ATTACHMENT B
INVESTMENT ADVISOR
AGREEMENT
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DISCRETIONARY INVESTMENT ADVISORY AGREEMENT
This is an agreement (“Agreement”) between Shuster Advisory Group, LLC (“SHUSTER”), a California limited liability company, and City of Lancaster (“Client”).
Client desires to engage SHUSTER to provide the investment management services described in this Agreement according to the terms of this Agreement.
1. Investment Management Services. Client hereby
appoints SHUSTER as an Investment Advisor to
perform the services hereinafter described, and
SHUSTER accepts such appointment. SHUSTER will
solely be responsible for the investment and
reinvestment of the assets in Client’s accounts in
securities and cash or cash equivalents described
in Schedule A designated by Client to be subject
to SHUSTER’s management (“the Account”). The
initial Account assets are identified on Schedule A.
Client has set forth on Schedule B any investment
guidelines, special instructions or restrictions that
Client wishes SHUSTER to follow in managing the
Account. Client agrees to notify SHUSTER promptly
of any significant change in any information
provided by Client on Schedule B, or any
significant change in Client’s financial
circumstances or investment objectives that could
reasonably be expected to affect the manner in
which Client’s account should be managed.
Client also agrees to provide SHUSTER with such
additional information as SHUSTER may request
from time to time to assist it in managing the
Account. SHUSTER’s authority under this
Agreement will remain in effect until changed or
terminated by Client in writing.
2. Investment Authority. Client acknowledges and
agrees that, except as otherwise set forth on
Schedule B:
(A) SHUSTER’s authority under this Agreement is to
investigate, purchase, and sell on behalf of
Client, various securities, and investments.
Shuster is authorized to execute purchases and
sales of securities on Client’s behalf. Client
understands that if the Account includes
investments with internal transaction and
execution costs, including redemption fees,
Client will bear its share of the funds’ fees and
expenses in addition to fees paid under this
Agreement. While it is not the general practice
of SHUSTER to sell Client’s securities in a period
that would generate a redemption fee, it
should be anticipated that SHUSTER might do
so if in its opinion the sale is in the Client’s best
interests, or if the mutual fund shares must be
redeemed to pay fees from the account.
3. Excluded Assets. Client acknowledges that
SHUSTER has no responsibility to provide any
services related to assets not included in the
SHUSTER investment portfolio or purchased
directly by Client. Such assets shall be referred to
collectively as “Excluded Assets.” The Excluded
Assets shall be disregarded in determining the
Fees payable to SHUSTER pursuant to this
Agreement, and the Fees shall be calculated only
on the remaining assets (the “Included Assets”).
4. Execution of Investment Account Transactions.
(A) Broker Selection. SHUSTER will arrange for the
execution of securities transactions for the
Account through brokers or dealers that
SHUSTER reasonably believes will provide best
execution. In selecting brokers or dealers,
SHUSTER may consider, among other things,
the broker’s or dealer’s execution capabilities,
reputation and access to the markets for the
securities being traded, the value of ongoing
relationships SHUSTER may have with such
brokers and dealers, and research services
available from brokers or dealers. SHUSTER
generally will seek competitive commission
rates but will not necessarily attempt to obtain
the lowest possible commission for transactions
for the Account.
(B) Aggregation. If SHUSTER, in its sole discretion,
decides to purchase or sell the same securities
for multiple clients at the same time, SHUSTER
may (but is not obligated to) combine or
“batch” such orders to obtain best execution,
to negotiate more favorable commission rates
or to allocate equitably among SHUSTER’s
clients differences in prices and commissions or
other transaction costs that might have been
obtained had such orders been placed
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independently. If SHUSTER cannot obtain
execution of all the combined orders at
desired prices or for transaction costs that
SHUSTER believes are desirable, SHUSTER will
allocate the securities SHUSTER is able to buy or
sell as part of the combined orders by following
SHUSTER’s order allocation procedures.
(C) Directed Brokerage. Instead of allowing
SHUSTER to select brokers or dealers for the
Account, Client may direct SHUSTER in writing
to use a particular broker or dealer to execute
some or all transactions for Client’s Account. In
that case, Client will negotiate terms and
arrangements for the Account with that broker
or dealer, and SHUSTER will not seek better
execution services or prices from other brokers
or dealers or be able to “batch” Client
transactions for execution through other
brokers or dealers with orders for other
accounts advised or managed by SHUSTER. As
a result, Client may pay higher commissions or
other transaction costs or greater spreads, or
receive less favorable net prices, on
transactions for the Account than would
otherwise be the case. In addition, Client’s
election to use directed brokerage may affect
costs incurred by SHUSTER, the availability to it
of research services, and/or its ability to utilize
certain Third Party Managers. Therefore, an
election by the Client to use directed
brokerage may result in higher fees or more
limited investment alternatives than those
available to Clients of SHUSTER who do not
elect directed brokerage.
(D) Evidence of SHUSTER’s Authority. SHUSTER may
give a copy of this Agreement to any broker,
dealer or other party to a transaction for the
Account, or the Custodian (as defined below)
as evidence of SHUSTER’s authority to act for
Client.
5. Custodial Arrangements. SHUSTER may require
that the Client establish brokerage accounts with
a specific custodian (“Custodian”), normally a
registered broker-dealer, Member SIPC/NYSE, to
maintain custody of Clients’ assets and to effect
trades for their accounts. The Custodian provides
SHUSTER with access to its institutional trading and
operations services, which are typically not
available to retail investors. These services
generally are available to Registered Independent
Advisers at no charge to them so long as some
minimum of SHUSTER’s Clients’ account assets are
maintained with the Custodian. The Custodian’s
services include research, brokerage, custody,
access to mutual funds and other investments that
are otherwise available only to institutional
investors or would require a significantly higher
minimum initial investment. The Custodian also
makes available to SHUSTER other products and
services that benefit SHUSTER but may not benefit
its Clients’ accounts. Some of these other products
and services may assist SHUSTER in managing and
administering Clients’ accounts. These include
software and other technology that provide
access to Client account data (such as trade
confirmations and account statements), facilitate
trade execution (and allocation of aggregated
trade orders for multiple Client accounts), provide
research, pricing information and other market
data and/or corporate changes, facilitate
payment of SHUSTER’s fees from its Clients’
accounts, and assist with back-office support,
recordkeeping and Client reporting. Many of these
services are generally used to service all or a
substantial number of SHUSTER’s accounts,
including accounts not maintained at the
Custodian. The Custodian may also provide
SHUSTER with other services intended to help
SHUSTER manage and further develop its business
enterprise. These services may include consulting,
publications and presentations on practice
management, information technology, business
succession, regulatory compliance, and
marketing. In addition, the Custodian may make
available, arrange and/or pay for these types of
services to SHUSTER by independent third parties.
The Custodian may discount or waive fees it would
otherwise charge for some of these services or pay
all or a part of the fees of a third-party providing
these services to SHUSTER. The availability to
SHUSTER of the foregoing products and services is
not contingent upon SHUSTER committing to the
Custodian any specific amount of business (assets
in custody or trading).
6. Manager Reports; Confirmation Information. The
Custodian(s) selected by SHUSTER will provide
Client quarterly and annual written statements
containing a description of all activity in Client’s
Account during the preceding period (including
all transactions made on behalf of the Account, all
contributions and withdrawals made by the Client,
all fees and expenses charged to the Account,
and the value of the Account at the beginning
and end of the period), together with
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performance data for the period (or, if shorter,
since opening of the Account).
7. Management Fees. Client will pay SHUSTER a fee
for its investment management services. The
management fee will be computed and paid
promptly following the close of each month. The
management fee will be a percentage (expressed
on an annualized basis) of the market value of
Included Assets held with the Custodian on the last
trading day of each month. The fee schedule is set
forth in Schedule A. The management fee is
payable in arrears. For any partial billing period,
the management fee will be pro-rated for the
number of days the account was open and be
based on the market value of all assets in the
Account on that last trading day prior to the close
of that period (or, if applicable, the last trading day prior to account termination). Client understands
that, as provided in Section 4, Account assets
invested in shares of mutual funds or other
collective investment funds will be included in
calculating the value of the Account for purposes
of computing SHUSTER’s fees and the same assets
will also be subject to additional advisory and
other fees and expenses, as set forth in the
prospectuses of those funds, that are paid by the
funds but ultimately borne by the investor.
Management fees do not include brokerage
commissions, exchange fees, taxes, or fees for
custodians.
Except as permitted by the preceding paragraph,
management fees hereunder shall not be based
on a share of capital gains or the capital effects of
any sale or purchase of securities or other property
for the Account.
SHUSTER may waive all or portions of any fees or
expenses referred to in this Agreement, and may
waive or discount fees for some Clients but not
others. SHUSTER may at any time terminate any fee
waiver or discount then in effect as to Client on 30
days’ advance written notice.
8. Contributions and Withdrawals. Client may
contribute cash or securities to the Account in
amounts over $1000. Client may withdraw assets
from the account, provided that up to five (5)
days’ notice may be required for cash withdrawals
in order to liquidate securities. SHUSTER is
authorized to sell any securities contributed to the
account, and Client will be responsible for the
payment of any taxes due upon such sale. Client
should consult its tax advisor for the consequences
of contributed securities to the Accounts.
9. Valuation. The Custodian will value securities in the Account that are listed on a national securities
exchange at the closing price, on the valuation
date, on the principal market where the securities
are traded. Other securities or investments in the
Account will be valued in a manner determined in
good faith by SHUSTER to reflect fair market value.
10. Other Investment Accounts. Client understands
that SHUSTER serves as investment manager for
other Clients and will continue to do so. Client also
understands that SHUSTER, its personnel and
affiliates (“Affiliated Persons”) may give advice or
take action in performing their duties to other
Clients, or for their own accounts, that differ from
advice given to or action taken for Client. SHUSTER
is not obligated to buy, sell or recommend for
Client any security or other investment that
SHUSTER or its Affiliated Persons may buy, sell or
recommend for any other Client or for their own
accounts. This Agreement does not limit or restrict
in any way SHUSTER or any of its Affiliated Persons
from buying, selling or trading in any securities or
other investments for their own accounts.
SHUSTER or its Affiliated Persons may provide
services for, or solicit business from various
companies, including issuers of securities that
SHUSTER may recommend or purchase or sell for
Client accounts. In providing these services,
SHUSTER or its Affiliated Persons may obtain
material, nonpublic or other confidential informa-
tion that, if disclosed, might affect an investor’s
decision to buy, sell or hold a security. Under
applicable law, SHUSTER and its Affiliated Persons
cannot improperly disclose or use this information
for their personal benefit or for the benefit of any
person, including Clients of SHUSTER. If SHUSTER or
any Affiliated Person obtains nonpublic or other
confidential information about any issuer, SHUSTER
will have no obligation to disclose the information
to Client or use it for Client’s benefit.
11. Risk Acknowledgment. SHUSTER does not
guarantee the future performance of the Account
or any specific level of performance, the success
of any investment decision or strategy that
SHUSTER may use, or the success of SHUSTER’s
overall management of the Account. Client
understands that investment decisions made for
Client’s Account by SHUSTER are subject to various
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markets, currencies, economic, political and
business risks, and that those investment decisions
will not always be profitable. Client understands
that past performance does not necessarily
predict future performance for the Account.
SHUSTER will manage only the securities, cash and
other investments held in Client’s Account and in
making investment decisions for the Account,
SHUSTER will not consider any other securities, cash
or other investments owned by Client. Neither
SHUSTER nor its officers, directors, agents,
employees, and affiliate shall be liable for any
losses in the Account, or any loss, cost,
indebtedness, or liabilities arising from SHUSTER’s
management of the investments in the Account
(together, “Losses”) except for any Losses that
result from an act or omission of SHUSTER
constituting a violation of law or an act or omission
of SHUSTER constituting gross negligence, willful
misfeasance, bad faith or reckless disregard of its
obligations under this Agreement or as otherwise
may be provided by law. SHUSTER shall not be
responsible for any loss incurred by reason of any
act or omission of Client, a Custodian (other than
SHUSTER), a Third-Party Manager, any broker-
dealer, or any other third party.
12. Other Legal Actions. Client agrees that SHUSTER
will not advise or act for Client in any legal
proceedings, including bankruptcies or class
actions, involving securities held or previously held
by the Account or the issuers of these securities
(“Legal Proceedings”). Client shall retain all rights
as a security holder with respect to any Legal
Proceedings.
13. Proxy Voting. SHUSTER will not vote the proxies of securities it manages in directly managed
portfolios.
14. Amendment. This Agreement may be amended at
any time by written agreement executed by Client
and SHUSTER; except that SHUSTER may amend the
fee calculation and payment provisions in
Schedule A. and the fee schedule in Exhibit A, by
giving 30 days’ advance written notice to Client.
15. Term and Termination. This agreement will continue
in effect until terminated by either party by written
notice to the other party. Client notice should
include instruction as to whether or not the Assets
should be liquidated or transferred. Termination of
this agreement will not affect (i) the validity of any
action previously taken by SHUSTER under this
Agreement; (ii) liabilities or obligations of the
parties from transactions initiated before
termination of this Agreement; or (iii) Client’s
obligation to pay advisory fees (prorated through
the date of termination). Upon the termination of
this Agreement, SHUSTER will have no obligation to
recommend or take any action with regard to the
securities, cash or other investments in the
Account.
16. Client Authority. If Client is an individual, Client represents that he or she is of legal age. If Client is a corporation, partnership or limited liability
company, the person signing this Agreement for
the Client represents that he or she has been
authorized to do so by appropriate action. If this
Agreement is entered into by a trustee or other
fiduciary, the trustee or fiduciary represents that
SHUSTER’s investment management strategies,
allocation procedures, and investment
management services are authorized under the
applicable plan, trust, or law and that the person
signing this Agreement has the authority to
negotiate and enter into this Agreement. Client
will inform SHUSTER of any event that might affect
this authority or the propriety of this Agreement.
17. Death or Disability. If Client is a natural person, the death, disability or incompetence of Client will not
terminate or change the terms of this Agreement.
However, Client’s executor, guardian, attorney-in-
fact or other authorized representative may
terminate this Agreement by giving written notice
to SHUSTER.
18. Binding Agreement. This Agreement will bind and
be for the benefit of the parties to the Agreement
and their successors and permitted assigns, except
that this Agreement may not be assigned (within
the meaning of the Investment Advisers Act of
1940, and rules adopted thereunder) by either
party without the consent of the other party.
19. No Deposit Insurance. Investments in mutual funds
involve risks, including the possible loss of principal.
Investments in money market funds are neither
insured nor guaranteed by the U.S. Government
and there can be no assurance that money
market funds will be able to maintain a stable net
asset value of $1 per share.
20. Governing Law. This Agreement will be governed
by and construed in accordance with the laws of
the State of California without giving effect to any
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conflict or choice of law provisions of that State,
provided that nothing in this Agreement will be
construed in any manner inconsistent with the
applicable law.
21. Notices. Any notice, advice or report to be given
under this Agreement will be delivered in person,
by U.S. mail or overnight courier (postage prepaid,
and certificate of delivery required) or sent by
facsimile transmission (with a hard copy sent by
U.S. mail) to either SHUSTER or Client at the relevant
address set forth below or at such other address as
such party may designate in writing, or
electronically. Any notice or other communication
given to a party in connection with this
Agreement, include Form ADV Part 2 and
SHUSTER’s Privacy Policy will be in writing and will
be deemed effective upon receipt, if delivered to
such party at its email address. It is your
responsibility to immediately review all
communications, including emails, and to advise
us of any discrepancies. By signing this Agreement,
you hereby consent to receiving communications
from us by email or other electronic delivery
without also receiving paper copies. By sending or
receiving sensitive or confidential electronic
communications, you accept the risks and possible
lack of confidentiality of communicating over the
Internet.
22. Imposition of Reasonable Restrictions. Throughout
the term of this Agreement Client shall have the
right on reasonable written notice to impose
reasonable restrictions on the management of the
Account, including designation of particular
securities or types of securities that should not be
purchased for the Account, or that should be sold
if held in the Account; provided, however, that
nothing in this Agreement requires that Client have
the ability to require that particular securities or
types of securities be purchased for the Account.
Client’s authority to impose reasonable restrictions
shall include, without limitation, the right to
preclude use of mutual funds otherwise authorized
by Section 4.(A). Client shall also have the right to
preclude SHUSTER from using Third Party Managers
(Section 3) and/or to modify existing elections
concerning directed brokerage (Section 5.(D)),
the Custodian (Section 6), and payment
procedures (Section 8). Reasonable restrictions so
imposed, or any modification of prior restrictions or
previous elections, must be set forth in a notice
signed by Client, and shall be deemed to modify
Schedule B as soon as reasonably practicable
following SHUSTER’s receipt of such notice.
However, nothing in this Section 22 shall in any way
limit SHUSTER’s right to terminate this Agreement,
including termination in response to any Client
restriction, modification or election.
23. Venue. In the event any action is commenced to
enforce or interpret any of the terms or conditions
of this Agreement, the Parties agree that all actions
or proceedings arising in connection with this
Agreement shall be tried and litigated in the state
courts in the County of Los Angeles, California.
24. Miscellaneous. If any provision of this Agreement is or should become inconsistent with any law or rule
of any governmental or regulatory body having
jurisdiction over the subject matter of this
Agreement, the provision will be deemed to be
rescinded or modified in accordance with any
such law or rule. In all other respects, this
Agreement will continue and remain in full force
and effect. No term or provision of this Agreement
may be waived or changed except in writing
signed by the party against whom such waiver or
change is sought to be enforced. All headings
used herein are for ease of reference only and in
no way shall be construed as interpreting,
decreasing, or enlarging the provisions of this
Agreement. SHUSTER’s failure to insist at any time
on strict compliance with this Agreement or with
any of the terms of the Agreement or any
continued course of such conduct on its part will
not constitute or be considered a waiver by
SHUSTER of any of its rights or privileges. The
provisions of Sections 9-12, 18, 20, 21, and 23 shall
be deemed to survive the termination of this
Agreement. This Agreement contains the entire
understanding between Client and SHUSTER
concerning the subject matter of this Agreement.
25. Receipt of disclosure documents. Client
acknowledges that he or she has received ADV
Part 2A and Privacy Statement of Shuster Advisory
Group, LLC. Further, client consents to delivery of
future Form ADV Part 2 and Privacy Statements via
email.
Initial Here Initial Here
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SIGNATURES
Client: City of Lancaster
/ /
Account Holder/Trustee Signature Today’s Date (mm/dd/yyyy) Jason Caudle, City Manager
Print Name
/ /
Account Holder/Trustee Signature Today’s Date (mm/dd/yyyy) Print Name
Shuster Advisory Group, LLC:
/ /
Shuster Advisory Group, LLC Authorized Signatory Today’s Date (mm/dd/yyyy) Mark Shuster, Managing Member
Print Name
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SCHEDULE A
SHUSTER ADVISORY GROUP, LLC
INVESTMENT MANAGEMENT AGREEMENT
Client: City of Lancaster
1. Account Assets. The assets that you wish SHUSTER to manage at this time are approximately $8,000,000 between the two accounts.
2. Custody of Account Assets. The assets to be managed under this agreement will be held in custodial accounts established with:
Charles Schwab & Co., Inc.
PO Box 982600
El Paso, TX 79998
Phone: (866) 855-9102
3. Types of Accounts (Check all that apply)
Defined Benefit Plan
415(m) Excess Benefit Plan
4. Investment Advisory Fees. SHUSTER’s fees for services provided under this agreement will be as follows, depending on the type of account chosen:
All Assets:
Yes
☐ All Assets excluding: Cash or cash equivalents held
within an investment portfolio in the account managed
by a third-party investment manager, exchange-
traded fund, or mutual fund.
Fees:
Basis Pts. 25 (0.25%)
☐ Flat Fee $________
The fees stated are per annum. The monthly fee is 1/12 the per annum fee shown. Fees will be paid monthly to SHUSTER by Charles Schwab. SHUSTER reserves the right to change the fee payment schedule, but not the per annum fee without client consent. In addition to the Advisory Fee, unaffiliated third parties may impose certain charges. These charges may include, but are not limited to, custodial fees, brokerage commissions, transaction fees, charges imposed directly by a mutual, hedge, index or exchange traded fund, fees imposed by variable annuity providers, certain deferred sales charges, odd-lot differentials, transfer taxes, and wire transfer and electronic fund fees.
5. Client Contact Information: Client contact information shall be as provided on custodian account opening paperwork
and as may be updated from time to time with custodian.
6. Signature(s):
___________________________________________
Client Signature – Jason Caudle, City Manager
___________________________________________
Client Signature –
Date:
Date:
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SCHEDULE B
SHUSTER ADVISORY GROUP, LLC
INVESTMENT MANAGEMENT AGREEMENT
Client: City of Lancaster
1. Investment Restrictions and Guidelines. Client has specified below any investment restrictions or guidelines to be followed by Shuster Advisory Group, LLC in managing Client’s Account. (Please describe investment restrictions and guidelines below or attach a separate statement.) Assets within the Account that are subject to investment restrictions or fall outside of the guidelines specified below are considered Excluded Assets pursuant to Section 3 of the Discretionary Investment Advisory Agreement. (Please check applicable line and add any restrictions or instructions) Investment Policy Statement.
The following investment restrictions and guidelines apply:
•Each plan will have its own Investment Policy Statement.
Signature(s):
___________________________________________
Client Signature – Jason Caudle, City Manager
___________________________________________
Client Signature –
Date:
Date:
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