HomeMy WebLinkAboutC2008-243 - 7/22/2008 - ApprovedINVESTMENT ADVISORY AGREEMENT
BETWEEN
PATTERSON & ASSOCIATES and
THE CITY OF CORPUS CHRISTI, TEXAS
This Investment Advisory Agreement dated as of the ~ day of J y~~ 2008 (the
"Agreement") is made and entered into by and between Patterson Capital Managbment, L.P., dba
Patterson & Associates ("P8u4"), a registered investment advisor and funds management Texas limited
partnership and the City of Corpus Christi, Texas (the "Client").
PREAMBLE
WHEREAS, the Client has determined to select and appoint P8~A to act as its investment advisor
for funds and securities to manage, maintain, and invest monies and securities and to perform the
advisory and consulting services described herein,
NOW THEREFORE, for and in consideration of the mutual promises, covenants, and agreements
herein contained and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree with each other as follows:
ARTICLE I. Definitions
"Authorized Investments" shall mean those investments authorized and defined in the Client's
Investment Policy made a part of this Agreement and attached hereto as Exhibit A.
"Authorized Representative(s) of the Client" shall mean the duly authorized officers,
members of the governing board or their delegated representatives, empowered to execute instructions
and take other necessary actions under this Agreement on behalf of the Client designated in writing,
attached hereto as Exhibit D.
"Authorized Representative(s) of P&A" shall mean any employee of PBiA who is designated
in writing by P8u4 as an authorized representative for purposes of this Agreement, attached hereto as
Exhibit D.
ARTICLE II. Creation of Portfolio and Account(s)
Section 2.01. Creation of a Separate and Distinct Portfolio(s). P8J1, on behalf of the
Client hereby creates and establishes for management and reporting purposes a separate and distinct
portfolio(s) (the "Portfolio") to be managed as a separate and distinct fund, held in the Client's name at
Client's safekeeping institution. P&A shall invest and manage all monies deposited by the Client into the
Portfolio in accordance with Client Investment Policy and in accordance with directions from Authorized
Representative of the Client. Client will determine the number of Portfolios to be established and
maintained in accordance with Client needs. All Portfolios shall be segregated and held distinct from all
other funds held or invested by P&A.
2008-243
07/22/08
Res. 027772
Patterson & Assoc.
ARTICLE III. Operation of Portfolio(s)
Section 3.01. Depository Services. The Portfolio and securities owned by the Portfolio will be
maintained in the Client's name and in the designated depository of the Client. The Authorized
Representatives of Client may authorize P&A to conduct security transactions in that account for Client.
All fees and expenses for depository account maintenance and transactions will be paid by Client.
Section 3.02. Delivery versus Payment. All securities managed by P&A will be settled on a
delivery versus payment (DVP) basis into the Client designated Depository Account. DVP will assure that
no Client funds are released until the security is received and verified by the Depository of the Client.
ARTICLE 1:V. Investment Duties and Services
Section 4.01. Prudence. P&A hereby agrees to manage the Portfolio(s) with judgment and
care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise
in the management of their own affairs, not for speculation, but for investment, considering the probable
safety of their capital as well as probable income to be derived. This Prudent Person Law shall be applied
to the investment of all Portfolios and Accounts with the same degree of care and assuming the same
duty as the Client. P&A shall obtain prior approval of Authorized Representative of Client prior to making
a purchase or sale of item in Client Portfolio.
Section 4.02. Investment Advisory Services. P&A shall provide full advisory services and
management of Client's Portfolio(s) which shall include market advice, portfolio structure advice, trade
execution and settlement on an ongoing basis, and services described on Exhibit F. All investments shall
be in accord with applicable state laws and Client's Investment Policy attached hereto and made a part
hereof as Exhibit A. P&A certifies that all funds shall be invested only in Client authorized investments.
Client Designation of Funds. Client has full discretion to designate the amount of funds to be
placed in Portfolio(s) or in separate investments in accordance with cash flow needs. Client has full
discretion to designate the amount of funds to be placed in Portfolio(s) or in a local government
investment pool or money fund consistent with applicable State laws and Client's Investment Policy, as
authorized by the Client's governing body for liquidity.
Client Directives. Monies held in the Portfolio(s) shall be invested and reinvested in Authorized
Investments selected by P&A and approved by Client before settlement, in accordance with the Client
Investment Policy. Client reserves the right to notify Depository of pending trades and approve
settlement of those trades. Client reserves the right to approve any and all trades. P&A will utilize only
Client approved broker/dealers.
Trade Aggregation. For the purpose of purchase transactional efficiency or market price
advantage involving funds of the Portfolio(s) as recommended by P&A, P&A may aggregate these funds
with other Client funds for investment. However, Client funds and securities shall never be commingled
with other Client funds and Client transactions will be specifically segregated on all brokerage transactions
and settled separately into Client depository.
Section 4.03. Confirmations. P&A will establish all necessary procedures for Client to receive
independent trade confirmations from all broker/dealers for each transaction in the Portfolio.
Independent confirmations will be sent directly to the Client, and P&A, for audit trail purposes.
Section 4.04. Reportino. P&A shall provide monthly and quarterly written reports detailing
and summarizing all investments and Portfolio transactions at a minimum. Client shall define all reporting
needs for information needed on a daily, monthly or quarterly basis. P&A shall submit all reports to the
Client of its transactions promptly after the end of each month with respect to monthly reports, and the
end of each quarter, with respect to quarterly reports. Such report shall indicate at a minimum the
balances remaining in the Portfolio and each account, the interest earned, all deposits and withdrawals,
and a detailed inventory of all securities purchased or sold and positions taken for the period. All reports
shall fulfill applicable statutory requirements. Reports will include information for GASB 3, 31, and 40
reporting on an annual basis.
Section 4.05. Presentations. An Authorized Representative of P&A will be available to
present reports or attend presentations to the Client or the Client's governing body on asemi-annual
basis, or as required by the Client.
Section 4.06. Earnings and Losses from Investments. The Client and P&A agree that all
funds in the Portfolio shall be invested only in Authorized Investments as designated by Client Investment
Policy. All earnings and profits from the investment of funds in any Portfolio(s) shall be credited to and
deposited in the Portfolio(s) unless designated by Client. All losses resulting from the investment of funds
in any Portfolio(s) shall be charged to such Portfolio or Account.
Section 4.07. Advisory Consulting Services. P&A agrees to provide advisory consulting
services for the Client in all areas of cash management to include, at a minimum, examination and
evaluation of the following treasury areas:
- Investment policy review. To analyze the existing Client Investment Policy for application
to the Client's needs and, if necessary, to formulate revisions for adoption.
- Investment strategy review. To continuously evaluate investment strategies (written and
operational) for feasibility and appropriateness.
- Cash Flow Analysis. To provide cash flow analysis advice to develop a cash flow system
for the Client to include ongoing forecasts and projections for investment purposes,
consistent with Client's Investment Policy and investment strategy.
- Internal procedures and processes. To evaluate internal treasury procedures for
maximum benefit and efficiency to the Client and its Portfolio(s) including broker/dealer
transactions, wire transfers, competitive bidding process, repurchase agreements
documentation, and transaction audit trails. To review for adequate management oversight
and prepare written procedures.
- Delivery and Settlement Oversight. To coordinate investment settlements, delivery and
availability of funds with City staff to assure safe transfer of funds and securities.
- Financial counter-party evaluation. To provide ongoing credit review of Clients banking
institutions and financial counter-parties. To obtain and maintain all statutorily required
broker certifications.
- GASB 31, 40 Compliance. To provide assistance on custodial procedures for GASB
compliance and reporting and accurate and timely annual GASB 31 and 40 reporting.
- Market Research. To provide technical and fundamental market research on an ongoing
basis.
- Banking arrangement and structure. To determine the efficiency and effectiveness of
the current banking structure and possible recommendations for improvement. To prepare
and evaluate the bidding and awarding of banking services.
- Coordination with external client agencies. To improve communications with and
efficiencies between the Client and any external service agencies (including broker/dealers)
for policy compliance, maximum utility of funds and investment alternatives. To maintain all
broker/dealers files for certification and compliance with Client and P&A requirements.
- Exposure review. To determine if the Client has any audit, operational or policy exposures
in the Treasury area.
- Investment Reporting. To review all investment reporting for adequacy of information
and presentation format for maximum benefit and understanding. To provide monthly and
quarterly Portfolio(s) reporting.
- Public Funds Investment Act Compliance. To evaluate the Client's Treasury operation
and reporting for ongoing full compliance to the Texas Government Code 2256.
- Public Funds Collateral Act Compliance. To evaluate the Treasury operation and
reporting for full and ongoing compliance to the Texas Government Code 2257.
Section 4.08 Quarterly Defined. For purposes of Section 4.04 of this Agreement, quarterly shall
mean the end of each fiscal quarter of Client. Currently, Client's fiscal year commences on August 1 and
ends on the next succeeding July 31. Currently, the client's fiscal quarters end October 31, January 31,
April 30, and July 31. The first quarterly report shall be for the period containing at least sixty (60) days
following the date this Agreement becomes effective.
ARTICLE V. Expenses and Reports
Section 5.01. Fee and Expenses. The Client agrees to pay to P8u4 on a quarterly basis, in
arrears, an amount sufficient to reimburse P8ua for the cost of performing the duties contemplated under
this Agreement in accordance with the Fee Schedule, attached hereto and made a part hereof as Exhibit
B. P&A shall advise the Client from time to time, in writing of the amount of such costs. This itemized
invoice shall set forth the services provided for the Portfolio(s) and the cost incurred. The invoice will be
provided to the Client by the fifth (5) business day of the succeeding month. Payment on the charges
shall be made within ten (10) business days after receipt of invoice.
Section 5.02. Records. P8u4 shall keep a book of records in which complete and correct
entries shall be made of all transactions relating to the holdings, balances and values in the Portfolio(s) in
accordance with generally accepted accounting principles. Such records shall be available for inspection
at all reasonable hours of the business day and under reasonable conditions by the Client.
Section 5.03. Client Confidentiality. All records and information regarding the Client will be
held as confidential by PBva.
ARTICLE VI. Miscellaneous
Section 6.01. Notices. Any notices, Letters of Instruction, requests or demands required or
permitted to be given hereunder shall be given in writing and shall be deemed duly given when mailed by
registered or certified mail, postage pre-paid, addressed or telefaxed as follows:
To the Client:
David Hedberg
City Treasurer
City of Corpus Christi
1201 Leopard Street
Corpus Christi, TX 78469
Telephone: 361-880-3650
Telefax: 361-880-7320
E-mail: davidhCalcc.tx.com
To P8J-: Linda T. Patterson
Patterson & Associates
301 Congress Avenue
Suite 570
Austin, Texas 78701
Telephone: (512) 320-5042
Telefax: (512) 320-5041
E-mail: IindaCla oatterson.net
Section 6.02. Severability. If any provision of this Agreement shall be held or deemed to be
or in fact shall be illegal, inoperative, or unenforceable, the same shall not affect any other provision or
provisions herein contained or render the same invalid, inoperative, or unenforceable to any extent
whatsoever.
Section 6.03. Limitation of Rights. With the exception of the rights herein expressly
conferred, nothing in or to be implied from this Agreement is intended or shall be construed to give any
person other than the parties hereto any legal or equitable right, remedy or claim under or in respect to
this Agreement or any of the covenants, conditions and provisions herein contained; this Agreement and
all of the covenants, conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of the parties hereto and herein provided.
The Client further agrees that P&A's responsibilities hereunder are limited to the management of
the Portfolio(s) as herein described and the providing of reports and information herein required; P&A
shall not be liable for any losses from investments made and transfers made in accordance with the
procedures set forth in this Agreement.
Section 6.04. Execution of Counterparts. This Agreement may be simultaneously executed
in several separate counterparts, each of which shall be an original and all of which shall constitute but
one and the same instrument.
Section 6.05. Aoolicable Law and Venue. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas and is performable in Nueces County, Texas.
Venue for any legal dispute shall be the courts of Nueces County, Texas.
Section 6.06. Options. The captions or headings in this Agreement are for convenience only
and in no way define, limit, or describe the scope or intent of any provisions, articles, or sections of this
Agreement.
Section 6.07. Amendment. The Client and P8ua may supplement or amend this Agreement
only if evidenced in a writing signed by both parties.
Section 6.08. Termination. P&A may terminate this Agreement with or without cause, by
tendering ninety (90) days prior written notice in the manner set forth in Section 6.01 hereof. The Client
may terminate this Agreement within five (5) business days of the date hereof, without cause and without
penalty, by notifying P&A in the manner set forth in Section 6.01 hereof of its decision to terminate the
Agreement. In addition, the Client may terminate this Agreement immediately with cause and without
penalty by notifying P&A in the manner set forth in Section 6.01 of its decision to terminate the
Agreement.
Section 6.09. Term. Unless terminated in accordance with Section 6.08 hereof, this
Agreement has a term of one year, starting on August 1. This Agreement may be renewed or extended
by the City Council by ordinance or resolution.
Section 6.10. Assignment. This Agreement shall not be assignable by either party hereto, by
operation of law or otherwise, without the prior written consent of the other party hereto. Any
assignment in violation of this Section 6.10 shall result in the automatic termination of this Agreement.
Section 6.11. Ownership Change. P&A shall notify the Client in writing at least 90 days
prior to any change in partnership ownership.
Section 6.12. SEC Document Disclosure. The Client, by execution of this document,
acknowledges the receipt of P&A's most current ADV Part II disclosure document as required by the SEC.
Section 6.13. Insurance. P8~A will comply with the attached insurance requirements, Exhibit E.
IN WITNESS WHEREOF the parties hereto have cause this Agreement to be executed in
multiple counterparts as of the date first set forth above.
CITY OF CORPUS CHRISTI, TX
Patterson Capital Management, L.P. dba
PATTERSON & ASSOCIATES
By: Patterson & Associ~s, Inc. General Partner
Linda T. Patterson, President
ATtEST~
ApprQroved as to Corm: ~ ~ a%
a-.~y+-
L sa Agw ar
Assistant City
For City Attorney
AAMANDp CHAP
Dat C+TY SECRETAfl"
Date: ~~~ ~a
Q~. ~~~nh,,,AUTH,U,Hcyltt.
9Y COUNCIL ..._.r~:1~a~d~S.11~rL
~.......Cr~
3ECRtTARY J~b-
EXHIBIT A
CLIENT'S INVESTMENT POLICY
Client Investment Policy is made part of this Investment Advisory Agreement in order to assure that all
investment decisions conform to the policy and parameters established by the Client and its governing
body. As the Policy changes with Council action the Client will provide the amended Policy to P&A and
the most recent amended and adopted Policy will control the Client's investments.
EXHIBIT B
FEE SCHEDULE
All services described under the terms of this Agreement are being provided in accordance with the
following fee schedule.
Services are provided for an annual fee of: $ 32,000
Payable quarterly in arrears.
Fees are calculated by P&A on services rendered in the preceding Client fiscal quarter and the invoice
provided to the Client by the fifth (S) business day of the succeeding month.
Fees are due and payable within ten (10) business days after receipt of invoice.
EXHIBIT C
Securities and Exchange Commission ADV FORM, PART II
This form is being provided the Client in accordance with SEC Regulations 204-3 for Registered
Investment Advisors. This disclosure document must be provided the Client not less than 48 hours prior
to entering any investment advisory contract. Failure to do so can result in a voidable contract. P8u4
shall provide to Client an updated ADV Form on an annual basis in accordance with SEC Regulations.
EXHIBIT D
AUTHORIZED REPRESENTATIVES
Authorized Representatives of the Client
Name/Title Phone Fax a-mail
David Hedberg/City Treasurer (361) 826-3651 (361) 882-7320 davidhColcdexas.com
Constance Sanchez/Asst. Director of Financial Services (361) 826-3227, same fax,
ConstanceP@cctexas.com
Cindy O'Brien/Director of Financial Services (361) 880-3604, same fax, CindyO@cctexas.com
Authorized Representatives of P&A
Name/Title Phone Fax a-mail
Linda T. Patterson
President 512-320-5042 512-320-5041 IindaCdpatterson.net
Howard Herring
Adviser 512-320-5042 512-320-5041 howieColpatterson.net
William MacArthur
Adviser 512-320-5042 512-320-5041 willCalpatterson.net
Rikki Ramirez
Portfolio Assistant 512-320-5042 512-320-5041 rikkiCla oatterson.net
EXHIBIT E
INSURANCE REQUIREMENTS
1. PATTERSON & ASSOCIATES
A. Patterson & Associates must not commence work under this agreement until they have
obtained all insurance required herein and such insurance has been approved by the City.
Nor may Patterson & Associates allow any subcontractor to commence work until all
similar insurance required of any subcontractor has been obtained.
B. Patterson 8c Associates must furnish to the City's Risk Manager or designee, 2 copies of
Certificates of Insurance, with the City named as an additional insured for the General
liability policy, and a blanket waiver of subrogation in favor of the City is required for the
WC policy showing the following minimum coverage by an insurance company(s)
acceptable to the City's Risk Manager.
TYPE OF INSURANCE MINIMUM INSURANCE COVERAGE
30-day written notice or material change, non-renewal, Bodily Injury and Property Damage
cancellation or termination is required on all certificates Per occurrence a e ate
COMMERCIAL GENERAL LIABILITY including: $1,000,000 per occurrence/ $2,000,000
1. Commercial Form AGGREGATE
2. Premises-Operations
3. Products/ Completed Operations Hazard
5. Contractual Liability
6. Broad Form Property Damage
7. Independent Contractors
8. Personallnjury
9. Employee Benefits Liability
BUSINESS AUTO LIABILITY
$1,000,000 COMBINED SINGLE LIMIT
WORKERS' COMPENSATION (Applicable when on City owned premises)
WHICH COMPLIES WITH THE TEXAS
WORKERS' COMPENSATION ACT AND
PARAGRAPH II OF THIS EXHIBIT
EMPLOYERS' LIABILITY $500,000
PROFESSIONAL LIABILITY $1,000,000 PER CLAIM LIMIT, $2,000,000
POLICY AGGREGATE
C. In the event of accidents of any kind, Patterson & Associates must furnish the Risk
Manager with copies of all reports of all accidents within (10) ten days of the accident.
2008 FICA- NRS ins. req.
7-2-08 djs Risk Mgmt.
I. ADDITIONAL REQUIREMENTS
A. Patterson & Associates must obtain workers' compensation coverage through a licensed
insurance company. The contract for coverage must be written on a policy and with
endorsements approved by the Texas Department of Insurance. The workers'
compensation coverage provided must be in an amount sufficient to assure that all
workers' compensation obligations incurred by the Lessee will be promptly met.
B. Certificate of Insurance:
The City of Corpus Christi must be named as an additional insured on the General
liability coverage, and a blanket waiver of subrogation in favor of the City is required
on the WC policy.
If your insurance company uses the standard ACORD form, the cancellation clause
(bottom right) must be amended by adding the wording "changed or" between "be"
and "canceled", and deleting the words, "endeavor to", and deleting the wording after
"left". In lieu of modification of the ACORD form, separate policy endorsements
addressing the same substantive requirements are mandatory.
* The name of the contract /project must be listed under "Description of Operations"
* At a minimum, a 30-day written notice to the Risk Manager of material change, non-
renewal, cancellation or termination is required.
2008 FICA- NRS ins. req.
7-2-08 djs Risk Mgmt.
Il
Exhibit F
Investment Advisory Services to be provided include the following but not limited to the following:
(1) Analyze markets, securities, portfolios and risk;
(2) Purchase securities in large volume, resulting in better interest rates for Client;
(3) Purchase securities in the secondary market, resulting in better interest rates for Client;
(4) Subscribe to Bloomberg with access to market analysis, trading information and real time interest
rate reporting;
(5) Provide free training in investment matters to Client staff;
(6) Review annual investment policy and make recommendations for change;
(7) Assist in preparation of annual budget as it relates to investment matters;
(8) Assist in preparing the Request for Qualifications for Client depository services contract;
(9) Provide financial analysis of client portfolio.
12
FORM ADV
Uniform Aoolication for Investment Adviser Reeistratien
'art II -Page 1 , , -- ------ - -------- ---~----~ -----
lame of Investment Adviser:
'atterson Capital Management LP
address: (Number and Street) (CiTy) (State) (Zip Code) Area Coda: 'telephone Number:
301 Congress Avenue Suite 570, Austin TX 78701 ~~2) 32o-soa2
This part of Form ADV gives Information about the Invealment adviser and its business for the use of caenb.
The Informnnon has not been approved or vermed by any governmental authority.
Table of Contents
Item Num ber Item gegg
I Advisory Services and Fees ......................................................................................... ................................... 2
2 Types of Clients ............................................................................................................ ................................... 2
3 Types of Investments .................................................................................................... ................................... 3
4 Methods of Analysis, Sources of Information and Investment Strategies .................. ................................... 3
5 Education and Business Standards ............................................................................... ................................... 4
6 Education and Business Background ........................................................................... ................................... 4
7 Other Business Activities ............................................................................................. ................................... 4
8 Other Financial Industry Activities or Affiliations ...................................................... ................................... 4
9 Participation or Interest in Client Transactions ........................................................... ................................... 5
10 Conditions for Managing Accounts ............................................................................. ................................... 5
1 I Review of Accounts ..................................................................................................... ................................... 5
12 Investment or Brokerage Discretion ............................................................................ ................................... 6
13 Additional Compensation ............................................................................................. ...................................6
14 Balance Sheet ............................................................................................................... ................................... 6
Continuation Sheet ....................................................................................................... ................... Schedule F
Balance Sheet, if required ............................................................................................ .................. Schedule G
(SchedWea A, B, C, D, and E ore Included Mth Pari I of tWa Forro, for the nse of regulotory bodies, Dori are not distributed to enente.)
Potennal persona e~ha are to respond to /he collection of information contained in thin form
are not regdred to respond urine the form diaploya a current~v vend OMB control number.
FORM ADV Applicant: SEC File Number: Date:
Part II -Pape 2 Patterson Capital Management LP go,.46437 3/:
1. A. Advisory Services end Feea. (check the applicable boxes) For each type of service provided, state the approximate
% of total advisory billings from that service.
(See instruction below.)
Appacmnt:
~ (1) Provides investment supervisory services ................................................................................................................................... 70
m (2) Manages investment advisory accounts not involving investment supervisory services ......................................................... 2l) %
~ (3) Fumishes investment advice through consultations not included in either service described above ....................................... ~ ~
^ (4) Issues periodicals about securities by subscription ...................................................................................................................
^ (5) Issues special reports about securities not included in any service described above ................................................................ °h
^ (6) Issues, not as part of any service described above, any charts, graphs, formulas, or other devices which clients may
use to evaluate eecurities .............................................................................................................................................................
^ (7) On more than m occasional basis, fumiahea advice to clients on matters not involving securities ........................................
^ (S) Provides a timing service .............................................................................................................................................................
^ (9) Fumishes advice about securities in any mamer not described above .....................................................................................
(Percentages should be based on applicant s last fiscal year. If applicant has not completed its first fiscal year,
provide estimates of advisory billings for that year and state that the percentages are estimates.)
Yes No
B. Dces applicant call any of the cervices it checked above fmancial planning or some similar term? ................................................... ^
C. Applicant oa'ers investment advisory services for: (check all that apply)
la (1) A percentage of assets under management ^ (4) Subscription fees
m (2) Hourly charges ^ (5) Commissions
QJ (3) Fixed fees (not including subscription fees) ^ (6) Other
D. For each checked box in A above, describe on Schedule F:
• the services provided, including the name of any publication or report issued by the adviser on a subscription basis or for a fee
• applicant's basic fee schedule, how fees ere charged and whether its fees are negotiable
• when compensation is payable, and if compensation is payable before service is provided how a client may get a refund or may
terminate an investment advisory contract before its ezpitation date
2. Types orclients -Applicant generally provides investment advice to: (check those that apply)
^ A. Individuals ^ E. Trusts, estates, or charitable organizations
^ B. Banks or thrift imtitutiom ® F. Corporations or business entities other than those listed above
^ C. Investment companies ^ G. Other (describe on Schedule F)
^ D. Pension and profit sharing plans
Answer all items. Complete amended pages in fYrll, circle amended Items and ale wlth e>recution page (page 1).
FORM ADV Applicant: SEC File Number: Date:
Part it -Page 3 Patterson Capital Management LP go,_46437 3/24/08
3. Types of Investments. Applicant offers advice on the following: (check those that apply)
A. Equity securities ~ H . United States government aecuritiea
^ (1) exchange-listed securities I. Options coniraMS on:
^ (2) securities traded over-the-counter
^ (3) foreign issuerc ~ (I) aecuritiea
^ (2) commodities
^ B. Warrants J. Futures contracts on:
^ C. Corporate debt aecuritiea (other than commercial paper) ^ (1) tangibles
^ (2) intangibles
D. Commercial paper
m E. Certificates of deposit K . interests in partnerships investing in:
F. Municipal securitice ^ (I) reel estate
^ (2) oil and gasinteresta
G. Investment company securities: ^ (3) other (explain on Schedule F)
^ (1) variable life insurance
^ (2) variable annuities ~ L . Other (explain on Schedule F)
Qf (3) mutual fund shares
4. Methods of Analysis, Sources of Intormation, end Investment Strategies.
A. Applicant's security analysis methods include: (check those that apply)
(I) m Charting (4) pf Cyclical
(2) pJ Fundamental (5) ^ Other (explain on Schedule F)
(3) ~ Technical
B. The main sources of information applicant uses include: (check [hose that apply)
(1) ~ Financial newspapers end magazines (5) ^ Timing services
(2) ^ Inspections of corporate activities (6) m Annual reports, prospectuses, filings with the
Securities and Exchange Commission
(3) m Research materiels prepared by others
(7) ~ Company press releases
(4) ~ Corporate rating services
(S) ^ Other (explain on Schedule F)
C. The investment strategies used to implement my investment advice given to clients include: (check those that apply)
(1) ~ Long teen purchases (5) ^ Margin transactions
(securities held at least a year)
(2) ® Short term purchases (6) ~ Option writing, including covered options, uncovered
(securities sold within a year) options, or spreading strategies
(3) ~ Trading (securities sold within 30 days) (7) ^ Other (explain on Schedule F)
(4) ^ Short sales
Answer all items. Complete amended pages la full, circle amended Items and ale with execution page (page 1).
FORM ADV Applicant: SEC File Number: Date:
Part 11 - Paae a Patterson Capital Management LP xn,.46437 3/:
5. Edncatlan and Business Standards.
Are there any general standards of education or business experience th¢t applicant requires of those involved in determining Yes No
or giving investment advice to clients? .............................................................................................................................................................
0 ^
(If yes, describe these etandarda on Schedule F.)
6. Educetlon end Business Background.
For:
• each member of the investment comminee or group that determines general investment advice to be given to clients, or
• if the applicant has no investment coromiftee or group, each individual who determines general investment advice given to clients
(if more than five, respond only for ihe,r supervisors)
• each principal executive officer of applicant or each person with ahnilar status or perfomdng similar functions.
On Schedule F, give the:
• name • formal education after high school
• year of birth • business background for the preceding five years
7. Other Business Activltiea. (check those that apply)
^ A. Applicant is actively rngaged in a business other than giving investment advice.
^ B. Applicant sells products or services other than investment advice to clients.
^ C. The principal business of applicant or its principal executive afficere involves something other than providing investment advice.
(For each checked box describe the other activities, including the time spent on them, on Schedule F.)
S. Other Financial Industry Aclivltiea or AffWations. (check those that apply)
^ A. Applicant is registered (or has an npplication pending) as a securities broker-0ealer.
^ B. Applicant is registered (or has an application pending) as a Cuturea commission merchant, commodity pool operator or commodity
trading adviser.
C. Applicant has arrangements that are material to its advisory business or its clients with a related person who is a:
^ (1) broker-dealer ^ (7) accounting fum
^ (2) investment company ^ (S) law firm
^ (3) other investment adviser ^ (9) insurance company or agency
^ (4) financial planning firm ^ (10) pemion consultnnt
^ (5) commodity pool operator, commodity trading ^ (l l) real estate broker or dealer
adviser or furores commission merchant
^ (6) banking or thrift institution ^ (l2) entity that creates or packages limited partnerships
(For each checked boz in C, on Schedule F identify the rented person and describe the relatiomhip and the arrangements.)
Yes No
D. Is applicant or a related person a general partner in any partnership in which clients are solicited to invest7 .................................... ^ m
(If yae, describe on Schedule F the pnMerehips and whet they invest in.)
Answer all items. Complete amended pages In t5s11, circle amended Items and Ble with execution page (page 1).
FORM ADV Applicant: sEC File
Part II - Paae 5 Patterson Capital Management LP an,_46
9. Par1iclpaNon or Interest in Client TrenaaMlona.
Applicant or a related person: (check those that apply)
^ A. As principal, buys securities for itself from or sells securities it owns to any client.
^ B. As broker or agent effects securities transamions for compensation for any client.
^ C. Aa broker or agent for any person other than a client effects framactions in which client securities are sold to or bought from a
brokerage customer.
^ D. Recommends to clients that they buy or sell securities or investment products in which the applicant or a related person has some
financial interest.
~ E. Buys or sells for itself securities that it also recommends to clients.
(For each box checked, describe on Schedule F when the applicant or a related person engages in these tranmctions and
what restrictions, internal procedures, or disclosures are used for conflicts of interest in those transactions J
10. Conditiom [or Manoging Accounts. Does the applicant provide investment supervisory services, manage investment advisory
accounts or hold itself out as providing financial planning or some similarly termed services and impose a minimum dollar value of Yea No
assets or other conditions for starting or maintaining an account9 ..................................................................................................................
~ ^
([f yes, describe on Schedule F.)
11. Review of Accounts. If applicant provides investment supervisory services, manages investment advisory accounts, or holds itself
out as providing financial planning or some similarly termed services:
A. Describe below the reviews and reviewers of the accounts. For reviews ,include their hequency, different levels, and triggering factors.
For revlewen, include the Dumber of reviewers, their titles and functions, imtructiona they receive from applicant on performing reviews,
end number of accounts assigned each.
managed accounts generally are reviewed weekly by a principal of or registered adviser within
Registrant. The review includes, among other things, examing compliance with clients'
estment policies, confirming clients' trades and reconciling trading records to the records of
Ints' custodians.
B. Describe below the nature and frequency of regular reports to clients on their accounts.
A holdings report, which includes accrued interest, amortization and accreditation,
ns/losses, and unrealized gains/losses. Except for those clients who request receipt of the
dings report on daily basis, clients are sent a holdings report on a monthly basis. Clients also
eive monthly transaction reports which detail all trades, transfers, additions or withdrawals.
Statement reports will be provided on a monthly and as needed basis. The statement report
nmarizes holidings by market sector and includes all holdings and a description of each
urity, its position and custodial status.
Performance reports will be provided on a monthly, or as needed, basis. Performance and
rket sector detail are provided along with yield, overall weighted maturity and book market
Answer all items. Complete amended pages in full, clrcie amended ilema and file with execution page (page 1).
FORM ADV Applicant: SEC File Number: Date:
Part II -Pages Patterson Capital Management LP go,_46437 3/24/08
12. Investment or Brokerage Dlecretlon.
A. Does applicant or any related person have authority to determine, without obtaining specific client consent, the:
Yes No
(I) securities to be bought or sold? ....................................................................................................................................................... m ^
Yes No
(2) amount of the securities to be bought or sold7 ............................................................................................................................... ~ ^
Yes No
(3) broker or dealer to be used7 ............................................................................................................................................................. ~ ^
Yes No
(4) commission rates paid7 .................................................................................................................................................................... ~ ^
Yes No
B. Does applicant or a related person suggest broken to clients? ............................................................................................................... m ^
For each yes amwer to A describe on Schedule F any limitations on the authority. For each yes to A(3), A(4) or B, describe on
Schedule F the factors considered in selecting broken and determining the reasonableness of their commissions. If the value
of products, research and services given to the applicant or a related person ie a faMOy describe:
• the products, research and services
• whether clients may pay commissions higher than those obtainable from other broken N return for those products and
services
• whether research is used to service all of applicant's accounts or just those accounts paying for it; and
• any procedures the applicant used during the lest fiscal year to direct client transactions to a particular broker in return for
products and research services received.
13. Addillonal Compensatlan.
Does the applicant or a related person have any artangements, oral or in writing, where it:
A. is paid cash by or receives some economic benefit (including commissions, equipment or non•research services) Yes No
from anon-client N conneMion with giving advice to clienta7 .............................................................................................................. ~ ^
Yes No
B. directly or indirectly compensates any person for client refertals? ........................................................................................................ ~ ^
(For each yes, describe [he arrangements on Schedule F.)
14. Balance Sheet. Applicant must provide a balance sheet for the moat recent fiscal year on Schedule G if applicant:
• has custody of client funds or securities; or
• requires prepayment of more than S500 in fees per client and 6 or more months in advance
Yes No
Has applicant provided a Schedule G balance sheet? ............................................................................................................................. ^ ~
Answer all items. Complete amended pages in ihB, circle amended Items and Ne with execution page (page 1).
Schedule F of
Form ADV Applicant: SEC File Number:
Continuation Sheet for Form ADV Part II Patterson Capital Management LP gn,.46437
(Do not use /his Schedule as a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1 A of PaR I of Form ADV: IRS Empl. Nerd. No.:
742703915
Item of Form
(identify) Answer
Item 1 Services and Fees
Patterson Capital Management, L.P. ("Patterson" or the "Registrant")provides
investment advisory and investment consulting services in short and intermediate
range fixed income securities to institutional clients. The Registrant's clients include
public funds (including cities, authorities, public cooperatives and school districts),
banks and corporations.
Patterson provides both discretionary and non-discretionary fund management
services. These services are provided in accordance with clients' liquidity, safety
needs and investment policies and objectives.
Patterson also provides consulting services, which includes, among other things, the
provision of advice on investment alternatives, banking and cash management. In
addition, Patterson provides advice to clients on the creation of policies and
procedures, internal controls reviews and advice related to the use of flex
repurchase agreements by clients. A flex repo is a term arrangement between a
registered dealer and a municipality or similar authority, in which the customer buys
securities from the dealer and may sell some of them back prior to the final maturity
date of such securities. The funds invested in a flex repo often are intended for use
in financing construction or similar projects to be completed in phases. When funds
are needed for a given phase of a project, the customer sells the required amount of
securities back to the dealer. Flex repos are usually collateralized by government
issued or backed securities. Patterson generally will provide advice to a client and
an intermediary broker/dealer who will execute the flex repo transaction. In this
capacity, Patterson will, among other things, provide advice to the client and
intermediary broker/dealer on the paperwork related to the flex repo, assist in the
determination of acceptable parameters, recommend flex repo providers, provide
advice in the preparation of a bid sheet and monitor underlying collateral. For these
advisory services, Patterson generally will receive a fee from the client and
intermediary broker/dealer that does not exceed 0.05°/n of the value of the flex repo.
Patterson will never have custody of clients' securities or funds in flex repo
arrangements.
Complete amended pages In tYdl, circle amended Items and nle with execntlon page (page 1).
Schedule F of
Form ADV Appltcant: SEC File Number:
Continuation Sheet for Form ADV Parl II atterson Capital Management LP gul_46437
(Do not use this Schedule ae a continuation sheet for Fotm ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item lA of Part I of Fortn ADV: IRS Empl. Ident. No.:
Item of Form
(identify)
Answer
tem 1 (cont'd) Patterson's basic fee schedule for the provision of investment advisory services
(discretionary) is as follows:
Up to $5 million - 0.50%
$5 -$10 million - 0.30%
$10 -$20 million - 0.20°/a
$20 -$30 million - 0.15°/a
$30 -$50 million - 0.12
over $50 million -negotiable.
Patterson's fees for serving as an investment sub-adviser to a registered investment
company may vary, but generally will not exceed the fees noted in the above
schedule.
In addition, the basic fee schedule described above may vary due to the particular
circumstances of the client or as negotiated with particular clients. Fees for
discretionary management services are generally billed in arrears on either a
monthly or quarterly basis. In the event a client terminates its contract with
Patterson prior to the end of the monthly or quarterly billing period, the fee for that
period will be prorated based on the number of days or months during the period in
which Patterson performed services. At times, Patterson may also recommend that
a client invest assets in a money market fund. If a client invests its assets into such
a fund, the client may have to pay a fee to that fund in addition to Patterson's normal
advisory fee.
Certain clients are charged a fixed fee, or an hourly fee, which varies from client to
client and is billed in arrears on a quarterly or monthly basis.
All fees paid to Patterson for investment advisory services are separate and distinct
from the fees and expenses charged by LGIP pools or mutual funds to their
shareholders. These fees and expenses are described in each fund's information
statement (pools) or prospectus (funds). Clients could invest in a fund or pool
directly without the services of Patterson.
Due to the nature of services provided, Patterson will not vote proxies on behalf of
clients.
Complete amended pages to [uR, circle emended ttema and Elie with execution page (page 1).
Schedule F of Applicant: SEC File Number: Date:
Form ADV
Continuation Sheet for Form ADV Part II atterson Capital Management LP 801.46437 3/e`
(Do no[ use this Schedule 88 a continuation sheet for Form ADV Part I or any other schedules.)
1. Full name of applicant exactly as stated in Item 1 A of Part I of Fortn ADV: IRS Empl. Ident. No.:
Item of Form
(identify)
Answer
tem 3L lex repos are but one of a variety of investment products that Patterson may
ecommend that clients use for the reinvestment of bond proceeds. These products
nclude structured portfolios of U.S. securities, a commingled pool or fund, bank
eposit and State and Local Government Series securities. Each of these products
ave benefits and negative aspects. Patterson fully discloses the benefits and
egative aspects of each of these products to clients, so that clients can choose the
nvestment product that most suits its needs and objectives.
tem 4 atterson relies primarily, but not exclusively, on multiple unaffiliated, nationally
ecognized securities rating organizations (NRSRO) such as Standard & Poor's and
oody Investor Services for analysis of credit risk on corporate entities.
tem 5 atterson requires all personnel who provide investment advice to have a bachelors
agree from an accredited college or required licenses.
tam 6 inda Thomson Patterson
OB: March 2, 1949
duration: Thiel College
European-American Study Center, Basel, Switzerland
Florida Atlantic University; BA, MPA
RWTH, Aachen (Fulbright Scholar)
usiness Background:
Patterson Capital Management, L.P., Director and President of Patterson's
General Partner, CCO.
Texas State Treasury, Deputy State Treasurer
City of Fort Worth, City Treasurer and Assistant Finance Director
City of Forth Lauderdale, Assistant to City Manager
illiam MacArthur
OB: February 2, 1944
duration: Bentley College, BS Finance and Accounting
usiness Background:
Patterson Capital Management, L.P.
Wachovia Securities Financial Network
oward N. Herring
OB: October 10, 1950
duration: U.S. Marine Corps Training
usiness Background:
Tejas Securities, Austin, TX
Wachovia Securities Financial Network
Complete amended pages in Nil, circle emended items end file with ezecuNon page (pugs 1).
Schedule F of
Form ADV
Continuation Sheet for Form ADV Part II
SEC File Num
Capital Management LP gal-46437
(Do not use this Schedule as a wntinuation sheet for Form ADV Pert I or any other schedules J
1. Full name of applicant exactly ae stated in Item IA of Part I of Form ADV: IRS Empl. Ident. No.:
Item of Form
(identify) Answer
tam 9.E n rare occasions, Patterson or one of its related persons may purchase or sell the
ame or a similar security for his/her personal account that is also purchased, or
ecommended for purchase, for a client account. Patterson has adopted a Code of
onduct that is designed to prevent and detect potential conflicts of interest,
ncluding with respect to personal trading. A copy of the Code of Conduct is
vailable upon request.
tam 10 atterson generally requires a minimum account size of $1 million and will generally
my provide services to institutional investors, including governmental entities.
tam 12.A atterson provides both discretionary and non-discretionary management services
o its clients. Where investment discretion has been granted, Patterson manages
he client's portfolio and makes investment decisions without consultation with the
lient that would involve determinations regarding which securities are bought and
old, the broker/dealer with whom orders for the purchase or sale of securities are
laced for execution and the price per share and the commission rates or mark-up
n the securities transactions. In some instances, Patterson's discretionary authority
n making these determinations may be limited by conditions imposed by clients in
heir investment guidelines, cash flow needs, or objectives or instructions otherwise
rovided to Patterson.
n non-discretionary relationships, Patterson customarily makes investment
ecommendations to the client relating to which securities should be bought or sold
nd the total amount of such purchases and sales.
nder Texas law, Patterson may not place a trade for certain Texas government
lients with abroker/dealer, unless Patterson has received a certification from the
roker/dealer that it has received and agrees to comply with that client's specific
nvestment policy. Prior to placing a trade for these client accounts, Patterson
btains at least three bids/offers from different broker/dealers who have provided the
equisite certification and generally will place the trade with the broker/dealer that
as provided the most competitive bid. If a client does not require that Patterson
xecute trades through broker/dealers who have certified that they will comply with
he client's stated investment policy, Patterson will only seek bids from a
roker/dealer that has provided Patterson with the following documents: the
roker/dealer's state registration, a completed questionnaire, NASD registration and
nnual financial statements.
Complete amended pages in full, circle amended items and me with execution page (page 1).
Schedule F of Applicant: SEC File Number: Data:
Form ADV
Contlnuatlon Sheet for Form ADV Parl II atterson Capital Management LP got-46437 3/e
(Do not use this Schedule ae a continuation sheet for Form ADV PaR 1 or any other schedules.)
1. Full name of applicant exactly as stated in Item lA of Part I of Form ADV: [RS Empl. Ident. No.:
Item of Porm
(identify)
Answer
tam 12.A (cont'd) t times, Patterson may place agency trades on behalf of its clients. In executing
gency trades, it is Patterson's policy, consistent with investment considerations, to
eek the most favorable price and execution for such orders. Most favorable
xecution is a combination of rates and prompt, reliable execution. When selecting
brokerage firm, Patterson considers the firm's execution capabilities, financial
lability, ability to maintain confidentiality and ability to obtain best price and
xecution.
ransactions for each client account generally are completed independently. On
ccasion, however, Patterson may purchase or sell the same securities for a number
f client accounts in a block transaction to facilitate best execution or to reduce
osts. Patterson effects block transactions in a manner such that each client
articipates at the same price. Securities purchased or sold in a block transaction by
atterson are allocated to clients based upon the amount of available funds in each
ccount and the long-term liquidity requirements of each account. The broker-dealer
hat executes the block transaction will directly deliver to the client the portion of the
rade allocated to that client.
tam 12B atterson may recommend broker/dealers to a client. The recommendations are
ased on the client's policy requirements and client needs as to market sector.
ommissions are not applicable infixed income and money market transactions.
tam 13.A rom time to time, Patterson may receive a minimal fee from unrelated third parties
or referrals of individuals or companies that are not clients of the Registrant.
tam 13.6 atterson may compensate unrelated third parties for client referrals in accordance
ith Rule 206(4)-3 under the Investment Advisers Act of 1940. The compensation
aid to such parties is generally based on a percentage of assets under
anagement of a client that had been found by the party.
Complete amended pages N NU, circle amended items end nle with ezecution page (page 1).
SUPPLIER NUMBER
~^' TO BE ASSIGNED BYZTT~
City Of PURCHASING DIVISION
Corpus
Chnsti
CITY OF CORPUS CHRISTI
DISCLOSURE OF INTEREST
All persons or firms seeking to do business with the City must provide the following information. Every question
must be answered. If the question is not applicable, answer with "NA". See reverse side for definitions.
COMPANY NAME : PATTERSON & ASSOCIATES
P. O. BOX:
STREET:_301 CONGRESS AVENUE, SUITE 570 CITY: AUSTIN, TX
ZIP: -7$TO1
FIRM IS: 1. Corporation 2. Partnership (X )3. Sole Owner ( )
4. Assoctauon ~ ; 5. Other ( )_
DISCLOSURE QUESTIONS
If additional space is necessarty, please use the reverse side of this page or attach separate sheet.
1. State the names of each `employee" of the City of Corpus Christi having an "interest" in the above named
..fine »
Name Job Title and City Department (if known)
NONE
2. State the names of each Council Member of the City of Corpus Christi having a "substantial interest" in the
above named "firm."
Name
Title
NONE
fate t e names o eac oar mein er o t e City of orpus rlsh avmg a su stantla interest m t e
above named "firm."
Name
Board, Commission, or Committee
4. State the names of each employee or officer of a "consultant" for the City of Corpus Christi who worked on any
matter related to the subject of this contract and has an "interest" in the above named "firm."
Consultant
N NE
CERTIFICATE
I certify that all information provided is true and correct as of the date of this statement, that I have not
knowingly withheld disclosure of any information requested; and that supplemental statements will be promptly
submitted to the City of Corpus Christi, Texas as changes occur.
Certifying Person: -Linda T. Patterson Title: President
(Type or Print
1 /
Signature of Certifying Person: ! 2~Cr1J'i~. Date: -July 10,