Investment Management Agreement Between Chicago Transit Authority Retiree Healthcare Trust
(the "Trust") and [Investment Manager]
THIS AGREEMENT, dated as of this ____ day of , 20__ is made by and between [NAME AND LOCATION OF INVESTMENT MANAGER] ("Manager") and the trustees of the Chicago Transit Authority Retiree Healthcare Trust (the "Trustee"), acting under the trust created pursuant to the provisions of Illinois Public Act 95-708, as amended from time to time (the "Act"), to govern the investment management of a portion of the assets of the Chicago Transit Authority Retiree Healthcare Trust (the "Fund").
W I T N E S S E T H:
Appointment as Investment Manager
The Manager, is appointed by the Trustee as an "Investment Adviser" (as defined in the Trust) for a investment of Fund assets in the investment class of [INVESTMENT CLASS] – [FUND NAME] and pursuant to such appointment, the Custodian shall establish and maintain an Investment Manager Account (the "Account") consisting of cash and securities as designated by the Trustee from time to time. Manager's appointment hereunder is made in reliance upon factual materials submitted by the Manager to the Trustee; and such appointment shall be subject to the provisions of the Trust, and shall be effectuated and maintained by the Trustee in a manner consistent with said provisions. The Trustee is making the appointment of Manager as an Investment Adviser based on Trustee's determination, that the Manager has a history of proven successful performance in the handling of significant sums of invested assets in the investment class. The assets available for management in the Account shall be subject to increase or decrease at any time in the Trustee's discretion. A copy of the Trust is attached hereto and is hereby incorporated herein for purposes of reference as Exhibit A; and the Manager by execution of this Agreement acknowledges receipt of a copy of the Trust. The Trustee shall deliver to the Manager a copy of any amendment to the Trust and, upon such delivery, the amendment shall be incorporated herein and be considered as part of Exhibit A.
The Manager shall invest the assets of the Account in the investment class of [INVESTMENT CLASS] – [FUND NAME] – as authorized by the Trustee and in accordance with the Trustee's investment guidelines attached hereto as Exhibit C, the Act, the Illinois Pension Code, as amended from time to time (the "Code") and other applicable law. Both parties to this Agreement acknowledge that the Trustee is charged under the provisions of the Trust with the responsibility for formulating the funding policy of the Trust and, as part of its formulation and direction for the implementation of same, that the Trustee is responsible for the diversification of the investments of the Trust as a whole as is required under the Trust and applicable fiduciary standards and for the allocation of investment responsibility between or among investment managers from time to time. With respect to the range of investments made in accordance with Exhibit C, the Manager shall diversify the assets of the Fund so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. Subject to the investment guidelines attached hereto as Exhibit C (such guidelines may be amended by the Trustee from time to time by written communication forwarded to the Manager and shall be effective unless objected to by the Manager within 7 days of receipt) the Manager shall have full authority to act in regard to the investment, reinvestment and management of Fund assets allocated to the Account, including the voting of shares or proxies, if any, and to direct the Custodian with respect to the settlement of exchanges, purchases and sales associated therewith. In the event that the Manager's investment authority with respect to the Account is terminated by the Trustee, the assets of the Account shall be managed by the Custodian, or the Trustee may direct the Custodian to transfer the assets of the Account to another account of the Trust for management by an investment manager which has been appointed by the Trustee, or the Trustee may direct the Custodian (or an investment manager of the Trust) to liquidate such assets. The Manager shall have the power to direct the Custodian, in writing or orally if confirmed in writing, as to the acquisition, retention, disposition (other than in connection with a termination of the Manager, in which case the sale, exchange or liquidation of assets shall be as provided above), voting of shares and proxies or management of assets in the Account, and the Custodian shall have no obligation with respect to such assets in the absence of such instructions except as is specifically provided elsewhere herein. Pending receipt of directions from the Manager for the Account, any cash received by the Custodian from time to time for the Account may be retained by the Custodian in cash, or, if so agreed upon by the Trustee, such cash may be temporarily managed and invested by the Custodian pursuant to the provisions of the custody agreement. Such investment by the Custodian may include, but shall not be limited to, the use of interest-bearing deposits in the Custodian's banking department.
- The Manager shall provide the Trustee and the Custodian with quarterly reports concerning the status of the Account. However, at the request of the Trustee, the Manager shall provide such reports more often and shall also provide such other information in connection with the Account as the Trustee may reasonably request from time to time.
- The reports required by Section III(a), hereof, shall include (but shall not necessarily be limited to) a detailed description of each Account asset, setting forth both its fair market value and book value (as determined pursuant to Section V, hereof) as of the date of the report. Where an Account asset consists of a security or interest in a security that is not traded on a national securities exchange or over-the-counter and reported on NASDAQ, the report also shall include a detailed description of the financial condition of the issuer of such security (including applicable financial statements). Such reports shall also reflect decisions made and actions taken by the Manager with regard to the voting of proxies appurtenant to Account assets in sufficient detail to enable the Trustee to monitor the activities of the Manager. The reports shall also disclose all fees, commissions, income or any other consideration earned by the Manager, whether directly or indirectly, from all sources (other than as provided for under Section IV, hereof) as a result of the performance of its duties and obligations under this Agreement.
- Representatives of the Manager shall meet with the Trustee at such times as the Trustee may reasonably request.
- The Manager shall keep accurate and detailed accounts of all investments, receipts, disbursements, and other transactions relating to the Account hereunder, and all accounts, books and records relating thereto shall be open to inspection and audit at all reasonable times by any person designated by the Trustee. On a quarterly basis, and within thirty (30) days after the effective date of the removal or resignation of the Manager, the Manager shall file with and deliver to the Trustee a written account setting forth all investments, receipts, disbursements, and other transactions effected by it in connection with the Account (including the information required by Section III(b), hereof), and an authorized officer of the Manager shall certify as to the accuracy of the information set forth therein. Such account may incorporate by reference any and all schedules and other statements setting forth investments, receipts, disbursements, and other transactions effected during the period for which such account is rendered and which the Manager has furnished to the Trustee prior to the filing of such account. The Manager shall furnish the Trustee such financial statements, and other information, as the Trustee may reasonably request from time to time with respect to the assets held under the Account.
As agreed upon between the Manager and the Trustee, the Manager shall be compensated for services hereunder in accordance with the fee schedule attached hereto as Exhibit B and incorporated herein by reference. No individuals or entities, aside from the Manager, shall receive as a result of the Trust's investments by the Manager any compensation or benefits unless in advance of such investments, the Manager in writing has notified the Trustee of the name, address, amount of compensation or benefits, and services of any such individual or entity.
For all purposes of this Agreement, including without limitation the computation of the Manager's compensation hereunder and any accounting as hereinabove provided, the fair market value of the assets of the Account on any date shall be computed as follows:
- as to debt obligations or other securities of (or guaranteed as to principal and interest by) the United States of America or any State (or any agencies or instrumentalities thereof), the bid and asked prices of which are published on a regular basis in The Wall Street Journal or The New York Times (or such other publication or reporting service selected by the Manager in good faith to best reflect the fair market value of such debt obligations or other securities), the bid price for such debt obligations or other securities so published (or reported) on, or most recently prior to, such date;
- as to debt obligations or other securities of (or guaranteed as to principal and interest by) the United States of America or any State (or any agencies or instrumentalities thereof), the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or The New York Times (or such other publication or reporting service selected by the Manager in good faith to best reflect the fair market value of such debt obligations or other securities), the average bid price on such date for such debt obligations or other securities as reported by any two of the recognized dealers at the time making a market in such debt obligations or other securities;
- as to all other debt obligations and common or preferred stock traded on a national securities exchange, the last sale price on such date on the principal national securities exchange on which such securities are traded or, if there has not been any sale on such date, the closing bid quotation on such exchange on such date;
- as to all other debt obligations and common or preferred stock which are traded over-the-counter and reported on NASDAQ, the closing bid quotation on such date as reported by NASDAQ; and
- as to all other debt obligations and common or preferred stock neither traded on a national securities exchange nor quoted by NASDAQ, the average of the bid prices on such date for such securities as quoted by any two recognized dealers at the time making a market in such securities.
Any Investment Account Asset that cannot be valued in accordance with the foregoing principles shall be valued in such commercially reasonable manner as determined in good faith by the Manager to reflect its fair market value, based upon values supplied by a nationally-recognized pricing or quotation service, or quotations furnished by one or more reputable and generally recognized sources (such as securities brokers, dealers or investment bankers, values of comparable property, appraisals and similar commercially acceptable sources).
The Manager shall attend meetings with representatives of the Trustee or Custodian, or both, to discuss the position of the Account and the immediate investment outlook, or shall submit its views concerning same in writing, as and at such times as the Custodian or the Trustee may reasonably request from time to time. The Manager shall, in its discretion, select broker – dealers with whom to place orders for the purchase and sale of securities for the Fund. The primary objective of the Manager shall be to obtain best price and execution of brokerage transactions and, to the extent consistent with that objective, the Manager shall take into account any Brokerage Policy provided to it by the Trustee.
Representations and Warranties by Manager
The Manager expressly acknowledges, represents, warrants and agrees that:
- it is and will continue to be: (i) an investment adviser registered under the Investment Adviser Act of 1940 or (ii) a bank, as defined in the Investment Adviser Act of 1940;
- it is and will be acting as a fiduciary with respect to the Fund and the Account in the exercise of its duties under this Agreement;
- it will exercise its investment authority hereunder in accordance with the fiduciary standards set forth in this Agreement, the Act, the Code, the Trust and other applicable law;
- it will discharge its duties under this Agreement solely in the interest of the participants in the Trust and their beneficiaries, 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 a like enterprise of a like character and with like aims and investment policies;
- it has, by appropriate corporate (or other) action, duly authorized the execution and implementation of this Agreement; such authorization or execution does not violate any obligation by which the Manager is bound or any applicable law; and this Agreement has been executed on behalf of the Manager by a person (or persons) authorized to transact business on behalf of the Manager and shall be binding upon the Manager in accordance with its terms;
- the personnel of the Manager who will be responsible for carrying out the terms of this Agreement are individuals experienced in the making of investments of the nature contemplated by this Agreement;
- it shall defend and hold the Trustee harmless from, and indemnify the Trustee against, any and all liability, loss, damages, court costs or reasonable expenses (including reasonable attorneys' fees and court costs) which the Trustee may incur or suffer as a result of any breach by the Manager of (i) any of the acknowledgments, representations, warranties or agreements made in this Section VII; or (ii) any other provision of this Agreement; except to the extent that such liability is due to the gross negligence, willful misconduct or bad faith of the Trustees; and it shall promptly advise the Trustees in the event of any material change in control of the Manager;
- except as disclosed in its Form ADV, to the best of its knowledge, neither the Manager, any of its subsidiaries or other affiliates, nor any of their respective current officers or directors, has ever within the scope of their respective employments and in such capacities been (i) convicted of or pleaded guilty (or nolo contendere) to a felony or misdemeanor involving (1) an investment or investment related business, (2) fraud, false statements or omissions, or (3) the wrongful taking of property, bribery, forgery, counterfeiting or extortion; (ii) found by a court to be in violation of any federal or state investment (or investment-related) statutes or regulations; (ii) found by the U.S. Securities and Exchange Commission, or any other federal or state regulatory agency or self-regulating organization, to have (1) made a false statement or omission, (2) been involved in a violation of its regulations or statutes, or (3) been a cause of an investment-related business having its authorization to do business denied, suspended, revoked or restricted;
- to the best of its knowledge, neither the Manager, any of its subsidiaries or other affiliates, nor any of their respective current officers or directors has ever within the scope of their respective employments and in such capacities (i) had an insurance or bonding company deny, pay out on or revoke a fidelity bond or fiduciary liability insurance policy; (ii) filed a bankruptcy or insolvency petition (or been declared bankrupt) or had a trustee appointed under the Securities Investor Protection Act; or (iii) had its registration revoked or its activities restricted;
- there currently exists in full force and effect a Manager's bond against fraud or dishonesty protecting the Trust in an amount of at least ONE MILLION DOLLARS ($1,000,000) and an insurance policy protecting the Manager (and its officers, directors, and employees) against liability or loss for a breach of fiduciary responsibility, errors and omissions and negligent acts by the Manager in connection with its duties under the Agreement, and the coverage limitations of such policy equal or exceeds TEN MILLION DOLLARS ($10,000,000); and the Manager warrants that such bond and insurance policy shall be maintained all the time while this Agreement is in effect.
- true and complete copies of (i) the Manager's statement of policy and procedures for the voting of proxies (if any such written statement exists), (ii) the fidelity bond referred to above (other than the list of clients covered), (iii) the insurance policy referred to in subparagraph VII(j) of this Agreement, and (iv) either its Investment Advisory Services Disclosure Document or Part 2 of its Form ADV, shall each be delivered to the Trustee within ten (10) business days of the effective date of this Agreement. True and complete copies of any changes, modifications, interpretations or new, revised or replacement issuances of such documents (including, without limitation, Form ADV annually) will be delivered to the Trustee as promptly as practicable after the adoption thereof;
- the foregoing acknowledgments, representations, warranties and agreements are understood to be relied upon by the Trustee and shall be continuing in nature; and
- it shall promptly notify the Trustee in the event that any of the foregoing acknowledgments, representations, warranties or agreements shall no longer be true.
Custody of Assets
The Custodian shall have custody of all assets allocated to and purchased for the Account, including all evidence of ownership and interest in such investments. Manager's instructions to the Custodian shall comply with the Custodian's procedures and shall include prompt confirmation of all brokerage transactions.
Effective Period of Agreement and Amendments
This Agreement shall become effective on the date hereof. Any amendment to this Agreement shall be in writing and signed by both parties to this Agreement. The Manager's appointment hereunder may be terminated at any time by written notice from the Trustee to the Manager; and the Manager may terminate this Agreement upon thirty (30) days written notice from the Manager to the Trustee. There shall be no penalty against the Trustee for such termination.
Any notices or communications which either party hereto may be required or permitted to make to the other shall be in writing and shall be effective upon the delivery by hand or by overnight carrier or by mailing of same by registered or certified United States mail, addressed as follows:
If to the Custodian:
The Northern Trust Company
Attention: CTA Retiree Healthcare Trust Account Administrator 50 South LaSalle Street
Chicago, Illinois 60675
If to the Manager:
[NAME AND ADDRESS OF INVESTMENT MANAGER]
If to the Trustee:
To the Executive Director at the address below
Either party may change the address to which notices or communications are to be sent by giving written notice of such change of address to the other party in the manner above provided for giving notice.
Copies of all notices or communications by either party shall be provided to the Executive Director acting for the Trustee at the following address:
Executive Director, Chicago Transit Authority Retire Healthcare Trust
55 West Monroe
Chicago, Illinois 60603
Copies of all notices or communications by either party shall also be provided to the Trustee's investment consultant at the following address:
This Agreement shall not in any manner or form be assigned by the Manager without the prior written approval of the Trustee.
Manager agrees that it will not divulge, furnish or make accessible to anyone (other than in the performance of its duties hereunder) any knowledge or information which it has acquired relating to confidential or proprietary information about the Trust or the Trustee obtained during the performance by the Manager of its services hereunder, except as may be required by law or a governmental agency having jurisdiction over the Manager.
Manager agrees that the services to be performed by it hereunder are those of an independent contractor and are not those of an employee of the Trust, the Chicago Transit Authority or the Trustee. Manager for itself, its officers, directors, stockholders, employees, agents, successors and assigns, hereby waives any and all rights and interests in and under any medical, insurance, retirement, profit-sharing, bonus, benefit or other similar plan maintained or sponsored by the Chicago Transit Authority existing at the date of this Agreement or which may come into existence during the term of this Agreement.
The performance of investment management or other services for any other person or entity by the Manager or any of its affiliates, or the officers or employees thereof, shall not be restricted in any way by this Agreement nor be deemed to violate, or give rise to, any duty or obligation to the Trustee or the Trust. Moreover, the services provided under this Agreement are not exclusive and nothing in this Agreement shall limit or restrict the Manager or any of its affiliates, or the officers or employees thereof, from buying, selling, or trading in any securities for its or their own account or accounts, as is otherwise permitted by law.
Each of the parties to this Agreement hereby represents that it is duly authorized and empowered to execute, deliver and perform this Agreement and that such action does not conflict with or violate any provision of law, rule, regulation, contract, deed of trust, or other instrument to which it is a party or to which any of its property is subject, and that this Agreement is a valid and binding obligation enforceable in accordance with its terms.
Documentation to be Furnished
The Trustee hereby agrees to furnish the Manager with such information and documentation as the Trustee has in its possession or may reasonably be requested to obtain, and such authorizations from the Trustee as the Manager may from time to time reasonably require to enable it to carry out its obligations under this Agreement.
This Agreement shall be construed and enforced according to the laws of the State of Illinois, except to the extent superseded by federal law, and all provisions hereof shall be administered according to the laws of the State of Illinois.
This Agreement may be signed in multiple counterparts, each of which shall be deemed to be an original, and all of which together shall constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
Chicago Transit Authority
Retiree Healthcare Trust
Title: Executive Director of the Trust
[NAME OF INVESTMENT MANAGER]
[NAME OF INVESTMENT MANAGER]