Funds, and 

WHEREAS, the Investment Manager is willing to provide services to the Pension Fund on the terms and conditions set forth hereunder, and has represented to the Pension Fund that it possesses the highest degree of competence and expertise essential to providing such services. 

NOW THEREFORE, in consideration of the covenants and promises herein recited, the parties agree as follows: 

ARTICLE I.        SCOPE OF WORK

(a)   The Pension Fund shall authorize and direct the Custodial Trustee, or such successor Custodial Trustee as the Pension Fund may appoint, to segregate certain assets into a separate account within the Permanent Fund to serve as a ______________ Account (the "Investment Account"), and to invest and reinvest the assets in the Investment Account in accordance with instructions received by the Custodial Trustee from the Investment Manager.  The assets shall at all times remain in the custody of the Custodial Trustee.  The Pension Fund, in its sole discretion, from time to time may transfer additional assets to, or may withdraw assets from the Investment Account. 

(b)   The Investment Manager shall supervise and manage the investment of the assets of the Investment Account in accordance with the written Statement of Investment Policy and Objectives and Investment Guidelines (the "Guidelines") adopted by the Pension Fund, a copy of which will be provided by the Pension Fund to the Investment Manager and is incorporated by reference herein.  The Pension Fund shall provide to the Investment Manager, in a timely manner, copies of any amendments thereto, and copies of any other written statements of investment policies, objectives or restrictions which are adopted by the Pension Fund or required by law. 

(c)       Consistent with the Guidelines and the provisions of this Agreement, the Investment Manager shall manage the investment of the assets in the Investment Account with an overall objective of long-term investment returns in excess of the actuarial assumption at a level of risk commensurate with the levels of returns and consistent with sound and responsible investment practices.  The Investment Manager shall seek to generate a rate of return that exceeds the ____________Index by no less than _____ basis points per annum on average, gross of management fees, over a 3 to 5 year period.    

F          NOTE: BENCHMARK AND PREMIUM ARE SUBJECT TO CHANGE AT THE CONCLUSION OF CONTRACT NEGOTIATIONS 

(d)       Subject to the parameters set forth in this Agreement, the Investment Manager shall have full discretionary authority to invest and reinvest the assets of the Investment Account at such times and in such manner as the Investment Manager believes to be in the best interest of the participants and beneficiaries of the Retirement Funds.    

(e)   The Investment Manager may not delegate to another party its discretionary authority to manage the Investment Account.  The Custodial Trustee shall have the authority to invest cash or short-term securities in the Investment Account, unless otherwise specifically prohibited by the Pension Fund.  The parties agree that at the end of each business day, the Custodial Trustee shall invest any cash not invested and remaining in the Investment Account provided that the investments selected by the Custodial Trustee permit immediate redemption. 

(f)       Nothing contained herein shall be deemed to authorize the Investment Manager to take or receive physical possession of any of the assets of the Investment Account.  The Custodial Trustee shall be solely responsible for the custody and safekeeping of all assets of the Investment Account, including securities purchased pursuant to the Investment Manager's instructions, and for the consummation of all deliveries and payments necessary to effectuate the purchases, sales, or other investments made pursuant to the Investment Manager's instructions.

(g)   The Investment Manager shall effect all securities transactions for the Investment Account consistent with the principles of best price and execution. Subject to the provisions of applicable law and this Agreement, the Investment Manager shall have full discretionary authority to select broker-dealers to execute securities transactions on behalf of the Investment Account.  If the selected broker-dealer maintains an office physically located in the Local City or State (“LCS”) subject to tax levied under the (City/State Code Citation), the Investment Manager shall make reasonable efforts to ensure that all commission dollars generated by securities trading executed by the broker-dealer on behalf of the Investment Account are credited on the books and records of the broker-dealer’s LCS.

(h)   The Investment Manager shall use best efforts to direct at least thirty-five percent (35%) of the commission dollars generated by securities trading executed by the broker-dealer for the Investment Account as follows, provided that each direction is consistent with the principles of best execution and minimum expense:

(1)       First, to local minority business enterprises; 

(2)       Second, to minority business enterprises located outside the LCS; and 

(3)       Third, to minority broker-dealers employed brokerage houses located in the LCS. 

(i)    For the purposes of Article I, paragraph (h) above, the term "minority" means African Americans, Asian Americans, and Hispanic Americans.  The term "minority business enterprise" means a business enterprise of which more than 50% of the ownership and control is held by individuals who are members of a minority, and of which more than 50% of the net profit or loss accrues to members of a minority.  The term "local minority business enterprise” means a minority business enterprise with its principal office physically located in the LCS. 

(j)    The Investment Manager shall give prompt written notification to the Custodial Trustee of the issuance by the Investment Manager of an order for the purchase or sale of securities for the Investment Account, and shall instruct the executing broker or dealer to confirm the execution of the transaction to the Custodial Trustee.  Such notification shall be deemed authorization for the Custodial Trustee to pay for securities purchased against receipt thereof and to deliver securities sold against payment therefore, as the case may be.  The Investment Manager shall provide such other information requested by the Custodial Trustee to enable the Custodial Trustee to fulfill its reporting obligations to the Pension Fund, and to arrange for the settlement of securities transactions and to ensure the proper safekeeping of the assets in the Investment Account. 

(k)   The Investment Manager shall reconcile all Investment Account transactions on at least a monthly basis with the Custodial Trustee.  The Investment Manager shall promptly notify the Pension Fund of any material inability to reconcile the Investment Account.

(l)    The Pension Fund will furnish or will cause to be furnished to the Investment Manager or to brokers or dealers selected by the Investment Manager such authorizations as may be necessary to effect securities transactions contemplated by this Agreement for the Investment Account.

ARTICLE II.        POWERS AND DUTIES 

(a)   The Investment Manager is hereby authorized to: 

(1)       Purchase, sell, exchange, hold or liquidate securities held in the name of and for the account of the Retirement Funds; 

(2)       Issue instructions to brokers, dealers, investment bankers, and underwriters to purchase, sell, or otherwise trade in or deal with securities in the Investment Account; 

(3)       Instruct the Custodial Trustee to make all necessary arrangements for the delivery upon receipt of payment, or payment for upon receipt, of securities purchased or sold in the Investment Account; and 

(4)       Vote all proxies, consistent with the Proxy Guidelines provided to the Investment Manager by the Pension Fund, for securities available for voting, where appropriate. 

(b)   With regard to the foregoing powers and duties, the Pension Fund acknowledges that the Investment Manager shall have no responsibility for the failure by the Custodial Trustee to make timely settlement of transactions in securities that have been loaned from the Account by the Custodial Trustee pursuant to a securities lending program authorized by the Pension Fund.  The Pension Fund further acknowledges that the Investment Manager shall have no obligation or responsibility to vote proxies for securities on loan from the Investment Account by the Custodial Trustee. 

ARTICLE III.              WARRANTIES AND REPRESENTATIONS 

(a)   The Investment Manager warrants and represents that: 

(1)   It is an investment adviser registered under the Advisers Act, and that if this status changes it will immediately notify the Pension Fund in writing.  In accordance with Securities and Exchange Commission Rule 204-3, issued under the Advisers Act, the Investment Manager shall deliver to the Pension Fund a copy of the Investment Manager’s Form ADV, Part II and shall deliver each subsequent update during the term of this Agreement.

(2)       In carrying out the requirements of this Agreement, it will be acting as a fiduciary with respect to the Retirement Funds in the Investment Account.  The Investment Manager shall carry out its duties and exercise its fiduciary authority in accordance with the responsibilities and standards imposed upon fiduciaries under applicable law including (applicable statutes). 

(3)   It shall obtain and maintain in full force and effect a bond which complies with the requirements of the (governing statute), and shall provide the Pension Fund with evidence of such compliance, or shall certify to the Pension Fund that it meets the conditions set forth in that section for exemption from the bonding requirement, specifying the basis for such conclusion.  Evidence of such a bond or exemption therefrom as described in this paragraph shall be provided to the Pension Fund upon request or at least annually. 

(4)   It shall maintain in full force and effect fiduciary liability insurance against errors and omissions and other potential liabilities which it may incur for breach of any of its fiduciary responsibilities hereunder.  Such insurance shall be maintained at a level, mutually agreed to by the parties herein, but at least as favorable to the Pension Fund as the evidence of initial coverage.  Evidence of such fiduciary liability insurance coverage as described in this paragraph shall be provided to the Pension Fund annually and at other times upon request. 

(5)       To the best of its knowledge and belief, neither its program for developing the investment strategy for the Investment Account nor the underlying data used to create this program, infringes upon any patents, trademarks, copyrights, or other proprietary rights of any third party, and the Investment manager is not aware of any cause of action, or claim asserting such infringement. 

(6)       To the best of its knowledge and belief, it has not employed or retained any company or person, other than a bona fide employee working solely for it, to solicit or secure this Agreement, and that it has not paid or agreed to pay any company or person, other than a bona fide employee working solely for it, any fee, commission, percentage, brokerage fee, gift, or any other compensation contingent upon or resulting from the award or making of this Agreement; except where: (A) the Investment Manager has disclosed, in writing to the Pension Fund, that it has engaged such a company or person other than a bona fide employee to secure the Agreement, and (B) the cost of such engagement is not charged to the Pension Fund under the terms of compensation under this or any subsequent Agreement.  For breach or violation of this warranty, the Pension Fund shall have the right to void this Agreement without liability, entitling the Pension Fund to recover all monies paid hereunder and the Investment Manager shall not make claim for, or be entitled to recover, any sum or sums due under this Agreement.  This remedy, if effected, shall not constitute the sole remedy afforded the Pension Fund for the falsity or breach, nor shall it constitute a waiver of the Pension Fund's right(s) to claim damages or refuse payment or take any other action provided for by law or pursuant this Agreement.

(7)   It has reviewed the prohibited transaction provisions prescribed by the (Governing Statute), and all activities authorized by the Pension Fund pursuant to request by the Investment Manager, and all actions undertaken by the Investment Manager, including execution of Investment Account portfolio transactions and all other advisory services furnished to the Pension Fund in connection with its management of the Investment Account, conforms with all prohibitions contained therein. 

(b)   The Parties to this Agreement agree as follows: 

(1)       The Investment Manager may perform investment advisory and management services for other clients, and in doing so, may give advice and 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 Investment Account, provided however, that it is the Investment Manager's policy to allocate investment opportunities to the Investment Account on a fair and equitable basis in relation to its other clients. 

(2)       The Investment Manager will not have any obligation to purchase or sell for the Investment Account any securities which the Investment Manager, its principals, affiliates or employees may purchase or sell for its or their own accounts or for the account of any other client, if the Investment Manager determines in good faith that such transaction or investment appears unsuitable, impractical, or undesirable for the Investment Account. 

ARTICLE IV.              REPORTS AND RECORDS 

(a)   The Investment Manager shall provide such reports as the Pension Fund from time to time may request and shall make representatives available to meet with the Pension Fund, at the Pension Fund's discretion, to discuss the status of the Investment Account. 

(b)   All reports and documents produced in the performance of this Agreement shall be the sole property of the Pension Fund.  The Investment Manager shall make no distribution of work specifically produced for the Pension Fund under this Agreement to others without the express written consent of the Pension Fund.  The Investment Manager agrees not to assert any rights at common law or in equity or establish any claim to statutory copyright in such reports. 

(c)       During the term of this Agreement, a representative of the Investment Manager shall be available during regular business hours to furnish advice or report to the Pension Fund, including the Staff of the Pension Fund, with respect to all matters contemplated by this Agreement. 

(d)   The Investment Manager shall maintain its records of the transactions of the Investment Account for a period of not less than (consult governing statute) years following the calendar year in which such transactions are effected. 

(e)       During the term of this Agreement, the Custodial Trustee and the Pension Fund shall be allowed during business hours of the Investment Manager, or at any other reasonable time, to inspect the Investment Manager's books, records and documents of all activities contemplated by this Agreement, including without limitation, regular and special reports of transactions effected hereunder and correspondence with the Custodial Trustee, the Pension Fund, brokers or any other parties with respect to its activities hereunder. 

(f)    In addition to the books, records, and documents, accounting procedures and practices of the Investment Manager shall be subject to examination by the Pension Fund and its auditors at the Pension Fund's expense. 

ARTICLE V.        COMPENSATION/FEES

 

(a)   The Investment Manager shall receive compensation for its services (subject to the appropriation of funds if applicable), in accordance with the Fee Schedule set forth in Appendix A, which is attached hereto and incorporated herein by reference.  The fee shall be computed at the end of each calendar quarter.  The fair market value of the assets in the Investment Account shall be determined by the Custodial Trustee as of the close of business on the last business day of each calendar quarter.  The fee shall be computed based on the average of the values of the total assets in the Investment Account at the beginning and end of the period for which payment is being made. 

(b)   If the Investment Manager does not provide services for a full quarter, the calculation and payment of the fee hereunder shall be prorated. 

(c)   The Investment Manager shall reimburse the Pension Fund for costs associated with the Investment Manager search (the "Search Cost Fee").  Remuneration of such Search Cost Fee ($_____ per search), shall be effectuated by means of a compensation reduction equal to ($____ per quarter, applied to the first four (4) calendar quarters for which the Investment Manager has provided services to the Pension Fund, and for which its fee is computed. 

(d)   If, at any time from and after the execution date of this Agreement, the Investment Manager shall enter into an agreement with any other client to provide investment management services comparable to those provided under this Agreement, and if such agreement requires the payment of fees that are in any respect lower than the fee established in paragraph (a) of this Article V, the Investment Manager agrees that the fee required under this Agreement shall be reduced to the level specified in the agreement with such other client.  Principal variables which shall be utilized to determine whether the services are comparable include, but are not limited to, size of account, restrictions on the account, aggressiveness of investment objectives and discretionary character of the account.  Such reduction in fees shall be effective as of the effective date of the agreement with such other client.  The Investment Manager agrees to provide the Pension Fund with timely written notice of any event or occurrence that would require a reduction in fees herein provided.

ARTICLE VI.              NOTICES AND ADMINISTRATION 

(a)   The Contract Administrator for this contract shall be the Executive Director, Pension Fund, (Address).  The Investment Manager shall submit quarterly invoices to the Contract Administrator for certification of receipt of services, with copies to the Chief Investment Officer.  

(b)   All instructions, notices, demands or other communications to be given by either party to the other party under this Agreement shall be in writing, shall be given by first class, certified or registered mail, by a recognized courier service that maintains written verification of actual delivery, by facsimile, with a copy thereof sent by first class mail, postage prepaid, or messenger.  Such communication shall be sufficient and effective when received by the parties as follows: 

(1)       To the Pension Fund:

Address

Attention:  Executive Director and Contract Administrator

Copy to:    Chief Investment Officer 

(2)       To the Investment Manager: 

(c)       Designated names and addresses for receiving notices may be changed at any time with appropriate notice in accordance with the foregoing. 

ARTICLE VII.        TERM AND TERMINATION 

This Agreement may be terminated by the Pension Fund at any time and for any reason upon written notice to the Investment Manager, or by the Investment Manager upon thirty (30) days written notice to the Pension Fund. 

ARTICLE VIII.             ASSIGNMENT 

The Investment Manager shall not assign its rights or duties under this Agreement in whole or in part without first obtaining the written consent of the Pension Fund.       

ARTICLE  IX.         INDEMNIFICATION

The Investment Manager hereby agrees to hold harmless the Pension Fund, its members, officers, employees, agents and representatives and the (local government/plan sponsor), and to indemnify and exonerate same against and in respect of any and all claims, demands, damages, actions, costs, charges, losses, liabilities, and deficiencies, including legal fees and expenses, resulting from, arising out of, or in any way related to (i) any untrue warranty or representation or omission of the Investment Manager in this Agreement; and/or (ii) any liens, claims, encumbrances, or infringement of any patent, trademark, copyrights, or other proprietary right; and/or (iii) the Investment Manager's willful misfeasance, bad faith, negligence or reckless disregard of its obligations in managing the Investment Account assigned to the Investment Manager under the terms of the Agreement; provided that a court of competent jurisdiction finds that the Investment Manager was in breach of the aforesaid obligations, or such finding is made by a mutually agreed upon arbitration panel. 

ARTICLE X.         GOVERNING LAWS 

This Agreement shall be governed by and construed in accordance with (applicable laws).

 

ARTICLE XI.              SEVERABILITY 

The parties intend that each provision of this Agreement is severable.  If any provision or term hereof is determined, for any reason whatsoever, to be illegal or otherwise unenforceable, such determination shall not affect the validity of the remaining provisions and terms hereof. 

ARTICLE XII.        AMENDMENT 

This Agreement constitutes the entire agreement of the parties to this Agreement, and is intended to be a complete and exclusive statement of their agreement, and may not be modified or amended except by a writing mutually agreed to, and duly executed by each party.  All previous communications between the parties whether written or oral, with reference to the subject matter of this Agreement, are hereby rescinded and superseded. 

ARTICLE XIII.             SPECIAL PROVISIONS 

(a)   The rights and remedies provided herein are cumulative and are in addition to any remedies otherwise available to the Pension Fund in law or in equity and the exercise of any one or more of such remedies shall not be construed as a waiver of any other right or remedy. 

(b)   The Investment Manager agrees to do all acts and execute all other papers, documents, or instruments necessary or desirable to effectuate the purposes of this Agreement. 

(c)       Unless specifically authorized by the Pension Fund, the Investment Manager shall not invest any assets of the Retirement Funds in shares of investment companies or in any other pooled funds, which are sponsored by the Investment Manager or any of its affiliates. 

(d)   The representations and warranties contained in this Agreement shall survive the termination of this Agreement.

(e)   The Investment Manager shall notify the Pension Fund as soon as possible of any material change in the personnel of the Investment Manager's organization either directly involved with the management of this Account or who could directly or indirectly impact the management of this Investment Account. 

(f)    The Investment Manager understands and acknowledges that the Pension Fund is subject to the District of Columbia Freedom of Information Act and consents to the disclosure of any information, recommendations and advice received by the Pension Fund from the Investment Managers if such information, recommendation, and/or advice is subject to disclosure under applicable Freedom of Information Act provisions.  The Pension Fund agrees to use reasonable efforts to give notice of any demand for disclosure to the Investment Manager, as soon as is reasonably practicable after demand for disclosure is made upon the Pension Fund. 

(g)   The failure of either party hereto to insist, in any one or more instances, upon performance of any of the terms, covenants or conditions of this Agreement shall not be construed as a waiver or relinquishment of the future performance of any such term, covenant or condition by the other party hereto, but the obligation of such party with respect to such future performance shall continue with full force and effect. 

(h)   The captions of the Articles of the Agreement are guides and labels to assist in locating and reading such Articles and will be given no effect in construing this Agreement and shall not be restrictive of the subject matter of any Article or part of this Agreement. 

(i)    This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same Agreement. 

(j)    Each manager represents that the person(s) executing this Agreement on behalf of the Managers are authorized to do so. 

(k)   In the event the Investment Manager conducts seminars, training sessions or similar events which are generally made available to the Investment Manager’s clients, the Pension Fund shall be invited to attend upon the same terms and conditions as such other clients.  If the Investment Manager offers to pay the costs of such events and/or the travel or lodging expenses incurred by its clients in connection with attending such events, the Investment Manager shall pay for or reimburse the Pension Fund for such expenses on the same basis as the Investment Manager pays for or reimburses the expenses of its other clients.  The parties acknowledge that any representative who attends on behalf of the Pension Fund shall obtain the express approval of the Pension Fund, pursuant to a majority vote, to attend prior to payment or reimbursement.