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R2024-141 2024-08-12Docusign Envelope ID: 6815DD27-7F60-49EB-9234-516B409FF203 RESOLUTION NO. R2024-141 A Resolution of the City Council of the City of Pearland, Texas, authorizing the City Manager or his designee to enter into a 2-year contract (1-year initial term with a 1-year renewal for investment advisory services with Hilltop Securities Asset Management LLC, in the estimated amount of $88,000.00, for the period of August 13, 2024 through August 13, 2024. BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS: Section 1. That contract for investment advisory services, a copy of which is attached hereto as Exhibit "A" and made a part hereof for all purposes, is hereby authorized and approved. Section 2. That the City Manager or his designee is hereby authorized to execute and the City Secretary to attest a contract for investment advisory services. PASSED, APPROVED and ADOPTED this the 12th day of August, A.D., 2024. ATTEST: DocuSigned by: -96EC22..31 FFF445 FRANCES AGUILAR, TRMC, MMC CITY SECRETARY APPROVED AS TO FORM: DocuSigned by: "— €t3CA898 B BtF4B8... DARRIN M. COKER CITY ATTORNEY ci.DocuSigned by:t. 2F-e&B ,3BC2A475... J. KEVIN COLS MAYOR Docusign Envelope ID: 5A10D7F1-B9F7-4CEE-AC35-EAD3FBC37925 Exhibit A AGREEMENT FOR INVESTMENT ADVISORY SERVICES BY AND BETWEEN CITY OF PEARLAND, TEXAS AND HILLTOP SECURITIES ASSET MANAGEMENT, LLC This Investment Advisory Agreement (the "Agreement") is made by and between the City of Pearland (the "Investor") and Hilltop Securities Asset Management, LLC ("HSAM"). This agreement shall be effective as of the date of its acceptance by the Investor as indicated on the signature page hereof. I. Terms and Conditions This Agreement sets forth the terms and conditions governing the relationship of the Investor to HSAM with respect to securities and money which the Investor holds, from time to time, and which are available for investment or reinvestment (the `Portfolio"). This Agreement shall apply to any and all investable funds and securities in the Investor's Portfolio during the period in which this Agreement shall be in effect. II. Investment Advisory Services A. Services. With respect to the Portfolio, HSAM will endeavor to provide investment advisory services and cause to be executed such trades as determined in accordance with Section II. B below. HSAM agrees to provide professional services and its facilities and to direct and coordinate all programs of investing as may be considered and authorized by the Investor and to assume and pay those expenses incurred by HSAM in connection with the execution of investment decisions. Specifically, HSAM agrees to perform the following duties: 1. Review the Investor's cash flow projections and investment policy; 2. Recommend appropriate strategies based upon cash flow requirements; 3. Advise the Investor on current market conditions and other general information; 4. Analyze risk/return relationships between various investment alternatives; 5. Attend meetings of the governing body of the Investor, its staff, representatives, or committees as requested by the Investor, when the subject of investments is to be discussed; 6. Assist in the selection of investment securities and, as directed by the Investor, cause the transactions to be executed; Advise on the investment of the Portfolio in a manner consistent with the Investment Policy, the proceedings of the Investor authorizing the investment of the bond funds and applicable state and federal rules and regulations; Promptly send (or cause to be sent) trade confirmations to the Investor; and 9. Assist the Investor in creating quarterly investment reports as required by written investment policy, stated procedures and / or state law. B. Scope of Investment Decisions. In performing the services listed in Section II. A above, HSAM shall not have discretionary authority and, accordingly, shall obtain approval from the Investor for the purchase or sale of securities prior to execution. The Investor hereby represents and acknowledges that its written investment policy and investment strategy includes its investment objectives and all portfolio limitations and restrictions, including; without limitation, acceptable levels of investment Docusign Envelope ID: 5A10D7F1-B9F7-4CEE-AC35-EAD3FBC37925 risk. The Investor also agrees to notify HSAM in writing ten business days in advance of the implementation of any changes in the Investor's investment objectives, investment limitations, and/or financial condition. Standard of Care. In the administration of its duties, HSAM shall exercise the judgment and care, under prevailing circumstances, that a prudent person would exercise in the management of the person's own affairs, not for speculation, but for investment, considering, with regard to the entire Portfolio rather than any particular investment or security, the probable safety of capital and the probable income to be derived. Settlement of Securities. The purchase of individual securities shall be executed "delivery versus payment (DVP) through the Investor's safekeeping agent. By so doing, Investor's funds will be released when and if the Investor has received, through the safekeeping agent, the designated securities purchased. Hold Harmless. The Investor hereby agrees to indemnify and hold harmless HSAM, as well as any of its officers, directors, shareholders, affiliates, general partners, employees, agents and trustees, from (i) charges incurred by HSAM on the Investor's behalf and (ii) for any and all market losses arising with respect to the Portfolio to the extent applicable per Texas State Law as to Investor. F. Return on the Portfolio. The Investor expressly affirms and acknowledges that HSAM has not promised or guaranteed any stated or specified return on, or performance of, the Investor's investment portfolio. III. Representations A. HSAM represents that it is registered as an investment advisor under the Investment Advisers Act of 1940 (the "Advisers Act") and is authorized and empowered to enter into this Agreement. B. The Investor represents and confirms that (1) the Investor has full power and authority to enter into this agreement; (2) the terms hereof do not violate any obligation by which the Investor is bound, whether arising by contract, operation of law, or otherwise; and (3) this Agreement has been duly authorized and will be binding on Investor according to its terms. C. The Investor agrees to: 1. Provide HSAM with the schedule of estimated cash flow requirements related to the Portfolio, and promptly notify HSAM as to any changes in such estimated cash flow schedule; 2. Provide HSAM, not less than monthly, with all relevant custodian, safekeeping and bank statements relating to all of the Portfolio; and 3. Allow HSAM to rely upon all information regarding schedules or other information pertaining to the Portfolio as provided to it by the Investor as being true and accurate. HSAM shall have no responsibility to verify, through audit or investigation, the accuracy or completeness of such information and HSAM will not undertake to authenticate any such information. D. The Investor recognizes that there may be loss or depreciation of the current liquidation, immediate and ongoing value of any investment due to the fluctuation of market values. The Investor represents that no party to this Agreement has made any guarantee, either oral or written, that the Investor's investment objectives will be achieved. HSAM shall not be liable for any error in judgment and/or for any investment losses in the Portfolio in the absence of willful malfeasance, gross negligence, or violation of applicable law. Nothing in this Agreement shall constitute a waiver or limitation of any rights that the Investor may have under applicable state or federal law including without limitation, the state and federal securities laws. Docusign Envelope ID: 5A10D7F1-B9F7-4CEE-AC35-EAD3FBC37925 E. Investor represents and acknowledges that Investor has reviewed and understands the risk factors and fees associated with the Portfolio. IV. Fees and Costs of HSAM As consideration for the services provided by HSAM under this Agreement, HSAM will be entitled to a fee (the "Advisor Fee") determined in accordance with the schedule set forth in the fee schedule ("Schedule A"), a copy of which is attached hereto, is incorporated herein for all purposes and is being delivered to the Investor simultaneously with the execution, and as an integral part, of this Agreement. The obligation of HSAM to pay or incur expenses shall not include any costs incident to litigation, mandamus action, regulatory investigation, test case or other similar legal actions. V. Reporting and Account Statements HSAM will deliver or cause to be delivered to the Investor confirmation of transactions and/or periodic statements for the Portfolio as set forth in this Agreement. HSAM will also provide the Investor with an annual valuation of the Investor's Portfolio and any additional statements that may be 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. VI. Other Services The investment advisory services provided hereunder by HSAM to the Investor are exclusive of any other services that HSAM may provide to the Investor. VII. Execution of Investment Transactions A. Affiliated Broker. HSAM is affiliated through common ownership and control with Hilltop Securities ("Hilltop"), a registered broker/dealer with the Financial Industry Regulatory Authority. (`FINRA"), the U.S. Securities and Exchange Commission ("SEC"), and various state and territorial regulatory authorities. Investor hereby authorizes HSAM to effect transactions for the Portfolio by execution through Hilltop. Where transactions are effected through Hilltop, Hilltop may act on an agency or principal basis to the extent permitted by law. Pursuant to Rule 206(3) of the Advisers Act, HSAM will obtain the Investor's consent on each investment transaction to allow Hilltop to act as a principal in acquiring a security to facilitate a trade. Fees for advisory services will be billed separately in accordance with the terms of this Agreement. B. Bundling of Investment Transactions. Transactions for each Investor account generally will be effected independently unless HSAM decides to purchase or sell the same securities for several Investors at approximately the same time. HSAM 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 HSAM investors included in the "batch group in proportion to the purchase and sale orders placed for each Investor in batch transactions. VIII. Selection of Brokers The Investor agrees that when HSAM effects or places orders for the execution of transactions for the Portfolio (other than situations where the Investor specifically instructs otherwise in writing), HSAM may allocate such transactions to such brokers and dealers for execution on such markets, at such prices as in the judgment of HSAM will be in the best interests of the Investor, taking into consideration, in the selection of such brokers and dealers, the available prices and rates of brokerage commissions and other relevant factors, without having to demonstrate that such factors are of a direct benefit to the Investor. Subject to the foregoing, HSAM will arrange for the execution of securities transactions for the Portfolio through brokers or dealers that HSAM reasonably believes will provide best execution. IX. Non -Exclusive Relationship -3- Docusign Envelope ID: 5A10D7F1-B9F7-4CEE-AC35-EAD3FBC37925 The Investor hereby acknowledges that HSAM's services under this Agreement are nonexclusive, and that HSAM shall be free to render the same or similar services to other Investors. The Investor further acknowledges that HSAM's advice is specific to each individual Investor's investment objectives, limitations and financial condition. Therefore HSAM, in the performance of its investment advisory duties, may give advice to, and take action on behalf of, other Investors that may differ from the advice given, or the timing and nature of the action taken, with respect to the Investor's Portfolio. Nothing in this Agreement shall be deemed to impose upon HSAM any obligation to purchase or sell, or to recommend for purchase or sale for the Investor's Portfolio, any security that HSAM or its affiliates may purchase or sell, for their own account or for the accounts of any other Investor if, at the sole discretion of HSAM, it is for any reason undesirable or impractical to take such action or make such recommendation for the Investor's Portfolio. The Investor also acknowledges that HSAM has varying fee structures and arrangements with other investors and may charge their investors different fees, which may be higher or lower than the fees charged with respect to the Investor's Portfolio for similar services. X. Instructions from the Investor HSAM may rely on all instructions (whether oral or written) given by the Investor or its agents that HSAM believes to be genuine. HSAM's records of such a transaction will be conclusive as to the content of any instruction. Instructions may be given to HSAM by any officer or agent authorized by (I) the investment policy; (2) a duly executed"Authorization to Trade Public Funds" form provided by HSAM; or (3) a resolution of the governing body of Investor. HSAM may rely on such authorization until written notice to the contrary is delivered to HSAM by the Investor; and if the Investor does not deliver appropriate authorizing documentation, HSAM may accept instructions from any person reasonably believed by HSAM to be an officer of the Investor. The Investor agrees to hold harmless, and to indemnify and defend to the extent applicable per Texas State Law as to Investor, HSAM, as well as any of its officers, directors, shareholders, affiliates, general partners, employees, agents, and trustees, against any and all losses sustained by HSAM resulting from or by reason of any and all claims, liabilities; losses, damages, charges, costs, fees, and expenses (including, without limitation, attorney fees and costs, including fees of attorneys who may be HSAM employees or employees of HSAM's affiliates) arising out of or in connection with any action taken in reliance upon any instruction or inquiry believed genuine. XI. Transactions Subject to Industry Regulations and Standards All transactions shall be subject to the regulations of all applicable government authorities and self -regulatory agencies including, but not limited to, the constitutions and rules of the clearing agent, exchange, or market where executed. The Investor understands that HSAM is registered as an investment advisor under the Advisers Act, and as such is obligated to comply with all applicable laws and regulations, including those of the SEC and other regulatory and self -regulatory agencies, and agrees that HSAM shall not be liable to the Investor as a result of any action taken by HSAM to comply with any ruling, interpretation, or directive of such organizations. Further, Investor understands and agrees that HSAM will not accept any instructions from Investor which would require a violation of any such rules or regulations. XII. Assignment Neither HSAM nor the Investor may assign any of its rights, authorizations, or obligations under this Agreement without the prior written consent of the other party. XIII. Term and Investor's Right of Cancellation This Agreement shall become effective as of the date hereof and continue for a one-year period after which time this contract may be renewed for an additional one-year period, with no change in terms, upon approval by both parties. Either party may terminate this Agreement upon delivering to the other party thirty calendar days' prior written notice. In the event of termination, it is understood and agreed that only the amounts due to HSAM for services provided and expenses incurred to and including the date of termination will be due and payable. No penalty will be assessed for termination of this Agreement. In addition, the parties hereto agree that upon termination of this Agreement HSAM shall have no continuing obligation to the Investor regarding the investment of funds or performing any other services contemplated herein. -4- Docusign Envelope ID: 5A10D7F1-B9F7-4CEE-AC35-EAD3FBC37925 XIV. Custodial Arrangements Custody of Portfolio assets will be maintained with a custodian selected by Investor and identified to HSAM (the "Custodian"). HSAM will not have custody of any assets in the Portfolio. Investor will be solely responsible for paying all fees or charges of the Custodian. Investor authorizes HSAM 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 Portfolio. XV. Miscellaneous A. Notices to the Investor. All written communication to the Investor shall be sent to the Investor's address set forth on the signature page hereof or as directed in writing to HSAM by the Investor. Any notice, statement, or other communication mailed to the Investor by HSAM in accordance with this section will be deemed to be given to the Investor personally on the date it is so mailed, whether or not it is actually received by the Investor. B. Notices to HSAM. Any notice, statement, or other communication from the Investor to HSAM under this Agreement must be in written form and will be deemed to be given to HSAM upon actual receipt thereof by HSAM, whether such notice was mailed, personally delivered, or telecopied to: Hilltop Securities Asset Management, LLC 2700 Via Fortuna, Suite 410 Austin, TX 78746 Attention: Scott McIntyre Fax Number: (512) 481-2020 E-Mail: Scott.McIntyre@HilltopSecurities.com 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 Investor may have under federal and state securities laws. E. Indemnity. The Investor will indemnify HSAM to the extent applicable per Texas State Law for any loss, liability, or expense (including attorney's fees) which HSAM may incur as a result of, or arising from, any claims asserted by any third party with respect to the Portfolio or the services rendered by HSAM under this Agreement, except in cases of gross negligence or willful misconduct by HSAM in managing the Investor's Portfolio. F. Inconsistent Provisions; Agreements. If any provisions of this Agreement should become or be found to be inconsistent with laws, rules, or regulations of any government or regulatory body having jurisdiction over the subject matter herein, such provisions shall be deemed modified or rescinded in accordance with any such laws, rules, or regulations. To the extent that the provisions of this Agreement are inconsistent with the provisions of any account agreement or clearing agreement with HSAM or its clearing agent, as the case may be, then the terms of such account agreement or clearing agreement shall govern and such terms shall supersede the inconsistent terms herein. 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 provisions and conditions shall not be affected, and this Agreement shall be carried out as if any such invalid or unenforceable provision or condition were not contained herein. -5- Docusign Envelope ID: 5A10D7F1-B9F7-4CEE-AC35-EAD3FBC37925 H. Waiver of Terms. HSAM's failure to insist at any time upon strict compliance with any terms of this Agreement shall not constitute a waiver of any of HSAM's rights as described herein. I. Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Texas, without regard to its principles of conflicts of laws. J. Extraordinary Events. Neither HSAM nor any of its officers, directors, shareholders, affiliates, general partners, employees, agents, or trustees shall be liable for losses caused directly or indirectly by government restrictions, exchange or market actions, suspensions of trading, wars, strikes, delays in the transmission of orders due to breakdown or failure of transmission or communication facilities, or any other causes beyond HSAM's reasonable control or anticipation. K. Written Disclosure Statement. Simultaneously with the execution of this Agreement, HSAM has delivered to the Investor Part II of its Form ADV as filed with the SEC, or a similar disclosure document, as its brochure pursuant to Rule 204.3 of the Advisers Act. The Investor's execution of this Agreement shall be deemed acknowledgment of receipt thereof. L. Verification of Information. The Investor represents and warrants to HSAM that all information furnished to HSAM in connection with the opening of the Portfolio (and all documents supplied by the Investor in this regard, including financial statements) are true, complete, and correct. HSAM is entitled to rely on this information until HSAM receives written notice of any change, which the Investor agrees to furnish promptly should any material changes occur. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. THE NEXT PAGE IS A SIGNATURE PAGE.] Docusign Envelope ID: 5A10D7F1-B9F7-4CEE-AC35-EAD3FBC37925 By signing this Agreement, the undersigned Investor acknowledges receipt of a copy of this Agreement, including Schedule A. C,L- OQi9P&RLAND FRRAR'17f1(`7AFA7't Signature of Investor Trent Epperson Print Name City Manager Capacity of Signatory Address 3519 Liberty Drive Pearland, TX 77581 HILLTOP SECURITIES ASSET MANAGEMENT, LLC More of Officer � _1 - C_O Tr ! f�/` i ►'� Print Name Capacity of Signatory 9/18/2024 1 12:51 PM CDT Date Date Docusign Envelope ID: 5A10D7F1-B9F7-4CEE-AC35-EAD3FBC37925 SCHEDULE A FEE SCHEDULE AND EXPENSE ITEMS As compensation for HSA1VI's professional services, the Investor agrees to a tiered asset -based annual fee of three (3) basis points, calculated on the first $250 million in average asset balance during the period, excluding any repurchase agreement (repo) balances and balances held with the City's own depository bank. On all balances above $250 million, the fee is reduced to two (2) basis points. This structure includes all costs associated with investment management and shall not exceed $125,000 during any calendar year. This fee will be billed in quarterly increments in arrears and calculated on the average month -end book value of the total Portfolio for the preceding three months, as reported on the monthly investment reports, excluding any repo balances and deposits held with the Investor's depository bank. The above fee includes all costs associated with investment management. Safekeeping and banking fees will remain the responsibility of the Investor.