REQUEST FOR PROPOSAL NO.: 11C-005L RFP FOR INVESTMENT ADVISORY SERVICES

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1 AGENDA ITEM: REQUEST FOR PROPOSAL NO.: 11C-005L RFP FOR INVESTMENT ADVISORY SERVICES DATE: January 18, 2011 DATE ADVERTISED: December 20, 2010 DATE SOLICITED: December 20, 2010 DATE OPENED: January 7, 2011 PRESENTED TO BOARD: February 16, 2011 DATE POSTED: January 18, 2011 CONTRACT PERIOD: February 17, 2011 through December 31, 2013 DEPARTMENT: 9236 FUND: Various FUNCTION: 7510 ACCOUNT: FUNDING SOURCE: Investment Interest Earnings REQUESTING DEPARTMENT: Treasury FINANCIAL IMPACT The estimated annual financial impact to the General budget is $200,000. The source of funds is the Investment Interest Earning. Services to be provided include Investment Advisory Services. VENDOR MINORITY STATUS TOTAL POINTS AWARDED American Beacon Advisors Cutwater Asset Management PFM Asset Management, LLC LEGEND: = Award MINORITY - (2-African American, 3-Hispanic American, 4-Native American, 5-Asian American, 6-American Woman, 7-Physically Impaired, 8-Other) The Evaluation Committee, consisting of District staff, convened and reviewed all responsive proposals. It was the recommendation of the Committee to award this contract to PFM Asset Management, LLC. RECOMMENDATION: I recommend contract award be made to PFM Asset Management, LLC based on the evaluation criteria outlined in the RFP. Note: Original RFP document is available upon request. Last printed 1/27/2011 4:00:26 PM

2 REQUEST FOR PROPOSAL NO. 11C-005L RFP PROTEST Failure to file a protest within the time prescribed in (3), Florida Statutes, shall constitute a waiver of proceedings under Chapter 120, Florida Statutes and applicable Board rules, regulations and policies. Offers from the vendors listed herein are the only offers received timely as of the above opening date and time. All other offers submitted in response to this solicitation, if any, are hereby rejected as late. If a proposer wishes to protest a RFP, they must do so in strict accordance with the procedures outlined in FS (3). Any person who files an action protesting a decision or intended decision pertaining to this RFP pursuant to FS (3)(b), shall post with the Purchasing Department, at the time of filing the formal written protest, a bond secured by an acceptable surety company in Florida payable to the School District of Palm Beach County in an amount equal to 1 percent (1%) of the total estimated contract value, but not less than $500 nor more than $5,000. Bond shall be conditioned upon the payment of all costs that may be adjudged against the protester in the administrative hearing in which the action is brought and in any subsequent appellate court proceeding. In lieu of a bond, a cashier's check, certified bank check, bank certified company check or money order will be acceptable form of security. If, after completion of the administrative hearing process and any appellate court proceedings, the District prevails, it shall recover all costs and charges included in the final order of judgment, including charges by the Division of Administrative Hearings. Upon payment of such costs and charges by the protester, the protest security shall be returned. If the protest prevails, he or she shall recover from the District all costs and charges, which shall be included in the final order of judgment. DISQUALIFYING CRIMES The bidder certifies by submission of this bid, that neither it nor its principals is presently debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from participation in this transaction by the State of Florida or Federal Government. Further, bidder certifies that it has divulged, in its bid response, information regarding any of these actions or proposed actions with other governmental agencies. SS:GM:AB

3 RFP 11C-005L REQUEST FOR PROPOSAL FOR INVESTMENT ADVISORY SERVICES American Beacon Advisors Cutwater Asset Management PFM Asset Management, LLC Experience and Qualifications Management and Approach Qualifications of Staff Investment Tracking and Reporting Cost of Services Minority/Women Business Participation GRAND TOTAL Last printed 1/27/2011 4:00:26 PM

4 CONTRACT BETWEEN THE SCHOOL BOARD OF PALM BEACH COUNTY, FLORIDA AND PFM ASSET MANAGEMENT, LLC This contract entered into this day of, 201_, between THE SCHOOL BOARD OF PALM BEACH COUNTY, FLORIDA, a political subdivision of the state of Florida, (hereinafter referred to as the "School Board") and PFM Asset Management, LLC, located at 300 S. Orange Avenue, Suite 1170, Orlando FL , (hereinafter referred to as the "Contractor") to provide Investment Advisory Services. SECTION I - Term of Contract This contract shall be for the period beginning February 17, 2011 through December 31, The contract may be renewed for one additional two-year period at the annual anniversary date. The contract will not extend beyond the fifth year. SECTION II - Services The Contractor shall provide Investment Advisory Services per specifications in RFP No. 11C-005L and the corresponding proposal submitted by the Contractor, which by reference herein becomes part of this contract. All addenda issued to RFP, if any, are also made a part of this contract. SECTION III - Cost of Services The Contractor shall be paid for services as listed in the RFP and awarded for Investment Advisory Services for the School Board. SECTION IV - Terms and Conditions The Contractor shall have the option to terminate the contract upon written notice to the authorized representative of the School Board. Such notice must be received at least 90 days prior to the effective date of termination. The School Board shall have the option to terminate the contract without cause upon written notice to the authorized representative of the Contractor. Such notice must be provided to the Contractor at least 30 days prior to the effective date of termination, and the Contractor shall only be entitled to compensation up to the date of termination. The Contractor shall not be entitled to lost profits. Early termination of the contract by the Contractor may prohibit the Contractor from submitting proposals for a period of three years from the date of termination of the contract. The School Board shall establish the termination date of the contract for use thereof.

5 There shall be no assignment of the contract or compensation to be derived therefrom by the Contractor. Included in this contract are the terms and conditions as described in the Request for Proposal, RFP No. 11C-005L which are incorporated by reference herein and made a part hereof as Exhibit A. SECTION V Indemnification/ Hold Harmless Agreement Contractor shall, in addition to any other obligation to indemnify the School Board, and to the fullest extent permitted by law, protect, defend, indemnify and hold harmless the School Board, its agents, officers, elected officials and employees from and against all claims, actions, liabilities, losses (including economic losses), costs arising out of any actual or alleged; A. bodily injury, sickness, disease or death, or injury to or destruction of tangible property including the loss of use resulting therefrom, or any other damage or loss arising out of, or claimed to have resulted in whole or in part from any actual or alleged wrongful act or omission, whether negligent or intentional, of the Contractor, subcontractor, anyone directly or indirectly employed by any of them, of anyone for whose acts any of them may be liable in the performance of the work; or B. violation of law, statute, ordinance, governmental administration order, rule or regulation by Contractor in the performance of the work; or C. liens, claims or actions made by the Contractor or any subcontractor or other party performing the work. The indemnification obligations hereunder shall not be limited to any limitation on the amount, type of damages, compensation or benefits payable by or for the Contractor of any subcontractor under workers' compensation acts, disability benefit acts, other employee benefit acts or any statutory bar. This article will survive the expiration and/or termination of this contract. SECTION VI - Insurance Insurance will be required as stated in RFP No. 11C-005L. The School Board of Palm Beach County, Florida shall be named as an additional insured. SECTION VII Cancellation of Award/Termination

6 In the event any of the provisions of this contract are violated by the Contractor, the Superintendent or designee will give written notice to the Contractor stating the deficiencies, and unless the deficiencies are corrected within ten (10) days of such notice, recommendation will be made to the School Board for immediate cancellation. Upon cancellation hereunder, the School Board may pursue any and all legal remedies as provided herein and by law. In the event that it is subsequently determined that a cancellation under this paragraph was incorrect, the termination shall be converted to a termination for convenience pursuant to the next paragraph. The School Board, reserves the right to terminate any contract at any time and for no reason, upon giving 30 days prior written notice to the other party. If said contract should be terminated for convenience as provided herein, the School Board will be relieved of all obligations under said contract. The School Board will only be required to pay to the Contractor that amount of the contract actually performed to the date of termination. The Contractor will have the option to terminate the contract upon written notice to the Director of Purchasing. Such notice must be received at least 90 days prior to the effective date of termination. years. Cancellation of contract by Contractor may result in removal from responder list for a period of three SECTION VIII - Funding Out, Termination, Cancellation Florida School Laws prohibit School Board from creating obligations on anticipation of budgeted revenues from one fiscal year to another without year-to-year extension provisions in the contracts. It is necessary that fiscal funding out provisions be included in all contracts in which the terms are for periods of longer than one year. Therefore, the following funding out provisions are an integral part of this contract: The School Board may, during the contract period, terminate or discontinue the services covered in this contract for lack of appropriated funds upon the same terms and conditions as set forth in Section VII Cancellation of Award / Termination. Such prior written notice will state: A. That the lack of appropriated funds is the reason for termination, and B. Agreement not to replace the services being terminated with services similar to those covered in this contract from another vendor in the succeeding funding period.

7 This written notification will thereafter release the School Board of all further obligations in any way related to such services covered herein. This completed statement must be included as part of any notice of termination. SECTION IX Jessica Lunsford Act All contract personnel (vendors, individuals, or entities) under contract with the School Board who are permitted access on school grounds when students are present, who may have direct contact with any student of the School District, or who may have access to or control of school funds must be fingerprinted and background checked. The Contractor agrees to undergo a background check and fingerprinting if he/she is an individual who meets any of the above conditions and to require that all individuals in the organization who meet any of the conditions to submit to a background check, including fingerprinting by the School District s Police Department, at the sole cost of the Contractor. Contractor shall not begin providing services contemplated by this Agreement until Contractor receives notice of clearance by the School District. The School Board, nor its members, officers, employees, or agents, shall not be liable under any legal theory for any kind of claim whatsoever for the rejection of Contractor (or discontinuation of Contractor s services) on the basis of these compliance obligations. Contractor agrees that neither the Contractor, nor any employee, agent or representative of the Contractor who has been convicted or who is currently under investigation for a crime delineated in section , Florida Statutes, will be employed in the performance of this contract. SECTION X - Default In the event that the Contractor should breach this contract the School Board reserves the right to seek remedies in law and/or in equity. SECTION XI - Debarment The School Board shall have the authority to debar a person / corporation for cause for consideration or award of future contracts. The debarment shall be for a period commensurate with the seriousness of the causes, generally not to exceed three (3) years. When the offense is willful or blatant, a longer term of debarment may be imposed, up to an indefinite period.

8 SECTION XII Federal and State Tax The District is exempt from federal and state taxes for tangible personal property. The Purchasing Department Coordinator will sign an exemption certificate submitted by the Contractor. Contractors doing business with the School Board will not be exempted from paying sales tax to their suppliers for materials to fulfill contractual obligations with the School Board, nor will any responder be authorized to use the District's Tax Exemption Number in securing such materials. SECTION XIII - Amendment This contract shall only be amended or modified in writing executed by both parties. SECTION XIV - Strict Performance The failure of either party to insist on strict performance of any covenant or conditions herein shall not be construed as a waiver of such covenants or conditions for any instance. This contract shall be construed in accordance with the laws of the State of Florida. If any litigation shall result from this contract, venue shall lie in Palm Beach County, Florida. This contract shall not be construed against the party who drafted the same as both parties have had experts of their choosing review the same. SECTION XV Investment Advisor Provisions (a) Services of Advisor. The Client hereby engages the Advisor to serve as investment advisor under the terms of this Agreement with respect to the funds described in this Agreement and such other funds as the Client may from time to time assign by written notice to the Advisor (collectively the "Managed Funds"), and the Advisor accepts such appointment. In connection therewith, the Advisor will provide investment research and supervision of the Client's Managed Funds investments and conduct a continuous program of investment, evaluation and, when appropriate, sale and reinvestment of the Client's Managed Funds assets. The Advisor shall continuously monitor investment opportunities and evaluate investments of the Client s Managed Funds. The Advisor shall furnish the Client with statistical information and reports with respect to investments of the Managed Funds. The Advisor shall place all orders for the purchase, sale, loan or exchange of portfolio securities for the Client's account with brokers or dealers

9 recommended by the Advisor and/or the Client, and to that end the Advisor is authorized as agent of the Client to give instructions to the depository designated by the Client as its custodian as to deliveries of securities and payments of cash for the account of the Client. In connection with the selection of such brokers and dealers and the placing of such orders, the Advisor is directed to seek for the Client the most favorable execution and price, the determination of which may take into account, subject to any applicable laws, rules and regulations, whether statistical, research and other information or services have been or will be furnished to the Advisor by such brokers and dealers. The depository designated by the Client shall have custody of cash, assets and securities of the Client. The Advisor shall not take possession of or act as custodian for the cash, securities or other assets in the Managed Funds and shall have no responsibility in connection therewith. Authorized investments shall include only those investments which are currently authorized by the state investment statutes and the bond covenants and as supplemented by such other written instructions as may from time to time be provided by the Client to the Advisor. The Advisor shall be entitled to rely upon the Client's written advice with respect to anticipated drawdowns of Managed Funds. The Advisor will observe the instructions of the Client with respect to broker/dealers who are approved to execute transactions involving the Client s Managed Funds and in the absence of such instructions will engage broker/dealers which the Advisor reasonably believes to be reputable, qualified and financially sound. (b) Pool Compensation. Assets invested by the Advisor under the terms of this Agreement may from time to time be invested in a money market mutual fund or local government investment pool managed by the Advisor (either, a Pool ) or in individual securities. Average daily net assets subject to the fees described in this Agreement shall not take into account any funds invested in the Pool. Expenses of the Pool, including compensation for the Advisor and the Pool custodian, are described in the relevant prospectus or information statement and are paid from the Pool. (c) Other Compensation. If and to the extent that the Client shall request the Advisor to render services other than those to be rendered by the Advisor under this Agreement, such

10 additional services shall be compensated separately on terms to be agreed upon between the Advisor and the Client. (d) Expenses. The Advisor shall furnish at its own expense all necessary administrative services, office space, equipment, clerical personnel, telephone and other communication facilities, investment advisory facilities, and executive and supervisory personnel for managing the Managed Funds. Except as expressly provided otherwise herein, the Client shall pay all of its own expenses including, without limitation, taxes, commissions, fees and expenses of the Client's independent auditors and legal counsel, if any, brokerage and other expenses connected with the execution of portfolio security transactions, insurance premiums, fees and expenses of the Custodian of the Managed Funds including safekeeping of funds and securities and the keeping of books and accounts. (e) Registered Advisor; Duty of Care. The Advisor hereby represents it is a registered investment advisor under the Investment Advisers Act of The Advisor shall immediately notify the Client if at any time during the term of this Agreement it is not so registered or if its registration is suspended. The Advisor agrees to perform its duties and responsibilities under this Agreement with reasonable care. The federal securities laws impose penalties under certain circumstances on persons who are required to act in good faith. Nothing herein shall in any way constitute a waiver or limitation of any rights which the Client or the Advisor may have under any federal securities laws. The Client hereby authorizes the Advisor to sign I.R.S. Form W-9 on behalf of the Client and to deliver such form to broker-dealers or others from time to time as required in connection with securities transactions pursuant to this Agreement. (f) Advisor s Other Clients. The Client understands that the Advisor performs investment advisory services for various other clients which may include investment companies, commingled trust funds and/or individual portfolios. The Client agrees that the Advisor, in the exercise of its professional judgment, may give advice or take action with respect to any of its other clients

11 which may differ from advice given or the timing or nature of action taken with respect to the Client's Managed Funds accounts. The Advisor shall not have any obligation to purchase, sell or exchange any security for the Client's Managed Funds solely by reason of the fact that the Advisor, its principals, affiliates, or employees may purchase, sell or exchange such security for the account of any other client or for itself or its own accounts. (g) Force Majeure. The Advisor shall have no liability for any losses arising out of the delays in performing or inability to perform the services which it renders under this Agreement which result from events beyond its control, including interruption of the business activities of the Advisor or other financial institutions due to acts of God, acts of governmental authority, acts of war, terrorism, civil insurrection, riots, labor difficulties, or any action or inaction of any carrier or utility, or mechanical or other malfunction. (h) Disciplinary Actions. The Advisor shall promptly give notice to the Client if the Advisor shall have been found to have violated any state or federal securities law or regulation in any criminal action or civil suit in any state or federal court or in any disciplinary proceeding before the Securities and Exchange Commission or any other agency or department of the United States, any registered securities exchange, FINRA, or any regulatory authority of any State based upon the performance of services as an investment advisor. (i) Independent Contractor. The Advisor, its employees, officers and representatives, shall not be deemed to be employees, agents (except as to the purchases or sale of securities described in subparagraph (a) above), partners, servants, and/or joint ventures of the Client by virtue of this Agreement or any actions or services rendered under this Agreement. (j) Books. The Advisor shall maintain appropriate records of all its activities under this Agreement. The Advisor shall provide the Client with a monthly statement showing deposits, withdrawals, purchases and sales (or maturities) of investments, earnings received, and the value

12 of assets held on the last business day of the month. The statement shall be in the format and manner that is mutually agreed upon by the Advisor and the Client. Each party shall be responsible for compliance with any public document request served upon it pursuant to Section , Florida Statutes, and any resultant award of attorney s fees for non-compliance with that law. (k) Disclosure Statement. The Advisor warrants that it has delivered to the Client, at least five business days prior to the execution of this Agreement, the Advisor's current Securities and Exchange Commission Form ADV, Part II (disclosure statement). The Client acknowledges receipt of such disclosure statement at least five business days prior to the execution of this Agreement. (l) Execution. Each party to this Agreement represents and warrants that the person or persons signing this Agreement on behalf of such party is authorized and empowered to sign and deliver this Agreement for such party. This contract is binding on the parties hereto, their heirs, successor and/or assigns. Section XVI Should either party breach this contract, the non-breaching party shall be entitled to all remedies as provided by law and equity. Section XVII (a) Equal Opportunity Provision. The parties agree that no person shall, on the grounds of race, color, sex, national origin, disability, religion, ancestry, marital status, sexual orientation, gender, gender identity or expression be excluded from the benefits of, or be subjected to any form of discrimination under any activity carried out by the performance of this contract. (b) Dispute Resolution. In the event an issue arises which cannot be resolved between the Client s Treasurer and the Contractor s regarding the matters set forth in this Contract, the dispute shall be referred to the Client s Chief Operating Officer and the Contractor s who shall both

13 make a good faith effort to resolve the dispute. (c) This document incorporates and includes all prior negotiations, correspondence, conversations, agreements and understandings applicable to the matters contained herein and the parties agree that there are no commitments, agreements or understandings concerning the subject matter of this contract that are not contained in this document. Accordingly, the parties agree that no deviation from the terms hereof shall be predicated upon any prior representations or agreements, whether oral or written. (d) Governing Law. This contract shall be interpreted and construed in accordance with and governed by the laws of the State of Florida. Any controversies or legal problems arising out of this contract and any action involving the enforcement or interpretation of any rights hereunder shall be submitted to the jurisdiction of the State courts of the Fifteenth Judicial Circuit of Palm Beach County, Florida. (e) Severability. In case any one or more of the provisions contained in this contract shall for any reason be held to be invalid, illegal, unlawful, unenforceable or void in any respect, the invalidity, illegality, unenforceability or unlawful or void nature of that provision shall not effect any other provision and this contract shall be considered as if such invalid, illegal, unlawful, unenforceable or void provision had never been included herein. (f) Waiver. The parties agree that each requirement, duty and obligation set forth herein is substantial and important to the formation of this contract and, therefore, is a material term hereof. Any party s failure to enforce any provision of this contract shall not be deemed a waiver of such provision or modification of this contract. A waiver of any breach of a provision of this contract shall not be deemed a waiver of any subsequent breach and shall not be construed to be a modification of the terms of this contract.

14 In witness whereof, this contract has been executed on the day and year first above written. PFM ASSET MANAGEMENT, LLC THE SCHOOL BOARD OF PALM BEACH COUNTY, FLORIDA BY: WITNESS: WITNESS: BY: Frank A. Barbieri, Jr., Esq., Chairman Date Attest: Arthur C. Johnson, Ph.D., Superintendent Reviewed and Approved for Form and Legal Sufficiency: DATE: BY: Attorney