2014-077sAlegal \our documents \ordinances\14 \investment advisory services ordinance- fsam.doc
•�• •
MOM
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS,
AUTHORIZING THE CITY MANAGER OR HIS DESIGNEE TO EXECUTE AN
INVESTMENT ADVISORY SERVICES CONTRACT WITH FIRST SOUTHWEST ASSET
MANAGEMENT, INC. FOR INVESTMENT ADVISORY SERVICES FOR AN AMOUNT
NOT TO EXCEED $52,000; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, Section 2256.003 of the Texas Government Code permits cities to contract
with an investment management firm in the exercise of their power to purchase, sell and invest
their funds in investments authorized by the Public Funds Investment Act; and
WHEREAS, on June 1, 2008, the City of Denton ( "City ") and First Southwest Asset
Management, Inc. ( "FSAM ") entered into an Investment Advisory Services Contract whereby
FSAM was designated as the investment advisor for the City beginning June 1, 2008 and ending
May 31, 2010, with a possible two -year extension of the Contract not to extend beyond May 31,
2012; and
WHEREAS, the City and FSAM initiated a two -year contract which began June 1, 2012
and ending May 31, 2014; and
WHEREAS, the City and FSAM desire to initiate a two -year contract which will begin
June 1, 2014 and ending May 31, 2016; NOW, THEREFORE,
SECTION 1. The City Manager or his designee is authorized to execute a two -year
contract between the City and FSAM for investment advisory services for an amount not to
exceed $52,000, a copy of which is attached hereto and made a part hereof for all purposes.
SECTION 2. The following officials: Bryan Langley, Assistant City Manager; Charles
Springer, Director of Finance; Antonio Puente, Jr., Assistant Director of Finance; and Caroline
Finley, Treasury Administrator are hereby authorized to transact business with the above listed
institution regarding investments for the City.
SECTION 3. The City Manager is authorized to make the expenditure of funds and fees
and take the actions as required by the Investment Advisory Services Contract as amended.
SECTION 4. This Ordinance is enacted pursuant to and in accordance with Section
2256.003 of the Texas Government Code.
SECTION 5. This Ordinance shall become effective immediately upon its passage and
a
approval.
s:\Iegal\our documents\ordinances\14\investment advisory services ordinance-fsam.doc
PASSED AND APPROVED this the day • —M�- 2014.
NJ 1101041
BY:
•
WAINW NO -0-m- Ul
FAI k All w L 4
QW0 I Wff 9j [A Q
BY:
am
M f
ARK A. BGRROtr6r,f-js,[ MAYOR
This Investment Advisory Agreement (the "Agreement") is made by and between the City of Denton, Texas (the
"City") and FirstSouthwest Asset Management, Inc. ("FSAM"). This agreement shall be effective as of the date of its
acceptance by the City as indicated on the signature page hereof. The term of this agreement shall commence on June 1,
2014 and conclude on May 31, 2016. This agreement may be extended for additional two (2) year periods upon approval
by the City.
Provide staff with research, analysis and market-related projects umrequested.
B� Scope of Investment Decisions. In performing the services listed in Suodoo ILA above, PSAM
shall not have discretionary authority and, accordingly, shall obtain approval from the City for the
investment of any City Funds. The City hereby represents and acknowledges that its written
investment policy and invooUnoot strategy inu|u6oa its investment objectives and all portfolio
limitations and ,oatriobnoo, including, without limitation, acceptable |ove|e of investment risk. The
City also agrees to notify P8AMiowriting ten business days in advance of the implementation nf
any obnogem in the City's investment objectives, investment limitations, and/or financial condition.
The City will give FSAM immediate verbal notice and written notice within fivedays of receipt nf
any trade confirmations should the City believe any iovcoUnem io the Funds violates the City's
investment objectives orlimitations.
C' Standard of Came. In the administration of its duties, FSAM shall exercise the judgment and care,
under prevailing oircumotan000, that a prudent person would exercise in the management of the
person's own affairs, not for speculation, but for investment, considering, with regard ta the entire
Funds rather than any particular investment or security, the probable safety of cupbu| and the
probable income tobederived.
D. Settlement ofSecurities. The purchase of individual securities shall be executed "delivery versus
payment" (DVP) through the City's safekeeping agent. By so doiog. City funds will be released
when and if the City has received, d6mogb the safekeeping agoo1, the designated securities
purchased.
B. Return on the Portfolio. The City expressly affirms and acknowledges that FSAM has not
promised or guaranteed any stated oropeoifiod return on, or performance of, the City's Funds, and
F8AM is not responsible for any market |nmaeo arising with respect to the Funds,
A. PBAM represents dbmi/ioregixteredaxaoiuvmotmmntadvbmcuoJezdbmluveu8oent/kdvisers Act of
l94O (the "Advisers Act') and io authorized and empowered to enter into this Agreement.
B. The City represents and confirms that (l) the City has full power and authority to enter into this
Agreement; (2) the terms hereof do not violate any obligation by which the City is bound, vv6uder
arising by contract, operation of law, or otherwise; and (3) this Agreement has been duty authorized
by and will be binding on the City according to its terms.
C. The City shall allow FSAM to rely upon all information regarding schedules m other information
pertaining to the Funds as provided toitbythe City as being true and accurate. FSAM shall have no
responsibility to verify, through audit or investigation, the accuracy or completeness of such information
and FS/\M will not undertake tu authenticate any such Information and F8AMvviU not undertake to
authenticate any such information.
D. The City recognizes that there may be loss nrdepreciation of the current liquidation, immediate and
ongoing value of any investment due to the fluctuation of market values. The City represents that no
party to this Agreement has made any guarantee, either oral nr written, that the City's investment
objectives will be achieved. F8/kM ohuU not be liable for any oonr in judgment and/or for any
investment losses inthe Funds in the absence of willful malfeasance, gross negligence, orviolation
of applicable law. Nothing in this Agreement shall constitute a waiver or limitation of any rights that
the City may have under applicable state orfederal |mv including without limitation, the state and
6:dcru| suoorhiuo laws.
In
B. City represents and acknowledges that City has reviewed and understands the risk factors and fees
associated with the Funds.
IV. Fees and Costs of FSAM
As consideration for the services provided byPSAMunder this Agreement, PSAM will 6e entitled toafee
(t6o "Advisor Fee") determined in accordance with the schedule set forth in the fee schedule ("Schedule
A^), ucopy of which is attached horeto, is incorporated herein for all purposes and is being delivered \uthe
City simultaneously with the exeuudon, and as an integral part of this Agreement. The obligation nfP8A&4
to pay or incur expouoco shall not include any onms incident to litigation, mandamus action, regulatory
investigation, test case or other similar legal actions. The Advisor Fee will be payable quarterly in arrears. In
the event this Agreement is terminated prior to the end of a quarter, the Advisor Fee shall be prorated and
paid within 30 days nftermination.
V. Reporting and Account Statements
PSAM will deliver or cause to he delivered to the City 000finnahoo of investment and monthly statements
for the Funds invested as mu{ forth in this Agreement. The omnt6h/ statement will reflect all investments,
including date of investment, pu/cb000 price, current price, date of maturity, profit or \ooa and ocmb
balances. FGAMvvU| also provide the City with an annual valuation ofthe City's Funds and any additional
statements that may he required by applicable law, including the reporting provisions of the Public Funds
Investment Act, or other applicable state law, with respect to transactions effected under this Agreement.
The investment advisory services provided hereunder byF8AM to the City are exclusive of any other
services that FSAM may provide to the City.
VID Execution ofInvestment Transactions
B. Bundling of Investment Transactions. Transactions for each client account generally will be
effected independently unless FSAM decides to purchase or sell the same securities for several of its
clients at approximately the same time. FSAM may (but is not obligated to) combine or "batch"
such orders to obtain best execution. Under this procedure, transactions will be averaged as to price
and will be allocated among FSAM's clients included in the "batch" group in proportion to the
purchase and sale orders placed for each client in batch transactions.
VIII. Selection ofBrokers
The City agrees that when FSAM effects or places mdcm for the execution of transactions for the Funds
(other than situations where the City specifically instructs otherwise inwrding),9SAM may allocate such
transactions to such brokers and dealers for execution on such markets, at such prices as in the judgment of
FSAMv/iU be io the best interests o[ the City, taking into consideration, io the selection nf such brokers and
deu|ers, the available prices and rates of brokerage commissions and other relevant factors, without having
to demonstrate that such factors are ofodirect benefit to the City. Subject to the foregoing, FSAM will
unongu for the execution of securities trunoaodnoo for City Funds through brokers or dealers that PB&M
reasonably believes will provide best execution.
m.-�lZrIT1198MUMM, OEM=-
The City hereby acknowledges that FSAM'o services under this Agreement are nonexclusive, and that
PBA84shall be free to render the oomu or similar services to other dieom. The City further acknowledges
that F8&M`o advice is specific to each individual City's investment objectives, limitations and financial
condition. Tbepothro F8/\M, in the pedbnmunxu of its iuvcou000( advisory dobeo, may give udv|oc to, and
take action on behalf of, other clients that may differ from the advice given, or the timing and nature of the
action taken, with respect to the City's Funds. Nothing in this Agreement nba|| be deemed to impose upon
FSAM any obligation to purchase or sell, or to recommend for purchase or ou|e for the City's Funds, any
security that PS&M or its affiliates may purchase or oo||, for their ovvo account or for the accounts of any
other client if, at the sole discretion nfF8/&M. it is for any reason undesirable or impractical to take such
action or make such recommendation for the City's Funds. The City also acknowledges thmF8/\M has
varying fee structures and arrangements with other clients and may charge other clients different fees, which
may be higher or lower than the fees charged with respect tu the City's Funds for similar services.
X. Instructions from the City
FS&Mmay rely on all instructions (whether oral mwritten) given by the City mits agents thatPSAM
believes to be genuine. Instructions may be given tnFS&88by any officer o, agent authorized by(l)the
investment policy; (2) odu|y executed "Authorization to Trade Public Funds" fbnn provided byFSA&Y;or
(3) o n:on|udon of the governing body of the City. FS/\M may n:|y on such authorization until written
ondcu W the contrary is delivered to FS/\M by the City; and if the City does not deliver appropriate
outborizingdnuumnntation, F8&M may accept instructions from any person reasonably believed byF8/\M
onbcun officer oy the City.
XII. Assignment
Neither FSAM nor the City may assign any of its rights, authorizations, or obligations under this Agreement
without the prior written consent of the other party.
oil F,
This Agreement shall become effective ueof the date hereof and continue for n period nf two (2)years. This
Agreement may be extended for additional two (2) year periods upon approval by the City. Either party may
terminate this Agreement upon delivering to the other party thirty (30) calendar days' prior written notice. In
addition, the City may terminate this Agreement without penalty for s period of five (5) business days after
the date it is executed by the City. The City may exercise this right by giving written notice 0oPSAMwithin
the required time period. In the event oftennb`n{inn, it is understood and agreed that only the amounts due to
FSAM for services provided and expenses incurred to and including the date of termination, plus those costs and
expenses incurred or sustained as a result of the /enuina&inn, will be due and payable. No pcuu|Yy will be
assessed for termination of this Agreement. In addition, the parties hereto agree that upon termination of this
Agreement FSAM shall have no continuing obligation to the City regarding the investment of funds or
performing any other services contemplated herein.
XIV. Custodial Arrangements
Custody of the Funds' invested assets will be maintained with a custodian selected by the City and identified
to FSAM (the "Custodian"). FSAM will not have custody of any assets in the Funds. The City will be
solely responsible for paying all fees or charges of the Custodian. The City authorizes FSAM to give
Custodian instructions for the purchase, sale, conversion, redemption, exchange or retention of any security,
cash or cash equivalent or other investment for the Funds.
V. Miscellaneous
A. Notices to the City. All written communication to the City shall be sent to the City's address set forth
on the signature page hereof or as directed in writing to FSAM by the City. Any notice, statement, or
other communication mailed to the City by FSAM in accordance with this section will be deemed to be
given to the City personally on the date it so mailed, whether or not it is actually received by the City.
B. Notices to FSAM. Any notice, statement, or other communication from the City to FSAM under this
Agreement must be in written form and will be deemed to be given to FSAM upon actual receipt
thereof by FSAM whether such notice was mailed, personally delivered, or telecopied to:
FirstSouthwest Asset Management, Inc.
300 West Sixth Street, Suite 1940
Austin, Texas 78701
Attention: Mr. Scott McIntyre
Fax Number: (512) 481-2020
C. Confidential Relationship. All of the information and advice furnished by either party to the other
under this Agreement, including their respective agents and employees, will be treated as strictly
confidential by each party and will not be disclosed to third parties under any circumstances except as
required by law.
D. Limitations of Liability. Federal and state securities laws impose liabilities under certain
circumstances on persons who do not act in good faith and, therefore, nothing in this Agreement shall in
any way constitute a waiver or limitation of any rights that the City may have under federal and state
securities laws,
E. Indemnity. The City will indemnify FSAM for any loss, liability, or expense (including attorney's
fees) which FSAM may incur as a result of, or arising from, any claims asserted by any third party with
respect to the Funds or the services rendered by FSAM under this Agreement, except in cases of gross
negligence or willful misconduct by FSAM in managing the City's Funds.
G. Invalid Provisions. If any provision or condition of this Agreement shall be held to be invalid or
unenforceable by any Court, or regulatory or self-regulatory agency or body, such invalidity or
unenforceability shall attach only to such provision or condition. The validity of the remaining
N
provisions and conditions ohd| not be affected, and this Agreement shall be carried out as if any such
invalid or unenforceable provision or condition were not contained herein,
B. Waiver of Terms. FSAM`o failure »ninsist at any time upon strict compliance with any terms of this
Agreement shall not constitute a waiver of any of FSAM's rights as described herein.
I. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the
State ofTexas, without regard to its principles nf conflicts o[laws,
J. Extraordinary Events. Neither FSAM nor any of its officers, directors, shareholders, affiliates, general
partners, omy|oyeeo, agents, or trustees shall be |iuh|c for lnouns caused directly or indirectly by
government restrictions, securities exchange or market actions, suspensions of trading, wars, strikes,
delays in the transmission of orders due to b,nukduvvn or failure of transmission or communication
faci|ities, or any other causes beyond PSAM'a reasonable control or anticipation,
K. Written Disclosure Statement. Bimo|toououo|y with the oxocudno of this Agreemont. PSAM has
delivered to the City Part 11 of its Form ADV as filed with the SEC, or a similar disclosure document, as
its brochure pursuant W Rule 204.3 of the Advisers Act. The City's execution nf this Agreement shall
be deemed ooknovv|edgnneo/ of receipt thereof.
L. Verification of Information. The City represents and warrants to FSAM that all information furnished
to PS&M in connection with the Agreement (and all documents supplied by the City in this regard,
including financial statements) are tme, uomplotu, and correct. P8&M is enbdoJ to rely on this
information until PSAM receives written undou of any change, *biub the City agrees to fbmimb
promptly should any material changes occur.
[THE REMAINDER OF THIS PAGE lS INTENTIONALLY LEFT BLANK. THE NEXT PAGE IS A
SIGNATURE PAGE.]
By signing this Agreement, the undersigned City official acknowledges receipt of a copy of
this Agreement, including Schedule A.
CITY OF DENTON, TEXAS
215 E McKinney
Denton, TX 76201
-- ---------
U
Sign:a�t7uteo ;0�fficer DatV
4
(Tit e — — ------ -
FIRSTSOUTHWEST ASSET MANAGEMENT, INC.
i-N"
Sligiuittfre of Officer Date
Scott McIntyre
Senior Vice-President
APPROVED AS TO
CITY ATTORNEY
CITY OF DENTON, 1
BY'
I W at wMa H 01 Dili a WAN 00 MW
In consideration for the services rendered by FirstSouthwest Asset 1T1anagemenT,-fffc—. (-FSWM")-fn- —connection with
the investment of the Portfolio for the City, it is understood and agreed that its fee will be at fixed quarterly rate of
$6,500,
The fees due FSAM shall be due and payable 30 days following the conclusion ♦ each calendar quarter. Said fee
includes all costs of services related to the investment services provided under this Agreement. Any other fees
earned by FSAM relating to City transactions, shall be disclosed to the City.
MUM Musyn
oil
MVW�M- - 9W, LM� Egg hWO, I P'- -INIMI. hIM
in