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HomeMy WebLinkAboutR-2001-070 The Bank of New York Security Custody Services AgreementRESOLUTION NO. R-2001-70 A RESOLUTION authorizing and directing the City Manager of the City of Yakima to execute a Security Custody Services Agreement with The Bank of New York 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 representatives of the Washington State Attorney General, negotiated and prepared the attached security custody services agreement; and WHEREAS, a representative of the City of Yakima Finance Department also participated in the negotiation and preparation process concerning said contract; and WHEREAS, the City Council deems it to be in the best interest of the City of Yakima to contract with The Bank of New York 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 Bank of New York for provision of investment security custody services. ADOPTED BY THE CITY COUNCIL this 1st day of May, 2001. ,e ATTEST: City Clerk (Ik)res/finance underwriter contr apr Ol/.pm ary Place, Mayor WASHINGTON STATEWIDE CONTRACT For Security Custody Services February, 2000 Contract -blanks tilled in WASHINGTON STATEWIDE CONTRACT FOR SECURITY CUSTODY SERVICES GENERAL PROVISIONS 1. >. 7. 10 11 12 13 14 15 Table of Contents 1 CONTRACTING PARTIES 1 HEREBY WITNESSETH• 1 ADDITIONAL SERVICES 1 CONSIDERATION 1 APPOINTMENT OF CUSTODIAN AGREEMENT 2 PERSONAL LIABILITY 3 HOLD HARMLESS AND INDEMNIFICATION 3 CONFLICT AND SEVERABILITY 4 NONDISCRIMINATION AND AFFIRMATIVE ACTION 4 GIFTS AND GRATUITIES 5 RIGHTS AND REMEDIES 5 PERFORMANCE 6 GOVERNING LAW 6 SUBCONTRACT/ASSIGNMENT 6 6 DEFINITIONS 16 DEFINITIONS 6 7 7 8 SCOPE OF SERVICES 17. SCOPE OF SERVICES AGREEMENT TERM AND TERMINATION 18. 19I. 20. 21 TERM OF AGREEMENT AND SURVIVORSHIP OF TERMS 8 TERMINATION AND REMEDIES 8 FORCE MAJEURE 11 CONFLICT OF INTEREST 11 12 CONTRACT ADMINISTRATION 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. INCORPORATED DOCUMENTS 12 ORDER OF PRECEDENCE 12 ENTIRE AGREEMENT - 13 LIMITATION OF AGENCY'S AUTHORITY 13 AGENCY CONTRACT ADMINISTRATOR 13 BANKS ACCOUNT MANAGER 13 CHANGES 14 DISPUTES 14 ADVERTISING 14 CONSENT 14 AGENCY RESPONSIBILITIES 15 32. PROTECTION OF PROPRIETARY AND CONFIDENTIAL INFORMATION 15 33. FUNDS TRANSFER AUTHORIZATION AGREEMENT 15 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 16 38. AUDITING 16 39. BANK COMMITMENTS, WARRANTIES, AND REPRESENTATIONS 16 40. YEAR 2000 COMPLIANCE 17 41. PRICE INCREASES 18 CUSTODY PROVISIONS 18 42. CUSTODY OF SECURITIES 18 PAYMENT PROVISIONS 26 43. PAYMENTS 26 44. TAXES 26 45. DAMAGES 26 CONTRACT EXECUTION 27 46. COUNTERPARTS �7 47. SIGNATURE BLOCKS �8 C+.,+.....:.4. i•„c+�r�<r i'rNn+rar+ 1. WASHINGTON STATEWIDE AGREEMENT FOR CUSTODY SERVICES GENERAL PROVISIONS CONTRACTING PARTIES THIS AGREEMENT is entered into by and between _The City of Yakima, STATE OF WASHINGTON, hereinafter referred to as the "Agency" and The Bank of New York, 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 23, 1999 for the purpose of obtaining proposals for providing statewide custody services. As 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 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 except as included by attachment to this Agreement. To the extent that any terms and conditions are in conflict with any other terms and conditions, 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 1 Washington Statewide Custody Contract 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: The Bank of New York One Wall Street New York, NY 10286 Attention: Government Agencies Department with a copy to: BNY Western Trust Company 601. Union Street Suite 520 Seattle, Washington 98101-2321 5. APPOINTMENT OF CUSTODIAN 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. 2 Washington Statewide Custody Contract 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. 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 42.9.1, 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 42.9.1. 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 42.9.1, 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 haiiuless 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 42.9.1 herein. 3 Washington Statewide Custody Contract 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. 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. This requirement does not apply, however, to a religious corporation, association, educational institution or society with respect to the employment of an individual of a particular religion to perfoini work connected with the carrying on by such corporation, association, educational institution or society of its activities. 10.1.1 The. Bank shall take affirmative action to ensure that employees are employed and treated during employment without discrimination because of their race, color, religion, national origin, creed, marital status, age, or the presence of any sensory, mental or physical disability. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment selection for training, including apprenticeships and volunteers. Washington Statewide Custody Contract 10.2 Nondiscrimination in Client Services: The Bank shall not, on grounds 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. 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 the 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 5 Washington Statewide Custody Contract 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 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, provided the Bank may enter into subcontracts, agreements and understandings with BNY Western Trust Company, a wholly owned subsidiary of The Bank of New York Company, Inc. whenever and on such temus and conditions as it deems necessary or appropriate to perform its services hereunder. 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 23, 1999. 6 Washington Statewide Custody Contract "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.— "Exhibit greement.ry"Exhibit E" shall mean the Agency's schedule of required Services provided under 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 The Bank of New York. It shall also include any subcontractor retained by the Bank as permitted under the teiius 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. "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 perfotitting 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, 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. 7 Washington Statewide Custody Contract AGREEMENT TERM AND TERMINATION 18. TERM OF AGREEMENT AND SURVIVORSHIP OF TERMS This Agreement shall commence on July 1st 2001, and continue until March 31_, 2004. 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 terra 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. 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 90 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 orother 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 8 Washington Statewide Custody Contract 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. 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. 9 Washington Statewide Custody Contract 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. 19.7 OBLIGATIONS UPON TERMINATION After receipt of a notice of teuuination, 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 or 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 he or she 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 10 Washington Statewide Custody Contract 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 Custodian. 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 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 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. 11 Washington Statewide Custody 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 rightsand remedies provided by law. 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 23, 1999. 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. 22.5 "Exhibit E" - The Agency's schedule of required Services provided under 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 12 Washington Statewide Custody Contract 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. for 23.2.3 Exhibit A - The Request by For Proposal the Office of the State ) Statewide Custody Services is ateTreasurerdated November 23, 1999, Exhibit B - The Bank's proposal in response to the State RFP for Statewide Custody Services, and Exhibit E - The Agency's schedule of required Services provided under this Agreement. 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. 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 r r bonding g untilrnmade in writing and signed by the Agency and the Bank unless otherwisep 26. AGENCY CONTRACT ADMINISTRATOR The Agency shall appoint an individual who will be the Contract Administratorder. Agency Agreement and will provide oversight of the activities conducted ben 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 Managerofor contthe t for the account. The Bank's Account Manager will be the principal point 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. 13 Washington Statewide Custody Contract 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. 29.3 Both parties agree to exercise good faith in dispute resolution and to avoid arbitration and 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. 14 Washington Statewide Custody Contract 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. 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 performing 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. 15 Washington Statewide Custody Contract 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 individual recipients of the Agency's services shall not be granted except as authorized by law or Agency rule. 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 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. Anyaudits 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 16 Washington Statewide Custody Contract 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. 40. YEAR 2000 COMPLIANCE 40.1 Year 2000 Compliance. The Custodian hereby warrants that it will use commercially reasonable efforts to ensure that the computer software and hardware (as used in this subsection, the "Systems") that are owned by the Custodian and used to provide the services to be provided by the Custodian under this Agreement (as used in this subsection "Services") are 2090 Compliant or will be made 2000 Compliant before December 31, 1999. With respect to software that the Custodian licenses from third parties and uses in providing the Services ("Third Party Software"), the Custodian warrants that it has used or will use commercially reasonable efforts to test the same by September 30, 1999 to certify, in accordance with the Custodian's standard practices, that the Third Party Software is 2000 Compliant. If the Custodian cannot certify any Third Party Software as 2000 Compliant, the Custodian will use commercially reasonable efforts to replace such Third Party Software with software that is warranted or certified by its vendor as 2000 Compliant, if such replacement is available, compatible with the Custodian's Systems and deemed by the Custodian as appropriate under the circumstances. In the event that the Custodian uses third party,service providers to provide the Services or any portion thereof ("Third Party Services"), the Custodian warrants that it has in place a program under which it will use commercially reasonable efforts to contact such service providers and obtain from them assurances that the Systems use in providing Third Party Services are 2000 Compliant. As used herein, the term "2000 Compliant" means that the Systems will function without material error caused by the introduction of dates falling on or after 17 Washington Statewide Custody Contract January 1, 2000. Notwithstanding the foregoing, the parties hereto acknowledge and agree that the Custodian cannot and does not warrant that the Systems, Third Party Software or Third Party Services will continue to interface with the hardware, firmware, software (including operating systems), records or data used by the Fund or third parties, nor does the Custodian make any warranties hereunder with respect to any public utility, communications service provider, securities or commodities exchange, or funds transfer network. 41. PRICE INCREASES 41.1 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. 41.2 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 42. CUSTODY OF SECURITIES 42.1 CUSTODIAL SERVICES The Custodian shall take custody of the securities ownedby 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 teiinination 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 18 Washington Statewide Custody Contract 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 encurnbrances. 42.2 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 security including, when applicable, the date of purchase and maturity date; CUSIP numbers; and other sources of identification. 42.3 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. 42.4 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: 42.4.1 All interest and other distributions received on account of the securities (including mortgages) held for the Agency; 42.4.2 All payments of principal or other return of capital, including, securities backed by mortgages and financing contracts; 42.4.3 All proceeds from the sale or transfer of securities, or rights appurtenant to the securities; 42.4.4 All payments made by the Agency to the Custodian and by the Custodian to the Agency; 19 Washington Statewide Custody Contract 42.4.5 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 or invested in an investment authorized by state statutes and approved by the Agency. 42.5 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: 42.5.1 Take possession of securities purchased by the Agency, and when authorized, make payment from the clearing accounts as established under this Agreement therefore; 42.5.2 Deliver securities sold or transferred by the Agency to the appropriate entity or person versus payment; 42.5.3 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; 42.5.4 At the option of the Agency, the Custodian shall: 42.5.4.1 42.5.4.2 Washington Statewide Custody Contract 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 20 not to exceed the actual short-term earnings of the Agency during the time the funds were credited to the Agency. 42.5.4.3 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. 42.5.5 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 teens 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. 42.6 INCOME ON DEFECTIVE TRANSACTIONS The Custodian shall pay the Agency the following sums when a transaction is defective without fault of the Agency: 42.6.1 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. 42.6.2 If a buyer fails to make payment on the settlement date, and the Custodian is not providing contractual settlement, the Custodian 21 Washington Statewide Custody Contract shall pay the Agency the interest or other income, if any, actually received by it, from the party in default. 42.6.3 If the transaction fails or is delayed due to the inability of the Custodian to make such delivery dueto actions of, or an inaction 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. 42.7 ANCILLARY SERVICES 42.7.1 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. 42.7.2 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"). 42.7.3 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. 42.7.4 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 22 Washington Statewide Custody Contract 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 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. 42.8 PROPER INSTRUCTIONS AND EVIDENCE •F 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 without and the party giving such instructions use its duldylauthorized officer to certify itation, oral instructions). The Agency shall to the Custodian in writing the names and specimen signatures of persons authorized to give proper iuthorito The r stodian ons unt 1 tshall rece vets notice ied to rely upon the identity and Y of suchpe from the Agency to the contrary. The Custodian shall be protected in acting uponany 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 of maywrlttene sn Mice to the contrary.ered as in full e and effect until receipt by the Custodian 42.9 RESPONSIBILITY OF CUSTODIAN 42.9.1 The Custodian shall perform its duties hereunder with "Due Care." For the purposes of this agreement, "I)ue 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 23 Washington Statewide Custody Contract 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, andprovided further that any depository selected with Due Care by the bank shall not be deemed for purposes of this agreement an agent or subcustodian of the Bank. 42.9.2 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: 42.9.2.1 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 42.9.2.2 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. 42.10 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 24 Washington Statewide Custody Contract Instructions, which the Custodian reasonably believes to be from the Agency. 42.11 SPECIAL AND CONSEQUENTIAL DAMAGES Except as otherwise provided in this Agreement, neither the Custodian nor the Agency shall be liable to the other for special or sequential damages or fraud of that party unless such damages result from the gross negligence 42.12 NOTICES .ICES Notices and other writings shall be 'elivered by the to the time sensitmo�y, expeditious means available, with due regardgiven of the notice or demand being made: - To the Agency: The City of Yakima 129 North Second Street Yakima, WA 98901 To the Custodian: The Bank of New York One Wall Street New York, NY 10286 Attention: Government Agencies Department with a copy to: BNY Western Trust Company 601 Union Street Suite 520 Seattle, Washington 98101-2321 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 (206) 224 - 3114 Facsimile (206) 224 - 4201 or to such other numbers as either party may furnish the other party by written notice under this Section. 25 Washington Statewide Custody Contract PAYMENT PROVISIONS • 43. 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 calendarThe quarter, with the first payment for the calendar quarter ending Bank 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. .44. 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. 45. DAMAGES If the Bank does not meet its Service obligations as detailed in Section 42 of this Agreement and such failure is not caused by a force majeure event, the Bank shall be required to negotiatea 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 42.9.1, 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. 26 Washington Statewide Custody Contract CONTRACT EXECUTION 46. 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. 27 Washington Statewide Custody Contract 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 Bank of New York SIGNATURE " SI City Manager TITLE May 23. 2001 DATE City Contract No. 2001-46 Resolution # R-2001-70 Washington Statewide Custody Contract ate- &b 6/ e & TITLE 29 cl a�I o2 00f DATE BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. I For Meeting of May 1, 2001 ITEM TITLE: Resolution Authorizing Excecution of an Investment/Security Custody Services Agreement with The Bank of New York SUBMITTED BY: Department of Finance & Budget CONTACT PERSON/TELEPHONE: Timothy Jensen, Finance Department 576-6639 Cindy Epperson, Accounting Manager 575-6070 SUMMARY EXPLANATION: This Resolution authorizes execution of the attached Investment/Security Custody Agreement with the Bank of New York (BONY) to be the custodian of the City's investments. Previously, the City has contracted with Key Bank for these services. Key Bank has notified us that they wish to terminate this relationship at the end of June 2001, because performing this service for an investment portfolio of our size is not profitable for them. Because the banking industry was beginning to increase charges for this service, the Washington State Treasurer recognized the benefit of negotiating for a statewide Security Custody agreement. In 1999 the Treasurer appointed a committee to prepare a Request for Proposal and negotiate a contract that can be used for all state agencies. The City's Finance Department was represented on this committee as Tim Jensen was asked to serve. The committee was able to negotiate an acceptable contract for these services, which was reviewed and approved by the Attorney General's office. Execution of the attached contract will result in changing the City's Security Custodian to The Bank of New York, and will provide this needed service at a lower cost to the City. Resolution X Ordinance Other (Specify) Contract X Mail to (name and address): Return to Tim Jensen Phone: Funding Source: General Fun budgeted) APPROVED FOR SUBMITTAL: City Manager STAFF RECOMMENDATION: Adopt Resolution BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-2001-70 WASHINGTON STATEWIDE CONTRACT For Security Custody Services February, 2000 Contract -blanks filled in.doc 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 3 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 6 14. GOVERNING LAW 6 15. SUBCONTRACT/ASSIGNMENT 6 DEFINITIONS 6 16. DEFINITIONS 6 SCOPE OF SERVICES 7 17. SCOPE OF SERVICES 7 AGREEMENT TERM AND TERMINATION 8 18. TERM OF AGREEMENT AND SURVIVORSHIP OF TERMS 8 19. TERMINATION AND REMEDIES 8 20. FORCE MAJEURE 11 21. CONFLICT OF INTEREST 11 CONTRACT ADMINISTRATION 12 22. INCORPORATED DOCUMENTS 12 23. ORDER OF PRECEDENCE 12 24. ENTIRE AGREEMENT 13 25. LIMITATION OF AGENCY'S AUTHORITY 13 26. AGENCY CONTRACT ADMINISTRATOR 13 27. BANK'S ACCOUNT MANAGER 13 28. CHANGES 14 29. DISPUTES 14 30. ADVERTISING 14 31. CONSENT 14 AGENCY RESPONSIBILITIES 15 32. PROTECTION OF PROPRIETARY AND CONFIDENTIAL INFORMATION 15 33. FUNDS TRANSFER AUTHORIZATION AGREEMENT 15 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 16 38. AUDITING 16 39. BANK COMMITMENTS, WARRANTIES, AND REPRESENTATIONS 16 40. YEAR 2000 COMPLIANCE 17 41. PRICE INCREASES 18 CUSTODY PROVISIONS 18 42. CUSTODY OF SECURITIES 18 PAYMENT PROVISIONS 26 43. PAYMENTS 26 44. TAXES 26 45. DAMAGES 26 CONTRACT EXECUTION 27 46. COUNTERPARTS 27 47. SIGNATURE BLOCKS 28 Washington Statewide Custody 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 The Bank of New York, 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 23, 1999 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 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 except as included by attachment to this Agreement. To the extent that any terms and conditions are in conflict with any other terms and conditions, the order of authority is as follows: (1) these General Provisions are 1 Washington Statewide Custody Contract controlling, followed by; (2) the Office of the State Treasurer RFP for Statewide 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: The Bank of New York One Wall Street New York, NY 10286 Attention: Government Agencies Department with a copy to: BNY Western Trust Company 601 Union Street Suite 520 • Seattle, Washington 98101-2321 5. APPOINTMENT OF CUSTODIAN if to the Agency, at: The City of Yakima Finance Department 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. 2 Washington Statewide Custody Contract 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. 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 42.9.1, 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 42.9.1. 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 42.9.1, 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, 3 Washington Statewide Custody Contract affiliates, agents, subcontractors, representatives or employees; or a failure to exercise due care as defined in Section 42.9.1 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. 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. This requirement does not apply, however, to a religious corporation, association, educational institution or society with respect to the employment of an individual of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution or society of its activities. 10.1.1 The Bank shall take affirmative action to ensure that employees are employed and treated during employment without discrimination because of their race, color, religion, national origin, creed, marital status, age, or the presence of any sensory, 4 Washington Statewide Custody Contract mental or physical disability. Such action shall include, but not be limited to, the following: employment, upgrading, demotion, or transfer; recruitment or recruitment selection for training, including apprenticeships and volunteers. 10.2 Nondiscrimination in Client Services: The Bank shall not, on grounds 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. 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 the 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. 5 Washington Statewide Custody Contract 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 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, provided the Bank may enter into subcontracts, agreements and understandings with BNY Western Trust Company, a wholly owned subsidiary of The Bank of New York Company, Inc. whenever and on such terms and conditions as it deems necessary or appropriate to perform its services hereunder. 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 6 Washington Statewide Custody Contract 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 23, 1999. "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. "Exhibit E" shall mean the Agency's schedule of required Services provided under 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 The Bank of New York. 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. "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. 7 Washington Statewide Custody Contract "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, 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 June 15th, 2001, and continue until March 31, 2004. 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. 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 90 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 8 Washington Statewide Custody Contract 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. 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. 9 Washington Statewide Custody Contract 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. 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; 10 Washington Statewide Custody Contract 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 or 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 he or she 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 Custodian. 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 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. 11 Washington Statewide Custody Contract 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 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. 12 Washington Statewide Custody Contract 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 23, 1999. 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. 22.5 "Exhibit E" - The Agency's schedule of required Services provided under 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 23, 1999, Exhibit B - The Bank's proposal in response to the State RFP for Statewide Custody Services, and Exhibit E - The Agency's schedule of required Services provided under this Agreement. 13 Washington Statewide Custody Contract 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. 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. 14 Washington Statewide Custody Contract 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. 29.3 Both parties agree to exercise good faith in dispute resolution and to avoid arbitration and 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 15 Washington Statewide Custody Contract 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. 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 performing 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 individual recipients of the Agency's services shall not be granted except as authorized by law or Agency rule. 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. 16 Washington Statewide Custody Contract 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 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 17 Washington Statewide Custody Contract 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. 40. YEAR 2000 COMPLIANCE 40.1 Year 2000 Compliance. The Custodian hereby warrants that it will use commercially reasonable efforts to ensure that the computer software and hardware (as used in this subsection, the "Systems") that are owned by the Custodian and used to provide the services to be provided by the Custodian under this Agreement (as used in this subsection "Services") are 2000 Compliant or will be made 2000 Compliant before December 31, 1999. With respect to software that the Custodian licenses from third parties and uses in providing the Services ("Third Party Software"), the Custodian warrants that it has used or will use commercially reasonable efforts to test the same by September 30, 1999 to certify, in accordance with the Custodian's standard practices, that the Third Party Software is 2000 Compliant. If the Custodian cannot certify any Third Party Software as 2000 Compliant, the Custodian will use commercially reasonable efforts to replace such Third Party Software with software that is warranted or certified by its vendor as 2000 Compliant, if such replacement is available, compatible with the Custodian's Systems and deemed by the Custodian as appropriate under the circumstances. In the event that the Custodian uses third party service providers to provide the Services or any portion thereof ("Third Party Services"), the Custodian warrants that it has in place a program under which it will use commercially reasonable efforts to contact such service providers and obtain from them assurances that the Systems use in providing Third Party Services are 2000 Compliant. As used herein, the term "2000 Compliant" means that the Systems will function without material error caused by the introduction of dates falling on or after January 1, 2000. Notwithstanding the foregoing, the parties hereto acknowledge and agree that the Custodian cannot and does not warrant that the Systems, Third Party Software or Third Party Services will continue to interface with the hardware, firmware, software (including operating systems), records or data used by the Fund or third parties, nor does the Custodian make any warranties hereunder with respect to any public utility, communications service provider, securities or commodities exchange, or funds transfer network. 18 Washington Statewide Custody Contract 41. PRICE INCREASES 41.1 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. 41.2 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 42. CUSTODY OF SECURITIES 42.1 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 teiuiination 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. 19 Washington Statewide Custody Contract 42.2 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 security including, when applicable, the date of purchase and maturity date; CUSIP numbers; and other sources of identification. 42.3 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. 42.4 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: 42.4.1 All interest and other distributions received on account of the securities (including mortgages) held for the Agency; 42.4.2 All payments of principal or other return of capital, including, securities backed by mortgages and financing contracts; 42.4.3 All proceeds from the sale or transfer of securities, or rights appurtenant to the securities; 42.4.4 All payments made by the Agency to the Custodian and by the Custodian to the Agency; 42.4.5 The Custodian may debit the account with disbursements authorized by the Agency. 20 Washington Statewide Custody Contract 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 or invested in an investment authorized by state statutes and approved by the Agency. 42.5 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: 42.5.1 Take possession of securities purchased by the Agency, and when authorized, make payment from the clearing accounts as established under this Agreement therefore; 42.5.2 Deliver securities sold or transferred by the Agency to the appropriate entity or person versus payment; 42.5.3 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; 42.5.4 At the option of the Agency, the Custodian shall: 42.5.4.1 42.5.4.2 Washington Statewide Custody Contract 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 21 42.5.4.3 not to exceed the actual short-term earnings of the Agency during the time the funds were credited to the Agency. 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. 42.5.5 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 detennination 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. 42.6 INCOME ON DEFECTIVE TRANSACTIONS The Custodian shall pay the Agency the following sums when a transaction is defective without fault of the Agency: 42.6.1 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. 22 Washington Statewide Custody Contract 42.6.2 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. 42.6.3 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 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. 42.7 ANCILLARY SERVICES 42.7.1 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. 42.7.2 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"). 42.7.3 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. 42.7.4 Pricing Services: 23 Washington Statewide Custody Contract 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 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. 42.8 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. 42.9 RESPONSIBILITY OF CUSTODIAN 42.9.1 The Custodian shall perform its duties hereunder with "Due Care." For the purposes of this agreement, "Due Care" shall mean the 24 Washington Statewide Custody Contract 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 shall not be deemed for purposes of this agreement an agent or subcustodian of the Bank. 42.9.2 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: 42.9.2.1 42.9.2.2 Washington Statewide Custody Contract 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. 25 42.10 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. 42.11 SPECIAL AND CONSEQUENTIAL DAMAGES Except as otherwise provided in this Agreement, neither the Custodian nor the Agency shall be liable to the other for special or consequential damages unless such damages result from the gross negligence or fraud of that party. 42.12 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: The City of Yakima Finance Department 129 North Second Street Yakima, WA 98901 To the Custodian: The Bank of New York One Wall Street New York, NY 10286 Attention: Government Agencies Department with a copy to: BNY Western Trust Company 601 Union Street Suite 520 Seattle, Washington 98101-2321 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: 26 Washington Statewide Custody Contract Telephone (509) 576-6639 Facsimile (509) 576-6634 If to Custodian: Telephone (206) 224 - 3114 Facsimile (206) 224 - 4201 or to such other numbers as either party may furnish the other party by written notice under this Section. 43. PAYMENTS PAYMENT PROVISIONS 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 09/30/2001. The Bank 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. 44. 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. 45. DAMAGES If the Bank does not meet its Service obligations as detailed in Section 42 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. 27 Washington Statewide Custody Contract 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 42.9.1, 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. 46. COUNTERPARTS CONTRACT EXECUTION 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. 47. 28 Washington Statewide Custody Contract 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 City of Yakima SIGNATURE City Manager TITLE May 23, 2001 DATE City Contract No. 2001-46 Resolution # R-2001-70 29 Washington Statewide Custody Contract APPROVED Bank of New York 4_41440 SI4NATTJ.RE 12ee Prc-15id k TITLE 'fl ,. �-Q � b2 'moi DATE The BANK OF NEW YORK CERTIFICATE OF AUTHORIZED INDIVIDUALS GOVERNMENT AGENCIES Account Name: City of Yakima Account #: 060573 I certify that I am the City Manager of the City of Yakima, formed and existing under the laws of Washington. 1 further certify that in accordance with the authority granted by City of Yakima and other applicable law (Attach a copy of appropriate ordinance, council minutes or other source of documented authority). The Bank of New York has been designated a custodian under the custodial agreement, a copy of which is attached to this authorization. I further certify that the persons holding the position(s) of Finance Director, Accounting Manager and Investment Officer may conduct business within the duties designated by state statute and local code and shall have the authority to instruct The Bank of New York and to execute such further documents and instruments as may be required or useful. The Bank of New York may rely on instructions given by any one of the Authorized Persons named below, who shall have the authority to obligate this public entity to contracts and agreements with The Bank of New York. Rita Anson / Finance Director Name/Position Signature Cindy Epperson / Accounting Manager Name/Position Timothy M. Jensen / Accountant Name/Position Name/Position Signature The above list of Authorized Persons may be amended from time to time in writing by certification executed by the undersigned or his/her successors in office. Witness my hand and the official seal the ,,e4 day of VIZ,GG � , / (OFFICIAL SEAL) 05/23/2001 u1FoRms/Accrix GPBsiaDoc Signature: • '-S Name: Richard A. Zais Jr. Title: City Manager The BANK OF NEW YORK SHAREHOLDER COMMUNICATIONS ACT The Bank of New York must comply with the Shareholder Communications Act and its related Securities and Exchange Commission rules. To assist us in our compliance with the Act we ask you consider your position regarding the disclosure of your name, address, and security position to those companies requesting such information regarding the owners of their securities. O Object to disclosure g4 Do not object to disclosure Customer Name: City of Yakima Account Number(s): 060573 Authorized Si ,nature Date Timothy M. Jensen Name If we do not receive a response from you within 30 days of this mailing, your account will be coded as "Non Objection" Thank you for helping us to comply with the Shareholder Communications Act 05/23/2001 U:i PO R M S/AC CT D O CIPB S IG. DOC The BANK OF NEW YORK EXHIBIT D FUNDS TRANSFER STANDING INSTRUCTIONS Client hereby directs Custodian to process funds received or disbursed, (including those for payment of maturing obligations, redemption collections, interest and dividends, and security settlements.) as directed below: Account Name: City of Yakima Account Number: Wire funds to : Kev Bank of Washington ❑ Send check payable to customer ❑ Special Instructions: Identify Trade and Dealer If we do not receive a response from you within 30 days of this mailing. BNY Western Trust Company, Custodian, will act upon these standing instructions until further notice is given to Custodian. Notification can include written, fax, or telephonic notice in accordance with your Custody Agreement. Date: May 23. 2001 Authorized by: 05/23/2001 U:IFOR MS/ACCTO O CPB SIG. D OC Rita M. Anson Print Name Finance Director Title The BANK OF NEW YORK FACSIMILE INSTRUCTIONS: AUTHORIZATION RE: Custody Agreement Dated May 23, 2001 Between The City of Yakima, and The Bank of New York. Customer Authorization. Limitation of Liability and Indemnity: The City of Yakima ("Customer") hereby authorizes The Bank of New York (the "Bank") to rely upon and comply with instructions and directions sent by facsimile or other similar electronic methods by persons believed by the Bank to be authorized to give instructions and directions on behalf of Customer. The Bank shall have no duty or obligation to verify or confirm that the person who sent such instructions or directions is, in fact, a person authorized to give instructions or directions on behalf of Customer, and the Bank shall have no Liability for any losses, liabilities, costs or expenses incurred or sustained by Customer as a result of such reliance upon or compliance with such instructions or directions. Please be advised that there are more secure methods of sending instructions and directions to the Bank. By executing this document, you elect to use the foregoing method of transmitting instructions and directions over such secure methods. This authorization shall remain in full force and effect until canceled, revoked or amended by written notice received by the Bank; and replaces and supersedes any previous authorization from Customer to the Bank relating to the giving of instructions by facsimile or other electronic methods and is in addition to all other authorizations. In accordance with Section 42.8 of the Washington Statewide Contract for Security Custody Services, 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 Customer. The Custodian may receive and accept a certificate from the Customer 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 Customer 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. Governing Law: This document shall be governed by, and shall be construed in accordance with, the substantive laws (and not the choice of law rules) of the State of Washington. Representations and Warranties oKustomer: Customer hereby represents and warrants to the Bank that this authorization is properly given and has been duly approved by a resolution of its Board of Directors. Nothing contained herein shall, or be deemed to, alter or modify the rights and remedies of the Bank as set forth in the Agreement. 05/23/2001 U:/FOR M S/A CCTDOC/PBS[0. DOC The BANK OF NEW YORK The execution of this document by Customer constitutes acceptance of the foregoing. THE BANK OF NEW YORK By:e ✓ Lee—i '-� .. Account Administrator Customer hereby accepts and agrees to the terms and conditions set forth herein: Signatures ,�.---rn Name: Rita M. Anson Title: Finance Director Date: J__r/J-Ci( 05/23/2001 U:; FORMS/ACCTDOC/PBSIG.DOC Fee Description Statewide Custody Fee Schedule Fee Charged Comments Account Charges: (Basic Service) (Includes 3 accounts ver relation hi Market Value up to $100 mil. $100.00 per month Per relationship Market Value $100 to $200 mil $200.00 per month Per relationship Market Value over $200 mil. $200.00 per month 1/200 of 1% on next $1.8 billion 1/400 of 1% on balance Per relationship Additional Accounts over initial 3 $50.00 per month Per portfolio Transactions: (Basic Service Manual (Fax, Phone) $12.00 per transaction Purchases & Sales Automated (On line entry by client) $8.00 per transaction Purchases & Sales Maturities $8,00 per transaction Wires: Outgoing only $10.00 per wire Accounting Statements: Standard Statements (Basic Service) Waived Daily Audited Accounting $1,000.00 per month Per portfolio Performance Measurement: ($5,000.00 annual minimum per relationship) Fundamental Performance Measurement $1,000.00 per portfolio annually ROR reports hardcopy InformPA analytics (Online) $2,000.00 per portfolio annually Online ROR's, characteristics, report writer, graphics InformPA attribution analysis (Online) $3,000.00 per portfolio annually Performance Snapshot Quarterly $1,200.00 per Snapshot report Performance Snapshot Monthly $3,500.00 per Snapshot report Out -of Pocket Expenses (Basic Service) Passed along at cost Courier, Postage, etc. On-line Communications: ' Installation fee $1,000.00 one-time Monthly Access Waived Invoices will be produced quarterly, Page 15 The Bank of New York Receive/Deliver Instructions For Our Customers Type of Security Delivery Instructions Rec/Del Deadline (Pacific Standard Time) Depository Trust Company (DTC) - Corrections & Late Trades - C/Ps - ADRs - Same day settlements - (SUMS) DTC Institutional Delivery System - Principal Party - Interested Party BNY Account # 901 City of Yakima a/c 060573 -- BNY Agent Bank #26500 - Institutional ID #26662 BNY Interested Party ID #26662 Rec/ Del: 7 30 a,m. or best efforts Rec/Dc1: 10:00 a.m. or best efforts Rec/Del: 8:00 a.m. Rec/Del: 10.00 a.m. or best efforts Trade Date Mus 2 for Instructions; Trade Date +2 9:00 PST for cancellations and corrections Federal Reserve Book Entry System (FRI3E) - Same day settlements BK of NYC/CUST City of Yakima a/c 060573 ABA #021000018 Rec: 10:00 a.m. or best efforts till close Del: 9:30 a.m. or best efforts till close Participants Trust Company (PTC) BYORK / Account # / Account Name Euroclear #97816 Account Name / Account # BK of NYC/ABA #021000018 BBK = IOC 363 City of Yakima a/c 060573 Rec/Del: 2:00 p.m. 5-1 All instructions must be received 2 days prior to settlements or best efforts thereafter 12:15 a.m., or best efforts thereafter Euro Items - Euro Time Deposits - Euroelear Items (Attn: Ceclia or Sue) - Eurodollar CDs jAttn: Nick Mirfm) Wire Transfers Physicals - Same day settlement (Fed Funds) - Clearing House Funds The Bank of New York One Wall Street, 3rd Floor Window A The Bank of New York One Wall Street, 3rd Floor Window A Rec: 12:00 p.m. Del: 10:00 a.m. Rec: 8:30 a.m. A/C Name, A/C # Del: 6:00 a.m. - 7.45 a, m. or best effort depending on the number of certificates. Free Receives/Delivers - Government - Stocks & Muni Bonds _ _ One Wall Street. 3rd Floor One Wall Street, 5th Floor _ No Deadline Cash Manaement 7:30 a.m. Pair -Offs Bic of NYC ABA #021000018 BBK-GLA 11.1567 -Pair Off Note: Du not reference Account Name / Account # All instructions must be received one day prior to settlements, best efforts thereafter. Note Instructions received after aur normal deadline will be handled on a best effort basis To enable The Bank of New York to give our "best effort", a telephone call in addition to the transmission or written instruction is always required after our "stated deadline". For any cash flow related item we require notice the day prior to settlement in order to position funds into of out of BNY short term investment vehicles. li. \ FORMS\ 13NY3RDr.DOC BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. ¥ i For Meeting of May 1, 2001 ITEM TITLE: Resolution Authorizing Excecution of an Investment/Security Custody Services Agreement with The Bank of New York SUBMITTED BY: Department of Finance & Budget CONTACT PERSON/TELEPHONE: Timothy Jensen, Finance Department 576-6639 Cindy Epperson, Accounting Manager 575-6070 SUMMARY EXPLANATION: This Resolution authorizes execution of the attached Investment/Security Custody Agreement with the Bank of New York (BONY) to be the custodian of the City's investments. Previously, the City has contracted with Key Bank for these services. Key Bank has notified us that they wish to terminate this relationship at the end of June 2001, because performing this service for an investment portfolio of our size is not profitable for them. Because the banking industry was beginning to increase charges for this service, the Washington State Treasurer recognized the benefit of negotiating for a statewide Security Custody agreement. In 1999 the Treasurer appointed a committee to prepare a Request for Proposal and negotiate a contract that can be used for all state agencies. The City's Finance Department was represented on this committee as Tim Jensen was asked to serve. The committee was able to negotiate an acceptable contract for these services, which was reviewed and approved by the Attorney General's office. Execution of the attached contract will result in changing the City's Security Custodian to The Bank of New York, and will provide this needed service at a lower cost to the City. Resolution X Ordinance Other (Specify) Contract X Mail to (name and ): Return to Tim Jensen Funding Source: General Fun\ udgeted) APPROVED FOR SUBMITTAL: Phone: City Manager STAFF RECOMMENDATION: Adopt Resolution -- BOARD/COMMISSION RECOMMENDATION: COUNCIL ACTION: