HomeMy WebLinkAboutR-2006-045 authorize security custody services agreement with Union Bank of CaliforniaRESOLUTION NO. R-2006- 45
A RESOLUTION authorizing and directing the City Manager of the City of Yakima to
execute a Security Custody Services Agreement with Union Bank of
California for provision of investment security custody services.
WHEREAS, the City of Yakima ("City") maintains an investment portfolio; and
WHEREAS, the City requires security custody services concerning said
investments; and
WHEREAS, the Washington State Treasurer, with the assistance of a
representative of the Washington State Attorney General, negotiated and prepared the
attached security custody services agreements; and
WHEREAS, A Staff member from the City of Yakima Finance Department
participated in review of the RFP; and
WHEREAS, the City Council deems it to be in the best interest of the City of
Yakima to contract with Union Bank of California whereby said entity will provide
security custody services in accordance with the terms of the attached agreement; now,
therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager of the City of Yakima is hereby authorized and directed to
execute the attached and incorporated Security Custody Services Agreement with the
Union Bank of California for provision of investment security custody services.
ADOPTED BY THE CITY COUNCIL this 21st day of March, 2006.
ATTEST:
XeCAuz-,,,,-- „Al
City Clerk
David Ed er, Mayor
Statewide Securities Custody Model Contract
WASHINGTON STATEWIDE
CONTRACT
For
Security Custody Services
2006
Statewide Securities Custody Model Contract
WASHINGTON STATEWIDE CONTRACT
FOR SECURITY CUSTODY SERVICES
Table of Contents
GENERAL PROVISIONS 1
1. CONTRACTING PARTIES .. 1
2. HEREBY WITNESSETH: 1
3. ADDITIONAL SERVICES 1
4. CONSIDERATION ........... ..... 1
5. APPOINTMENT OF CUSTODIAN 2
6. AGREEMENT 2
7. PERSONAL LIABILITY 2
8. HOLD HARMLESS AND INDEMNIFICATION 3
9. CONFLICT AND SEVERABILITY 4
10. NONDISCRIMINATION AND AFFIRMATIVE ACTION 4
11. GIFTS AND GRATUITIES 5
12. RIGHTS AND REMEDIES 5
13. PERFORMANCE 5
14. GOVERNING LAW 5
15. SUBCONTRACT/ASSIGNMENT 6
DEFINITIONS 6
16. DEFINITIONS .... 6
SCOPE OF SERVICES 7
17. SCOPE OF SERVICES ....... 7
AGREEMENT TERM AND TERMINATION 7
18. TERM OF AGREEMENT AND SURVIVORSHIP OF TERMS 7
19. TERMINATION AND REMEDIES . 8
20. FORCE MAJEURE.... 10
21. CONFLICT OF INTEREST 11
CONTRACT ADMINISTRATION 12
22. INCORPORATED DOCUMENTS 12
23. ORDER OF PRECEDENCE 12
24. ENTIRE AGREEMENT 12
25. LIMITATION OF AGENCY'S AUTHORITY 13
26. AGENCY CONTRACT ADMINISTRATOR 13
27. BANK'S ACCOUNT MANAGER 13
28. CHANGES 13
29. DISPUTES 13
30. ADVERTISING 14
31 CONSENT 14
Statewide Securities Custody Model Contract
AGENCY RESPONSIBILITIES 14
32. PROTECTION OF PROPRIETARY AND CONFIDENTIAL INFORMATION 14
33. FUNDS TRANSFER AUTHORIZATION AGREEMENT 14
BANK RESPONSIBILITIES 15
34. REGISTRATION WITH THE DEPARTMENT OF REVENUE .. 15
35. LICENSING AND ACCREDITATION STANDARDS 15
36. WORKERS' COMPENSATION INSURANCE COVERAGE ................. 15
37. CONFIDENTIALITY OF AGENCY RECORDS 15
38 AUDITING 16
39 BANK COMMITMENTS, WARRANTIES, AND REPRESENTATIONS 16
40. PRICE INCREASES 17
CUSTODY PROVISIONS 17
41. CUSTODY OF SECURITIES 17
PAYMENT PROVISIONS 24
42. PAYMENTS 24
43. TAXES 25
44. DAMAGES.. . 25
CONTRACT EXECUTION 25
45. COUNTERPARTS 25
46. SIGNATURE BLOCKS 26
Statewide Securities Custody Model Contract
WASHINGTON STATEWIDE AGREEMENT
FOR CUSTODY SERVICES
GENERAL PROVISIONS
1. CONTRACTING PARTIES
THIS AGREEMENT is entered into by and between The City of Yakima, STATE OF
WASHINGTON, hereinafter referred to as the "Agency" and Union Bank of California,
hereinafter referred to as the "Custodian" or the "Bank."
2. HEREBY WITNESSETH:
The State Of Washington, acting by and through the OFFICE OF THE TREASURER of
the STATE OF WASHINGTON, issued a Request for Proposal (RFP), dated November
17, 2005 for the purpose of obtaining proposals for providing statewide custody services.
As a result of that process, the State Treasurer has designated the Bank as the Statewide
Custodian, and the Bank has agreed to provide Statewide Custody Services, hereinafter
referred to as the "Services," as described in Bank's proposal, attached hereto at the
prices stated therein, in accordance with the terms of this Agreement.
3. ADDITIONAL SERVICES
The Parties agree that additional services, appropriate to the scope of this Agreement,
may be added to this Agreement by an instrument in writing and only with the written
consent of both parties. Such writing shall include a specific description of the additional
Services, pricing and additional terms and conditions as relevant. The additional Services
shall be available under the same terms and conditions established herein except as
specifically amended between the parties.
4. CONSIDERATION
In consideration whereof, the mutual promises made to each other, as hereinafter set
forth, the parties further agree as follows:
The Agency and the Bank agree that this Agreement together with any amendments or
addenda attached thereto is the complete and exclusive statement between the parties
which supersedes all proposals or prior agreements, oral or written, and all other
communications between the parties relating to the subject matter of this Agreement.
To the extent that any term or condition is in conflict with any other term or condition of
this Agreement, the order of authority is as follows: (1) these General Provisions are
controlling, followed by; (2) the Office of the State Treasurer RFP for Statewide
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Securities Custody Services; and (3) the Bank's Proposal, inclusive of related Exhibits
and Schedules.
Unless otherwise agreed in writing, all amendments, addenda, and orders signed during
the life of this Agreement shall be governed by these General Provisions.
Any notice or demand which under this Agreement or applicable law must or may be
given by the Bank, or Agency shall be in writing, properly addressed and, as an
alternative to personal delivery, made by the most expeditious means available, with due
regard given to the time sensitivity of the notice or demand being made.
if to the Bank, at: if to the Agency, at:
Union Bank of California
350 California Street, 6th Floor
San Francisco, CA 94104
Attention: Moon Lee
Institutional Custody Services
5. APPOINTMENT OF CUSTODIAN
City of Yakima
R.A. Zais, City Manager
129 North Second Street
Yakima, WA 98901
The Agency hereby appoints the Bank as Custodian for certain assets of the Agency and
authorizes Custodian to hold such assets in registered form in its name or the name of its
nominees. All property delivered to the Bank, its agents or subcustodians, shall be held
and dealt with as herein provided. The Bank shall have no responsibility or liability for
the acts or omissions of prior Custodians, and shall not be responsible for any property of
the Agency not delivered to the Bank, its agents or subcustodians, and shall only be
obligated to accept such property that is in street name or other good delivery form. The
Bank hereby accepts this appointment.
6. AGREEMENT
NOW THEREFORE the Agency hereby awards to the Bank this Agreement for Custody
Services, hereinafter referred to as "Services," as listed and described in the RFP for
Statewide Custody Services as Exhibit A and acknowledged in the Bank's proposal as
Exhibit B both of which are on file at the Office of the State Treasurer, and by this
reference made a part hereof, as though completely set forth herein, subject to and in
accordance with the terms of this Agreement.
7. PERSONAL LIABILITY
It is agreed by and between the parties hereto that in no event shall any official, officer,
employee or agent of the Agency be in any way personally liable or responsible for any
covenant or agreement herein contained whether expressed or implied, nor for any
statement or representation made herein or in any connection with this agreement.
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8. HOLD HARMLESS AND INDEMNIFICATION
8.1 The Bank shall be financially responsible (liable) for any direct money
damages suffered by the Agency which are caused by the Bank's own
negligence, fraud, or failure to exercise Due Care, as defined in Section
41.9.1, in the Bank's performance of its duties under this Agreement. For
the purposes of this Agreement, direct money damages shall include those
situations where interest charges are incurred by the Agency or any loss of
earnings occurs that would otherwise have been realized by the Agency
through an overnight investment of funds, and where such interest charges
or loss of earnings are caused by the Bank's own negligence, fraud, or
failure to exercise Due Care, as defined in Section 41.9.1.
8.2 The Bank shall not be financially responsible (liable) for any damages or
for any losses to the Agency, unless such losses constitute direct money
damages caused by the Bank's own negligence, fraud, or failure to
exercise Due Care, as defined in Section 41.9.1, in the Bank's
performance of its duties under this Agreement. Notwithstanding any
other document or provision in this Agreement to the contrary, but
subject to Section 8.1 hereof, in no event shall the Bank be liable for
indirect, incidental, consequential or special damages regardless of the
form of action and even if the same are foreseeable, except that the
foregoing provisions of this sentence shall not limit the Bank's liability
for any punitive damages.
8.3 Each party to this Agreement agrees to indemnify and hold harmless the
other party, to the extent authorized by law, from all losses (excluding
attorney's fees and expenses) which relate to or result from lawsuits
brought by non-parties to this Agreement from activities covered by this
Agreement from:
8.3.1 A failure by the indemnifying party or its subsidiaries, affiliates,
agents, subcontractors, representatives or employees to comply
with any applicable federal, state or local law, rule or regulation;
8.3.2 A negligent act or omission or the breach of this Agreement (as
defined in Section 19.3) by the indemnifying party, its subsidiaries,
affiliates, agents, subcontractors, representatives or employees; or
a failure to exercise due care as defined in Section 41.9.1 herein.
8.3.3 Fraudulent or intentional misconduct by the indemnifying party or
its agents, subcontractors, representatives or employees.
8.3.4 Nothing in this section shall be construed to mean either party is
prevented from commencing a legal action against the other.
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8.4 Notwithstanding any other document or provision in this Agreement to the
contrary, the above indemnity by the Bank to the Agency shall be limited
to direct money damages and shall relate only to the Bank's own actions
or omissions which constitute negligence, fraud, or failure to exercise Due
Care.
9. CONFLICT AND SEVERABILITY
9.1 CONFLICT In the event of conflict between contract documents and
applicable laws, codes, ordinances or regulations, the most stringent or
legally binding requirement shall govern and be considered a part of this
contract to afford the Agency maximum benefits.
9.2 SEVERABILITY Any provision of this document found to be
prohibited by law shall be ineffective to the extent of such prohibition
without invalidating the remainder of the document.
10. NONDISCRIMINATION AND AFFIRMATIVE ACTION
During the performance of this Agreement, the Bank shall comply with all federal and
state nondiscrimination statutes and regulations. These requirements include, but are not
limited to:
10.1 Nondiscrimination in Employment: The Bank shall not discriminate
against any employee or applicant for employment because of race, color,
sex, religion, national origin, creed, marital status, age, or the presence of
any sensory, mental or physical disability.
10.2 Nondiscrimination in Client Services: The Bank shall not, on the basis of
race, color, sex, religion, national origin, creed, marital status, age or the
presence of any sensory, mental or physical disability:
10.2.1 Deny an individual any services or other benefits provided under
this contract;
10.2.2 Provide any service(s) or other benefits to an individual which are
different, or are provided in a different manner, from those
provided to others under this contract;
10.2.3 Subject an individual to segregation or separate treatment in any
manner related to the receipt of any service(s) or other benefits
provided under this contract; or,
10.2.4 Deny any individual an opportunity to participate in any program
provided by this contract through the provision of services or
otherwise, or afford any opportunity which is different from that
afforded others under this contract.
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Statewide Securities Custody Model Contract
10.3 The Bank, in determining (1) the types of services or other benefits to be
provided or (2) the class of individuals to whom, or the situation in which,
such services or other benefits will be provided or (3) the class of
individuals to be afforded an opportunity to participate in any services or
other benefits, will not utilize criteria or methods of administration which
have the effect of subjecting individuals to discrimination because of their
race, color, sex, religion, national origin, creed, marital status, age or the
presence of any sensory, mental or physical disability.
10.4 Noncompliance With Nondiscrimination Requirements: In the event of
the Bank's noncompliance or refusal to comply with these
nondiscrimination requirements, this contract may be rescinded, canceled
or terminated in whole or in part, and the Bank may be declared ineligible
for further contracts with the Agency. The Bank shall, however, be given
a reasonable time in which to cure the noncompliance. Any dispute may
be resolved in accordance with the Disputes section set forth in this
Agreement.
11. GIFTS AND GRATUITIES
In accordance with RCW 42.23 Code of Ethics for Municipal Officers -Contract Interests,
it is unlawful for any person to accept, directly or indirectly, any compensation, gratuity,
or reward in connection with this contract from any person beneficially interested therein.
12. RIGHTS AND REMEDIES
In the event of any claim for default or breach of contract, no provision in this document
nor in the Bank's proposal for services shall be construed, expressly or by implication, as
a waiver by the Agency of any right to insist upon the strict performance of any term or
condition of the contract or to exercise or delay the exercise of any right or remedy
provided in the contract or by law, or as the acceptance of (or payment for) materials,
equipment or services, or to release the Bank from any responsibilities or obligations
imposed by this contract or by law.
13. PERFORMANCE
Acceptance by the Agency of unsatisfactory performance with or without objection or
reservation shall neither waive the right to claim damage for breach nor constitute a
waiver of requirements for satisfactory performance of any obligation remaining to be
performed by Bank.
14. GOVERNING LAW
This Agreement shall be governed in all respects by, and construed in accordance with,
the law and statutes of the State of Washington. The venue of any action hereunder shall
be exclusively in the Superior Court for Yakima County, Washington. The Bank, by
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Statewide Securities Custody Model Contract
execution of this contract, acknowledges the jurisdiction of the courts of the state of
Washington in this matter.
15. SUBCONTRACT/ASSIGNMENT
The Bank shall not subcontract or assign its obligations under this contract without the
prior written consent of the Contract Administrator. The Bank shall be responsible to
ensure that all requirements of the contract shall be communicated to any and all
subcontractors.
Substitution of another financial institution to act as the Bank under this Agreement may
occur in the event of a takeover, merger, or acquisition. In this event, the Successor Bank
shall provide an automatic continuation of all terms of this Agreement, provided the
Successor Bank can meet all required terms of the Agreement. However, the Agency
reserves the right to terminate the contract in the event a Successor Bank is substituted,
after providing 60 calendar days written termination notice.
DEFINITIONS
16. DEFINITIONS
Definitions as used throughout this Agreement shall have the meanings set forth below:
"Exhibit A" shall mean the Request For Proposal (RFP) for Statewide Custody Services
issued by the Office of the State Treasurer, dated November 17, 2005.
"Exhibit B" shall mean the Bank's proposal in response to the State RFP for Statewide
Custody Services.
"Exhibit C" shall mean the Bank's schedule of fees for all Services provided under this
Agreement.
"Exhibit D" shall mean the Funds Transfer Authorization Agreement which shall run
concurrently with this Agreement.
"Agency Contract Administrator" shall mean the staff person appointed by the Agency
to administer this Agreement on behalf of the Agency.
"Bank" shall mean Union Bank of California. It shall also include any subcontractor
retained by the Bank as permitted under the terms of this Agreement.
"Bank's Account Manager" shall mean an employee of the Bank who is permanently
assigned as the primary contact person whom the Agency Contract Administrator shall
work with for the duration of this Agreement.
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Statewide Securities Custody Model Contract
"Custody Services" may also be referred to as "Services," and shall be inclusive of all
services, including associated support services and maintenance provided pursuant to this
Agreement.
"Depository" shall include the Federal Reserve/Treasury book -entry system for receiving
and delivering securities, the Depository Trust Company, and any other securities
depository, book -entry system or clearing agency (and their respective successors and
nominees) authorized to act as a securities depository, book -entry system or clearing
agency pursuant to applicable law.
"Subcontractor" shall mean one not in the employment of the Bank, who is performing
all or part of those Services under this Agreement under a separate contract with the
Bank. The term "subcontractor" means subcontractor(s) of any tier.
"RCW" shall mean the Revised Code of Washington (Washington State Law).
SCOPE OF SERVICES
17. SCOPE OF SERVICES
The Bank agrees to provide custody services, record keeping and cash management, as
further described in the Office of the State Treasurer RFP (Exhibit A) and the Bank's
Proposal (Exhibit B), under the terms of this Agreement, serving as the Statewide
Custodian of Washington State.
AGREEMENT TERM AND TERMINATION
18. TERM OF AGREEMENT AND SURVIVORSHIP OF TERMS
This Agreement shall commence on March 31st 2006, and continue until March 31St
2010.
The Bank is not obliged to offer this contract for a time period of less than one year, nor
is the Bank obliged to offer the contract with a termination date exceeding the
termination date of its appointment as the Statewide Custodian.
The term of this Agreement may be extended for additional contract periods or portions
thereof, whereby the total contract period with extensions shall not exceed six (6) years,
PROVIDED: the extension shall be by mutual agreement between the Agency and the
Bank, and by the Agency giving written notice of the extension to the Bank not less than
180 days prior to the termination date of this Agreement.
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19. TERMINATION AND REMEDIES
19.1 TERMINATION FOR CONVENIENCE The Agency may terminate
this contract, in whole or in part, at any time and for any reason by giving
60 calendar days written termination notice to the Bank and the State
Treasurer. The Bank may terminate this contract, by giving 180 days
written termination notice to the Agency and the State Treasurer.
19.2 TERMINATION FOR REDUCTION OF FUNDING OR
WITHDRAWAL OF AUTHORITY In the event that either funding from
the Agency or other sources is withdrawn, reduced, or limited, or the
authority of the Agency to perform any of its duties is withdrawn, reduced
or limited in any way after the effective date of this Agreement and prior
to its normal completion, the Agency may terminate this Agreement, in
whole or in part, at any time by giving 60 calendar days written
termination notice to the Bank.
19.3 TERMINATION FOR BREACH Except in the case of delay or failure
resulting from circumstances beyond the control of and without the fault
or negligence of the Bank or of the Bank's suppliers or subcontractors, the
Agency shall be entitled, by written or verbal notice, to cancel this
contract in its entirety or in part, for breach of any of the terms herein, and
to retain all other rights against the Bank by reason of the Bank's breach as
provided by law.
A breach shall mean one or more of the following events: (1) the Bank
fails to perform the services by the time and date required and such failure
is not caused by a force majeure event; (2) the Bank breaches any
warranty, or fails to perform or comply with any term or agreement in the
contract; (3) the Bank fails to exercise Due Care as to any aspect of this
Agreement, with Due Care being defined in Section 42.9.1; (4) the Bank
makes any general assignment for the benefit of creditors; (5) the Bank
becomes insolvent or in an unsound financial condition so as to endanger
performance hereunder; (6) the Bank becomes the subject of any
proceeding under any law relating to bankruptcy, insolvency or
reorganization or relief from debtors; or (7) any receiver, trustee or similar
official is appointed for the Bank or any of the Bank's property. If it is
subsequently found that the Bank was not in breach, the rights and
obligations of the parties shall be the same as if a Notice of Termination
had been issued pursuant to subparagraph 19.1.
The Agency Contracting Officer shall issue a written notice of breach
providing a period not to exceed 30 days in which the Bank shall have an
opportunity to cure. Time allowed for cure shall not diminish or eliminate
the Bank's liability for damages.
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If the breach remains, after the Bank has been provided the opportunity to
cure, the Agency may do one or more of the following:
19.3.1 Exercise any remedy provided by law;
19.3.2 Terminate this contract and any related contracts or portions
thereof, by written or verbal notice;
19.3.3 Seek damages.
19.4 TERMINATION BY MUTUAL AGREEMENT The Agency and the
Bank may terminate this contract in whole or in part, at any time, by
mutual agreement.
19.5 TERMINATION PROCEDURE Upon termination of this contract the
Agency, in addition to any other rights provided in this contract, may
require the Bank to deliver to the Agency any property specifically
produced or acquired for the performance of such part of this contract as
has been terminated.
The Agency shall pay to the Bank the agreed upon price, if separately
stated, for completed work and services accepted by the Agency, and the
amount agreed upon by the Bank for (a) completed work and services for
which no separate price is stated, (b) partially complete work and services,
(c) other property or services which are accepted by the Agency, and (d)
the protection and preservation of property, unless the termination is for
default, in which case the Agency shall determine the extent of the
liability of the Agency. Failure to agree with such determination shall be a
dispute within the meaning of the "Disputes" section of this contract. The
Agency may withhold from any amounts due to the Bank such sum as the
Agency determines to be necessary to protect the Agency against potential
loss or liability.
The rights and remedies of the Agency provided in this clause shall not be
exclusive and are in addition to any other rights and remedies provided by
law or under this contract.
19.6 TERMINATION -RELATED OBLIGATIONS ANTECEDENT TO
DATE OF TERMINATION Upon nearing the end of the final term of
this agreement, and without respect to either the cause or time of such
termination, the Bank shall take all reasonable and prudent measures to
facilitate the transition to a successor provider's system.
The Bank shall provide, at any time during the nine (9) months preceding
termination, such information about the Bank's systems as will be
reasonably required by the Agency and/or the successor for purposes of
planning the transition and conversion to the successor's system.
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19.7 OBLIGATIONS UPON TERMINATION After receipt of a notice of
termination, and except as otherwise directed by the Agency Contract
Administrator, the Bank shall:
19.7.1 Stop work under the contract on the date, and to the extent,
specified in the notice;
19.7.2 Place no further orders or subcontracts for materials, services, or
facilities except as may be necessary for completion of such
portion of the work under the contract as is not terminated;
19.7.3 Assign to the Agency, in the manner, at the times, and to the extent
directed by the Agency Contract Administrator all of the rights,
titles, and interest of the Bank under the orders and subcontracts so
terminated, in which case the Agency has the right, at its
discretion, to settle or pay any and all claims arising out of the
termination of such orders and subcontracts;
19.7.4 Settle all outstanding liabilities and all claims arising out of such
termination of orders and subcontracts, with the approval or
ratification of the Agency Contract Administrator to the extent
they may require, which approval or ratification shall be final for
all the purposes of this clause;
19.7.5 Transfer title to the Agency and deliver in the manner, at the times,
and to the extent, if any, as directed by the Agency Contract
Administrator, any property which, if the contract had been
completed, would have been required to be furnished to the
Agency;
19.7.6 Complete performance of such part of the work as shall not have
been terminated; and
19.7.7 Take such action as may be necessary, or as the Agency Contract
Administrator may direct, for the protection and preservation of the
property related to this contract which is in the possession of the
Bank and in which the Agency has or may acquire an interest and
to transfer that property to the successor Bank.
By such termination, neither the Agency nor the Bank may nullify
obligations already incurred for performance or failure to perform
prior to the date of termination.
20. FORCE MAJEURE
20.1 DEFINITION Neither party shall be liable to the other or deemed in
default under this contract if and to the extent that such party's
performance of this contract is prevented by reason of force majeure. The
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term "force majeure" means an occurrence that is beyond the control of
the party affected and could not have been avoided by exercising
reasonable diligence. Force majeure shall include acts of God, war, riots,
strikes, fire, floods, earthquakes, epidemics, or other similar occurrences.
20.2 ALLOCATION OF SERVICE When force majeure affects only part
of the Bank's capacity to perform, the Bank may allocate services among
its customers, including regular customers not included in this Agreement,
in any manner which is fair and reasonable.
20.3 NOTIFICATION If either party is delayed by force majeure, said
party shall provide reasonable notice that there will be delay or non-
delivery of reports or services. The notification shall provide evidence of
the force majeure to the reasonable satisfaction of the other party. Such
delay shall cease as soon as practicable and written notification of same
shall be provided. The time of completion shall be extended by contract
modification for a period of time equal to the time that the results or
effects of such delay prevented the delayed party from performing in
accordance with this contract.
20.4 RIGHTS RESERVED The Agency reserves the right to cancel the
contract and/or purchase services from the best available source during the
time of force majeure, and Bank shall have no recourse against the
Agency.
21. CONFLICT OF INTEREST
21.1 The Bank warrants that it presently has no interest and shall not acquire
any interest, direct or indirect, which would conflict in any manner or
degree with the performance of services required under this contract.
21.2 The Agency may terminate this Agreement, by written notice to the
Bank, if it is found after due notice and examination that there is a
violation by Bank of:
21.2.1 RCW 42.23 Code of Ethics for Municipal Officers -Contract
Interests or any other similar statute involving the Bank in its
performance under this Agreement.
21.3 In the event this Agreement is terminated as provided above, the Agency
shall be entitled to pursue the same remedies against the Bank as it could
pursue in the event of a breach of this Agreement by the Bank. The
rights and remedies of the Agency provided by this clause shall not be
exclusive and are in addition to any other rights and remedies provided
by law.
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CONTRACT ADMINISTRATION
22. INCORPORATED DOCUMENTS
This Agreement shall consist of the terms and conditions as set forth herein and the
following documents which are incorporated herein by reference:
22.1 "Exhibit A" - The Request For Proposal (RFP) for Statewide Custody
Services, issued by and on file at the Office of the State Treasurer, dated
November 17, 2005.
22.2 "Exhibit B" - The Bank's proposal in response to the State RFP for
Statewide Custody Services, also on file at the Office of the State
Treasurer.
22.3 "Exhibit C" - The Bank's schedule of fees for all Services provided under
this Agreement.
22.4 "Exhibit D" - The Funds Transfer Authorization Agreement which shall
run concurrently with this Agreement.
23. ORDER OF PRECEDENCE
23.1 The headings used herein are inserted for convenience only and shall not
control nor affect the meaning or construction of any of the provisions.
23.2 If any provision of this Agreement shall be deemed to be in conflict with
any statute or rule of law, such provisions shall be deemed modified to
conform to said statute or rule of law. In the event of any inconsistency in
this Agreement, the inconsistency shall be resolved in the order of
precedence stated below:
23.2.1 Applicable Federal and State Statutes and Regulations.
23.2.2 The Terms and Conditions of this Agreement.
23.2.3 Exhibit A - The Request For Proposal (RFP) for Statewide
Custody Services issued by the Office of the State Treasurer, dated
November 17, 2005, and Exhibit B - The Bank's proposal in
response to the State RFP for Statewide Custody Services.
24. ENTIRE AGREEMENT
This document, including all addenda and subsequently issued change notices, comprises
the entire agreement between the Agency and the Bank and shall be governed by the laws
of the State of Washington incorporated herein by reference.
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25. LIMITATION OF AGENCY'S AUTHORITY
Only the Agency Contracting Officer, or delegate by writing, shall have the express,
implied, or apparent authority to alter, amend, modify, or waive any clause or condition
of this Agreement. Furthermore, any alteration, amendment, modification, or waiver of
any clause or condition of this Agreement is not effective or binding until made in
writing and signed by the Agency and the Bank unless otherwise provided herein.
26. AGENCY CONTRACT ADMINISTRATOR
The Agency shall appoint an individual who will be the Contract Administrator for this
Agreement and will provide oversight of the activities conducted hereunder. The Agency
Contract Administrator will manage this Agreement on behalf of the Agency, and will be
the principal point of contact for the Bank concerning Bank's performance hereunder.
The Agency shall notify Bank, in writing, when there is a change in staffing and a new
Contract Administrator is assigned to this Agreement.
27. BANK'S ACCOUNT MANAGER
The Bank shall appoint an individual who will be the Account Manager for the Agency
account. The Bank's Account Manager will be the principal point of contact for the
Agency concerning the Bank's performance hereunder. The Bank's Account Manager
will also serve as the focal point for business matters, support coordination, and
administrative activities. The Bank shall notify the Agency in writing if a new Account
Manager is assigned.
28. CHANGES
No modifications or amendments to this Agreement shall be effective unless it is in a
written amendment signed by an authorized officer of the Bank and the Agency Contract
Administrator.
29. DISPUTES
29.1 Except as otherwise provided in this Agreement, when a bona fide dispute
concerning a question of fact arises between the Agency and the Bank,
and it cannot be resolved, either party may initiate the dispute resolution
procedure provided herein.
29.2 Time is of the essence in resolving disputes. The initiating party shall
reduce its description of the dispute to writing and deliver it to the
responding party. The responding party must respond in writing within
two (2) Agency working days.
29.2.1 Then, both parties shall have three (3) Agency working days to
negotiate in good faith to resolve the dispute.
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Statewide Securities Custody Model Contract
29.3 Both parties agree to exercise good faith in dispute resolution and to avoid
litigation whenever reasonably possible. Nothing in this Agreement shall
prevent either party, after the expiration of the three (3) day period in
Section 29.2.1, from pursuing other methods of dispute resolution.
29.4 The Agency and the Bank agree that, the existence of a dispute
notwithstanding, they will continue without delay to carry out all their
respective responsibilities under this Agreement which are not affected by
the dispute.
30. ADVERTISING
The Bank shall not advertise or publish information concerning this contract in any form
or media without prior written consent from the Agency.
31. CONSENT
Both parties agree that whenever a party's consent is required under the terms of this
Agreement, that consent shall not be unreasonably delayed or withheld.
AGENCY RESPONSIBILITIES
32. PROTECTION OF PROPRIETARY AND CONFIDENTIAL INFORMATION
Any specific information that is contained in the Bank's Proposal (Exhibit B) that is
confidential or proprietary, must be clearly identified by the Bank by stamping
"CONFIDENTIAL" on the lower right hand corner of the corresponding page(s). A
blanket designation of the entire proposal as being confidential will be disregarded. If a
request is made to view Bank's proprietary information, the State Treasurer and the
Agency will comply with the Public Records Act, chapter 42.17 RCW.
33. FUNDS TRANSFER AUTHORIZATION AGREEMENT
The Agency shall execute a Funds Transfer Authorization Agreement with the Bank.
This agreement shall remain in effect for the duration of this Agreement. The Transfer
Agreement is attached hereto as Exhibit D. In the case of any conflict between the Funds
Transfer Authorization Agreement and this Agreement, this Agreement shall take
precedence.
Page 14
Statewide Securities Custody Model Contract
BANK RESPONSIBILITIES
34. REGISTRATION WITH THE DEPARTMENT OF REVENUE
The Bank shall complete registration with the Department of Revenue, General
Administration Building, Olympia, Washington 98504, and be responsible for payment
of all taxes due on payments made under this contract.
35. LICENSING AND ACCREDITATION STANDARDS
The Bank shall comply with all applicable local, state, and federal licensing requirements
and standards necessary in the performance of this Agreement.
36. WORKERS' COMPENSATION INSURANCE COVERAGE
The Bank shall provide or purchase applicable workers' compensation insurance coverage
prior to perfoiniing work under this contract. The Agency will not be responsible for
payment of industrial insurance premiums for the Bank, or any subcontractor or
employee of the Bank, which might arise under the workers' compensation insurance
laws during performance of duties and services under this contract. Should the Bank fail
to secure workers' compensation insurance coverage or fail to pay premiums on behalf of
its employees, the Agency may deduct the amount of premiums owing from the amounts
payable to the Bank under this contract and transmit the same to the appropriate workers'
compensation insurance fund.
37. CONFIDENTIALITY OF AGENCY RECORDS
37.1 The Bank acknowledges that material and information which has or will
come into its possession or knowledge in connection with this Agreement,
or its performance, may consist of confidential and proprietary data, the
disclosure of which to, or use by, third parties could be damaging.
37.2 Access to information concerning the Agency or individual recipients of
the Agency's services shall not be granted except as authorized by law or
in writing by the Agency.
37.3 The Bank, therefore, agrees to hold all such material and information in
strictest confidence, not to make use thereof other than for the
performance of this Agreement, to release it only to authorized employees
requiring such information, and not to release or disclose it to any other
party.
37.4 Notwithstanding anything apparently to the contrary in the preceding
provisions of this Section 37, the Bank may release the material and
information described in this Section 37 to authorized bank examiners and
to its internal and external auditors for official use and may also release it
pursuant to a subpoena or other order issued by a court of competent
Page 15
Statewide Securities Custody Model Contract
jurisdiction. The Bank shall promptly notify the Agency of any such
subpoena or order upon its receipt.
38. AUDITING
The Bank shall permit representatives of the Agency, the Agency Auditor, an auditor
selected by the Agency, and/or the Auditor of the State of Washington or their authorized
assistant to examine the records of the Bank relating to the services rendered under this
Agreement, including securities transactions. Such audits may include, but are not
limited to, examination of the securities themselves. If the Bank has contracted for
deposit of the securities with another Bank, the Bank shall require its subcontractor to
provide similar access to the designated Agency and State officials or their
representatives. Any audits required by this Section which do not necessitate the
compilation of records in addition to those which are otherwise required by other
Sections of this Agreement may be conducted without notice. Any audits required by
this Section which require the compilation of records in addition to those which are
otherwise required by this Agreement may be conducted upon ten (10) days written
notice from the Agency to the Bank. The provisions of this Section shall remain in effect
for eighteen (18) months after the expiration, or sooner termination, of this Agreement.
Records of Agency transactions must be kept and maintained by the Bank for a period of
no less than seven (7) years from the date of the transaction.
39. BANK COMMITMENTS, WARRANTIES, AND REPRESENTATIONS
39.1 Any written commitment by the Bank within the scope of this Agreement
shall be binding upon the Bank. Failure of the Bank to fulfill such a
commitment may constitute breach and shall render the Bank liable for
damages due the Agency under the terms of this Agreement.
39.2 For purposes of this Agreement, a commitment by the Bank, which must
be in writing, includes: (1) prices and options committed to remain in
force over a specified period(s) of time; (2) any warranty or representation
made by the Bank in a proposal as to Service performance; (3) any
warranty or representation made by the Bank concerning the
characteristics of items in (2) above, contained in any literature,
descriptions, or specifications accompanying or referred to in a proposal;
(4) any modification of or affirmation or representation as to the above
which is made by Bank in writing whether or not incorporated into a
formal amendment to the proposal in question; and (5) any representation
by the Bank in a proposal, supporting documents or amendments thereto
as to, services to be performed, prices and options committed to remain in
force over a fixed period of time, or any other similar matter regardless of
the fact that the duration of such commitment may exceed the duration of
this Agreement.
Page 16
Statewide Securities Custody Model Contract
40. PRICE INCREASES
40.1 The Bank agrees to provide the Services at the costs, rates and fees set
forth in Exhibit C, Custody Fee Schedule. No other costs, rates, or fees
shall be payable to the Bank for implementation of Bank's proposal.
40.2 The fee schedule applies for two years from the date the Letter of
Agreement is signed. Annual adjustments may be made by the Bank after
the first two years to any or all items no greater than the national
Consumer Price Index (CPI) as published by DRI/McGraw Hill for the
preceding calendar year. The limitation would continue if the term of the
Letter of Agreement is extended.
CUSTODY PROVISIONS
41. CUSTODY OF SECURITIES
41.1 CUSTODIAL SERVICES The Custodian shall take custody of the
securities owned by the Agency, and tendered for transfer to its custody;
provide safekeeping services for them and accept complete responsibility
as a fiduciary for their safekeeping from the moment of delivery to it
and/or its transfer agent until their safe return and delivery to the Agency
or its designated agent upon expiration or sooner termination of this
Agreement.
When ownership of a security is manifested by a certificate, bond, note or
other physical document, the Custodian will verify proper registration of
the security in the name of the Agency; keep the physical specimen in a
secure vault, safe from destruction, damage, embezzlement and/or other
loss; readily available to the Agency; and in a condition suitable for sale or
transfer. When ownership is reflected in a book entry on official records
only, the Custodian shall be shown on the books of the Federal Reserve
System, the Depository Trust Corporation, or other depository agencies, as
Custodian of the Agency's book -entry security; the Custodian shall verify
the proper registration, evidenced by an entry in the Custodian's books
reflecting that the Custodian holds those particular securities (or a quantity
of securities that are part of a fungible bulk of government book -entry
securities) as Custodian for the Agency; and the Custodian shall obtain
and maintain the confirmatory documents in a secure area and unless
expressly authorized by the Agency, keep the securities ready for
immediate sale or transfer free and clear of all encumbrances.
41.2 INVENTORY; DELIVERY AND REDELIVERY the Custodian shall
keep an accurate, current inventory of all securities held within its custody
for the Agency. The inventory will contain precise identification of each
Page 17
Statewide Securities Custody Model Contract
security including, when applicable, the date of purchase and maturity
date; CUSIP numbers; and other sources of identification.
41.3 DEPOSIT OF SECURITIES the Custodian shall keep tangible securities
in the facilities of the Custodian located in New York City, unless the
Custodian and the Agency agree in writing to another location. Where
securities are eligible for deposit in a book -entry system or a Depository,
the Custodian may use that depository.
Security arrangements shall restrict access to the Agency securities, record
all entries and withdrawals, and provide physical safety for records at least
equal to customs and standards of banks in large metropolitan financial
centers for maintenance of valuable commercial securities.
In addition, the Custodian shall maintain a "back-up" system of
confirmatory records at another location so that if the vault at the
Custodian's approved facility is inaccessible or its material damaged,
destroyed, or stolen, the Custodian can establish to a reasonable degree of
certainty, the securities belonging to the Agency.
41.4 AGENCY CLEARING ACCOUNT the Custodian shall establish a
clearing account for the Agency as directed by the Agency. This account
shall accurately reflect transactions of all kinds, with respect to securities
of the Agency. This account is not to be construed as a Depository
Account.
The Custodian shall credit the following to the accounts immediately upon
the earlier of the settlement date or the payment date:
41.4.1 All interest and other distributions received on account of the
securities (including mortgages) held for the Agency;
41.4.2 All payments of principal or other return of capital, including,
securities backed by mortgages and financing contracts;
41.4.3 All proceeds from the sale or transfer of securities, or rights
appurtenant to the securities;
41.4.4 All payments made by the Agency to the Custodian and by the
Custodian to the Agency;
41.4.5 The Custodian may debit the account with disbursements
authorized by the Agency.
At the close of business, there shall be no cash in the clearing account. At
the option of the Agency, all funds in the account at the close of business
shall either be remitted by wire to the Agency in care of its primary bank
Page 18
Statewide Securities Custody Model Contract
or invested in an investment authorized by state statutes and approved by
the Agency.
41.5 TRANSACTIONS the Custodian shall assist the purchase of securities
and the sale of securities within its possession owned by the Agency.
When so instructed, the Custodian will:
41.5.1 Take possession of securities purchased by the Agency, and when
authorized, make payment from the clearing accounts as
established under this Agreement therefore;
41.5.2 Deliver securities sold or transferred by the Agency to the
appropriate entity or person versus payment;
41.5.3 Register in its name or in its name as Custodian, securities owned
by the Agency and held in its physical custody or those securities
indicated on the records of the Federal Reserve System, the
depository trust company of New York Agency, or another
depository, provided that adequate records are maintained to
identify the actual ownership of the securities by the Agency and
all rights to interest, and sale proceeds are vested in the Agency;
41.5.4 At the option of the Agency, the Custodian shall:
41.5.4.1
41.5.4.2
credit or debit the appropriate money account of the
Agency in connection with the purchase, sale,
maturity, redemption, income, dividends or other
disposition of securities and other assets held for the
time being on behalf of the Agency in said accounts
on an actual settlement basis; or
make available provisional credit of settlement,
maturity redemption proceeds, income and
dividends on a contractual settlement basis. The
Custodian reserves the right to reverse any such
crediting at any time before actual receipt of the
item associated with the credit when the Custodian
determines that actual receipt will not be received in
due course for such an item. In such instances, the
Custodian may charge the appropriate money
account of the Agency for the expense of providing
funds associated with such advance in an amount
not to exceed the actual short-term earnings of the
Agency during the time the funds were credited to
the Agency.
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Statewide Securities Custody Model Contract
41.5.4.3
In order to secure repayment of an advance of funds
made in connection with a purchase of securities the
Custodian shall have a purchase money security
interest in, and a security entitlement with respect
to, all of the Agency's right, title and interest in and
to the securities acquired with such advance
(including proceeds thereof). The Custodian shall
with respect to such purchase money security
interest be entitled to all the rights and remedies of a
pledgee and secured creditor under applicable laws,
rules or regulations as then in effect. If the
Custodian, in its sole discretion, advances funds to
the Agency or there shall arise for whatever reason
an overdraft in the Agency's account the Custodian
may at any time charge any such overdraft or
indebtedness together with interest due thereon
against any balance of account standing to such
Agency's credit on the Custodian's books.
41.5.5 Disburse funds as requested and remit funds to the Agency before
the close of each business day.
The Agency retains the exclusive authority to manage the assets of the Agency within the
Custodian's custody. This includes the determination of which investments shall be
made; what and when securities shall be sold or encumbered; the terms or conditions of
any transaction; and the disposition of cash on hand. The Custodian shall make no
transaction without instructions from the Agency, except the advance crediting of
principal, interest and other proceeds to the Agency's clearing account.
41.6 INCOME ON DEFECTIVE TRANSACTIONS The Custodian shall
pay the Agency the following sums when a transaction is defective
without fault of the Agency:
41.6.1 If a seller fails to deliver the securities in proper form on the
settlement date, and the Custodian is not providing contractual
settlement, the Custodian shall return to the Agency all those funds
designated for purchase before the close of each business day, or
invest those funds in an investment authorized by state statutes and
approved by the Agency.
41.6.2 If a buyer fails to make payment on the settlement date, and the
Custodian is not providing contractual settlement, the Custodian
shall pay the Agency the interest or other income, if any, actually
received by it, from the party in default.
41.6.3 If the transaction fails or is delayed due to the inability of the
Custodian to make such delivery due to actions of, or an inaction
Page 20
Statewide Securities Custody Model Contract
by, the Custodian, its agents, employees or equipment, the
Custodian shall promptly pay the Agency an amount to make it
whole as if the transaction had been properly executed, provided
that the foregoing provisions shall not apply if the inability, action
or inaction is by reason of forces beyond the control of Custodian,
and provided further that Custodian's obligation to make payment
to the Agency shall be limited to amounts constituting direct
money damages.
41.7 ANCILLARY SERVICES
41.7.1 The Custodian shall have a comprehensive contingency plan for
timely disaster recovery in the event systems are rendered
inoperative due to fire, flood or other disaster.
41.7.2 Settlement of Transactions:
Settlement of and payment for securities received for, and
delivered from, the account may be made in accordance with the
customary or established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including without limitation, the delivery of
securities to a purchaser, broker, dealer or their respective agents
either against a receipt for future payment or without any payment
(so-called "free delivery").
41.7.3 Taxes:
The Agency is solely responsible and liable for the payment of and
the reclamation, where applicable, of all taxes assessments, duties,
and other governmental charges (including any interest or penalties
with respect thereto) with respect to the cash or securities held
hereunder or the Account. The Custodian, however, will cooperate
with the Agency in connection with the Agency's payment or
reclamation of taxes.
41.7.4 Pricing Services:
To the extent that the Custodian provides values of, and pricing
information with respect to, securities, the Custodian is authorized
to utilize generally recognized pricing services (including brokers,
dealers and market makers). The Custodian shall not be liable or
responsible for or be under any duty to inquire into, nor be deemed
to make any assurances or warranties with respect to, the accuracy
or completeness of such values or information, even if the
Custodian, in performing services for itself and others, including
services similar to those performed for the Agency, receives
Page 21
Statewide Securities Custody Model Contract
different valuations of the same or similar securities of the same
issuer. In the event such services are unable to provide a value of
or pricing information with respect to securities and the Custodian,
nevertheless, provides values and pricing information, the
Custodian shall so advise the Agency, but shall have no other
obligation or liability with respect to such valuation or pricing
information.
41.8 PROPER INSTRUCTIONS AND EVIDENCE OF AUTHORITY The
term "Proper Instructions" shall mean instructions received by the
Custodian from the Agency or any person duly authorized by them. Such
instructions may be in writing signed by the authorized person or may be
in a tested communication or in a communication utilizing access codes
effected between electro -mechanical or electronic devices or may be by
such other means as may be agreed to from time to time by the Custodian
and the party giving such instructions (including, without limitation, oral
instructions). The Agency shall cause its duly authorized officer to certify
to the Custodian in writing the names and specimen signatures of persons
authorized to give proper instructions. The Custodian shall be entitled to
rely upon the identity and authority of such persons until it receives notice
from the Agency to the contrary.
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate, instrument or paper reasonably believed by it
to be genuine and to have been properly executed or otherwise given by or
on behalf of the Agency. The Custodian may receive and accept a
certificate from the Agency as conclusive evidence (i) of the authority of
any person to act in accordance with such certificate or (ii) of any
determination or of any action by the Agency as described in such
certificate, and such certificate may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
41.9 RESPONSIBILITY OF CUSTODIAN
41.9.1 The Custodian shall perform its duties hereunder with "Due Care."
For the purposes of this agreement, "Due Care" shall mean the
degree of care and skill demonstrated by fiduciaries acting in like
capacity as a safekeeping Custodian. The Custodian shall not be
responsible for the title, validity or genuineness, including good
deliverable form, of any property or evidence of title thereto
received by it or delivered by it pursuant to this Contract. The
Custodian may at its discretion appoint and remove agents or
subcustodians to carry out such of the provisions of this contract as
the Custodian may from time to time direct; provided, however,
that such appointment shall not relieve the Custodian of its
responsibilities or liabilities under this Contract, and provided
further that any depository selected with Due Care by the bank
Page 22
Statewide Securities Custody Model Contract
shall not be deemed for purposes of this agreement an agent or
subcustodian of the Bank.
41.9.2 Provided always that the Custodian and its agents and
subcustodians act in good faith and with the exercise of Due Care
in performance of such duties as would ordinarily be expected of a
financial institution in the relevant market and subject to the terms
of the Custody Agreement:
41.9.2.1
41.9.2.2
It is not liable for any loss or damage caused by the
delay or failure of any central bank, any Depository,
or any commercially prevalent payment or clearing
system to deliver to or for the Bank or its
subcustodians securities purchased or sold, or to
make or receive and remit, any payment in
connection with purchases or sales of securities, for
delays or failures in providing corporate action
notices, or for delays or inability by the Bank to
perform its duties due to acts or omissions of any
Depository or to disorder in market infrastructure
with respect to any particular security, security
exchange, central depository or clearing system;
and
It is not liable for any delay or failure of any non-
parties, company, corporation, or other body in
charge of registering or transferring Securities in the
name of the Custodian, any customer of the
Custodian, or the Subcustodian, its nominee or
agent, or for any consequential losses arising out of
such delay or failure to transfer such Securities
including non -receipt of bonus, dividends and rights
and other accretions or benefits.
41.10 SECURITY CODES If the Custodian has issued security codes or
passwords to the Agency in order that the Custodian may verify that
certain transmissions of information, including Proper Instructions, have
been originated by the Agency, the Custodian shall, to the extent
authorized by law, be kept indemnified by and be without liability to the
Agency for any action taken or omitted by it in reliance upon receipt by
the Custodian of transmissions of information with the proper security
code or password, including instructions purporting to be Proper
Instructions, which the Custodian reasonably believes to be from the
Agency.
41.11 SPECIAL AND CONSEQUENTIAL DAMAGES Except as otherwise
provided in this Agreement, neither the Custodian nor the Agency shall be
Page 23
Statewide Securities Custody Model Contract
liable to the other for special or consequential damages unless such
damages result from the gross negligence or fraud of that party.
41.12 NOTICES Notices and other writings shall be delivered by the most
expeditious means available, with due regard given to the time sensitivity
of the notice or demand being made:
To the Agency:
City of Yakima
Attn: Timothy Jensen
129 North Second Street
Yakima WA 98101
To the Custodian:
Union Bank of California
350 California Street, 6th Floor
San Francisco, CA 94104
Attention: Moon Lee
Institutional Custody Services
and: City of Yakima
Attn: Rita DeBord
129 North Second Street
Yakima, WA 98901
Or to such other address as the Agency or Custodian may hereafter specify in writing.
Telephone and facsimile notices shall be sufficient if communicated to the party entitled
to receive such notice at the following numbers:
If to Agency:
Telephone (509) 576 - 6639 Facsimile ( 509) 576 - 6634
If to Custodian:
Telephone: (800) 255-0654 Facsimile: (415) 705-7320
or to such other numbers as either party may furnish the other party by written notice
under this Section.
PAYMENT PROVISIONS
42. PAYMENTS
Fees and reimbursement for costs and expenses incurred by the Bank in connection with
this Agreement, shall be paid quarterly after the last business day of each calendar
quarter, with the first payment for the calendar quarter ending June 30, 2006. The Bank
Page 24
Statewide Securities Custody Model Contract
shall submit to the respective Agency an invoice containing an itemized list of all costs
and expenses.
The respective Agency will forward payment for service charges to the Bank, after the
Agency verifies all activity and charges; within thirty days of receipt of the invoice,
provided there are no significant unreconciled differences.
In the event services are rendered for less than a calendar quarter, as will be the case for
the initial invoice period, or this Agreement is terminated prior to the end of a calendar
quarter, the respective Agency shall pay the Bank's fee prorated for the portion of the
calendar quarter such services are rendered or the Agreement is in effect, plus any costs
and expenses incurred by the Bank for the Account up to or subsequent to the date of
termination.
43. TAXES
It is mutually agreed and understood that all payments accrued on account of payroll
taxes, unemployment contributions, any other taxes, insurance or other expenses for the
Bank's staff shall be the sole liability of the Bank.
44. DAMAGES
If the Bank does not meet its Service obligations as detailed in Section 41 of this
Agreement and such failure is not caused by a force majeure event, the Bank shall be
required to negotiate a settlement with the Agency Contract Administrator for an
appropriate reduction in charges.
In the event the Agency suffers any loss as a result of the Bank's gross negligence, fraud,
or failure to exercise Due Care, as defined in Section 41.9.1, in the performance of its
duties under this Agreement, either by the Bank or the Bank's agents, employees,
subcontractors, or representatives under this Agreement, the Bank shall be liable to the
Agency for such damages but only to the extent such damages constitute direct money
damages caused by the Bank's negligence, fraud, or failure to exercise Due Care. The
Agency shall be required to fully document such losses in writing by submitting such
documentation to the Bank.
CONTRACT EXECUTION
45. COUNTERPARTS
This Agreement is to be executed in duplicate originals and each duplicate shall be
deemed an original copy of the Agreement signed by each party, for all purposes.
Page 25
Statewide Securities Custody Model Contract
46. SIGNATURE BLOCKS
IN WITNESS WHEREOF the parties hereto, having read this Agreement in its entirety,
including all attachments hereto, do agree in each and every particular.
APPROVED APPROVED
City of Yakima
(NAME OF AGENCY)
SIGNATURE
R. A. Zais, Jr.
City Manager
TITLE
UNION BANK OF CALIFORNIA
(NAME OF BANK)
SIGNA RE
\ItC-U.
TITLE
-170(D
DATE DATE
CITY CONTRAC r NO: ae-)O6 -3/
RESOLUTION NO: le-d/A06 -4/5
Page 26
;'.4/fes
1,-/ )
416"
EXHIBIT A
Request for Proposal
- Not enclosed, available upon request
EXHIBIT B
Bank's Proposal
-› Not enclosed, available upon request
EXHIBIT C
Schedule of Fees
4 See attached
EXHIBIT D
Funds Transfer Authorization Agreement
- Not yet completed; should be available by March 24, 2006
EXHIBIT C
INSTITUTIONAL CUSTODY SERVICES
SCHEDULE OF FEES
for
State of Washington Office of the Treasurer
SERVICES INCLUDED
• New account set-up
• Free receipt of assets transferring into Bank
• Asset safekeeping
• Trade settlements
• Income collections
• Monthly cash and asset statements
• Dedicated relationship manager assigned to your account
• Toll-free telephone and fax lines
• Internet access via Online Trust and CustodysMsystem
MONTHLY ADMINISTRATION FEE $50
ITEMIZED FEES
Transaction fee Depository eligible $15
Depository ineligible $40
Monthly holding fee Per security $1
Disbursements Fed wires / checks $10
P&I paydowns $5
Out-of-pocket expenses As incurred
MINIMUM ANNUAL FEE per account $1,500
• A transaction is defined as any activity affecting assets including purchases, sales, tender offers, stock dividends, free
deliveries, maturities, exchanges, redemptions, etc. Fees for foreign securities, foreign exchange transactions, international
wires and non-standard services are quoted separately
• Fees will be billed quarterly unless otherwise agreed.
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. * /5
For Meeting Of 3/21/2006
ITEM TITLE: Resolution authorizing and directing the City Manager to execute a Security Custody
Agreement with Union Bank of California for provision of investment security custody services
SUBMITTED BY: Rita DeBord, Finance Director
Tim Jensen, Treasury Services Office
CONTACT PERSON/TELEPHONE: Tim Jensen, Treasury Services Officer 575-6070
SUMMARY EXPLANATION: In May of 2000, the State Treasurer's office, in conjunction with the
State Attorney General's office, developed a Statewide Custody Contract for the benefit of Cities
in the State unable, due to the size of their portfolios, to obtain third party investment custody
services at reasonable prices. These services consist of clearing trades through the Federal
Reserve System and then safekeeping the securities, paying interest and maturities when due
and reporting market valuations on a monthly basis. Since the City has a portfolio of securities
held for investment, having a contract with a third party custodian is essential to ensure the safety
of our investments. In 2000, through a competitive RFP process, the contract was awarded to
The Bank of New York. That contract will expire on March 31st of this year.
In November of 2005, the State Treasurer's office conducted another competitive bid process and
subsequently awarded the contract to the Union Bank of California (UBOC), primarily due to lower
fees. Attached for your consideration is the final contract with UBOC, which is identical in all
material respects to the contract developed and approved in 2000. This contract has served the
City well for the last six years and we look forward to our new relationship with UBOC and believe
Continued...
Resolution X Ordinance _ Other (Specify)
Contract Mail to (name and address):
Phone
Funding Source
APPROVED FOR SUBMITTAL:
City Manager
STAFF RECOMMENDATION: Adopt Resolution
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION:
Legal/BD
rev. effective 7/21/92
Resolution adopted. RESOLUTION NO. R-2006-45
it will serve the City well for the next six years. If Council adopts the attached Resolution, the
City's portfolio of Securities will be transferred to l mor- on March 11st The contract effective
City's - ,_ __ __ ____ �.. .�.will �.. .�. �.. .� v.. Morch v 1 . . ..V VV..i[4A V4 is effective
March 11, 900R through March 31st `010 and contains an option for a two-year extension to 2012,
if mutually agreed to.
Attached for Council review are:
• Award letter from State Treasurer's office
• Resolution for your adoption
Final form of Statewide Custody Contract (which includes a pricing schedule, see exhibit
C)
Staff Recommendation:
While the City has been pleased with the existing contract and services provided by The Bank of
New York, Staff feels it is in the best interests of the City to follow the State Treasurer's
recommendation which resuuited from an exhaustive RFP procacc and contract with the l inion
with , I V V I I I I I
Bank of California for our custody services. By doing so we stay under the umbrella of a contract
that is proven, and guarantee low fees for custody services to the City for the next several years.
Staff respectfully requests Council's approval of this contract by adoption of this Resolution
authorizing the nit; manager to begin our new relationship with the union Rank of C'alifornio
Legal/BD
rev effective 7121/92
Addendum to the
Union Bank of California
Master Funds Transfer Agreement
and Security Procedures
Limiting our Liability: Delete First Sentence and insert the following in its place and stead:
To the extent not inconsistent with the provisions of the Washington Commercial Code, and only
to such extent, we are not responsible for any loss, expense or liability related to:
Additional Terms:
Choice of law: Strike California and insert Washington
Entire Agreement: Delete this section and substitute the following in its place and stead:
This Agreement contains the entire understanding between you and us regarding funds transfers
and supplements but does not modify any other agreements we have with you. To the extent that
the terms or conditions of this Agreement are inconsistent with the terms or conditions of that
certain Washington Statewide Contract for Security Custody Services (the "Custody
Agreement") dated March 31, 2006 between us and City of Yakima , the terms and conditions
of the Custody Agreement shall prevail. Washington law shall govern the right to a trial by jury
and the availability of attorney fees in any action under this agreement.
Scope of Addendum: This Addendum shall apply only to transfers to and from Accounts
number 6736301250 and shall not apply to any other accounts you have with us. Except as set
forth herein, in all other respects the Master Funds Transfer A_reement and Security, Procedures
remains in full force and effect.
City of Yakima , R.M. DeBord
Finance Director Union Bank of California, authorized signature
Date Date
't_.UNION'-
'''SBANKOF
CALIFORNIA
1. CLIENT INFORMATION
FUNDS TRANSFER AUTHORIZATION
DATE: 3 - q- 2 7 ,
The undersigned ("client", "you", or "your') and Union Bank of California, N.A. ("Bank") agree that the Bank will provide funds transfer services according to
the terms of the Bank's Master Funds Transfer Agreement, and as specified below.
PAYE
, .M, �i° # I e. ,;4) 57IP-436,V
vccRe� /,�%ey1 9 'STATE, �Z1=' 9f/h
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2. CLIENT ACCOUNT(S) (Line out all unused lines)
Designate all accounts you wish to use for funds transfers
ACCOUNT NUMBER(S)
4734 31)1a254 -
elft' Dy4,4h14
ACCOUNT NAME(S)
3. SELECT FUNDS TRANSFER AND SECURITY PROCEDURE OPTIONS
Indicate how you wish to initiate funds transfers and your preference for security procedures. Further descriptions appear in the Master Funds Transfer
Agreement. For recurring (repetitive) transfers, we callback only when you initially set up the transfer unless you request otherwise in writing.
Initiating Funds Transfers - Select one or both
[B Facsimile
Security Procedure for Facsimile Transfers - Select ONLY one
El Written (by Mail) Repetitive - No Callback
4. AUTHORIZED REPRESENTATIVES (Line out all unused lines)
❑ Non -Repetitive - Callback
Complete the following section to designate the individuals who are authorized to initiate funds transfer and receive callbacks.
NAME OF AUTHORIZED REPRESENTATIVE
SIGNATURE
TELEPHONE
I - Jr .•
'WA t
5P4 575 I?;
�mpril y in- ..1.845e1)
T1mDril
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Complete the following section to designate the authorized signers for a Third Party as additional Authorized Representatives to initiate funds transfers and
receive callbacks. By designating a Third Party in this section, Client hereby authorizes Bank to refer to the list of authorized signers for the designated Third
Party on file with the Bank as of the date of receipt of each funds transfer request.
NAME OF DESIGNATED THIRD PARTY
TELEPHONE
5. AGREE TO TERMS - All individuals with authority over Client Account(s) should complete this section (Line ou�tt aa) u e j lines
By signing here, each person accepts and agrees to the terms and conditions contained in the Master Funds Transfer Agreemenraan flecTaYess uund� ria
of perjury that the following is true and correct: (1) I am authorized to make this declaration and hold the position (if any) listed next to my name; (2) Each
person listed as an Authorized Signer in this "Agree to Terms" section has authority to enter into or change any agreement with the Bank relating to funds
transfers on behalf of the client including, but not limited to, authority to add or delete Authorized Representatives and designated accounts (3) No other
person's authonzation is necessary to bind the client for purposes of funds transfers; (4) This authonzation supplements all authorizations already in effect.
NAME OF AUTHORIZED SIGNER
SIGNATURE
TITLE
Rix, d e.e.rcil�;k'�
`'
I%int�;uct,Olr
�mpril y in- ..1.845e1)
/ . ' �, --'-®—
iRSAsvey Smi
6. RESOLUTION AND CERTIFICATION - Required for all Non -Individual Entities, including but not limited to, Corporations,
Associations, Limited Partnerships, LLC, Foundations, Political Subdivisions
Client is responsible for providing Bank with documentary evidence to confirm the capacities and authority of the individual(s) listed in Section 5 -
"Agree to Terms" section of this Funds Transfer Authorization. Acceptable documentation includes a copy of a Corporate Resolution on client letterhead
certified by the Corporate Secretary and evidendng a Corporate Seal, a certified copy of the most recent annual report or board meeting minutes or an
equivalent document depending on the type of entity Each resolution or authorizing document shall provide that it will remain in full force and effect until
Bank receives written notice of revocation at the address where the Account is administered. Bank reserves the right to request additional documentation
at its sole discretion.
7. UNION -BANK OF CALIFORNIA, N.A.
iYE _
{TITLE
IFiTc
5c-r;:.Tt.nc
SSC-ri4+_.Z'+f,c
FTA - 3i2005.xls
9
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••01Acee
MASTER FUNDS TRANSFER AGR
EEMENT PAGE 3
WAIVER OF RIGHT TO JURY TRIAL; DISPUTE
RESOLUTION BY JUDICIAL REFERENCE
If you have a problem with a funds transfer, we ask that you
bring it to our attention immediately In most cases, a
telephone call will quickly resolve the problem in an
informal manner If a dispute cannot be resolved informally,
either you or the Bank may file a lawsuit.
Jury Trial Waiver- You and the Bank intentionally and
deliberately give up the right to a trial by jury to resolve
each dispute, claim, demand, cause of action, and
controversy (referred to below by the single word, "Dispute)
between you and the Bank arising out of, or relating to, any
funds transfer subject to this Agreement.
Please refer to the All About Business Accounts & Services or
All About Personal Accounts & Services Disclosure and
Agreement for the terms of our agreement to resolve
Disputes using a judicial referee.
Additional terms
Headings: Headings are included for reference only and are
not part of this Agreement.
Waiver Waiver of any of the provisions of this Agreement
will not constitute a waiver of other provisions.
Agreement clauses stand alone: All the provisions of this
Agreement can exist independently of each other If any
provision is held invalid or unenforceable, all remaining
provisions will continue to be valid and enforceable.
Non -Assignability This Agreement is made exclusively for
the benefit of you and us. You may not assign this
Agreement without our written consent.
Attorneys' fees: No attorneys' fees will be awarded in any
action to enforce this Agreement.
Choice of law This Agreement is made under and governed
by the laws of the State of California.
Entire Agreement. This Agreement contains the entire
understanding between you and us regarding funds
transfers, and it replaces any prior agreements or
understandings you and we may have had.
ABOUT SECURITY PROCEDURES
For all funds transfer requests, we will attempt to verify that
the person requesting the transfer is authorized. For
telephone and facsimile requests, we use one or more of the
following security procedures. Please note that our
validation checks will not detect any errors you make, and
we will rely on the information you give us in making your
funds transfers.
We offer the following combinations of verification
procedures depending on the type of funds transfer request,
and where you make the request
• Callback
• Callback and Digit Test (Non-Dired Access)
• Test Key only (Direct Access only)
• Test Key & Callback (Direct Access only)
Trust clients use the "callback only" procedure exclusively
All Direct Access clients use SecurlD, whether alone or with
other verification procedures.
Security Procedures Definitions
Callback: After we receive a funds transfer request, we
telephone or "callback" you or someone else whom you have
previously authorized to verify the request. If this option is used
as the sole security procedure, the person we call will need to
provide us with a Caller Identification Number (Caller ID)
Caller ID No.. A unique number forwarded separately that we
use to verify the identity of the caller For Direct Access only.
Digit Test: An algorithm performed by the clients when faxing
or telephoning funds transfer instructions to their banking
office.
Repetitive Funds Transfers: Transfers sent to the same account
at the same bank that differ only in amount To establish a
repetitive funds transfer, complete a Funds Transfer
Authorization. We will assign a Transfer No. for use with
telephone and facsimile requests. For transfers, we callback
only when you first set up the transfers unless you request
otherwise in writing.
Repetitive Transfer No.. A number we assign and use to identify
repetitive transfers so that full details are not needed each time.
SecurID: The SecurID Token is a lightweight physical device used
in conjunction with a user name and password. The SecurlD
Token displays a randomly generated access code that changes
every 60 seconds. The SecurlD Token is used to authenticate
you to the Bank for initiation of funds transfers for all Direct
Access transfers and Internet initiated funds transfers. You agree
you have an obligation to us to safeguard your SecurlD Token
and will take reasonable steps to prevent its unauthorized use.
You agree to accept responsibility for any failure to
SecurID (Cont.):
safeguard your Token. Your SecurlD Token should be kept
separate from your Password and User ID You also agree to
notify us immediately if your Token is lost or stolen, your
Password has been compromised, or you notice any
unauthorized activity We may request you put your report of
unauthorized activity in writing. You agree that failure to do so
may delay or void your claim. The SecurlD Token remains the
properly of the Bank, and you may be liable for the cost of a
damaged, lost or stolen Token
SecurID Token Costs.
1-2 Token(s) No Charge
3 -Over $100.00
Lost or Stolen $100.00
cost Key: To use the Test Key, you or someone you authorize will
need to provide us with a test amount when requesting a funds
transfer You will calculate the test value using a unique "test
key" mathematical formula we will have given to you earlier
The Test Key is our property and may not be transferred or
disclosed. All Test Keys have serial numbers. If you choose this
method, you agree to treat the Test Key as you do other sensitive
and irreplaceable business records. You must always be able to
account for the location of your Test Key.
FORM 02340 IR 4, 1 1 /2001)
UNION
BANK Of
CAI .I FO R N 1A
MASTER FUNDS
TRANSFER AGREEMENT
AND
SECURITY PROCEDURES
MASTER FUNDS TRANSFER AGREEMENT
PAGE 2
This Agreement supplements, but does not modify any other
agreements we may have with you.
INTRODUCTION
In this Agreement, "you" and "your" refer to the funds transfer
client; "we," "us," "our" and "Bank" mean Union Bank of
California, N.A. The terms and conditions that follow govern:
• your rights and responsibilities, as well as ours;
• the rules that affect funds transfers;
• our policies for verifying and completing funds transfers.
ABOUT FUNDS TRANSFERS
Authorizing funds transfers
By signing the accompanying Funds Transfer Authorization
or acknowledging agreement on a Funds Transfer Order,
you permit us to transfer funds and complete reverse
transfers/ third party drawdowns based on instructions you
or someone you authorize gives us. You agree that anyone
you allow to transfer funds may ad, even if this person
cannot withdraw funds from your account in other ways. In
addition to persons you designate in the Funds Transfer
Authorization, we may accept funds transfer orders from
persons listed on your Bank Depositor Agreement as
authorized to withdraw funds from your account when the
orders are made in person at one of our branches. We may
record our telephone conversations with you.
Requesting funds transfers
You or someone you authorize may request funds transfers
as follows, depending on your account type:
In person at a Bank office/department Primary
I_; identification must be shown.
T2,..-{ In writing (in person or by mail): All written requests must
-� be signed.
,,t7 Telephone: Most clients can request funds transfers by
telephone by calling a Bank office or department.
teDirect Access: Clients may request funds transfers by
telephoning or faxing our Wire Services Unit. Direct
Access customers are assigned a Caller ID number
which must be used in conjunction with a SecurlD
token.
Facsimile: All facsimile requests must be signed.
Ii,; TEAMS"' Personal Computer. This is a personal
' _computer-based funds transfer service that uses
message authentication, data encryption, security
diskettes, personal IDs and passwords to allow access
to our Money Transfer Service.
rd- -MAW' Terminal: This is a terminal -initiated funds
transfer service that uses personal IDs and passwords
to allow access to our funds transfer service.
Instructions on set-up changes can be effected
electronically through TEAM. e-mail service.
Agrfr Internet. Initiate funds transfer instructions via the
Internet using your personal ISP provider Wires on the
Web utilizes access codes/passwords, 128 SSL
encryption and SecurlD for authentication.
You may select one or more of the above methods when you
set up your funds transfer service, depending on your
account service area, Bank office or department. If you later
wish to change the way(s) you request funds transfers, we
will send you a form to complete and return. It can take up
to 10 business days before you may use the new method(s)
while we are making the changes. Until we notify you, you
will still be able to use your existing method(s) for requesting
funds transfers.
Keeping funds transfers secure
We maintain certain security procedures described
beginning on page 3. You agree to:
• use one or more of our security procedures for your funds
transfer instructions,
• keep our security procedures confidential, and
• inform us promptly if one of our security procedures is no
longer confidential.
Some of our procedures may provide greater security than
others. If we follow a security procedure you have selected,
you authorize us to execute funds transfers and will be
bound by the transfer
Processing funds transfers
We will use our best efforts to transfer funds the same day if:
• you make your request when our funds transfer
transmission facility is open, and
• we receive and can authenticate your instructions, or in
cases of reverse wires, instructions we receive on your
behalf, before our cutoff time (which we may change
without prior notice).
If you request that we use a specific account for a transfer,
we will try to transfer funds from this account You agree to
pay us the current fees for funds transfers established in our
published fee schedules. We may change our fees, but we
will provide you with prior notice in writing, if you have
completed a Funds Transfer Authorization Form.
If you identify the beneficiary or a bank for a funds transfer
using both a name and an account or other ID number, we
and subsequent banks involved in the transfer may use the
number alone to complete your funds transfer request. We
are not responsible if the name and the number do not
agree.
We use a variety of facilities to make funds transfers. Unless
you instruct otherwise, we will use one or more of the
following fund transfer systems:
• Fed Wire System (Fedwire)
• Clearing House Interbank Payments System (CHIPS)
• Society for World -Wide Interbank Financial
Telecommunications (SWIFT)
• Any correspondent bank or bank we consider suitable
under the circumstances
You accept and agree to the rules of the funds transfer
payment system we, the beneficiary bank and any
intermediary bank may use.
Changing or recalling funds transfers
If you try to cancel or change an instruction after we receive
it, we will use reasonable efforts to comply with your
request. We cannot guarantee that we will be able to do so.
You agree that we are not responsible if we do not cancel or
change your instructions.
Sending funds outside the United States
If you request that United States Dollars be sent to a foreign
country, payment may instead be made in currency of the
foreign country Funds transfers may also be made from
your foreign country currency deposit account.
If your transfer is returned, you agree to accept the refund
in United States Dollars. We will calculate your refund
based on the buying rate of exchange of the foreign
currency on the date of the refund. The exchange rate will
include a commission to us for making the exchange. You
agree to accept this amount as a full refund, even if it is less
than the original amount we transferred. You also agree to
pay us any other charges and expenses we incur either as a
result of a USD or foreign currency funds transfer
Confirming your instructions
We will send you confirmations of your funds transfer
instructions and/ or account statements. You agree to review
them and to notify us immediately of any errors,
unauthorized transactions or irregularities.
Rejecting funds transfers
We may decide to reject any instructions we cannot verify or
believe are unauthorized. If we cannot verify your funds
transfer instructions to our satisfaction, you agree that we
are not responsible if we do not execute your instruction(s).
If you do not have sufficient funds available in your
account(s) with us, we may, but are not required to complete
fund transfers you request In such cases, you agree to
repay us immediately the amount of any overdraft and for
any related fees.
ABOUT THIS AGREEMENT
Limiting our liability
Subject to the provisions of the California Commercial
Code, we are not responsible for any loss, expense or
liability related to:
• delay, inaccuracy, misexecution, events, persons or causes
not within our reasonable control
• failure of others to accept payment
• subsequent wrongful dishonor resulting from our acts or
failure to act
• accidents, strikes, fire, flood, war, riot, equipment failure,
acts of third parties or acts of God
If we have met our obligations under this Agreement, you
agree to indemnify and hold us harmless against any claim
related to this Agreement or our performance of funds
transfer services. You agree that any liability we have in
connection with this Agreement will be limited to direct loss
to you, if any, plus interest. We make no warranty that the
intended recipient of your funds transfer will receive the
funds transferred. We are not liable for incidental,
consequential, indirect, punitive or special damages that
arise from this Agreement or relate to our making funds
transfers.
Changing or terminating this Agreement
We may change, delete, add to, or terminate this Agreement
at any time if we provide you with notice. Any amendment
or termination will only affect your or our rights and
obligations for fund transfers that occur after the effective
date of amendment or termination. You confirm your
acceptance of the new terms by continuing to request funds
transfers.
Office of the State Treasurer
Request for Proposal Statewide Securities Custody Services
STATEWIDE
SECURITIES CUSTODY
SERVICE PROVIDER
REQUEST FOR PROPOSAL
EXHIBIT A
MICHAEL J. MURPHY
WASHINGTON STATE TREASURER
TABLE OF CONTENTS
SUMMARY INFORMATION AND PROPOSAL RETURN COVER PAGE 2
SECTION I - INTRODUCTION 3
1-1 BACKGROUND 3
1-2 PURPOSE/OBJECTIVES. 3
1-3 RFP COORDINATOR .. 4
1-4 RFP SCHEDULE 5
1-5 RFP MODIFICATION 5
1-6 APPARENT SUCCESSFUL FINANCIAL INSTITUTION ....... 5
1-7 PERIOD OF PERFORMANCE. 6
1-8 RENOGIATION OF FEES .... . 6
1-9 FINAL SELECTION 6
I-10 SINGLE RESPONSE 6
1-11 ERRORS IN RESPONSE 6
SECTION II - STATEMENT OF WORK 7
11-1 SCOPE. 7
11-2 SERVICES TO BE PROVIDED 7
SECTION III - SELECTION PROCESS 10
111-1 SELECTION SCHEDULE 10
111-2 SELECTION STEPS 10
111-3 EVALUATION AND SELECTION PROCESS 11
SECTION IV - PROPOSAL PREPARATION AND CONTENT REQUIREMENTS 12
IV -1 SUBMISSION OF PROPOSAL 12
IV -2 RESTATEMENT OF RESPONSE QUESTIONS 13
IV -3 SUPPLEMENTAL MATERIAL 13
IV -4 PROPRIETARY RESPONSE MATERIAL.... 13
IV -5 CONTRACTUAL REQUIREMENTS 14
IV -6 CLARITY OF PROPOSAL 14
IV -7 ORGANIZATION OF PROPOSAL 14
1V-8 SINGLE VOLUME 15
IV -9 PROPOSAL CONTENTS . . . . . . ............. . . . . 15
SECTION V - EVALUATION OF RESPONSES 15
V-1 EVALUATION PROCEDURES 15
V-2 BASIS FOR EVALUATION 15
V-3 EVALUATION TEAM 16
V-4 EVALUATION CRITERIA 16
SECTION VI - MODEL CONTRACT AND LETTER OF AGREEMENT SPECIFICATIONS 16
VI -1 MODEL CONTRACT NEGOTIATION 16
VI -2 LETTER OF AGREEMENT NEGOTIATION 17
VI -3 DESIGNATION OF STATEWIDE CUSTODIAN 17
VI -4 PROTEST PROCEDURES 17
ATTACHMENT A A-1
APPENDIX A .A-15
Office of the State Treasurer
Request for Proposal Statewide Securities Custody Services
SUMMARY INFORMATION
AND PROPOSAL RETURN COVER PAGE
RFP NUMBER
ISSUE DATE:
TITLE:
ISSUING AGENCY:
CLOSING DATE:
LETTER OF
AGREEMENT PERIOD:
SUBMISSION
AGREEMENT:
NAME AND ADDRESS
OF FIRM:
DATE:
BY:
TITLE:
SCSP-05-001
November 17, 2005
STATEWIDE SECURITIES CUSTODY SERVICE PROVIDER
Office of the State Treasurer
P.O. Box 40200
Olympia, WA 98504-0200
Douglas D. Extine
RFP Coordinator
(360) 902-9012
December 14, 2005
The term for the Letter of Agreement will cover a four-year period,
commencing on April 1, 2006 through March 31, 2010. At the option
of the Treasurer's Office, and upon mutual agreement, this agreement
may be extended for one, 2 -year period, or a portion thereof. Total
Letter of Agreement period, with extensions, shall not exceed six (6)
years.
In compliance with this Request for Proposal, and to all the conditions
imposed herein, the undersigned agrees to furnish statewide securities
custody services in accordance with the attached signed proposal, or
mutually agreed upon in subsequent negotiations.
(Signature in Ink)
TELEPHONE NUMBER: ( )
Page 2 RFP#: SCSP-05-001
Office of the State Treasurer
Request for Proposal Statewide Securities Custody Services
SECTION I
INTRODUCTION
I-1 BACKGROUND
The State Treasurer is an officer established by the constitution of the State of Washington. The
State Treasurer and staff comprise the Office of State Treasurer, hereinafter OST or the
Treasurer's Office. In January 1999, the State Treasurer introduced legislation designed to enable
local governments and institutions of higher education to contract with a custodian for their
investments on terms and conditions the Treasurer's Office negotiated. The legislation, now
codified as RCW 43.08.280, was passed unanimously by both House and Senate, and was signed
into law by the Governor, with an effective date of September 1, 1999.
The intent of the legislation was to make third -party custody available to as many local entities as
possible on the best terms that could be negotiated on a statewide basis. The legislation is
designed to enable the State Treasurer to select a custodian and negotiate a model contract and
fees with the selected firm. The model contract and fee structure would then be available to any
local government or institution of higher education in the state for an agreed upon time period.
The local government or institution of higher education, hereinafter the local entity or
participating entity, may execute the model contract with the selected firm, once it had received
notification by the Treasurer's Office that agreement on a statewide model contract had been
reached with the firm. The local entity would therefore not have to conduct its own RFP.
However, the decision to sign the model contract would rest entirely with the local entity.
Nothing in the legislation prevents the local entity from arriving at its own contract with the same
or a different firm. If it chose to do that, normal procurement regulations applicable to the local
entity would apply, however.
Upon execution, the resulting contract would be solely between the local entity and the statewide
custodian. OST would not be a party to the contract. It would be the responsibility of the local
entity to understand the terms and conditions of the contract prior to executing it with the
statewide custodian and to ensure the terms and conditions were met by the statewide custodian
during the term of the agreement.
OST, with extensive involvement of local entities and utilizing the RFP process, conducted a
search culminating in the January 2000 selection of The Bank of New York (BONY) as the first
statewide provider of custody services. The appointment of BONY was effective from April 1,
2000 through March 31, 2004, with a possible 2 -year extension, which was implemented.
BONY's appointment as the statewide custody is effective through March 31, 2006. As of
September 10, 2005 there were 20 local entities utilizing the statewide custody program, with
portfolios having a combined market value of $1.026 billion.
I-2 PURPOSE/OBJECTIVES
The State Treasurer is seeking a qualified firm to provide custody services for safekeeping,
delivery, securities valuation, reporting and other specified services to local governments and
institutions of higher education in Washington State.
Page 3 RFP#: SCSP-05-001
Office of the State Treasurer
Request for Proposal Statewide Securities Custody Services
The State Treasurer intends to sign a Letter of Agreement with the successful financial institution,
establishing a model contract and fee schedule to be made available for use by local entities at
their discretion. The term of the Letter of Agreement will be four years, commencing on April 1,
2006. At the option of the State Treasurer, and upon mutual agreement, the term may be extended
for one, 2 -year period, or portion thereof.
It is understood that the administration of any contract established under the terms of the model
contract shall be the responsibility of the contracting local entity. Entities that choose the
statewide custodian as their custody services provider will enter into a contract with the statewide
custody provider. Individual contracts will be executed between the successful financial
institution and each participating entity. OST will not be a party to the contracts and will
not act as principal or arbitrator with respect to executed contracts, but will act to ensure
that all parties to executed contracts are treated in accordance with the terms of the Letter
of Agreement.
The statewide custody provider would be obligated to offer the model contract to participating
entities. However, individual contracts may vary somewhat from the model contract due to
services chosen and corresponding fees. Each entity choosing to utilize the statewide custody
provider would negotiate their own contract with the statewide custody provider, using the model
contract as a basis. The general terms and conditions found in the model contract will have been
approved by both the evaluation team and the statewide custody provider; however, all
participating entities will be expected to have the contract reviewed by their legal counsel. OST
has attempted to minimize the need to negotiate individual specifications by working with several
entities to arrive at acceptable language for the model contract.
As offerors review the services to be provided, it will be evident that the requirements of the local
entities differ in scope. Therefore, the objective is to structure a model contract that sets forth the
standard terms and conditions and a pricing matrix for custodial services.
This document should provide prospective respondents with the information necessary to assess
the ability of their organization to meet the needs of the participating entities in providing the
specified services, the procedures and criteria by which a financial institution will be selected, and
the proposed terms of the model contract (Appendix A).
I-3 RFP COORDINATOR
Upon release of this RFP, all responding financial institutions' communications must be directed
to the RFP Coordinator listed below. Disqualification from consideration for the statewide
custody search may result if contact is made with any evaluation team members regarding the
response or evaluation of this RFP. However, by going through the proper channel, (i.e.
contacting the RFP Coordinator) approval to communicate with an evaluation team member may
be granted.
RFP Coordinator:
Douglas D. Extine
Office of the State Treasurer
Legislative Building, 416 14th Avenue SW, Room 230
P.O. Box 40200
Page 4 RFP#: SCSP-05-001
Office of the State Treasurer
Request for Proposal Statewide Securities Custody Services
Olympia, WA 98504-0200
Phone: (360) 902-9012
Facsimile: (360) 902-9044
E -Mail: doug@tre.wa.gov
I-4 RFP SCHEDULE
Event
• Release RFP
• RFP Responses Due
• Conduct Site Visits
• Winning Instution Notified
• Letter of Agreement Signed
• Agreement Period Commences
I-5 RFP MODIFICATION
Date
November 17, 2005
December 14, 2005
January 16-20, 2006
January 30, 2006
January 30, 2006
April 1, 2006
The Treasurer's Office reserves the right to change the RFP Schedule or issue addenda to the RFP
at any time. The Treasurer's Office also reserves the right to cancel or reissue the RFP in whole
or in part, and for any reason, at the sole discretion of the Treasurer's Office, at any time prior to
the execution of the agreement.
If it is necessary to revise any part of this RFP prior to the due date for submission of the
proposals, amendments and clarifications will be presented on the OST web -site at
http://www.tre.wa.gov in the "What's New" section, under the title, "Statewide Custody Provider
RFP." It is the responsibility of each bidder to check the web -site for this information.
All responses to this RFP shall be based on the material contained in this RFP, and any
amendments which may be made to the RFP.
I-6 APPARENT SUCCESSFUL FINANCIAL INSTITUTION
An evaluation team will select the apparent successful financial institution who most closely
meets the requirements on the basis of the evaluation points included in Section V-4 of this RFP.
When the winning financial institution is selected, a model contract will be negotiated and a Letter
of Agreement signed. The letter would commit the firm to execute an attached model contract for
custody services at the fees specified, for the time period agreed upon. On its part, OST would
designate the firm as the statewide custodian for the period of time agreed upon.
The model contract would incorporate all the requirements, terms, and conditions of this RFP and
the apparent successful financial institution's proposal as negotiated. If the Treasurer's Office
fails to negotiate a model contract with the apparent successful financial institution, OST reserves
the right to negotiate a model contract with the next most qualified financial institution. The
award of a Letter of Agreement pursuant to this RFP is expressly conditional upon the
development of a model contract document deemed acceptable by OST.
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I-7 PERIOD OF PERFORMANCE
The term of the Letter of Agreement will cover a four-year period, commencing on April 1, 2006
through March 31, 2010. At the option of the Treasurer's Office, and upon mutual agreement,
this agreement may be extended for one, 2 -year period, or a portion thereof. The total Letter of
Agreement period, with extensions, shall not exceed six (6) years.
I-8 RENEGOTIATION OF FEES
OST is seeking an agreement that would remain open for four years with the possibility of a single
2 -year extension. The fee schedule would apply for the initial two-year period, with annual
adjustments after the first two years to any or all items no greater than the national Consumer
Price Index (CPI) as published by DRI/McGraw Hill for the preceding calendar year. The
limitation would continue if the term of the Letter of Agreement is extended.
I-9 FINAL SELECTION
The Treasurer's Office reserves the right, at its sole discretion, to reject any or all proposals for
any reason prior to the execution of a Letter of Agreement with no penalty to the State.
The issuance of this RFP does not compel OST to sign a Letter of Agreement, nor does it compel
entities to participate or purchase services. The final selection, if any, will be the proposal that, in
the opinion of the Treasurer's Office, best meets the requirements set forth in this RFP and is in
the best interest of the local governments and institutions of higher education in Washington
State.
I-10 SINGLE RESPONSE
A single response to this RFP may be deemed a failure of competition and, at the sole option of
the Treasurer's Office, the RFP may be canceled. Likewise, receipt of only one response may
allow the state to claim it as a valid sole source acquisition of services.
I-11 ERRORS IN RESPONSE
The Treasurer's Office will not be liable for any errors in proposals from financial institutions.
Financial institutions will not be allowed to alter proposal documents after the deadline for
submission of the proposals. The Treasurer's Office reserves the right to waive minor
irregularities in the responses.
The Treasurer's Office reserves the right to make corrections or amendments to the response due
to errors identified by the State or the financial institution. This type of amendment will only be
allowed for such errors as typing, transposition, omission, or any other obvious clerical error.
Any changes will be date and time stamped and attached to the response. All changes must be
coordinated in writing with, authorized by, and made by the RFP Coordinator. Financial
institutions are liable for all errors or omissions contained in their responses.
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SECTION II
STATEMENT OF WORK
II -1 SCOPE
The selected financial institution will negotiate a model contract, including a fee schedule, with
the State Treasurer, and sign a Letter of Agreement with OST to offer this contract to local
governments and institutions of higher education in Washington State. The financial institution
will be designated as the statewide custodian, as authorized in RCW 43.08.280, to provide the
following:
Domestic Custody and Record Keeping
The custodian will provide custody services for investment securities of participating entities.
Cash Management
The custodian will provide a daily sweep of net cash flows, by account, into a qualified
investment vehicle, at the option of the participating entity and as directed by the model
contract.
I1-2 SERVICES TO BE PROVIDED
The local entities that have indicated they would be likely users of the statewide custody contract
include a wide range of portfolio sizes and frequency of trades. All current participating local
entities require basic custody services, with no added bells and whistles.
The preferred method of communicating with the custody provider for relaying trade information
or receiving reports will vary. On-line access through a dial-up system, a fax, over the Internet,
telephone, and hard copy are all possible methods for communication and should be available
during times appropriate for Washington State entities. For phone communication, a toll free
number to the daily account administrator must be available for participating entities.
The custodian will make available for selection, at the option of a participating entity, the
following:
A. Accounting and Auditing
1. Trade date or settlement date accounting for all securities;
2. Payable date posting for bond interest and principal, interest on collateralized
mortgage obligations, mortgage-backed securities, and mortgage pass-through
certificates;
3. Accounting on a fiscal year basis of either July 1 to June 30, January 1 to December
31, or September 1 to August 31;
4. A pricing system which ensures the accuracy of the prices received. Most of the
participating entities will require month-end pricing of their portfolios. However,
some entities may require more frequent pricing, i.e., daily pricing of repo collateral;
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5. Notification of bond calls and other non-scheduled redemptions and corporate
actions must be made within one business day of the custodian receiving
notification.
B. Trade Settlement and Custody
1. On-line security clearing at the DTC, Federal Reserve and other security clearing
operations;
2. The ability to settle and safekeep physically held securities;
3. Actual settlement on all trades, income payments and maturities;
4. Settlement on a delivery versus payment basis. Free delivery settlement must receive
prior approval by participating entities within established policies and procedures;
and,
5. Procedures must allow for timely client notification, tracking, and resolution of failed
trades.
C. Cash Management
1. Provide a daily sweep of net cash flows, by account, into a qualified investment
vehicle, at the option of the participating entity. Generally, local entities will
maintain a zero end of day balance in their account(s). However, there will be
occasions where a positive balance does exist, i.e., in the case of a purchase fail or
unanticipated income payments. In those cases, either the cash will be wired to the
local entity or invested as authorized by state statutes, at the option of the local
entity. Interest-bearing demand deposit accounts are an option if the custody
provider is also a qualified public depositary in Washington State. Otherwise,
discrete investments, segregated by client, must be purchased. Money market
funds or other similar types of vehicles are not eligible investments. The
publication "Eligible Investments for Public Funds" is available on the OST web-
site at: http:// http://www.tre.wa.gov/Invest/invest.htm; and,
2. Provide daily cash flow projections and other standard cash management reports.
D. Technology/Systems
The systems configurations and capabilities of potential participants in the statewide
contract vary greatly. As a result, these requirements are broadly stated. The apparent
successful financial institution should be able to:
1. Provide various options for communicating trades to the bank for settlement, i.e.,
faxing, via the internet, or a dial-up system;
2. Provide on-line or other electronic access to portfolio data. Complete histories of
investment activity for current holdings should be maintained indefinitely. In
addition, ad hoc query and reporting functions should be available;
3. Provide on-line or other electronic access to reports;
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4. Make documents transmitted via electronic communication available as attachments
on e-mails (for those participating entities with internet e-mail capability, but no
Web access);
5. Provide adequate protection against unauthorized access to participant's records;
6. Safeguard records against potential loss or destruction by fire, theft, vandalism,
storm, earthquake, or any other hazard, by retaining backup data and systems in a
secure location;
7. Re-create records and resume operations in the event of a disaster or other event
which results in records being destroyed and/or interrupts normal operation of the
offeror's systems -- and guarantee such resumption of service -- within twenty-four
hours;
8. While not a requirement, it is a desirable option to have a PC-based system or
workstation system that can access the offeror's management information and
accounting systems; and,
9. Retain computer records of all audited investment transactions and month end
positions on magnetic media for six years.
E. Reporting Requirements
1. Provide daily, monthly, and yearly accounting reports electronically and in hard
copy;
2. Provide an accurate report of all holdings, yearly transactions, and other pertinent
investment data;
F. Transition
The scope of services and minimum requirements set forth in this RFP define the
conditions, provisions, qualifying factors, and prerequisites that are necessary to compete
successfully in this process. Some of the local entities that expressed interest in
participating in the contract do not currently utilize a third -party custodian, but instead
safekeep the securities at the dealer(s) where they purchased the securities. Other
interested local entities currently utilize a third -party custodian, with either an open
agreement or a specific contract end -date. Still other local entities either did not respond
to the survey or were not interested at this time. It is reasonable to assume that more
local entities will be interested in participating in the contract as they are made aware of
the success and the terms of the statewide custody contract. In other words, the transition
for this contract will be unusual in that it will involve a number of different local entities,
a number of different custody or safekeeping providers, and differing conversion dates.
The firm selected to provide the statewide custody services must be prepared to do the
following:
1. If applicable, perforin all procedures necessary to convert from the current
custodian's system to the new system of record; and,
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2. Upon termination of any contract with a local entity under this agreement, the
custodian shall cooperate fully with the successor custodian to facilitate the
transition from the custodian's system to the successor's system.
G. Personnel
Personnel must be available for conducting site visits, if deemed necessary by
participating entities, for attendance at local conferences, and to meet with the Local
Government Investment Pool Advisory Committee to discuss services related to
particular needs of the participating entities and the overall administration of custody
services. Additionally, the firm selected must agree to make appropriate personnel
available for addressing questions regarding trade settlement, accounting issues, and
systems development during Washington State business hours.
SECTION III
SELECTION PROCESS
III -1 SELECTION SCHEDULE
A.
B.
C.
D.
E.
F.
G.
EVENT
RFP Released
Proposal Development
RFP Responses Due
Evaluate Responses
Site Visits
Winning Institution Notified
Letter of Agreement Signed
DATE
November 17, 2005
November 17 — December 14, 2005
December 14, 2005
December 14, 2005 — January 6, 2006
January 16-20, 2006
January 30, 2006
January 30, 2006
III -2 SELECTION STEPS (outlined in Section III -1, "Selection Schedule" above)
A. RFP Release
OST will release the RFP document.
B. Proposal Development
Financial institutions will use this time to develop their responses to the formal RFP, in
accordance with the instructions included therein.
C. Proposal Due
Responses to the RFP must be received by the RFP Coordinator by 2:00 PM (PST),
Wednesday, December 14, 2005. Financial institutions will be disqualified from review if
this deadline is not met.
D. Evaluate Responses
Financial institutions will submit their proposals, including proposed fees, and comments
regarding the terms of the draft model contract. The evaluation team will evaluate the
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responses and select which financial institutions will receive site visits, if site visits are
deemed necessary.
E. Conduct Site Visits
The evaluation team may select up to three institutions for site visits. The site visits are
tentatively scheduled to take place in mid-January.
F. Announce Apparent Successful Financial institution
Based upon the evaluation of the formal response to the RFP, reference checks, and
information gathered during the site visits, the apparent successful financial institution will be
selected and announced.
G. Model Contract Negotiated and Letter of Agreement Signed
When the winning financial institution is selected, OST will negotiate a model contract with
the apparent successful financial institution which will be executed between the statewide
custodian and a participating entity. Because responding to contractual requirements for the
model contract is an integral part of the formal RFP response, contract negotiation should be
brief in duration. However, if no agreement can be reached during contract negotiation, the
evaluation team will notify the second choice for the statewide custodian and begin the
negotiation process again.
Once a model contract has been negotiated, a Letter of Agreement will be signed, and OST
will designate the firm as the statewide custodian for the period of time agreed upon. The
Letter of Agreement will commit the firm to offer the model contract to local entities for
custody services at the fees specified, for the time period agreed upon.
III -3 EVALUATION AND SELECTION PROCESS
A. Selection Method
The final selection will be based on known requirements and new information learned during
the selection process. The following guidelines will be used in conducting this selection:
1. Ensure that all financial institutions at any point in the selection process receive
comparable information and are evaluated with the same criteria.
2. Require best and final proposals from the financial institutions that describe in detail their
formal RFP response for providing the services requested.
Provided that the above guidelines for conducting this selection are followed, the Treasurer's
Office has the latitude to conduct this selection to obtain the best overall value for the State of
Washington. This includes the ability to negotiate final terms, including price.
The financial institution's participation in this selection constitutes agreement with the
selection method.
B. Evaluation
The evaluation process is documented in Section V — Evaluation of Responses, and includes
the evaluation criteria used, changes to criteria resulting from the process, key decisions made
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during the evaluation process and rationale for selecting the finalist financial institutions and
the apparent successful financial institution.
C. Financial institution Selection
The apparent successful financial institution will be the financial institution which, in the
judgment of OST, best satisfies the combination of evaluation criteria and provides the best
overall value to the state.
SECTION IV
PROPOSAL PREPARATION AND CONTENT REQUIREMENTS
IV -1 SUBMISSION OF PROPOSAL
• Financial institutions must submit nine (9) copies of the proposal. One (1) copy must
have original signatures and eight (8) copies may have photocopied signatures.
• The copy containing original signatures must be unbound and must be marked
"Master Copy." The original copy of the proposal must be accompanied by the
"Summary Information and Proposal Return Cover Page" (page 2 of this RFP) which
has been completed and signed by the financial institution's representative who is
authorized to bind the financial institution contractually.
• The eight copies of the proposal must each be bound and in a separate document.
Each bound document must include all supplemental material, excluding the
regulatory audit reports requested in the Statewide Securities Custody Questionnaire.
• Responses must be readable, and reasonable and manageable in size.
• Responses are to be prepared on standard 8 1/2 x 11 paper; however, 11 x 14 paper is
permissible for charts, spreadsheets, etc.
• The proposals must be received by the RFP Coordinator by 2:00 p.m., Pacific
Standard Time, Wednesday December 14, 2005. Faxed proposals are not acceptable.
• Terms and prices included in the response must be guaranteed for 120 days from the
date of receipt.
• Late proposals will not be accepted, nor will time extensions be granted. It is the sole
responsibility of the financial institution to ensure receipt of proposals by the RFP
Coordinator by the specified date and time and at the specified location.
• All proposals and accompanying documentation become the property of the
Treasurer's Office and will not be returned.
• Proposals that are substantially incomplete will be disqualified from further
consideration.
IV -2 RESTATEMENT OF RESPONSE QUESTIONS
• The financial institution is required to answer each question in Attachment A —
Statewide Securities Custody Questionnaire.
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• Responding financial institutions must provide answers to the questions by reiterating
the number and text of the question in sequence and providing answers immediately
following each question. To assist in the evaluation process, each answer should start
on the same page as the question. Furthermore, questions with multiple parts are
broken down with "a, b, c, etc." Answers to these questions must indicate where each
portion of the question is answered. For example, place an "(a)" next to the text
which pertains to portion (a) of the question, place a "(b)" next to the text which
pertains to portion (b) of the question, etc.
IV -3 SUPPLEMENTAL MATERIAL
The financial institution may submit materials such as brochures and articles that the
financial institution believes to be helpful. However, such materials will not qualify as
substitutes for direct answers to the response questions. As mentioned in IV -1,
Submission of Proposal, the eight copies of the proposal must each be bound and in one
document. This bound document must include all supplemental material, excluding the
regulatory audit reports requested in the Statewide Securities Custody Questionnaire.
IV -4 PROPRIETARY RESPONSE MATERIAL
Materials submitted in response to this competitive procurement will become the property
of OST. Only information exchanged that identifies a new requirement will be shared
among all responding financial institutions. All responses received shall remain
confidential until the apparent successful financial institution, if any, is announced by the
Treasurer's Office. Thereafter, responses shall be deemed to be disclosable pursuant to
Chapter 42.17 RCW (the Washington State statute pertaining to accessibility to public
records) except as exempted in that chapter. Financial institutions are advised that the
permissible exemptions from public disclosure pursuant to RCW 42.17 are very narrow in
scope and strictly construed. Financial institutions should identify any materials which
they believe constitute "valuable formulae, designs, drawings, and research data", or any
materials otherwise claimed to be exempt, along with a statement of the basis for such
claim of exemption in a Response transmittal letter. The transmittal letter must identify
the page and particular exemption(s) from disclosure upon which it is making its claim.
Further, each page claimed to be exempt must be clearly identified by the word
"CONFIDENTIAL" printed on the lower right-hand corner of the page. Designating the
entire response as confidential is not acceptable and will not be honored.
If an official request is made to view a financial institution's response, the State will
respond in accordance with RCW 42.17.250 et seq. If any of the specifically requested
information is marked as "confidential" in the response but in the opinion of the State does
not clearly fall within any one of the enumerated exemptions from disclosure, such
information will be made available five (5) business days after the affected financial
institution has been given telephonic notice that the information has been requested unless
the affected financial institution obtains, within that five day period, a court order
restraining the State from disclosing the "confidential" information requested.
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The RFP response of the successful financial institution will be attached to the resulting
model contract and incorporated therein by that attachment. Therefore, as part of a public
state agency model contract, the entirety of the financial institution's response will be
subject to public disclosure regardless of any claim of confidentiality or previously
applicable statutory exemption. Nevertheless, should the financial institution obtain a
court order from a Washington State court of competent jurisdiction prohibiting disclosure
of parts of its Response, the Treasurer's Office will comply with the court order. The
burden is upon the financial institution to evaluate and anticipate its need to maintain
confidentiality and to proceed accordingly.
The sole responsibility of the Treasurer's Office shall be limited to maintaining the above
data in a secure area and to notify financial institution of any request(s) for disclosure
within a period of six (6) years from date of award. Failure to label materials
"confidential" as required above, or failure to timely respond after notice of request for
public disclosure has been given, shall be deemed a waiver by the financial institution of
any claim that such materials are exempt from disclosure.
IV -5 CONTRACTUAL REQUIREMENTS
Before a financial institution will be designated as the statewide custody provider, a
contract will be negotiated by the Treasurer and the apparent successful financial
institution. The final contract should contain substantially the same general terms and
conditions as the model contract found in Appendix A. To be responsive to this RFP
financial institutions must indicate, in writing, their acceptance of all provisions of the
model contract, or indicate those provisions they do not accept and include the substitute
language they are proposing. Unless a financial institution has indicated in its response to
the RFP that they do not accept a provision or provisions in the model contract, they may
propose revisions to the model contract for clarification or of a technical nature only
during the contract negotiation phase.
IV -6 CLARITY OF PROPOSAL
Proposals should be prepared simply and economically, providing straightforward, concise
descriptions of capabilities to satisfy the requirements of the RFP. Emphasis should be
placed on completeness and clarity of content.
IV -7 ORGANIZATION OF PROPOSAL
Proposals should be organized in the order in which the requirements are presented in
Section IV -9, "Proposal Contents" of this RFP. All pages of the proposal should be
numbered, and each paragraph in the proposal should reference the paragraph number of
the corresponding section of the RFP. The proposal should contain a table of contents,
which cross-references the RFP requirements. Additional information which the financial
institution wishes to present that does not fall within any of the requirements of the RFP
should be inserted at an appropriate place or be attached at the end of the proposal and
designated as additional material.
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IV -8 SINGLE VOLUME
Each copy of the proposal shall be contained in a single volume. All documentation
submitted with the proposal should be contained in that single volume.
IV -9 PROPOSAL CONTENTS
Financial institution's proposal must address each of the requirements noted below in the
same order as listed to be considered responsive. The proposal should be as thorough and
detailed as possible so that the evaluation team can properly evaluate your organization's
capability to provide the required services and the proposed pricing structure. Proposals
that merely state that the firm will conduct the services in accordance with the respective
sections shall be considered non-responsive to this request.
Responses must include the "Summary Information and Proposal Return Cover Page" and
must address each question in the "Statewide Securities Custody Questionnaire —
Attachment A". Each question must be addressed in the order in which they are asked and
any supplemental infoimation must be included in the section where it is requested.
The proposal shall include the following sections, separated by tabs:
TAB 1: Summary Information and Proposal Return Cover Page
TAB 2: Attachment A — Organizational Background
TAB 3: Attachment A —Services
TAB 4: Attachment A —Automation and Communication
TAB 5: Attachment A —Fee Schedule
TAB 6: Attachment B —Contract Provisions
SECTION V
EVALUATION OF RESPONSES
V-1 EVALUATION PROCEDURES
The financial institution must satisfy the requirements of this RFP to qualify for further
consideration. Staff from the Treasurer's Office and the evaluation team will perform a
technical and financial evaluation of each financial institution's response. The evaluation
process will determine the merits of the financial institutions' approach and relative
competitive position.
It is the intent of this section to indicate the basic methodology that will be used to
evaluate all proposals.
V-2 BASIS FOR EVALUATION
The Organizational Background, Services, Automation and Communication, Proposed
Model Contract Changes, and Fee Schedule will be evaluated on the basis of information
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provided in the proposal and any subsequent interviews, presentations, and clarification
response.
V-3 EVALUATION TEAM
All proposals will be reviewed by members of an evaluation team, which consists of
potential users of the statewide custody contract and OST staff. The evaluators will
consider how well the financial institution's response meets all requirements as described.
It is important that the responses be clear and complete so that the evaluators can
adequately understand all aspects of the proposal.
Disqualification from consideration for the statewide custody search could result if
improper contact is made with any evaluation team members regarding the response or
evaluation of this RFP. However, by going through the proper channel, (i.e. contacting the
RFP Coordinator) approval to communicate with an evaluation team member may be
granted. Furthermore, if a vendor contacts any evaluation team member without going
through the proper channels, the evaluation team member will contact the RFP
Coordinator immediately.
V-4 EVALUATION CRITERIA
The following criteria and relative values will be used by the evaluation committee to
evaluate each written proposal:
Organizational Background 15 %
Services 30 %
Automation and Communication 15 %
Fee Schedule 40 %
Proposed Model Contract Changes (?) % -- May have negative impact
SECTION VI
MODEL CONTRACT AND LETTER OF AGREEMENT SPECIFICATIONS
VI -1 MODEL CONTRACT NEGOTIATION
The Treasurer's Office shall conduct contract negotiations with the financial institution
that has most closely met the requirements on the basis of the Evaluation Criteria points.
If the Treasurer's Office and the apparent successful financial institution fail to negotiate
an agreement deemed acceptable by the Treasurer's Office, the Treasurer's Office reserves
the right to negotiate a model contract with the next most qualified financial institution.
As indicated in Section IV -5, contract negotiation will be limited to those provisions the
apparent successful financial institution did not accept in the RFP phase and so indicated
at that time, and to technical or clarifying changes, as opposed to substantive issues. The
general terms and conditions of the proposed model contract, located in Appendix A, will
be available on the OST web -site.
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VI -2 LETTER OF AGREEMENT NEGOTIATION
After successful model contract negotiations have been completed, a Letter of Agreement
will be negotiated and signed. This letter will include all requirements, terms and
conditions of this solicitation and the financial institution's response. The negotiation of
the Letter of Agreement should be brief in duration. However, if no agreement can be
reached during this negotiation, the Treasurer's Office reserves the right to negotiate a
model contract and Letter of Agreement with the next most qualified financial institution.
VI -3 DESIGNATION OF STATEWIDE CUSTODIAN
After successful Letter of Agreement negotiations have been completed, the apparent
successful financial institution will be awarded a Letter of Agreement for statewide
custody services for the State of Washington. The term of the Letter of Agreement will
cover a four-year period, commencing on April 1, 2006 through March 31, 2010. At the
option of the Treasurer's Office, and upon mutual agreement, this agreement may be
extended for one, 2 -year period, or a portion thereof. The total Letter of Agreement
period, with extensions, shall not exceed six (6) years.
V1-4 PROTEST PROCEDURES
In the event a respondent protests this RFP process or protests the selection of an
"Apparent Successful Financial Institution," the respondent must follow the procedures set
forth in the paragraphs below.
• Protests and appeals—Form and substance
All protests and appeals must be in writing and signed by the protester or appellant
or an authorized agent. Such writing must state all facts and arguments on which
the protester or appellant is relying as the basis for its action. Such protester or
appellant shall also attach, or supply on demand by the RFP Coordinator, any
relevant exhibits referred to in the writing. Copies of all protests, appeals, and
exhibits shall be mailed or delivered by the protester or appellant to the
respondent(s) against whom the protest is made at the same time such protest,
appeal, and exhibits are submitted to the Treasurer's Office.
• Protest procedure prior to award
Prior to award, a respondent desiring to protest the proposal of another respondent
must send or deliver its protest to the RFP Coordinator in charge of the RFP
process as soon as possible after it becomes aware of the reason(s) for the protest.
If the protest is mailed, the protester shall immediately notify the RFP Coordinator
in charge of the proposal by telephone, or some other means of instant
communication, that a protest is being made.
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The RFP Coordinator shall consider all of the facts available and issue a decision
in writing within ten business days after receipt of the protest, unless more time is
needed. The protester and the respondent(s) against whom the protest is made will
be notified if longer time is necessary. If the protesting respondent or the
respondent against whom the protest is made is not satisfied with the decision of
the RFP Coordinator, he/she shall have the right to appeal to the agency designated
review officer, hereinafter Review Officer or Designee. Such appeal must be
received by the Review Officer or Designee within five business days after
notification of the RFP Coordinator's decision. The Review Officer or Designee
shall consider all of the facts available and issue a decision in writing within ten
business days after receipt of the appeal, unless more time is needed. The
appealing respondent will be notified if longer time is necessary.
Unless the Treasurer's Office deems an emergency to exist, award of the model
contract, if one is to be made, will be postponed until after the Review Officer or
Designee has issued a decision.
• Protest procedure after award
Protests after award will not be considered unless the protest concerns a matter
which arises after the award or could not reasonably have been known or
discovered prior to award. Such protests shall be received by the Review Officer
or Designee not later than five business days after announcement of the award. If
the protest is mailed, the protester shall immediately notify by telephone, or some
other means of instant communication, the RFP Coordinator and the respondent
that has received the award that a protest is being made. The Review Officer or
Designee shall consider all of the facts available and issue a decision on the protest
within ten business days after receipt thereof, unless more time is needed. In such
event, the protester and the respondent that has received the award shall be notified
of any delay.
If the Review Officer or Designee finds that the award should not have been made,
he/she shall notify the respondent which received the award of his/her intent to
cancel the award and the reasons therefor. Such respondent shall then have five
business days in which to appeal the decision to the Review Officer or Designee.
The Review Officer or Designee shall consider all of the facts available and issue a
decision within ten business days after receipt of the appeal, unless more time is
needed. If more time is needed, the respondent shall be so notified.
If the Review Officer or Designee agrees that the award should be canceled he/she shall
cancel the award within ten business days after the decision is delivered to the respondent to
whom the model contract had been awarded. All bids shall then be rejected and new bids
solicited.
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Statewide Securities Custody Questionnaire Attachment A
STATE OF WASHINGTON
OFFICE OF STATE TREASURER
STATEWIDE SECURITIES CUSTODY
QUESTIONNAIRE
EXHIBIT B
The following questionnaire must be completed and included with your response to the RFP.
This questionnaire has been prepared to obtain responses to questions concerning your firm's
capability to provide the services identified in Section II of the offering document.
Limit your response for each question to one or two pages. Some questions can be answered with
a brief response. Type your responses in the same order as the questionnaire, listing the question
first followed by your answer.
FIRM NAME: Union Bank of California, N.A.
ADDRESS: 350 California Street
11th Floor
San Francisco, CA 94104
TELEPHONE NUMBER: (415) 705-5043
FACSIMILE NUMBER: (415) 705-5052
CLIENT CONTACT: Andy Jeremi
SIGNED:
Name (print):
Title:
Date:
Andy Jeremi
Vice President
December 13, 2005
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Statewide Securities Custody Questionnaire Attachment A
SECTION I - ORGANIZATIONAL BACKGROUND
A. Organization
1. What is your firm's fiduciary classification? (check all that apply)
X Bank - National
Bank - State
Trust Company - National
Trust Company - State
Limited Purpose Trust Company
Affiliate of Investment Bank
Affiliate of Foreign Bank
Other:
2. Provide a brief history of the firm that includes the following:
• Year of organization
• Year of initiation of custody business
• Development of major business lines
• Nature of firm's ownership
• Nature of relationships with affiliated companies or joint ventures
Union Bank of California, N.A. was founded in San Francisco, California in 1864 and
operates under a federal charter. Union Bank is a full-service commercial bank
providing a broad mix of financial services: consumer and small business banking,
middle market banking; real estate finance, corporate banking, correspondent banking,
trade finance; personal and business trust services; domestic and global custody; and
securities lending. The Institutional Services & Asset Management Division has over
$210 billion in assets Below is a history of our Custody Services:
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Master Trust/Custody Product Development
1915
•
Began trust/custody servicing to institutional clients
1957
•
First Taft -Hartley client relationship established with customized lock -box
services Developed for Southern California Pipe Trades, still a Union
Bank relationship
1972
•
Automated accounting solutions introduced
1987
•
SunGard introduced — in-house global custody
1980
•
Simulated Environments Inc. (SEI) introduced — domestic custody
1990
•
PBS online system client access
1992
•
Securities Lending introduced
1994
•
DataStation introduced, PC based system and account access for clients
and investment managers, customized report writing tool
1999
•
Successful Y2k readiness planning, testing system implementation
2000
•
Inbound messaging developed utilizing SWIFT for global custody clients
•
DirectData®Web, online, web based trust account access introduced
•
DirectData Global Web introduced, on-line, web based account access for
global custody clients
2001
•
Customized reporting and statements module implemented to enhance
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Statewide Securities Custody Questionnaire Attachment A
3. Provide details of the financial condition of your organization including the firm's
short and long-term credit ratings over the past five years. Including copies of the
five most recently audited annual reports will fulfill most of this requirement.
Describe any material changes to your organization in the last five years, including
acquisitions and mergers.
Please refer to the 1 r%rar.
section of this proposal.
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client reporting capabilities for trust/custody clients
•
Developed more automated client solutions, including an automated
reconciliation, providing complete transactional position data.
2002
•
•
Established direct, customized links to firms like Advent, Centerpiece,
Security APL, Pension Fund Evaluators and Electra.
Interfaces developed for client and consultant proprietary systems
including Wilshire & Associates, ISF, Vestek, and Marco Consulting
2003
•
•
Enhanced online reporting and reconciliation initiatives
Developed process for creating customized reports for clients, available
for retrieval on the web through DirectDataWeb We currently generate
daily reports for one client's Board of Trustees to utilize as needed
■
SWIFT outbound messaging implementation -domestic and global
custody
•
Enhanced, modular trust/custody statement redesign, new client
statements introduced, significantly reduced time required to produce
statements, now 3 after month end Enhanced quality and detail of
information available Modular structure allows for more customized
reporting options
•
Implemented OMGEO straight -through -processing solution for already
executed trades
•
In bound messaging utilizing SWIFT developed for domestic custody
•
Performance measurement services added, proprietary relationship
established with Russell Mellon
•
Online Business Banking Web initiative, single client login process for
institutional /commercial client relationships
•
4-4-5 Interval accounting module launched, normalizes reporting for
entities not using a traditional quarterly cycle for reporting purposes
•
Launch expected of automated incoming ACH deposits into trust
accounting system, Q4
2004
•
•
•
•
•
Launch of web enhancements Including, but not limited to single site for
domestic & global custody, trade order entry for domestic accounts, global
trade order entry available in phase 2, later in 2004, electronic delivery of
statements, secured messaging
Online securities lending information including interfaces between global
and domestic
Corporate actions
Performance measurement online reporting, compliance monitoring
Straight- through -processing solutions.
3. Provide details of the financial condition of your organization including the firm's
short and long-term credit ratings over the past five years. Including copies of the
five most recently audited annual reports will fulfill most of this requirement.
Describe any material changes to your organization in the last five years, including
acquisitions and mergers.
Please refer to the 1 r%rar.
section of this proposal.
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Service:
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
4. (A) Describe your organization's historical and current commitment to the custody
business.
The Institutional Services & Asset Management ("IS&AM") Division has been identified
as a growth area by senior management and as such, receives considerable visibility
and commitment of resources. Our objective for providing custody services is to
continue to grow our business while providing superior service to maintain our existing
client base. Our commitment to trust and custody services has been demonstrated by
senior management's ongoing investments in the continued growth of this business line,
as described in the response to the previous question. Over the next several years, we
intend to retain and develop our existing business by continuing to offer superior client
services and by developing our technology to enhance deliverables. We also will
continue to expand and develop our business through strategic acquisitions and new
clients.
(B) What distinguishes your firm from your competitors?
Union Bank is a full-service master custodian and is qualified to meet the client's
custodial, cash management and accounting needs, as well as to provide administration
and management assistance Our professionals are specialists in the custody and
securities industry, and are supported by our technical staff and our comprehensive
custody accounting systems.
All accounts are assigned to a Client Services Team, which is directed by a Senior
Relationship Manager who oversees all aspects of our custodial services, which include
the following:
• Full trade settlement capabilities
• Direct depository and physical safekeeping
• Straight -through processing capabilities
• Principal and income collection
• Capital change and corporate action notification
• Proxy voting
• Complete portfolio valuation and reporting
• Investment management fee collection
• Ad-hoc reports upon request
• Monthly statements
• On-line account access through the Internet
We believe the following distinguishes Union Bank of California from our competitors:
Union Bank has built its reputation on delivering the highest level of service in the
market, supported by 700 Institutional Services & Asset Management Division ("IS&AM")
professionals. Our commitment to the highest quality of service is demonstrated by our:
• Successful track record working with large, sophisticated clients with unique service
requirements & challenges
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• Capacity & technology to manage larger clients with a high level of customer service
• Commitment to future growth & investment to service our clients regardless of
economic conditions
• Knowledgeable professionals working in a "client -first" corporate culture
• Senior IS&AM staff members average 15 years of industry experience
We provide reliable support and access to knowledgeable people who give our clients
fast, effective solutions to their service requirements Our Trust and Custody Units
provide clients with a team of front-line professionals to manage each component of our
full-service program, including: Senior Relationship Managers, Administrators, and
Operations, Systems, and Investment specialists
Union Bank has provided trust and custody services for nearly a century We administer
$209.8 billion in assets in the Institutional Services & Asset Management (IS&AM)
Division IS&AM provides a full range of integrated services to our clients, including
asset management, trust, global and domestic custody, and securities lending for both
institutional and personal investors, as well as a full-service daily valuation program for
defined contribution plans.
Commitment:
Union Bank's commitment to trust and custody services is demonstrated by senior
management's ongoing investments in the continued growth of this business line
Management has demonstrated its commitment to the business by making the following
acquisitions.
1998 Acquired the retirement plan recordkeeping business of Louis Kravitz &
Associates, adding $800 million in assets
1999 Acquired the entire business of Imperial Trust Company, including $9.5 billion in
assets
2001 Acquired Copper Mountain Trust Company, adding $6 billion in assets
2002 Acquired the trust business of San Diego First National Bank, including $800
million in assets
2002 Acquired Bank of Tokyo Mitsubishi Trust Retirement Services, including $960
million in assets
2004 Acquired CNA Trust Company, (now known as TruSource, a Division of Union
Bank of California), including $3.9 billion in assets.
2004 Acquired Bank of Tokyo -Mitsubishi Trust Company Corporate Trust business,
including $26 billion in assets
5. In the event of a merger or acquisition, describe your plans as they relate to your
custody customers. Summarize the business plan for the next five years.
Our business plan for custody services include the following initiatives.
• Utilize web technology to enhance delivery of client communication
• Continue targeted acquisitions of selected opportunities
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• Continually enhance our service models to reflect our goal of being the premier
provider nationally of trust and investment management services
• Fully utilize SWIFT and other electronic processing capabilities to enhance
straight through processing for UBOC and our clients
Union Bank of California's trust business lines allocate over $5 million annually for the
enhancement of systems and client service capabilities In addition, our trust accounting
vendor, SEI, budgets over $66 million annually for Research and Development.
6. Provide a brief explanation and indicate the current status of any litigation,
investigation by a regulatory authority, contingent liabilities, or other legal
proceedings involving your company or any officer or principal over the past five
years. Please include a description of all pending legal and regulatory activity.
Our custody services group is not involved and has not been involved in any litigation.
Regulatory Matters
Union Bank of California International has entered into a written agreement with the
Federal Reserve Bank of New York relating to Union Bank of California International's
Bank Secrecy Act controls and processes Union Bank of California International is
wholly owned by Union Bank of California, N.A., which is wholly owned by UnionBanCal
Corporation Union Bank of California International is headquartered in New York City
and, as an Edge Act subsidiary, is limited to engaging in international banking activities.
Union Bank of California International is implementing a plan to strengthen its Bank
Secrecy Act controls and processes UnionBanCal Corporation filed a Form 8-K on
October 19, 2004 containing Union Bank of California International's agreement with the
Federal Reserve Bank of New York.
On February 28, 2005, Union Bank of California, N.A., a wholly-owned subsidiary of
UnionBanCal Corporation, was advised by the Office of the Comptroller of the Currency,
its principal regulator, that it expects to provide Union Bank of California, N.A. with a
memorandum of understanding which will require Union Bank of California, N.A. to
strengthen its Bank Secrecy Act and anti -money laundering controls and processes We
do not expect the memorandum of understanding to be accompanied by any fines or
penalties.
Management is committed to resolving the issues raised by the regulators and already
has begun to take action.
These regulatory matters may adversely affect UnionBanCal Corporation's and Union
Bank of California, N.A.'s ability to obtain regulatory approvals for future initiatives
requiring regulatory approval, including acquisitions. However, neither this effect, Union
Bank of California, N.A.'s expected memorandum of understanding with the Office of the
Comptroller of the Currency, Union Bank of California International's agreement with the
Federal Reserve Bank of New York, nor the financial impact of enhanced Bank Secrecy
Act and anti -money laundering controls and processes, are expected to have a material
adverse impact on the financial condition or results of operations of Union Bank of
California, N.A. or UnionBanCal Corporation
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7. (A) How many domestic, fixed income clients do you currently have and what is the
average and median size of those clients?
(B) How many domestic, municipal, fixed income clients do you have and what is the
average and median size of those clients?
(C) Provide a list of references of your domestic fixed income clients including:
• Two of your clients with portfolio sizes of $ < 50 million
• Two of your clients with portfolio sizes of $ 50-100 million
• Two of your clients with portfolio sizes of $ 100-250 million
• Two of your clients with portfolio sizes > $250 million
NOTE: Please include at lease one public fund client in each category.
We value our clients and appreciate their time when they serve as a reference. We
have regularly been asked by clients to not disclose their names until we have been
named as a finalist in the provider search At this point, we can provide you with a list of
representative clients:
Representative clients include the following:
(D) If you have clients with an arrangement similar to the statewide securities
custody program, include the entity in charge of the program as a reference.
Please refer to the above question
8. (A) Describe your commitment to providing custody services to public fund clients
in Washington State.
Our goal is to be the premier provide of Trust and Investment Management Services in
the West. We are committed to the public sector .
(B) Provide a list, including contact names and phone numbers, of your current
public fund clients in Washington State.
Kings County
Snohomish County Arif Kanji 425-388-3630
Thurston County Robin Williams 360-786-5545
Whatcom County
City of Bellevue
City of Redmond Kelley Wood 425-556-2161
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9. Provide information (e.g. name of client, portfolio size, reason for termination)
regarding terminated tax-exempt institutional master trust / master custody client
relationships over the past three years.
B. Internal Controls and Risk Management
10. Have there been any negative audit findings, NASD or SEC involvement, or any
other sanctions against your firm in the last five years?
Yes X No
If you answered yes to the above question, what was the resolution?
11. Do you have procedures for notifying your clients of any sanctions, findings, or
changes in credit rating?
Yes No
If you answered yes to the above question, please outline those procedures.
12. Do you provide assurances through a third party letter that internal control reviews
are being conducted in compliance with the Statements on Auditing Standards?
X Yes No
If you answered yes to the above question, please provide a copy of the most recent
report.
Andy/Moon, is this covered in our SAS70 audit report? YES SAS70
13. Do you have an internal audit staff that consistently evaluates all controls, systems,
and risks associated with master trust / master custody services?
X Yes No
If you answered yes to the above question, please describe the frequency and scope
of these audits as they relate to master trust / master custody services.
Internal Audit has dedicated trust auditors completing "continuous audits" and issuing
reports throughout the year on various departments/ activities Based on the risk profile
of the areas, audits follow cycles ranging from 12 to 36 months . In general, operational
areas are rated high risk (inherent risk). Audit findings are reported in audit reports, and
are tracked by Internal Audit and Trust Compliance until resolved. In all instances, trust
management clears the findings or proposes a course of action to remedy the finding
Significant open audit finding/issues and their status are also reported to the Audit
Committee of the Board of Directors.
Audit Cycles
18 months Safekeeping/operations (trade processing)
18 months Income collection
18 months Vault (physical assets)
18 months Asset reconciliation
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18 months
18 months
Security operations
Systems data processing controls (e g , systems
access, program change controls)
Internal audit test system Access and relies on the SAS70 report for program change
controls
14. Would you afford statewide custody clients or their auditors access to the working
papers and reports of the external reviews/audits?
Yes No
If you answered no to the above question, please describe what you would provide.
15. Describe the various types of insurance coverage and indemnification provided to
protect clients of service(s) proposed, including risk coverage, carriers, insurance
levels, limitations, and deductibles.
We carry the following insurance:
Carrier. American International Group
Term: June 30, 2005 through June 30, 2006
Coverage: Errors & Omissions Insurance
Limit. $100 million
Deductible: $15 million
Carrier. National Union Fire Insurance Company
Term: June 30, 2005 through June 30, 2006
Coverage: Financial Institution Bond (including computer crime)
Limit: $100 million
Deductible: $2 5 million
16. Are investment securities held by your organization so they are not subject to the
claims of creditors against your organization?
X Yes No
17. Briefly describe your practice of reviewing and updating documented policies and
procedures for custody services.
Union Bank of California, N.A. operates under a federal charter that was issued in 1864.
As a National Banking Association, our operating policies and procedures are subject to
oversight by the OCC (Office of the Comptroller of the Currency), a division of the U.S
Treasury Department. In addition, we maintain our own rigorous quality control and
internal audit revue Finally, our operating units are subject to „revue by the bank's
outside audit firm, Deloitte and Touche, LLC Please see the sc#jai of this
proposal for a copy of the most recent SAS 70 Report.
SECTION II — SERVICES
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A. Administration and Client Relations
18. What is your organization's philosophy on customer service, particularly as it
applies to servicing your mid -market client base? How is the philosophy
communicated to employees and how is it monitored for customer satisfaction?
What forums do you use for client evaluations and how are comments provided by
clients acted upon by senior management?
We monitor client satisfaction in a number of ways. First, the Relationship Manager is
responsible for overall service and client satisfaction He or she monitors our
performance and client satisfaction on an ongoing basis. Second, we schedule regular
meetings with our clients and review our performance with them After each meeting,
the Relationship Manager completes a Call Report, which includes a section detailing
the client's evaluation of our performance. Call Reports are reviewed by management.
Finally, we solicit ongoing input regarding our performance from our client. Our clients
are important to us and we recognize that our performance is critical to maintaining our
clients' business Client feedback is discussed with all team members, including senior
management as needed, and acted upon as required.
19. THIS QUESTION IS VERY IMPORTANT! PLEASE GIVE A COMPLETE,
DETAILED RESPONSE!
(A) Describe your proposed approach to servicing individual participating
entities in the statewide securities custody program.
(B) How do you propose to encourage local entities to execute the model contract
with you if you become the statewide custody provider? Who would do that
work? Please include their resume(s).
(C) List the proposed team that would be responsible for the custody
relationships, including the Relationship Manager and the Daily Account
Administrator(s). The Daily Account Administrator(s) is the person(s) that
clients would deal with on a daily basis for trade processing and settlement and
cash confirmation purposes. If different Daily Account Administrators handle
cash management and trade processing, please answer for both positions.
Include for each position:
• Name and title
• Location
• Is the person an officer of the bank?
• The role of the position within the relationship
• Detailed resume including background, experience, and number of years
within your firm
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• Hours of availability
Insert bios.
(D) Provide the above information for the individual(s) providing back-up for
the Daily Account Administrator.
Insert bios.
(E) Has this team worked together before on custody relationships?
X Yes No
If yes, for how long?
(F) Would this team service other accounts?
X Yes No
If yes, how many?
(G) Discuss the following aspects of your custody services for the statewide
custody program:
• Inquiry and problem resolution processes;
• Conveying information on available services;
• Training in the use of the services and systems access;
• Training in accounting for new investment vehicles and implementation of new
accounting standards;
• Help desk (if any);
• Quality control of products and reports;
• Availability of a toll-free number for the daily account administrator; and,
• Availability of a toll-free facsimile number.
Union Bank of California uses a team approach to providing Institutional Custody
Services. A Senior Relationship Manager serves as Team Leader and is responsible for
delivering services and your overall satisfaction. The Senior Relationship Manager is
supported by a team of Account Administrators who coordinate most of the daily
administration. In addition, operations and systems professionals support the Client
Services Team in the day-to-day management and operation of the account. Reports
are audited prior to being made available to clients to ensure accuracy and quality
control Toll-free contact numbers for both phone and fax are made available as well. —
Do we have toll-free fax numbers???
20. Provide an organizational chart, including the areas responsible for: a) client
service, b) trade settlement, c) accounting, and d) systems development. Include
enough detail to show the level in your organization where those four areas
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converge. Include all members of the day-to-day client service team and highlight
these members on the organizational chart.
21. Provide the following information on personnel turnover in the master custody unit
for the last three years, differentiating between individuals leaving the firm and
those transferring within the firm:
• Departures: Number of employees, position titles, length of service, reason for
departure; and,
• New Hires: Number of employees, position titles.
We have had no departures from our master custody unit in the last three years, and
have hired one account administrator.
22. Describe how you maintain personnel in sensitive staff positions, including:
• Recruitment/replacement
• Training
• Retention, including incentive programs
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B. Trade Settlement and Custody
23. Is your institution a direct participant of The Depository Trust Company of New
York and The Federal Reserve System?
X Yes No
What was your annual number of transactions, for each, processed in 2004?
What was the dollar volume of transactions, for each, processed in 2004?
24. THIS QUESTION IS VERY IMPORTANT! PLEASE GIVE A COMPLETE,
DETAILED RESPONSE!
(A) Describe your procedures for processing trade instructions for both a Fed
Book -Entry purchase and sale for a client utilizing actual settlement. Provide
a detailed flow -chart which begins with receiving trade instructions from a
client and follows the flow of information, securities, cash, and the posting of
that trade into the accounting system. Be sure to include information as to
when the account would be debited or credited for the cash. Demonstrate the
extent of your straight -through processing by distinguishing which steps in the
process require manual input and which are automated.
(B) Describe your procedures for processing trade instructions for both a DTC
(i.e., commercial paper) purchase and sale for a client utilizing actual
settlement.
25. In what ways may clients in the statewide custody program relay trade instructions
to you?
? Phone
X FAX
X Electronically
26. Will all trades be settled on a delivery -versus -payment (DVP) basis, only upon the
receipt of valid trade instructions from the client?
X Yes No
Describe any instances in which you would deviate from this method of settlement.
When the account is new, and securities are being delivered by prior custodian. Or
when delivering securities from another custodian. We will receive the securities on
free delivery basis.
27. Will you provide settlement of trades on an actual settlement basis?
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X Yes No
28. (A) Provide information regarding the failure rates for domestic fixed income and
money market securities sold and purchased for each of the past four years.
Our failure rate for domestic securities is negligible it has bee under 1% for the past
four years.
(B) Describe your procedures, including timing (for notification), tracking and
resolving failed trades, and for reporting failed trades to clients.
All transactions will be settled on contractual settlement date. The Bank will follow up
on buy/sell fails.
We can provide you with daily system -generated fail reports, which are reviewed by our
operations staff. Individual items exceeding established thresholds are brought to
management's attention for further review and corrective action.
29. Describe your procedures and capabilities for settling and accounting for same-day
cash trades, including Pacific Standard Time cutoff times for these transactions
Client procedures for cash trades are not different from other types of trades. Clients
forward instructions by designated deadline. We compare the instructions to the actual
trade communicated through the clearing agent. If the instructions match, the trades
are settled and posted to the account.
30. Discuss your policy and procedures for assuring that each client's investment
securities are properly held in safekeeping and positions are accurately maintained
in your accounting records
All cash and marketable securities held for clients within the trust group are segregated
and governed by Reg. 9 of the OCC which require they not be commingled with the
general assets of the bank. All book -entry eligible securities, as well as physical
securities held at our agent, are processed with those depositories and all securities are
held in nominee name All of our trust accounting records are maintained on our trust
accounting system. Assets are categorized by specific codes that denote depository
location and registration. There are numerous interfaces between the system, various
vendors and the depositories that enable us to process information in an accurate and
efficient manner. We also utilize a number of software applications which enable us to
balance our respective cash and security positions by location All sub -custodian cash
and securities activity is reconciled on a daily basis In addition, all securities positions
are reconciled weekly and monthly.
31. Do you provide on-line trade confirmation services? If so, briefly describe this
process.
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Yes, we do provide on-line trade confirmations through our Online Trust & Custody
Internet -based service. For more detailed information about this service please refer to
question 53 below or see the Online Trust & Custody Section of this proposal.
32. (A) How frequently do you reconcile your records with depositories?
(B) What information is reconciled?
(C) Is this reconciliation manual or automated?
33. Describe your system for registration and custody of assets, including depositories
used, level of interface, and procedures for depository -ineligible securities.
C. Cash Management
Generally, statewide custody clients will maintain a zero end of day balance in their
account(s). However, there will be occasions where a positive balance does exist, i.e., in
the case of a purchase fail or unanticipated income payments. In those cases, either the
cash will be wired to the local entity or invested in a statutorily eligible investment
vehicle, at the option of the local entity. Interest-bearing demand deposit accounts are
an option if the custody provider is also a qualified public depositary in Washington
State. Otherwise discrete investments, segregated by client, must be purchased. Eligible
investments that may be utilized by state and local governments are governed by state
statute, e.g., RCW 43.84. Money market funds or other similar types of vehicles are not
eligible investments. The publication "Eligible Investments for Public Funds" is
available on the OST web -site at: http://www.wa.ov/tre/invest.htm.
34. Will you provide a statutorily eligible short-term investment option for cash
balances that may exist?
Yes No
If you answered yes to the above question, please describe your proposed options for
overnight investment on behalf of the participating entities. Include a description of
your process (including cutoff times) of maintaining full investment (i.e. a daily
"sweep") of cash balances for all accounts of participating entities. Describe how
the interest rate for overnight investments will be determined, how often interest
will be credited, and when it will be paid.
35. For those participating entities that require a daily wire as opposed to a daily sweep,
describe this process, including cutoff times.
36. Provide an example of your cash forecast reports. Describe the media employed and
the timing of receiving information from, and providing information to, the client.
37. Will you provide statewide custody clients advance notification of calls and other
non-scheduled securities -related payments, and will this be made within one
business day of the bank receiving notification?
Yes No
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If yes, describe the procedure for providing notification to the statewide custody
clients.
D. Accounting, Reporting, and Reconciliation
38. Provide a diagram showing the relationships and interfaces of the accounting
systems and personnel that support master custody. Include a written description
of the diagram.
39. Describe the accounting options your institution will make available to participating
entities. For example, would you provide options with regard to accounting basis
(i.e. trade date versus settlement date accounting), or would participating entities
have only one choice?
40. (A) Is daily pricing of securities available?
Yes No (if no, what frequency of pricing is available?)
(B) Describe your source(s) for security pricing.
(C) By what method(s) could this information be transmitted to the clients?
(D) How are pricing differences resolved between the clients and the master
custody department?
41. (A) What standard accounting reports are provided by your system - daily,
monthly, quarterly, annually and by exception? Please provide a summary listing of
these reports and copies of sample reports.
(B) How quickly after the close of business each month can you provide monthly
accounting reports in a format required by participating entities?
(C) Describe your reconciliation process for monthly reporting.
(D) By what method(s) could clients receive those reports?
42. (A) Describe the history of the accounting system(s) and any major system
enhancements that have occurred in the last three years.
(B) What changes and enhancements are planned for the future?
43. (A) Describe your accrual accounting process for each accounting system.
(B) What transactions are not accrued?
44. Are you able to provide GASB 31 compliant reports? If so, provide an example.
45. (A) Describe your ability to account for domestic fixed income portfolios based on
amortized/accreted cost.
(B) What method(s) does your system use to calculate amortization and accretion?
(C) How often is amortization and accretion recorded in your accounting system?
Page A-16 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
46. Provide, in detail, your policy for posting trade related and income related cash
flows to client accounts for each of the accounting methods listed below. Include
information on fail float and overdraft facilities.
• Trade date accrual accounting;
• Cash basis actual settlement date accounting; and,
47. (A) What are your sources and how do you account for mortgage-backed, asset-
backed, and CMO paydown information?
(B) Do you maintain a record of the original face amount purchased?
(C) How would clients receive this information?
48. (A) Describe your on-line systems and workstation capabilities for clients with
regard to the timing of on-line data available by electronic delivery, for view,
manipulation, downloading of standard or customized reports, download of data
files, and report writer and ad-hoc query access.
(B) Is client information updated via real-time or a batch method?
E. Other Services
49. List any other services that are routinely associated with master trust / master
custody that you could provide to the participating entities, e.g., performance
reporting.
SECTION III - AUTOMATION AND COMMUNICATION
A. Hardware and Software
50. Provide a brief list of major systems supporting the custody service and how these
systems are integrated. For each, identify the source of the original system, the
development date, the extent of internal development, and any scheduled plans for
updates.
51. Describe the hardware/software platform(s) on which the master custody systems
operate. What effect on your system's capacity would the addition of the state-wide
custody contract have on your systems and capacity during the first 12 months?
52. How many times in the last two years has an outage occurred in either computer
systems or communications facilities that caused an interruption or delay of service
to one or more of your clients? What was the longest and approximate average
duration of such outages? What were the causes and how were the problems
corrected? Describe redundancy, if any, built into your computer systems and
telecommunications facilities for the purpose of minimizing system outages.
53. Describe your on-line system that is provided to clients. Include the length of time it
has been offered to clients, and the percentage of your custody clients that utilize the
on-line service.
Page A-17 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
We offer online account access through the Internet with our Web- based account
access system, Online Trust & Custody. Information on both domestic and international
holdings and activities in local currency and US dollars can be consolidated through
OTC. This account information management service features advanced security and
access to essential account information including:
• Summary of Account Market Values
• Asset Allocation
• Holdings — Including Tax Lot Reporting and locations
• Transaction History — including pending trades
• Gain/Loss Information — both unrealized and realized
• Securities Lending Reports
• Customized Reports and Downloads
• Online Account Statements
• User Tools and Resources
A dedicated technical staff supports Online Trust & Custody and representatives are
available to assist you through our toll-free User Support Line during regular business
hours.
For more details, see the brochure in the Online; Trus. & Custody Section of this
proposal.You can also view our demo at uboc.com/trustandcustody com.
54. What are the requirements to access your on-line system, and what provisions are
made for training client personnel?
Online Trust & Custody is a web -based service requiring a computer with Internet
access It is user-friendly and easily navigated, however our Client Services Team will
review the system with your staff to explain all features, services and reports and to
make sure staff is comfortable using it.
The Client Services Team is always available to assist your staff with any questions they
may have. In addition, daily support for the online system is available through our toll-
free Hotline and toll-free Fax line between 7:00 a m. and 5:00 p.m. Pacific Time.
B. Communications
55. (A) Describe the communications systems (including electronic systems, telex, fax,
etc.) used for receiving trade instructions and providing information to clients.
(B) Include line type, protocol and transmission rate, and whether this is dial-up or
dedicated (or virtual dedicated) service.
(C) Specify all hardware and software components that must be installed on the
various client systems to connect to the communications facility.
(D) Which options would be available for participating entities to choose?
Page A-18 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
56. If your system provides on-line information in a customized reporting format,
discuss the custom reporting flexibility and limitations and the compatibility with
Microsoft Excel, Microsoft Access, and other PC based software.
57. How many personnel are devoted to development and enhancement of your
communications systems and software?
C. Security
58. What are your security procedures to protect customer information, especially with
respect to unauthorized access to data?
We use passwords and encryption, and allow only those with a need to know, access to
the accounts.
59. Describe your process for file back-up and off-site storage, including the frequency
and location of the data and software. If the location is confidential, describe the
physical conditions of the storage location and approximate distance from your
primary computing facility.
60. Describe your system for prevention of damage by fire.
61. (A) Describe the procedures and provisions you have implemented to be employed
in the event of disaster, equipment failure, or other circumstances which would
disable your primary processing site(s).
(B) Include the results of your most recent test of each plan and the date of the tests.
D. Transition and Conversion
62. Please discuss the procedures used to transfer physically held and book entry
securities and cash from a prior custodian or dealer to control the risk of loss of
investment securities and assure that they are received and accounted for properly.
Conversion planning commences with our selection as your custodian A detailed
conversion plan is completed between the client and ourselves with input from the
prior custodian to ensure the smooth transfer of securities and currencies with minimal
interruption to the investment process The securities are sent to us on a free delivery
basis by the present custodian or brokers holding those securities
In addition to ensuring a smooth transition of assets, UBOC also plans on-site training
for both the client and any new investment advisors to minimize "day one" processing
interruptions. We prefer to have at least thirty -day window prior to transfer date to
prepare everyone for the conversion. A short time frame can be arranged dependent
on the completion of any technical consideration.
We follow an established process in our approach to conversion planning:
Page A-19 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
A team will be created at UBOC to implement the various operational components of
the transition.
A complete listing of names and phone numbers will be made available at least one
month prior to the transfer date.
63. (A) Describe the transition and conversion process you would employ for the
participating entities in the statewide securities custody contract. In responding to
this question assume that 12 entities would be ready to utilize your service at the
inception (April 1, 2006) with other entities beginning at regular intervals
thereafter.
Prior to the transition, representatives from UBOC Client Services will meet with
members of your staff to review existing account relationships and workflow with the
purpose of constructing an "operating profile".
The review will cover:
• Structure of Accounts
• Current Information Flows
• Existing Operating Procedures with Prior Custodian Bank
• Telecommunications Needs
• The Authority's Reporting Needs
• Investment Advisory Relationships
(C) What would you estimate to be a reasonable transition period for participating
entities that would be ready to utilize the contract at its inception?
We have converted many public entities, and find that a transition period can be as short
as a week end. We would like at least 15 days to set up the accounts as necessary.
(D) Please provide a detailed conversion and transition plan identifying all tasks to
be completed with specific target dates and the amount of participating -entity
employee involvement in each task.
Once we are appointed your custodian, we will work together on a plan that will suit your
needs. Please refer to above answers.
(E) Who would be responsible for coordinating the transition and conversion
process for the bank? If this is someone other than the ongoing relationship
manager please provide resume(s).
The relationship manager will be responsible for coordinating the transition and
conversion process for the bank
Page A-20 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
64. What additional planning and training would need to occur with participating
entities' investment accounting staff, data systems technical staff, current master
custodians, and with your depositories?
We will see that each entity is familiar with trade procedures, with our Online Trust and
Custody System, and that the brokers they are dealing with are familiar with our delivery
instructions.
65. (A) What are your expectations with regard to the roles and responsibilities the
participating entities and your organization have in identifying and resolving
reconciling items between the prior custodian's system and the new system?
Prior to conversion we would like to get a copy of the entities latest custodial statement.
We will then balance to that statement upon conversion taking into account any buys or
sells after the statement period.
(B) What resources will your organization provide in this effort?
The account administrator will oversee the effort.
Page A-21 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
SECTION IV — FEE SCHEDULE
A. Fee Schedule
This schedule is meant to allow vendors to address all costs of services. Please ensure that
all costs associated with services to be provided are included. Any fee not fully
documented in your proposal will not be allowed. Provide sufficient detail so that the total
annual costs of a hypothetical entity may be calculated if the portfolio size, activity, and
required services were all known. Be sure to denote any minimum or maximum fees, fees for
multiple portfolios, or fees that are based on portfolio size, along with an explanation of how
those fees would be determined. Also include timing and method of billing clients.
Proposed Fee Schedule
Fee Description
Fee Charged
Comments
Administrative Fees:
$60 per month per
account
Issue Holding Fees:
$ 1 per month per
cusip
Market Value Charges:
No Charge
Transactions:
Purchases
Book Entry
Physical
$15
$40
Sales
Book Entry
Physical
$15
$40
Maturities/Calls
Book Entry
Physical
$15
$40
Paydowns
$5.00 each
Income Payments
No -charge
Outgoing Wires
$10 each wire
Incoming Wires
No charge
Technology Fees:
Other: Minimum billing
$1,500 per entity
Page A-22
RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
B. Annual Costs of Specific Entities
From the information presented below for four hypothetical participating entities calculate
the total annual custody fees to be paid by each entity.
Entity #1
• Number of Portfolios 1
• Portfolio Size ($ in millions) 13
• Securities Held 25
• Annual Activity
Purchases 14
Maturities 14
Income Payments 50
Fed Wires:
Outgoing 25
Incoming 20
• Fax Trades Instructions
• Reports via Mail
• Portfolio Composition 100% Treas/Agency
Pro -Forma Billing Entity #1
Annual Administration Fee 600.00
Purchases 14x$15.00 210.00
Maturities 14X$15.00 210.00
Income Payments 50 x no charge
Fed Wires Outgoing 25x $10.00 250.00
Fed Wires Incoming 20x No charge
Holding fees 25x$1.00x12months 300.00
Total Annual Cost $1,570.00
Page A-23 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
Entity #2
• Number of Portfolios 3
#1 #2 #3
• Portfolio Size ($ in millions) 15.0 3.0 2.0
• Securities Held 15 6 4
• Annual Activity
Purchases 8 3 2
Maturities 8 3 2
Income Payments 30 12 8
Fed Wires:
Outgoing 30 12 8
Incoming 10 5 3
• Fax Trade Instructions
• Reports via Mail
• Portfolio Composition All portfolios -100% Treas/Agency
Pro -Forma Billing Entity #2
Annual Administration Fee 3 Portfolios 1,200.00
Purchases 25x$15.00 375.00
Maturities 13X$15.00 195.00
Income Payments 50 x no charge
Fed Wires Outgoing 50x $10.00 500.00
Fed Wires Incoming 20x No charge
Holding fees 25x$1.00x12months 300.00
Total Annual Cost $2,570.00
Page A-24 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
Entity #3
• Number of Portfolios 1
• Portfolio Size ($ in millions) 137
• Securities Held 55
• Annual Activity
Purchases 16
Sales/Maturities 20
Paydowns (P&I) 36
Income Payments 75
Fed Wires:
Outgoing 60
Incoming 30
• Fax Trade Instructions
• On-line Report Access
• Portfolio Composition 90% Treas/Agency
10% Commercial Paper
Pro -Forma Billing Entity #3
Annual Administration Fee 600.00
Purchases 16x$15.00 240.00
Maturities 20X$15.00 300.00
Paydowns 36X$5.00 180.00
Income Payments 75 x no charge
Fed Wires Outgoing 60x $10.00 600.00
Fed Wires Incoming 30x No charge
Holding fees 55x$1.00x12months 660.00
Online Access No Charge
Total Annual Cost $2,580.00
Page A-25 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
Entity #4
• Number of Portfolios 1
• Portfolio Size ($ in millions) 218
• Securities Held 75
• Annual Activity
Purchases 40
Maturities 40
Income Payments 125
Fed Wires:
Outgoing 80
Incoming 50
• Fax Trade Instructions
• On-line Report Access
• Portfolio Composition 80% Treas/Agency
15% CP
4 % Munis
Pro -Forma Billing Entity #1
Annual Administration Fee 600.00
Purchases 40x$15.00 600.00
Maturities 40X$15.00 600.00
Income Payments 125 x no charge
Fed Wires Outgoing 80x $10.00 250.00
Fed Wires Incoming 50x No charge
Holding fees 75x$1.00x 12months 900.00
Online Access No charge
Total Annual Cost $1,570.00
SECTION IV — MODEL CONTRACT GENERAL TERMS AND CONDITIONS
Appendix A contains the model contract. The negotiated contract is expected to contain
substantially the same general terms and conditions. To be responsive to this RFP,
financial institutions must indicate, in writing, their acceptance of all provisions of the
model contract, or indicate those provisions they do not accept and include the substitute
Page A-26 RFP#: SCSP-05-001
Office of the State Treasurer
Statewide Securities Custody Questionnaire Attachment A
language they are proposing. Unless a financial institution has indicated in its response to
the RFP that they do not accept a provision or provisions in the model contract, they may
propose revisions to the model contract for clarification or of a technical nature only
during the contract negotiation phase.
The response to this section of the RFP Questionnaire will include your acceptance of all
provisions of the model contract, or an indication of those provisions that you do not
accept. In the latter case, you are to provide substitute language you are proposing, or
indicate "none" if the intent is to eliminate the provision entirely.
Page A-27 RFP#: SCSP-05-001
EXHIBIT C
INSTITUTIONAL CUSTODY SERVICES
SCHEDULE OF FEES
for
State of Washington Office of the Treasurer
SERVICES INCLUDED
• New account set-up
• Free receipt of assets transferring into Bank
• Asset safekeeping
• Trade settlements
• Income collections
• Monthly cash and asset statements
• Dedicated relationship manager assigned to your account
• Toll-free telephone and fax lines
• Internet access via Online Trust and Custody' system
MONTHLY ADMINISTRATION FEE $50
ITEMIZED FEES
Transaction fee Depository eligible $15
Depository ineligible $40
Monthly holding fee Per security $1
Disbursements Fed wires / checks $10
P&I paydowns $5
Out-of-pocket expenses As incurred
MINIMUM ANNUAL FEE per account $1,500
• A transaction is defined as any activity affecting assets including purchases, sales, tender offers, stock dividends, free
deliveries, maturities, exchanges, redemptions, etc. Fees for foreign securities, foreign exchange transactions, international
wires and non-standard services are quoted separately
• Fees will be billed quarterly unless otherwise agreed
UNION
BANK OF
CALIFORNIA
Exhibit D
REPETITIVE FUNDS TRANSFERS - WIRE INSTRUCTIONS
Please refer to Union Bank of Califomia's "Master Funds Transfer Agreement and Security Procedures" for further information regarding
our Wire Transfer Services. We must also receive an original, executed "Funds Transfer Authorization" document for the UBOC
Custody Account indicated below before we can act upon these wire transfer instructions.
1. CLIENT ACCOUNT INFORMATION
UBOC Custody
Account Number: 6736301250
UBOC Custody
Account Name: City of Yakima
2. REPETITIVE WIRE TRANSFER INSTRUCTIONS
Beneficiary Bank
Name: Key Bank
Beneficiary Bank
Address: 102 E Yakima Avenue
Beneficiary Bank
ABA Number: 125-000-574
Beneficiary
Account Number: 90458372
Beneficiary
Account Name: City of Yakima - General
Special Instructions/
Further Credit to: N/A
Special Instructions/
Account Number: N/A
3. OPTIONAL - STANDING INSTRUCTIONS FOR PERIODIC TRANSFERS N/A
Start
Date: N/A
Frequency: El DAILY
Funds to be drawn from:
❑ PRINCIPAL ❑ INCOME
❑ MONTHLY ❑ QUARTERLY ❑ OTHER:
DOLLAR AMOUNT: $N/A OR PERCENTAGE: N/A
4. CLIENT AUTHORIZATION(S)
0/0
Client Client
Name: Rita DeBord Name: Timothy M. Jensen
Client Client
Signature: Signature:
Date: Date:
5. BANK USE ONLY - VERIFICATION AND APPROVAL
REQUIRED ACTION (CHECK ONE) : ❑ ADD
❑ CHANGE ❑ DELETE
Callback
Made To:
Callback
Made By:
Date
and Time:
FTA
Dated:
Reviewed By:
Approved By:
Date :
REPETITIVE WIRE
NUMBER ASSIGNED:
MASTER FUNDS TRANSFER AGREEM
This Agreement supplements, but does not modify any other
agreements we may have with you.
INTRODUCTION
In this Agreement, "you" and "your" refer to the funds transfer
client; "we," "us," "our" and "Bank" mean Union Bank of
California, N.A. The terms and conditions that follow govern:
• your rights and responsibilities, as well as ours;
• the rules that affect funds transfers;
• our policies for verifying and completing funds transfers.
ABOUT FUNDS TRANSFERS
Authorizing funds transfers
By signing the accompanying Funds Transfer Authorization
or acknowledging agreement on a Funds Transfer Order,
you permit us to transfer funds and complete reverse
transfers/ third party drawdowns based on instructions you
or someone you authorize gives us. You agree that anyone
you allow to transfer funds may act, even if this person
cannot withdraw funds from your account in other ways. In
addition to persons you designate in the Funds Transfer
Authorization, we may accept funds transfer orders from
persons listed on your Bank Depositor Agreement as
authorized to withdraw funds from your account when the
orders are made in person at one of our branches. We may
record our telephone conversations with you.
Requesting funds transfers
You or someone you authorize may request funds transfers
as follows, depending on your account type:
In person at a Bank office/department. Primary
identification must be shown.
;1-
VA.In writing (in person or by mail): All written requests must
\-.,a be signed.
, Telephone: Most clients can request funds transfers by
i+. telephone by calling a Bank office or department
Direct Access: Clients may request funds transfers by
telephoning or faxing our Wire Services Unit. Direct
Access customers are assigned a Caller ID number
which must be used in conjunction with a SecurlD
token.
Facsimile: All facsimile requests must be signed.
TEAM' Personal Computer This is a personal
computer-based funds transfer service that uses
message authentication, data encryption, security
diskettes, personal IDs and passwords to allow access
to our Money Transfer Service.
ENT
TEAM' Terminal: This is a terminal -initiated funds
transfer service that uses personal IDs and passwords
to allow access to our funds transfer service.
Instructions on set-up changes can be effected
electronically through TEAM' e-mail service.
frInternet. Initiate funds transfer instructions via the
Internet using your personal ISP provider Wires on the
Web utilizes access codes/passwords, 128 SSL
encryption and SecurlD for authentication.
You may select one or more of the above methods when you
set up your funds transfer service, depending on your
account service area, Bank office or department. If you later
wish to change the way(s) you request funds transfers, we
will send you a form to complete and return. It can take up
to 10 business days before you may use the new method(s)
while we are making the changes. Until we notify you, you
will still be able to use your existing method(s) for requesting
funds transfers.
Keeping funds transfers secure
We maintain certain security procedures described
beginning on page 3. You agree to
• use one or more of our security procedures for your funds
transfer instructions;
• keep our security procedures confidential, and
• inform us promptly if one of our security procedures is no
longer confidential.
Some of our procedures may provide greater security than
others. If we follow a security procedure you have selected,
you authorize us to execute funds transfers and will be
bound by the transfer
Processing funds transfers
We will use our best efforts to transfer funds the same day if:
• you make your request when our funds transfer
transmission facility is open, and
• we receive and can authenticate your instructions, or in
cases of reverse wires, instructions we receive on your
behalf, before our cutoff time (which we may change
without prior notice).
If you request that we use a specific account for a transfer,
we will try to transfer funds from this account. You agree to
pay us the current fees for funds transfers established in our
published fee schedules. We may change our fees, but we
will provide you with prior notice in writing, if you have
completed a Funds Transfer Authorization Form.
PAGE 2
If you identify the beneficiary or a bank for a funds transfer
using both a name and an account or other ID number, we
and subsequent banks involved in the transfer may use the
number alone to complete your funds transfer request. We
are not responsible if the name and the number do not
agree.
We use a variety of facilities to make funds transfers. Unless
you instruct otherwise, we will use one or more of the
following fund transfer systems:
• Fed Wire System (Fedwire)
• Clearing House Interbank Payments System (CHIPS)
• Society for World -Wide Interbank Financial
Telecommunications (SWIFT)
• Any correspondent bank or bank we consider suitable
under the circumstances
You accept and agree to the rules of the funds transfer
payment system we, the beneficiary bank and any
intermediary bank may use.
Changing or recalling funds transfers
If you try to cancel or change an instruction after we receive
it, we will use reasonable efforts to comply with your
request. We cannot guarantee that we will be able to do so.
You agree that we are not responsible if we do not cancel or
change your instructions.
Sending funds outside the United States
If you request that United States Dollars be sent to a foreign
country, payment may instead be made in currency of the
foreign country Funds transfers may also be made from
your foreign country currency deposit account.
If your transfer is returned, you agree to accept the refund
in United States Dollars. We will calculate your refund
based on the buying rate of exchange of the foreign
currency on the date of the refund. The exchange rate will
include a commission to us for making the exchange. You
agree to accept this amount as a full refund, even if it is less
than the original amount we transferred. You also agree to
pay us any other charges and expenses we incur either as a
result of a USD or foreign currency funds transfer
Confirming your instructions
We will send you confirmations of your funds transfer
instructions and/ or account statements. You agree to review
them and to notify us immediately of any errors,
unauthorized transactions or irregularities.
Rejecting funds transfers
We may decide to reject any instructions we cannot verify or
believe are unauthorized. If we cannot verify your funds
transfer instructions to our satisfaction, you agree that we
are not responsible if we do not execute your instruction(s)
If you do not have sufficient funds available in your
account(s) with us, we may, but are not required to complete
fund transfers you request. In such cases, you agree to
repay us immediately the amount of any overdraft and for
any related fees.
ABOUT THIS AGREEMENT
Limiting our liability
Subject to the provisions of the California Commercial
Code, we are not responsible for any loss, expense or
liability related to:
• delay, inaccuracy, misexecution, events, persons or causes
not within our reasonable control
• failure of others to accept payment
• subsequent wrongful dishonor resulting from our acts or
failure to act
• accidents, strikes, fire, flood, war, riot, equipment failure,
acts of third parties or acts of God
If we have met our obligations under this Agreement, you
agree to indemnify and hold us harmless against any claim
related to this Agreement or our performance of funds
transfer services. You agree that any liability we have in
connection with this Agreement will be limited to direct loss
to you, if any, plus interest. We make no warranty that the
intended recipient of your funds transfer will receive the
funds transferred. We are not liable for incidental,
consequential, indirect, punitive or special damages that
arise from this Agreement or relate to our making funds
transfers.
Changing or terminating this Agreement
We may change, delete, add to, or terminate this Agreement
at any time if we provide you with notice. Any amendment
or termination will only affect your or our rights and
obligations for fund transfers that occur after the effective
date of amendment or termination. You confirm your
acceptance of the new terms by continuing to request funds
transfers.
MASTER FUNDS TRANSFER AGREEMENT
PAGE 3
WAIVER OF RIGHT TO JURY TRIAL; DISPUTE
RESOLUTION BY JUDICIAL REFERENCE
If you have a problem with a funds transfer, we ask that you
bring it to our attention immediately In most cases, a
telephone call will quickly resolve the problem in an
informal manner If a dispute cannot be resolved informally,
either you or the Bank may file a lawsuit.
Jury Trial Waiver. You and the Bank intentionally and
deliberately give up the right to a trial by jury to resolve
each dispute, claim, demand, cause of action, and
controversy (referred to below by the single word, "Dispute")
between you and the Bank arising out of, or relating to, any
funds transfer subject to this Agreement.
Please refer to the All About Business Accounts & Services or
All About Personal Accounts & Services Disclosure and
Agreement for the terms of our agreement to resolve
Disputes using a judicial referee.
Additional terms
Headings: Headings are included for reference only and are
not part of this Agreement.
Waiver. Waiver of any of the provisions of this Agreement
will not constitute a waiver of other provisions.
Agreement clauses stand alone: All the provisions of this
Agreement can exist independently of each other If any
provision is held invalid or unenforceable, all remaining
provisions will continue to be valid and enforceable.
Non -Assignability. This Agreement is made exclusively for
the benefit of you and us. You may not assign this
Agreement without our written consent.
Attorneys' fees: No attorneys' fees will be awarded in any
action to enforce this Agreement.
Choice of law- This Agreement is made under and governed
by the laws of the State of California.
Entire Agreement This Agreement contains the entire
understanding between you and us regarding funds
transfers, and it replaces any prior agreements or
understandings you and we may have had.
ABOUT SECURITY PROCEDURES
For all funds transfer requests, we will attempt to verify that
the person requesting the transfer is authorized. For
telephone and facsimile requests, we use one or more of the
following security procedures. Please note that our
validation checks will not detect any errors you make, and
we will rely on the information you give us in making your
funds transfers.
We offer the following combinations of verification
procedures depending on the type of funds transfer request,
and where you make the request:
• Callback
• Callback and Digit Test (Non -Direct Access)
• Test Key only (Direct Access only)
• Test Key & Callback (Direct Access only)
Trust clients use the "callback only" procedure exclusively
All Direct Access clients use SecurID, whether alone or with
other verification procedures.
Security Procedures Definitions
Callback: After we receive a funds transfer request, we
telephone or "callback" you or someone else whom you have
previously authorized to verify the request. If this option is used
as the sole security procedure, the person we call will need to
provide us with a Caller Identification Number (Caller ID)
Caller ID No. A unique number forwarded separately that we
use to verify the identity of the caller For Direct Access only
Digit Test. An algorithm performed by the clients when faxing
or telephoning funds transfer instructions to their banking
office
Repetitive Funds Transfers: Transfers sent to the same account
at the same bank that differ only in amount To establish a
repetitive funds transfer, complete a Funds Transfer
Authorization. We will assign a Transfer No. for use with
telephone and facsimile requests For transfers, we callback
only when you first set up the transfers unless you request
otherwise in writing.
Repetitive Transfer No.. A number we assign and use to identify
repetitive transfers so that full details are not needed each time.
SecurID: The SecurlD Token is e lightweight physical device used
in conjunction with a user name and password. The SecurlD
Token displays a randomly generated access code that changes
every 60 seconds. The SecurID Token is used to authenticate
you to the Bank for initiation of funds transfers for all Direct
Access transfers and Internet initiated funds transfers. You agree
you have en obligation to us to safeguard your SecurlD Token
and will take reasonable steps to prevent its unauthorized use
You agree to accept responsibility for any failure to
SecurlD (Cont.):
safeguard your Token. Your SecurID Token should be kept
separate from your Password and User ID You also agree to
notify us immediately if your Token is lost or stolen, your
Password has been compromised, or you notice any
unauthorized activity We may request you put your report of
unauthorized activity in writing. You agree that failure to do so
may delay or void your claim. The SecurID Token remains the
property of the Bank, and you may be liable for the cost of a
damaged, lost or stolen Token.
SecurID Token Costs:
1-2 Token(s) No Charge
3 -Over $100.00
Lost or Stolen $100.00
Test Key: To use the Test Key, you or someone you authorize will
need to provide us with a test amount when requesting a funds
transfer You will calculate the test value using a unique 'Vest
key" mathemotical formula we will have given to you earlier
The Test Key is our property and may not be transferred or
disclosed. All Test Keys have serial numbers If you choose this
method, you agree to treat the Test Key as you do other sensitive
and irreplaceable business records You must always be able to
account for the location of your Test Key.
FORM 02340 (Rev 17/2001)
UNION
BALK or
CALI FORN;A
MASTER FUNDS
TRANSFER AGREEMENT
AND
SECURITY PROCEDURES
Addendum to the
Union Bank of California
Master Funds Transfer Agree]
and Security Procedures
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Limiting our Liability: Delete First Sentence and insert the following in its place and stead:
To the extent not inconsistent with the provisions of the Washington Commercial Code, and only
to such extent, we are not responsible for any loss, expense or liability related to.
Additional Terms:
Choice of law: Strike California and insert Washington
Entire Agreement: Delete this section and substitute the following in its place and stead:
This Agreement contains the entire understanding between you and us regarding funds transfers
and supplements but does not modify any other agreements we have with you. To the extent that
the terms or conditions of this Agreement are inconsistent with the terms or conditions of that
certain Washington Statewide Contract for Security Custody Services (the "Custody
Agreement") dated March 31, 2006 between us and City of Yakima , the terms and conditions
of the Custody Agreement shall prevail. Washington law shall govern the right to a trial by jury
and the availability of attorney fees in any action under this agreement.
Scope of Addendum: This Addendum shall apply only to transfers to and from Accounts
number 6736301250 and shall not apply to any other accounts you have with us. Except as set
forth herein, in all other respects the Master Funds Transfer A;reement and Security, Procedures
remains in full force and effect.
City of Yakima , R.M. DeBord
Finance Director
--(-(-0F0
Date
Union Bank of California, authorized signature
Date
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. /3
For Meeting Of 3/21/2006
ITEM TITLE: Resolution authorizing and directing the City Manager to execute a Security Custody
Agreement with Union Bank of California for provision of investment security custody services
SUBMITTED BY: Rita DeBord, Finance Director(VP*
Tim Jensen, Treasury Services Office
CONTACT PERSON/TELEPHONE: Tim Jensen, Treasury Services Officer 575-6070
SUMMARY EXPLANATION: In May of 2000, the State Treasurer's office, in conjunction with the
State Attorney General's office, developed a Statewide Custody Contract for the benefit of Cities
in the State unable, due to the size of their portfolios, to obtain third party investment custody
services at reasonable prices. These services consist of clearing trades through the Federal
Reserve System and then safekeeping the securities, paying interest and maturities when due
and reporting market valuations on a monthly basis. Since the City has a portfolio of securities
held for investment, having a contract with a third party custodian is essential to ensure the safety
of our investments. In 2000, through a competitive RFP process, the contract was awarded to
The Bank of New York. That contract will expire on March 31st of this year.
In November of 2005, the State Treasurer's office conducted another competitive bid process and
subsequently awarded the contract to the Union Bank of California (UBOC), primarily due to lower
fees. Attached for your consideration is the final contract with UBOC, which is identical in all
material respects to the contract developed and approved in 2000. This contract has served the
City well for the last six years and we look forward to our new relationship with UBOC and believe
Continued...
Resolution X Ordinance _ Other (Specify)
Contract Mail to (name and address)
Phone
Funding Source
APPROVED FOR SUBMITTAL:
64
(1/4700
City Manager
STAFF RECOMMENDATION: Adopt Resolution
BOARD/COMMISSION RECOMMENDATION:
COUNCIL ACTION:
Legal/BD
rev effective 7/21/92
Resolution adopted. RESOLUTION R-2006-45
it will serve the City well for the next six years. If Council adopts the attached Resolution, the
City's portfolio of securities will be transferred to UBOC on March 31St. The contract is effective
March 31, 2006 through March 31st 2010 and contains an option for a two-year extension to 2012,
if mutually agreed to.
Attached for Council review are:
• Award letter from State Treasurer's office
• Resolution for your adoption
• Final form of Statewide Custody Contract (which includes a pricing schedule, see exhibit
C)
Staff Recommendation:
While the City has been pleased with the existing contract and services provided by The Bank of
New York, Staff feels it is in the best interests of the City to follow the State Treasurer's
recommendation which resulted from an exhaustive RFP process and contract with the Union
Bank of California for our custody services. By doing so we stay under the umbrella of a contract
that is proven, and guarantee low fees for custody services to the City for the next several years.
Staff respectfully requests Council's approval of this contract by adoption of this Resolution
authorizing the City manager to begin our new relationship with the Union Bank of California.
Legal/BD
rev effective 7/21/92
MICHAEL J. MURPHY
State Treasurer
State of Washington
Office of the Treasurer
February 24, 2006
TO:
FROM:
SUBJECT:
Local Government Investment Pool Participants
Michael J. Murphy
Washington
c i rerer
STATEWIDE CUSTODY PROGRAM
I am pleased to announce selection of Union Bank of California (UBOC) as the next
statewide securities custody provider. This appointment is effective April 1, 2006, through
March 31, 2010, with an optional two-year extension.
RCW 43.08 280, passed by the 1999 Washington State Legislature, authonzes the Office
of the State Treasurer (OST) to negotiate a statewide custodial contract on behalf of local
governments and institutions of higher education. I want to stress that participation In this
program is strictly at the option of the local entities.
This program has provided many benefits for the local entities of Washington. Most
importantly, it allows local governments to get the best rate and terms from a single
financial institution for custody banking services. It offers significant time savings for local
entities because they don't have to prepare and evaluate requests for proposals (RFPs) or
negotiate contracts. The financial institution benefits, as well, by needing only one search
process, as opposed to separate RFPs for each local entity.
As was the case when the program was inaugurated in 1999, the participation of likely
clients in the selection process was invaluable. The evaluation team helped develop the
RFP documents, evaluated vendor responses, visited sites of potential vendors and made
the final recommendation to the State Treasurer. Members of the evaluation team were
Katie Jungquist, Skagit County Treasurer; Carrie Lewellen, City of Vancouver; Michele
Pearson, Kitsap County; Karen Thomas, Whatcom County; and Kelley Wood, City of
Redmond.
Legislative Building, P O Box 40200 • Olympia. Washington 98504-0200 • (360) 902-9000 • TDD (360) 902-8963
FAX (360) 902-9044 • Home Page http://tre.wa.gov
In addition, a review team participated in developing RFP documents. The members of the
review team were Tim Jensen, City of Yakima; Ross Baglien, Spokane County; Zemed
Yitref, City of Bellevue; Debbie Litchfield, Chelan Co. PUD; Mark Wyman, Thurston
County; and Lon Pearce, Clark County.
I'd also like to recognize members of the staff of the Office of the State Treasurer who
played a key role in this selection process: Douglas Extme, deputy treasurer and RFP
coordinator; Joshua Freese, portfolio administrator; and Robbi Stedman, LGIP
administrator.
I'd like to thank each member of the evaluation and review teams and the members of my
staff for their commitment to this process. I also want to recognize the contribution of the
Local Government investment Pool (LGIP) Advisory Committee, which provided
oversight of the selection process.
The evaluation team unanimously recommended to the LGIP Advisory Committee that
UBOC be selected as the statewide securities custody provider. The committee, in turn,
made a unanimous recommendation to me. Based on those recommendations, I am naming
UBOC as the statewide secunties custody provider
If you are interested in program details you may contact Andy Jeremi, the UBOC
relationship manager for the Statewide Securities Custody Program, at 425-296-6435, or by
e-mail at andyjeremi(th,UBOC.com. You can also get information about the program from
OST by visiting our Web site at (www.tre.wa.gov) or by contacting Doug Extine at 360-
902-9012 or by e-mail at dougtre.wa.gov.
cr
I am proud of the partnership my office shares with local governments as we serve the
citizens of this state. This selection process was an excellent example of that relationship.
RESOLUTION NO. R-2006- 45
A RESOLUTION authorizing and directing the City Manager of the City of Yakima to
execute a Security Custody Services Agreement with Union Bank of
California for provision of investment security custody services.
WHEREAS, the City of Yakima ("City") maintains an investment portfolio; and
WHEREAS, the City requires security custody services concerning said
investments; and
WHEREAS, the Washington State Treasurer, with the assistance of a
representative of the Washington State Attorney General, negotiated and prepared the
attached security custody services agreements; and
WHEREAS, A Staff member from the City of Yakima Finance Department
participated in review of the RFP; and
WHEREAS, the City Council deems it to be in the best interest of the City of
Yakima to contract with Union Bank of California whereby said entity will provide
security custody services in accordance with the terms of the attached agreement; now,
therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager of the City of Yakima is hereby authorized and directed to
execute the attached and incorporated Security Custody Services Agreement with the
Union Bank of California for provision of investment security custody services.
ADOPTED BY THE CITY COUNCIL this 21st day of March, 2006.
ATTEST:
/s/ KAREN S. ROBERTS
City Clerk
/s/ DAVID EDLER
David Edler, Mayor
Certified to be a true and correct co y of 00 o'
original filed in my office. J/2. 7o '
CITY CLERK
By
CITY OF YAKIMA
CITY CLERKS OFFICE
129 North Second Street, Yakima WA 98901 TELEPHONE: (509) 575-6037 FAX: (509) 575-6107
NOTICE OF COUNCIL ACTION
DATE: March 24, 2006
TO: Tim Jensen
FROM: Linda Watkins, City Clerk's Office
RE: Contract Signatures — Union Bank
Enclosed are twp originals of the subject contract requiring signatures. Please have
them signed, dated and return one fully executed original to:
City Clerk
City of Yakima
129 North Second Street
Yakima, WA 98901
I've also enclosed a certified copy of the authorizing resolution for your files.
Thanks