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INVESTMENT MANAGEMENT SERVICES AGREEMENT
THIS INVESTMENT MANAGEMENT SERVICES AGREEMENT (“Agreement”) is made by
and between THE CITY OF SEATTLE, acting by and through the Board of Administration
of the Seattle City Employees’ Retirement System (hereinafter called "the Board”) and
___________________________________________(hereinafter called "Investment
Advisor,” a __________________________ company authorized to do business in the
State of Washington). This Agreement is effective as of the date when signed by both
parties (“Effective Date”).
The parties agree as follows:
I. MANAGEMENT SERVICES
The Board hereby retains the Investment Advisor for the period commencing on the
effective date of the contract and ending at, 9 p.m. Pacific Time, on the 1,460th day of the
contract, to manage the Board's portfolio. The Investment Advisor shall perform the
services specified in its <<Date>> proposal to the Board and the City’s Request for
Proposals; a copy of each of which is attached hereto as Exhibit A and Exhibit B,
respectively, and incorporated into this Agreement by this reference. The Investment
Advisor will manage assets in strict accordance with the guidelines detailed in Exhibit C.
Neither the investment guidelines nor the services described herewith shall be in violation
with the Board’s Statement of Investment Policy and Procedures attached as Exhibit D.
The Board may increase their allocation to the portfolio managed by the Investment
Advisor subject to the concurrence of the Investment Advisor, and, upon reasonable
notice, from time to time, may reduce their allocation to the portfolio managed in order to
meet the financial needs of the Retirement System.
All securities are to be held by a custodial bank designated by the Board in the name and
in trust for The Seatte City Employees’ Retirement System (“Retirement System”). No
securities shall be subject to any debt or liability of the Investment Advisor or to any levy by
the Investment Advisor or any creditor of the Investment Advisor.
II. FEE
For and in consideration of the rendering of the services described in Section I hereof, the
Investment Advisor shall receive a fee as described in Exhibit D. The fee shall be payable
at the end of each calendar quarter and shall be calculated based on the average month
end value of assets managed as reported by the custodian bank for the four (4) preceding
quarters. The Investment Advisor certifies that as of the Effective Date, the fee will not be
greater than the fee the Investment Advisor charges other clients with similar investment
style, investment objective, and account type, size and service, excluding certain clients
with whom the Investment Advisor has committed to continue a fee schedule which was
previously in effect. If the Investment Advisor reduces its fee in the future for other clients
for managing such portfolios, the Investment Advisor shall reduce the fee payable by the
Board.
Within 30 calendar days after final payment has been made to the Investment Advisor, the
Investment Advisor shall submit to the City a completed “Final Investment Advisor Contract
Payments Reporting Form,” listing the name of and dollar amount paid to each sub-
Investment Advisor utilized by the Investment Advisor under the terms of this Agreement,
as well as the dollar amount paid to the Investment Advisor. This obligation shall survive
the expiration or earlier termination of this Agreement.
III. PRUDENT INVESTMENT
In making investments, the Investment Advisor shall act with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent investor acting in a like
capacity and familiar with such matters would use in the conduct of making investments for
a retirement system, and as required by law. The Investment Advisor shall comply with the
Board’s Statement of Investment Policy and Procedures (Exhibit C).
The Investment Advisor shall comply with applicable laws and rules governing the markets
used in the management of the portfolio.
IV. EQUAL EMPLOYMENT OPPORTUNITY AND OUTREACH
During the term of this Agreement, the Investment Advisor agrees as follows:
a. The Investment Advisor shall not discriminate against any employee or applicant for
employment because of race, religion, creed, age, color, sex, national origin, sexual
orientation, gender identity, marital status, political ideology, ancestry, or the
presence of any sensory, physical or mental handicap, unless based upon bona fide
occupational qualification. The Investment Advisor shall take affirmative efforts to
ensure that applicants are employed, and that employees are treated during
employment, without regard to their creed, religion, race, color, sex, age, national
origin, marital status, political ideology, ancestry, sexual orientation, gender identity,
or the presence of any sensory, physical or mental handicap. Such efforts shall
include, but not limited to the following: employment, upgrading, demotion, or
transfer; recruitment or recruitment advertising, layoff or termination, rates of pay, or
other forms of compensation and selection for training, including apprenticeship.
The Investment Advisor shall post in conspicuous places, available to employees
and applicants for employment, notices setting forth the provisions of this
nondiscrimination clause.
b. If the Investment Advisor will hire employees for this project, the Investment Advisor
shall make affirmative efforts to recruit minority and women candidates. Affirmative
efforts may include the use of advertisements in publications directed to minority
Guidelines – 2
communities and other targeted recruitment efforts, and using the services of
available minority community and public organizations to perform outreach.
c. Record-Keeping: The Investment Advisor shall maintain, for at least 36 months
after the expiration or earlier termination of this Agreement and permit access to the
Investment Advisor’s records of employment, employment advertisements,
application forms and other pertinent data and records requested by the City of
Seattle Director of Executive Administration for the purposes of investigation to
determine compliance with the requirements of this section. If, upon investigation,
the Director of Executive Administration finds probable cause to believe that the
Investment Advisor has failed to comply with any of the requirements of this section,
the Investment Advisor and the Retirement System Executive Director shall be so
notified in writing. The Retirement System Executive Director shall give the
Investment Advisor an opportunity to be heard after ten calendar days’ notice. If the
Retirement System Executive Director concurs in the findings of the Director of
Executive Administration, he/she may suspend this Agreement and withhold any
funds due or to become due to the Investment Advisor, pending compliance by the
Investment Advisor with the requirements of this section.
d. The City encourages the use of women and minority employees and apprentices on
all City contracts and encourages outreach efforts in employment opportunities.
Outreach efforts may include use of targeted solicitation lists, advertisement in
publications directed to underrepresented communities, providing student
internships or apprentice opportunities, noting the Investment Advisor’s Equal
Employment Opportunity (EEO) policy in solicitation, emphasizing EEO and
outreach policies within the company, and using the services of available minority
community and public organizations to perform outreach.
e. Upon request by the Director of Executive Administration, the Investment Advisor
shall submit EEO Reports in the form specified by the City, detailing actual
employment data for the Investment Advisor and for any and all subcontractor(s)
utilized for the Work.
f. The Investment Advisor, by executing this Agreement, is affirming that the
Investment Advisor complies with all applicable federal, state, and local
nondiscrimination laws, particularly the requirements of Seattle Municipal Code
section 20.42 as incorporated in this Agreement. Any violation of the mandatory
requirements of the provisions of this section shall be a material breach of
Agreement for which the Investment Advisor may be subject to damages and
sanctions provided for by the Agreement and by applicable law, including but not
limited to debarment from City contracting activities in accordance with SMC Ch.
20.70.
g. The foregoing provisions of this section shall be inserted in all subcontracts for the
Work covered by this Agreement.
Guidelines – 3
V. REPORTING
If in its review of the transactions during a month, the Board at its monthly meeting or at a
special meeting should question any of the Investment Advisor transactions, the
Investment Advisor shall have a representative appear in person at the next following
meeting or at a meeting of the Retirement System’s Investment Committee to explain the
challenged transaction(s).
The Investment Advisor shall deliver to the Board within 30 calendar days after the end of
each calendar year an annual report regarding the state of funds managed and the
managers’ summary of significant events or trends during the year, and, at the Board’s
option, arrange to have a representative appear at least annually in person at a meeting of
the Board or its Investment Committee to discuss such annual report and such other
matters as may be of interest to the Board or its Committee.
If requested by the Board’s Investment Staff, the Investment Advisor shall make a record
of its investment transactions for the City portfolio available for analysis and answer such
Investment Staff’s inquiries, if any, to assist the Board in evaluating the Investment
Advisor’s performance. The Investment Advisor shall reconcile all investment reports with
the custodial reports monthly, and provide a copy of such reconciliation to the Executive
Director of the Retirement System within 10 business days of receiving the custodial
reports.
VII. ACCESS TO DOCUMENTS
Materials provided by the Investment Advisor to the Board become public records of the
Retirement System and are subject to public disclosure under the Washington Public
Records Act (“PRA”), Chapter 42.56 Revised Code of Washington. Material and
information supplied to the Investment Advisor by a third party with a request of
confidentiality shall be subject to public inspection only if and to the extent the Investment
Advisor forwards the same to the Board. The Board shall provide notice to Investment
Advisor of any request under the PRA for disclosure of materials provided to the Board
prior to disclosure to enable Investment Advisor to seek appropriate legal action regarding
such disclosure, if any.
VIII. TERMINATION
a. Termination upon Ten Day's Prior Notice by Board: The Board may terminate this
Agreement effective upon ten (10) days' prior notice if:
(1) The Investment Advisor shall fail to fulfill, in a timely and proper manner, its
obligations under Section IV ”Equal Employment Opportunity And Outreach”
or violate any of the terms of that provision;
(2) The Board feels insecure in permitting Investment Advisor's continued
management of the securities, because Investment Advisor has become the
subject of one or more orders of the Securities and Exchange Commission,
Guidelines – 4
or the New York Stock Exchange, or the Investment Advisor has filed for or
become the subject of a bankruptcy or receivership proceeding;
(3) Any public agency in the United States commences a criminal proceeding or
seeks civil relief against the Investment Advisor or any of the officers of the
Investment Advisor on account of the handling of a client portfolio, whether of
the City or another client, by the Investment Advisor or any of its officers; or
(4) The Investment Advisor merges with, or is taken over by another entity or is
reorganized so that without consent of the Board, the investment manager(s)
assigned to the City portfolio are substantially different from those identified
in Exhibit “A” or the investment officer(s) are substantially restricted in their
investment management.
b. Board's Authority to Suspend Investment Advisor's Transactions Regarding Board's
Portfolio: If the Board, in the exercise of its sole discretion, deem such action to be
necessary to protect the portfolio or for any other reason whatsoever, the Board
may order a suspension in transactions by the Investment Advisor with respect to
the Board’s portfolio during the ten (10) day period before the Board's termination
notice is effective.
c. Termination upon Thirty Day's Prior Notice by Board: The Board may terminate
this Agreement upon thirty (30) days prior notice if:
(1) The Board’s Investment Committee so recommends. (Committee
recommendations may be based on changes in the Board’s investment
objectives; asset reallocation; government investment policies; and other
causes, as well as the Investment Advisor’s performance);
(2) The Investment Advisor's performance, as analyzed by the Board’s
Investment Advisor, falls below the median performance of portfolio
managers with similar investment guidelines as set forth in the Statement of
Investment Policy and Procedures. Evaluations will take into account the
Board’s restrictions upon the types of investments available to the
Investment Advisor and any unanticipated withdrawals of cash or securities
in order to meet the financial needs of the Board or to provide for asset
reallocation; or
(3) The Investment Advisor is in breach of any provision of this Agreement other
than Section IV (Equal Employment Opportunity And Outreach); or
(4) The Board determines this action to be in the interest of the Retirement
System.
d. Investment Advisor's Right to Terminate Agreement. The Investment Advisor may
terminate this Agreement upon thirty (30) days' prior written notice, delivered by
U.S. mail or a traceable overnight delivery service. Such notice to be addressed to
and delivered to the Executive Director of the Retirement System.
Guidelines – 5
IX. INDEMNIFICATION AND INSURANCE
a. Indemnification: The Investment Advisor shall indemnify, save harmless and defend
the City from all claims, demands, suits, judgments, and liability (including
reasonable attorney’s fees, losses, cost and expenses of any kind) arising out of
Investment Advisor’s performance of the services contemplated in this Agreement,
to the extent attributable to or incident to the negligent acts, errors, omissions, willful
misconduct, or breach of this Agreement by the Investment Advisor, its agents and
employees under this Agreement. The indemnification provided for in this section
shall survive any termination or expiration of this Agreement. The Investment
Advisor further waives, with respect to the City only, its immunity under RCW Title
51, Industrial Insurance.
b. Insurance Coverage Requirements: The Investment Advisor shall, at all times
during the term of this Agreement, obtain and maintain continuously, at its own
expense, and file with the Board, evidence of a policy or policies of insurance as
enumerated below:
(1) Commercial General Liability Insurance including:
- Premises/Operations Liability
- Products/Completed Operations
- Personal/Advertising Injury
- Contractual Liability
- Independent Contractors Liability
- Stop Gap/Employers Contingent Liability
Such policy (ies) must provide the following minimum limit:
Bodily Injury and Property Damage -
$ 2,000,000 General Aggregate
$ 2,000,000 Products & Completed Operations Aggregate
$ 1,000,000 Personal & Advertising Injury
$ 1,000,000 Each Occurrence
Stop Gap Employers Liability -
$ 1,000,000 Each Accident
$ 1,000,000 Disease - Policy Limit
$ 1,000,000 Disease - Each Employee
Any deductible or self-insured retention must be disclosed and is subject to
approval by the City's Risk Manager. The cost of any claim payments falling within
the deductible shall be the responsibility of the Investment Advisor.
Guidelines – 6
(2) Business Automobile Liability, including coverage for owned, non-owned,
leased or hired vehicles, with the following minimum limit:
Bodily Injury and Property Damage -
$ 1,000,000 per accident
(3) Professional Liability Insurance (Acts, Errors or Omissions Insurance)
appropriate to the Investment Advisor’s profession. Coverage should be for
a professional act, error, or omission arising out of the scope of services
shown in this Agreement.
The minimum limit of liability coverage shall be:
$2,000,000 each claim
(4) Worker’s Compensation appropriate to this Agreement.
c. Additional Insured, Primary Insurance, and Severability of Interest Provisions:
The City of Seattle shall be included as an additional insured under Subsection IX.b
(1) and (2`) but only as respects the negligent activities of Investment Advisor in
connection with this agreement.
Such insurance shall include a standard separation of insureds provision.
d. Evidence of Insurance: The following documents must be provided as evidence of
insurance coverage:
A certificate of insurance stating that the coverages provided by this policy to the
City, or any other named insured shall not be terminated, reduced, or otherwise
materially changed without providing at least thirty (30) days prior written notice to
the Seattle City Employees’ Retirement System Board of Administration.
e. Policy Rating: All insurers must either be rated A-: VII or higher in the current A.M.
Best's Key Rating Guide if licensed to do business in the State of Washington, or
issued as a surplus line by a Washington Surplus lines broker.
f. Self-Insurance: If the Investment Advisor is self-insured with respect to the
Commercial General or Business Automobile Liability coverage required above, the
Investment Advisor shall deliver to the City a letter from the Investment Advisor's
Risk Manager or appropriate Finance Officer indicating whether the Investment
Advisor's self-insurance program is actuarially funded and its fund limits and
enclosing any excess declaration pages necessary to demonstrate that the
Investment Advisor meets the contract requirements. Further, this letter should
advise how the Investment Advisor would protect and defend the City of Seattle as
an Additional Insured in the Investment Advisor's self-insured layer, and include
claims handling directions in the event of a claim.
Guidelines – 7
X. AUDIT
The Investment Advisor shall permit the City and Washington State Auditor, from time to
time as the City Auditor, the Executive Director of the Seattle City Employees’ Retirement
System, or State Auditor deems necessary (including up to six (6) years after the final
payment of any fee payable hereunder or the release of withheld amounts has been made
under the Agreement), to inspect and audit at any and all reasonable times in the
Investment Advisor’s offices, all pertinent books and records related to the Investment
Advisor service and any sub-Investment Advisor or other person or entity that has
performed work in connection with or related to the Investment Advisor’s services under
this Agreement to verify, among other things, that the compensation or other consideration
provided to the Investment Advisor has been appropriate, and that the contracted-for
services were provided in a timely manner. The Investment Advisor shall supply the City
with, or shall permit the City or State Auditor to make, a copy of such books and records
and any portion thereof, upon the request of the City Auditor, Executive Director, or the
State Auditor. The Investment Advisor shall ensure that such inspection, audit and copying
right of the City and State Auditor is a condition of any subcontract, agreement or other
arrangement under which any other person or entity is permitted to perform work in
connection with or related to the Investment Advisor’s services under this Agreement.
XI. RELATIONSHIP
The Investment Advisor is an independent contractor with limited management authority to
buy and sell securities within the City's portfolio consistent with the directions or
instructions as specified from time to time by the Board. The Investment Advisor is not an
agent of the City or the Board in any respect, nor a partner, associate, or joint venture of
the City or its Retirement System and, except for the purchases and sales of securities in
the management portfolio for the Retirement System, may not create any obligation or
responsibility on behalf of the Board or the City or bind the Retirement System or the City
in any manner.
The Board consents and agrees that, to the extent permitted by applicable law, the
Investment Advisor may (but is not required to) aggregate investment sale and purchase
orders for the portfolio with similar orders being made contemporaneously for other
accounts managed by the Investment Advisor or with accounts of affiliates of the
Investment Advisor if, in the Investment Advisor’s reasonable judgment, such aggregation
is reasonably likely to result in an overall economic benefit to the portfolio, based on an
evaluation that the portfolio is benefited by relatively better purchase or sale prices, lower
commission expenses or beneficial timing of transactions, or a combination of these and
other factors. In many instances, the purchase or sale of investments for the portfolio shall
be affected substantially simultaneously with the purchase or sale of like investments for
the accounts of other clients of the Investment Advisor and its affiliates.
XII. WAIVER
Rights under this Agreement are cumulative; the failure to exercise any right on any
occasion does not prevent the exercise of such a right on another occasion. The use of
one remedy shall not be taken to exclude or waive the right to use another. No waiver of
Guidelines – 8
full performance by either party shall be construed or operate as a waiver of any
subsequent default of any of the terms, covenants, and conditions of this Agreement. The
payment or acceptance of compensation or expense reimbursement whether before or
after a default shall not be deemed to be a waiver of any right or acceptance of defective
performance.
XIII. AMENDMENT
The parties reserve the right to modify or amend this Agreement from time to time as
deemed necessary, by mutual agreement. No modification or amendment shall be
effective unless written and signed by an authorized representative of each of the parties.
XIV. SEVERABILITY
If any term, provision, condition or portion of this Agreement or the application thereof be
held to be inoperative, invalid or unenforceable, the remainder of this Agreement or the
application of such term or provision in other circumstances shall not be affected thereby
and shall continue in full force and effect.
XV. COMPLIANCE WITH LAW
a. General Requirement: The Investment Advisor, at its sole cost and expense,
shall perform and comply with all applicable laws of the United States and the State
of Washington; the Charter, Municipal Code, and ordinances of The City of Seattle;
and rules, regulations, orders, and directives of their administrative agencies and
the officers thereof.
b. Licenses and Similar Authorizations: The Investment Advisor, at no expense to
the City, shall secure and maintain in full force and effect during the term of this
Agreement all required licenses, permits, and similar legal authorizations, and
comply with all requirements thereof.
c. Taxes: The Investment Advisor shall pay, before delinquency, all taxes,
levies, and assessments arising from its activities and undertakings under this
Agreement; taxes levied on its property, equipment and improvements; and taxes
on the Investment Advisor’s interest in this Agreement.
d. Use of Recycled Content Paper: The Investment Advisor shall, whenever
practicable, use recycled content paper on all documents submitted to the City.
Investment Advisor will duplex all documents that are prepared for the City under
this Contract, whether such materials are printed or copied, except when
impracticable to do so due to the nature of the product being produced. Investment
Advisors are to use 100% post consumer recycled content, chlorine-free paper in
any documents that are produced for the City, whenever practicable, and to use
other paper-saving and recycling measures in performance of the contract with and
for the City.
Guidelines – 9
e. Americans with Disabilities Act: The Investment Advisor shall comply with all
applicable provisions of the Americans with Disabilities Act of 1990 (ADA) in
performing its obligations under this Agreement. Failure to comply with the
provisions of the ADA shall be a material breach of, and grounds for the immediate
termination of, this Agreement.
f. Fair Contracting Practices Ordinance: The Investment Advisor shall comply with
the Fair Contracting Practices Ordinance of The City of Seattle (Chapter 14.10
SMC), as amended.
XVI. ASSIGNMENT AND SUBCONTRACTING
The Investment Advisor shall not assign or subcontract its obligations under this
Agreement, in whole or in part, without the prior written approval of the Executive Director.
Any assignment or subcontract made by the Investment Advisor with the consent of the
City shall incorporate by reference all the terms of this Agreement. The Investment Advisor
shall be responsible for ensuring that all sub-Investment Advisors comply with the
obligations and requirements of this Agreement.
XVII. INVOLVEMENT OF FORMER CITY EMPLOYEES
In the event that the Investment Advisor intends to utilize for work under this Agreement
(whether as an employee or sub-Investment Advisor) any person who the Investment
Advisor knows was employed by the City at any time during the twelve months
immediately prior to such proposed utilization, the Investment Advisor shall give notice of
such intention to the Executive Director of the Retirement System, identifying by name the
person to be so utilized. The Investment Advisor shall not knowingly utilize any former City
employee who, in the course of his/her City employment, was involved or participated in,
or acted on any matter related to the Investment Advisor's services under this Agreement
and whose City employment was ended within the twelve months immediately preceding
such proposed utilization by the Investment Advisor.
XVIII. NO CONFLICT OF INTEREST
The Investment Advisor confirms that to the best of its knowledge the Investment Advisor
does not have a business interest or a close family relationship with any City officer or
employee who was, is or will be involved in the selection of the Investment Advisor for
work under this Agreement; or the negotiation, preparation, execution, administration, or
evaluation of the Investment Advisor’s performance. As used in this section, the term
“Investment Advisor” shall include any employee of the Investment Advisor who was, is, or
will be involved in the negotiation, preparation, execution, administration, or performance
of the Agreement. As used in this section, the term “close family relationship” refers to the
following: spouse or domestic partner; any dependent parent, parent-in-law, child, son-in-
law, or daughter-in-law; or any parent, parent-in-law, sibling, uncle, aunt, cousin, niece or
nephew residing in the household of a City officer or employee described above.
Guidelines – 10
XIX ADDRESSES FOR NOTICES
All notices and other material to be delivered hereunder shall be in writing and shall be
delivered or mailed to the following addresses:
If to City: Cecelia M. Carter, Executive Director
Seattle City Employees’ Retirement System
720 3rd Avenue, Suite 1000
Seattle, WA 98104
Cc: Teresa M. Wells, Investment Strategic Advisor
If to the Investment Advisor:
_____________________________
_____________________________
_____________________________
_____________________________
or such other respective address(es) as may be specified herein or as either party may,
from time to time, designate for itself by notice to the other party.
XX. KEY PERSONS.
The parties agree that the individuals designated in this Agreement are essential to the
services offered pursuant to this Agreement. If any such individual is no longer employed
by the Investment Advisor during the term of this Agreement, the Investment Advisor shall
promptly notify the Executive Director of the Retirement System. The Investment Advisor
shall propose to the City an individual with greater or equal qualifications as a
replacement.
XXI. ENTIRE AGREEMENT
This Agreement contains all of the covenants, promises, agreements, and conditions,
either oral or written, between the parties. The terms and conditions of this Agreement
supersede the terms, obligations and conditions of any existing or prior agreement, oral or
written, between the parties regarding the specific subject matter hereof. This Agreement
shall be construed and interpreted in accordance with the laws of the State of Washington.
The venue of any action brought hereunder shall be in the Superior Court of King County.
IN WITNESS whereof each of the parties has executed this Agreement by having an
authorized representative sign his/her name in the spaces provided below.
Guidelines – 11
BOARD OF ADMINISTRATION <<Investment Advisor>>
SEATTLE CITY EMPLOYEES’
RETIREMENT SYSTEM
By: By:
__________________________________ ________________________________
Cecelia M. Carter, Executive Director Managing Director
Date: ________________________ Date: _____________________
Guidelines – 12
Exhibit A
[Presentation Materials Used in Presentation to the Investment Committee]
Guidelines – 13
Exhibit B
[Response to Questionnaire Submitted to the Retirement System]
Guidelines – 14
Exhibit C
[Investment Advisor Strategy Guidelines]
Guidelines – 15
Exhibit D
[Board Statement of Investment Policy and Procedures]
Guidelines – 16
<<Please provide a glossary of terms and asset types relating to the investment strategy.>>
Contract Template – Inv Mgr
Page 17
Exhibit D
SCHEDULE OF PORTFOLIO MANAGEMENT FEES
Contract Template – Inv Mgr
Page 18
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