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HomeMy WebLinkAboutC-3053(A) - Investment advisory (Public Funds)June 27, 1995 TO: FROM: C] 0 CITY OF NEWPORT BEACH DEPARTMENT OF FINANCE Interdepartmental Memorandum Fv� � HONORABLE MAYOR AND MEMBERS OF THE CITY Dennis Danner, Director of Finance 4� 01 ' „ I 0 Iqc; SUBJECT: FIRST INTERSTATE BANK AGREEMENT C 3c53 (A) `' C - 3t >53 (15) V DISCUSSION: At the Council Meeting of June 12, 1995, the City Council preliminary approved, subject to the review of the City Attorney, three agreements with First Interstate Bank establishing investment advisory and custodial services. Two of the agreements, for Management and Custody by the Bank, will be put into effect immediately. First Interstate Bank will begin managing approximately 18 -20 percent of our investment portfolio. The third agreement, which is for First Interstate Bank to act strictly as a custodian for funds actually being managed by one of our other advisors, will be implemented later, if necessary. One of our other custodians (Bank of America) is divesting itself of that particular aspect of its operations, and we will need a replacement custodian. The City Attorney has now given his final approval to the attached agreements and resolution. RECOMMENDATION: It is respectfully recommended that the City Council approve the attached agreements and resolution with First Interstate Bank for investment advisory and securities custodial services 06/27/95 5:08 PM MEMO 1.DOC (3x) RESOLUTION NO. 95 - 84 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH AUTHORIZING THE INVESTMENT AND CUSTODY OF FUNDS WITH FIRST INTERSTATE BANK OF CALIFORNIA WHEREAS, the City of Newport Beach ( "CITY ") is a California Public Agency which means that it is City in California, and WHEREAS, the City may invest its idle cash reserves in compliance with the laws of the State of California and its own investment policy. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Newport Beach that the following persons may: (a) Execute such agreements or documents as First Interstate Bank of California ( "BANK ") may at any time request (and all renewals or amendments thereto) regarding the City's custody account, including Bank's Custodial Agreement (which contains indemnity and hold harmless provisions), which agreement the Treasurer has reviewed and does approve. (b) Deposit in any such custody account or accounts, stocks, bonds, securities, cash, funds, checks, instruments and/or other property held or owned by the City from whatever source received, and to hold, exchange, acquire, buy, sell, pledge, collect, transfer, deliver, disburse, redeem, withdraw, and/or dispose of any such stocks, bonds, securities, cash, funds, checks, instruments and/or other property upon written order or instruction of any one of the following Authorized Persons: Kevin J. Murphy City Manager Dennis C. Danner Treasurer Richard C. Kurth Deputy Treasurer BE IT FURTHER RESOLVED, that the Bank is authorized to act and rely on these resolutions until it actually receives written notice of their revocation. ADOPTED this 10th day of July, 1995. ATTEST CITY CLERK V(l'D MAYOR as 3'33 iii City of Newport Beach Managing Agency Agreement Public Funds First Interstate Bank of California Institutional Trust & Investments Division MANAGING AGENCY AGREEMENT This Agreement is made and entered into this /O day of 17- -11 /� , 199 S , by and between First Interstate Bank of California ( "Agent ") having its principal offices at 707 Wilshire Blvd., Los Angeles, California and City of Newport Beach ( "Principal "), having its principal offices at 3300 Newport Boulevard, Newport Beach, CA. WHEREAS, Principal desires to employ Agent as its investment manager and custodian with respect to those assets Principal deposits with Agent from time to time, ( "the Account'), and Agent desires to provide investment management and custodian services to Principal on the following terms and conditions. NOW, THEREFORE, in consideration of the mutual covenants hereinafter, contained, the parties hereto mutually agree as follows: 1. Appointment Principal being duly authorized, hereby employs and appoints Agent as investment manager and custodian for the Account and Agent hereby accepts such appointment. 2. Receipt and Investment of Account. Principal's custodian shall receive and hold all assets acceptable to Principal. Agent may, (a) buy, sell, exchange, convert and otherwise trade in any stocks and any other securities, notes, obligations or money market instruments of any kind whatsoever subject to Principal's Investment Policy, (b) place orders for the execution of such securities transactions with or through such brokers, dealers or issuers as Agent may select. Agent may employ suitable sub - agents or sub - custodians as shall be necessary and appropriate. Neither the Agent nor any sub - custodian or sub -agent shall be entitled to reimbursement by the Principal for any fees or expenses of any sub - custodian or sub - agent. 3. Standard of Care Agent shall exercise the standard of care of a professional investment manager in performing its services under this Agreement in managing the funds of a Public Agency. 4. Registered Investment Company. To meet the cash requirements of Principal or Account, Principal authorizes Agent to invest in any sweep vehicle. Such sweep vehicle must meet the investment policy of the City and the Agent may not receive compensation from sweep vehicle or any other investment placed by Agency on City's behalf. 5. Use of Nominee The Agent's custodian will hold property in its nominee name; but no such registration or holding will relieve the Agent or its custodian of the 2 q;\alunneVpJ 0 0 responsibility for the safe custody of such securities and investments and at all times the assets will be shown on the Bank records as the property of the Principal. 6. Disbursements_ Agent shall disburse cash and other property then held in the Account in accordance with the written directions of Principal. Agent shall have no responsibility to determine whether any such disbursements are in accordance with applicable law, regulations, or any agreement other than this Agreement. Notwithstanding any other provision of this Agreement, if at any time there in insufficient cash or securities in the Account with which to carry out the instructions of Principal or its authorized representatives, Agent shall notify the party giving the instructions of such insufficiency as soon as practicable after receiving the instructions and shall have no further responsibility for complying therewith until it receives sufficient cash or securities. 7. Bepn[ts. Agent shall render to Principal monthly, quarterly or annual reports, in the usual and customary manner and form, or as may be required by Principal, setting forth all receipts, disbursements and transactions effected with respect to the Account. Agent shall also provide Principal with a report of the status of the Account upon request of Principal at reasonable intervals. In the absence of any exception thereto filed in writing with the Agent within ninety (90) days after the date of filing with Principal, any accounting filed with Principal shall constitute a final accounting by and discharge of Agent from all claims and liabilities with respect to the acts and transactions as shown in such account, except for any acts of fraud or misrepresentation by Agent and shall be binding and conclusive upon all persons. It is agreed that Agent, in the maintenance of its records, does not assume responsibility for the accuracy of information furnished by Principal. In computing the market value of any investment of the Account, the valuation method shall be consistent with generally accepted principles of valuation utilized in the investment management industry, and each security listed on any national securities exchange shall be valued at the last quoted sale price on the valuation date on the principal exchange on which such security is traded. Any other security or asset shall be valued in a manner determined in good faith by Agent to reflect its fair market value. 8. Indemnification. Agent shall defend, indemnify and hold harmless Principal and its officers and employees, with respect to any claim, litigation, loss or damages (including reasonable attorneys fees and defense costs) to the extent caused by the negligence, fraud or willful misconduct on the part the Agent; provided, however, Agents duties pursuant to this paragraph shall not apply to any claim, litigation, loss, or liability to the extent caused by the sole negligence, fraud or willful misconduct of Principal and /or its officers or employees. 9. Termination. This Agreement may be terminated at any time by either party giving to the other thirty (30) days written notice of such termination. Agent shall deliver to Principal or as otherwise directed, all securities and other instruments duly endorsed, and all cash, except compensation and expenses due under this agreement. After termination of this Agreement, Agent shall file with Principal an accounting as of the date of such termination, covering the period since the close of the last previous period for which an accounting was filed. 10. Amendment This Agreement may be modified at any time by a writing signed by the parties. 3 gl \dUmw41514 • • 11. Notices.. Unless otherwise specified herein, all notices, instructions and advises with respect to security transactions or any other matters contemplated by this Agreement shall be deemed duly given when received in writing by Agent at the address first above written or when deposited by first -class mail postage prepaid, or delivered by hand to Principal at the address appearing above, or at such other address or addresses as shall be specified, in each case, as notice similarly given. Agent may rely upon any notice (written or oral) from any person reasonably believed by it to be genuine and authorized. 12. Bank's Compensation and Ex ep rises. Bank shall not be reimbursed for any expenses incurred on behalf of Principal unless such expenses have been authorized prior to the time they are incurred. Bank shall receive quarterly compensation for its services hereunder calculated at the rate of 10 basis points annually times the amount of money on hand in the managed account at the end of a quarter. Compensation shall be paid to Bank for its services quarterly. All expenses must be approved in writing by the Principal's Finance Director, Deputy Finance Director or City Manager. To the extent that Bank's compensation and expenses have not been paid by Principal within thirty (30) days following delivery by Bank to Principal of Bank's statement of such compensation and expenses, Bank will charge such compensation and expenses to the assets of the Account. 13. Counsel. Bank may, at the expense of Principal, consult with and obtain advice from legal counsel, provided that the Principal has in advance authorized the expense and the parties have mutually agreed upon the Attorney supplying the services and the nature and extent of the expenses to be incurred. The expenses must be approved in writing by the Principal's Finance Director or City Manager. 14. Governing Law. Subject to any laws of the United States which may be applicable, this Agreement shall be governed, construed, regulated and administered under the laws of the State of California. 15. Force Maieure_ Agent shall not be liable for any delay or failure to act as may be required hereunder when such delay or failure is due to fire, earthquake, any act of God, interruption or suspension of any communication or wire facilities or services, war, emergency conditions or other circumstances beyond its control provided it exercises such diligence as the circumstances may reasonably require. 16. Invalid Provisions It is not the intention of any party to this Agreement to violate any statute, regulation, ruling, judicial decision, or other legal provision applicable to this Agreement or the performance thereof. If any term of this Agreement, or any act or omission in the performance thereof, is or becomes violative of any such provision, such term, act or omission shall be of no force or effect and any such term shall be severed from this Agreement. Any such invalid term, act or omission shall not affect the validity of any other term of this Agreement that is otherwise valid, nor the validity of any otherwise valid act or omission in the performance thereof, unless such invalidity prevents accomplishment of the objectives and purposes of this Agreement. In the event any such term, act or omission is determined to be illegal or otherwise invalid, the necessary steps to remedy such illegality or invalidity shall be taken immediately by the parties. 4 11 9 IN WITNESS WHEREOF, the parties have agreed to the foregoing as of the date first written above. City of Newport,Beach ( "Principal ") By Its First Interstate,/Bank of Califgtnia / ( "Agent ") By Its / VtCE PRESlDEN1 J Its ASSISTANT VICE PRESIDENT APP / /V/ED AS TO FORM: ty Atiorney� F \Jma \n 5 19 C 3os3lB� City of Newport Beach MANAGING AGENCY CUSTODIAL AGREEMENT Institutional Custody Services FIRST INTERSTATE BANK OF CALIFORNIA Institutional Trust and Investments Division March 1994 ���U�o���������� .,"=�� ~,. ^....".�.".w ARTICLE 1: APPOINTMENT ()F BANK A/S CUSTODIAN .................................... ............ l ARTICLE 11: AUTHORITY AND RESPONSIBILITY ()F CUSTODIAN ................................ } ARTICLE III: INVESTMENT ()F CUSTODIAL ACCOUNT ..................................... ............ 4 ARTICLE IV: AUTHORIZED REPRESENTATIVES .......... . ........ ........................................... 5 ARTICLE V: CUSTODIAN INSTRUCTIONS ...... ... ........................................................... 6 ARTICLE VI: COMPENSATION AND EXPENSES (}F THE BANK ....................................... 6 ARTICLE VII: ADVANCES AND OVERDRAFTS ................................................................... 6 ARTICLE VIII: RECORDS AND ACCOUNTS ................................................................ ....... 7 ARTICLE IX: AMENDMENTS AND TERMINATIONS ......................................................... 8 ARTICLE X: CONCERNING THE CUSTODIAN .................................................... ............ 8 ARTICLE XI: k4|5[ELLANE()U5 .............. .......................................................... —............. 9 0 0 INSTITUTIONAL CUSTODY CUSTODIAL AGREEMENT THIS AGREEMENT is made this ZO—! day of .192r-between City of Newport Beach (the "Principal') and FIRST INTERSTATE BANK OF CALIFORNIA (the "Bank"). The Principal and the Bank hereby agree as follows: ARTICLE I: APPOINTMENT OF BANK AS CUSTODIAN Section 1.01. The Principal appoints the Bank as custodian to receive and hold for safekeeping in the Custodial Account all securities tendered to it from time to time by the Principal or upon the Principal's direction ( "Custodial Assets "), and to perform such ministerial functions as provided in this Agreement. The Bank agrees to hold and keep as custodian all property deposited or received by it for the account of the Principal and shall faithfully discharge its duties as set forth in this Agreement. Section 1.02. The Principal represents and warrants that it is authorized under the laws of the State of California to appoint the Bank as custodian and to transfer or cause to be transferred custody of Custodial Assets to the Bank. Section 1.03. The Principal may direct the Bank to establish one or more sub - accounts to hold such portions of the assets of the Custodial Account as the Principal shall direct, along with the earnings and profits thereon. ARTICLE II: AUTHORITY AND RESPONSIBILITY OF CUSTODIAN Section 2.01. The Bank is authorized to sign any documents which are now or may hereafter be required in order for the Bank to perform its responsibilities under this Agreement. Section 2.02. The Bank shall collect and receive the interest and other income, including dividends, paid to it by any person or organization with respect to securities and other properties which it holds as custodian under the terms of this Agreement. In the case of interest or dividends paid upon any municipal bonds, federal book -entry eligible treasury issues, and debt obligations or equity securities of any domestic corporation, the monies shall be credited to the Custodial Account and /or Demand Deposit Account #_.. (hereafter referred to as the "DDA ") in accordance with the Funds Payment Policy in effect from time to time. Interest or dividend income on all other assets shall be credited to the Custodial Account and /or DDA when received by the Bank. In the event the Bank fails to actually receive any monies which have been credited to the Custodial Account and /or DDA as hereinabove described, the Bank shall notify the Principal within twenty four (24) hours thereof, shall reverse out such credit and shall be entitled to interest at a fair and reasonable rate, as mutually determined by the Bank and Principal when such event happens, from the date of credit to the Custodial Account until the date such credit is reversed. See attached Funds Payment Schedule. 3 0 Section 2.03. The Bank shall use its best efforts to collect, on behalf of the Principal, monies which are due and owing to the Principal upon the maturity, redemption, principal payments, or sale of securities or other property held in the Custodial Account, or at the dates of their calls for payment of which the Bank has actual notice from the reporting services to which the Bank subscribes, and proceeds of property so received shall be held in the Custodial Account, or forwarded upon the direction of the Principal. The Bank shall not be obligated to institute or participate in any legal proceedings to make such collection. Whenever the Bank has been unable to make a collection pursuant to this section, it will notify the Principal of its inability to make such collection, and the reasons therefor, insofar as such reasons are known to the Bank. Section 2.04. The Bank will notify the Principal of any voluntary offering with respect to the securities held in the Custodial Account and will forward to the Principal, upon request, such literature and reports as may be received by the Bank pertaining to any securities held hereunder. The Bank, absent directions, is under no duty to take any action with respect to any securities held in the Custodial Account. The Bank will execute proxies with respect to Custodial Assets held in its name or in its nominee name and forward the proxies to the Principal without having voted the proxies. Section 2.05. The Bank shall disburse cash and other property then held in the Custodial Account and /or DDA in accordance with the instructions of the Principal. The Bank shall have no responsibility to determine whether any such disbursements are in accordance with applicable law, regulations, or any agreement other than this Agreement. Section 2.06. (a) The Principal hereby authorizes the Bank on a continuous and on -going basis to deposit in the Federal Reserve/Treasury Book -Entry System (the 'Book -Entry System ") and /or The Depository Trust Company and /or The Participants Trust Company (the "Depositories ") all securities eligible for deposit therein and to utilize the Book -Entry System and the Depositories to the extent possible in connection with settlements of purchases and sales of securities, and other deliveries and returns of securities. (b) Where securities eligible for deposit in the Book -Entry System and /or the Depositories are transferred to the Custodial Account, the Bank shall identify as belonging to the Principal a quantity of Securities in a fungible bulk of securities shown on the Bank's account on the books of the Book -Entry System or the Depositories. Securities and monies of the Principal deposited in either the Book -Entry System or the Depositories will be represented in accounts which include only assets held by the Bank of customers, including but not limited to accounts in which the Bank acts in a fiduciary or agency capacity. Section 2.07. The Bank will hold property in its nominee name; but no such registration or holding will relieve the Bank of responsibility for the safe custody of such securities and investments and at all times the assets will be shown on the Bank records as the property of the Principal. Section 2.08. The Bank is authorized to deliver any instrument or document necessary to register the securities in the Custodial Account, or to complete any sales or deliveries of them. The Bank may execute on the Principal's behalf any declarations, affidavits, certificates of ownership or other documents required to service the Custodial Account and guarantee that such documents have been executed by the Principal. The Principal shall furnish the Bank with all documents, authorizations, representations, or powers of attorney as may be reasonably required by the Bank to carry out its obligations hereunder, but no such document, authorization, representation, or power of 4 0 0 attorney shall be construed to authorize the Bank to take any action not authorized by this Agreement. Section 2.09. The Bank is authorized to sell fractional interests resulting from a stock split, a stock dividend or any capital change on a security and to credit the Custodial Account with the proceeds thereof. ARTICLE III: INVESTMENT OF CUSTODIAL ACCOUNT Section 3.01. The assets of the Custodial Account shall be invested and reinvested in accordance with Instructions of the Principal, unless the Principal delegates investment responsibility and authority for all or a portion of the Custodial Account to one or more authorized representatives. In addition to the powers and duties described in Article II, the Bank shall have the following powers and duties which it shall exercise and perform only upon the Instructions of the Principal or its authorized representatives: (a) to pay for all securities which have been purchased upon receipt of such securities by or for the Bank. (b) to deliver securities which have been sold in accordance with generally accepted street practices or any special directions of the Principal or its authorized representatives, including but not limited to, the free delivery of securities. In acting upon instructions (on which the Bank is authorized to rely) to deliver securities against payment, the Bank is authorized, in accordance with customary securities processing practices, to deliver such securities to the purchaser thereof or dealer therefor (including to an agent for any such purchaser or dealer) against a receipt, with the expectation of collection payment from the dealer, purchaser or agent to whom the securities were so delivered before the close of business on the same day. When the Bank delivers securities against a receipt in accordance with the preceding sentence, the Bank shall not bear the risk associated with such securities processing practice, provided that the Bank did not select the party to which such securities were delivered. (c) to convert, surrender, tender or exchange securities. Section 3.02. (a) Notwithstanding any other provision of this Agreement, if at any time there is insufficient cash or securities in the Custodial Account and /or DDA with which to carry out the instructions of the Principal or its authorized representatives, the Bank shall notify the party giving the instructions of such insufficiency as soon as practicable after receiving the Instructions and shall have no further responsibility for complying therewith until it receives sufficient cash or securities. (b) Principal agrees that all investments executed through a broker - dealer will be in compliance with all applicable laws and regulations and that sufficient cash will be available in the Custodial Account to pay for any securities purchased without consideration given to the proceeds from the sale of the same securities. Principal acknowledges that Bank will not pay for the purchase of securities with the proceeds from the sale of the same securities. Section 3.03. The Bank shall have no duty or responsibility: (a) to supervise the investment of, or make recommendations with respect to the purchase, retention or sale of, securities or other property relating to the Custodial Account. 0 0 (b) for any loss occasioned by delay in the actual receipt of notice by the Bank of any payment, redemption or other transaction in respect to which the Bank is authorized to take some action pursuant to this Agreement, unless due to negligence or an intentional act of the Bank. (c) for any act or omission, or for the solvency or notice to Principal of the solvency, of any broker or dealer which is selected by Principal or any other person other than the Bank officers, employees or agents, to effect any transaction for the Custodial Account. Section 3.04. Principal may authorize Bank to invest a portion or all of the Custodial Assets in shares of one or more registered investment companies ( "Funds ") made available by Bank to its customers. Bank or its affiliates may not receive fees for services provided to the Funds. Bank shall provide to Principal copies of the prospectuses of the Funds. Bank shall have no investment authority over those assets of the Custodial Account so invested or the Funds' which have been purchased with such assets, nor shall the Bank have any responsibility with respect to investment performance of the Funds or to make any recommendations with respect to the purchase or sale of such shares. ARTICLE IV: AUTHORIZED REPRESENTATIVES The Principal may appoint in writing one or more authorized representatives for the Custodial Account and shall contemporaneously give written notice of said appointment or appointments to the Bank and shall instruct the Bank in writing with respect thereto. Selection of an authorized representative shall be in the sole and absolute discretion of the Principal. The Bank shall follow the instructions of the authorized representatives in exercising the powers granted the Bank under Articles II and III. ARTICLE V: CUSTODIAN INSTRUCTIONS Section 5.01. Except as hereafter provided, any directions, instructions or notices which the Principal, or any other person designated by the Principal is required or permitted to give to the Bank under this Agreement (the 'Instructions ") shall be in writing. The Bank is authorized to record any telephonic communications between authorized representatives and the Bank. Section 5.02. The transmission of the Instructions by photostatic teletransmission with duplicate or facsimile signatures or by affirmation via the national institutional delivery system shall be authorized methods of communication until the Bank is notified by the Principal to the contrary. Section 5.03. The Bank shall as promptly as possible comply with any direction given by the Principal or any authorized representative. ARTICLE VI: COMPENSATION AND EXPENSES OF THE BANK The Bank shall receive reimbursement for any expenses, if any, incurred from the Principal's Investment Manager. All expenses must be approved by the City's Finance Director, Deputy Finance Director or City Manager in writing prior to incurring expenses. 11 0 ARTICLE VII: ADVANCES AND OVERDRAFTS Section 7.01. In the event that (1) the amount on deposit in the Custodial Account, DDA and /or any sub - account is insufficient to pay the total amount due upon the purchase or delivery of securities therefor, or (2) an amount otherwise drawn against the Custodial Account, DDA and /or any sub - account is in excess of the available balance on deposit therein, the Bank may, if practicable, elect to advance funds to the Custodial Account, DDA and /or any sub - account in an amount necessary to cover any resulting overdraft on such account. Section 7.02. If the Bank should advance funds to or on behalf of the Custodial Account or any sub- account to cover such overdraft or for any other reason, the amount so advanced by the Bank (less any amount deposited by the Bank to the Custodial Account or sub - account in lieu of monies which have not been collected by the Bank on behalf of the Custodial Account or sub - account when due because of the failure of the Bank to make timely presentment or demand for payment) shall constitute a Loan hereunder. Each such Loan shall be payable on demand. Any Loan not repaid by the Bank's close of business on the day of disbursement shall bear interest for each day until payment in full at a rate per annum equal to _ percent over the Bank's prime commercial lending rate in effect from time to time, such rate to be adjusted on the effective date of any change In such rate but in no event should the rate payable be less than six percent per annum. Interest on the Loans shall be computed on the basis of a 360 -day year and actual days elapsed and shall accrue from and including the day of disbursement to but excluding the date of payment. The Bank will notify the Principal of any interest owed due to a Loan prior to recovering the principal and accrued interest of any Loan made to the Custodial Account by the Bank hereunder. Section 7.03. In order to secure the repayment of the principal and interest of any Loan to the Custodial Account or any sub - account, the Principal hereby agrees that the Bank shall have a continuing lien and security interest in and to any property specifically allocated to and held by the Custodial Account or any sub - account to which such Loan is deemed to have been made. In this regard, the Bank shall be entitled to all the rights and remedies of a pledgee under common law and a secured party under the California Commercial Code as then in effect. ARTICLE VIII: RECORDS AND ACCOUNTS Section 8.01. The Bank shall keep accurate records and accounts with respect to all cash and other assets held by it in the Custodial Account, and all receipts and disbursements and other transactions involving such cash, securities and other assets. The Principal shall have access to all such accounts, books and records at all reasonable times. All such accounts, books and records shall be open for inspection and audit at all reasonable times by the Principal or by any person or persons duly authorized by the Principal. Section 8.02. The Bank shall furnish the Principal and the Principal authorized representatives with monthly reports in the usual and customary manner and form, setting forth all receipts, disbursements and transactions effected with respect to the Custodial Account. Section 8.03. Upon agreement of the parties, the Bank shall periodically determine the market value of the assets held in the Custodial Account. Market value for the purposes of this Agreement means with respect to marketable securities the market price of each such security at the close of business of the day as of which the valuation is being made, and in the case of all other assets the market value shall be deemed to be cost. 7 0 0 In determining the market value of marketable securities, the Bank may utilize any one or more sources of information deemed by the Bank to be reliable, including, but not limited to, a pricing service, standard financial periodicals or publications, newspapers of general circulation, records of and information from securities exchanges and brokerage firms. ARTICLE IX: AMENDMENTS AND TERMINATIONS Section 9.01. This Agreement may be modified at any time by a writing signed by the Principal and the Bank, and may be terminated at any time upon thirty (30) days' written notice delivered by any party to the other, provided, however, that this Agreement shall continue thereafter for such period as may be necessary for the complete divestiture of all cash, securities, and other instruments held hereunder by the Bank, but solely to the extent necessary to effect such complete divestiture. Section 9.02. The Bank shall, immediately upon the receipt or transmittal notice of termination, as the case may be, commence and prosecute diligently to completion the transfer of all cash and the delivery of all securities and other instruments, duly endorsed, to the successor of the Bank. The Principal shall select such successor within thirty (30) days after the receipt or transmittal of such notice of termination, as the case may be, and shall forthwith notify the Bank of the selection of such successor. In the event the Principal has not timely notified the Bank of the selection of a successor, the Bank, in its discretion, may deliver to the Principal all securities and other instruments, duly endorsed, and all cash. Upon delivery to the Principal or successor of the cash, securities and other instruments held by it hereunder, the Bank shall have no further liability or responsibility under this Agreement or otherwise, or for any act or omission of the Principal or the successor. Section 9.03. Upon termination of this Agreement and either after payment to the Bank of all fees owed pursuant to this Agreement or the holding of sufficient funds or assets equal to any fees in question, all monies, securities and other assets of every kind and nature held in the Custodial Account shall be paid over, delivered or surrendered upon a written order or receipt signed by the Principal or its appointed successor. ARTICLE X: CONCERNING THE CUSTODIAN Section 10.01. Agent shall defend, indemnify and hold harmless Principal and its officers and employees, with respect to any claim, litigation, loss or damages (including reasonable attorneys fees and defense costs) to the extent caused by the negligence, fraud or willful misconduct on the part the Agent; provided, however, Agents duties pursuant to this paragraph shall not apply to any claim, litigation, loss, or liability to the extent caused by the sole negligence, fraud or willful misconduct of Principal and /or its officers or employees. Section 10.02. The Bank shall not be liable for any delay or failure to act as may be required hereunder when such delay or failure is due to fire, earthquake, any act of God, interruption or suspension of any communication or wire facilities or services, war, emergency conditions or other 17 E s circumstances beyond its control provided it exercises such diligence as the circumstances may reasonably require. ARTICLE XI: MISCELLANEOUS Section 11.01. Subject to any laws of the United States which may be applicable, this Agreement shall be governed, construed, regulated and administered under the laws of the State of California. Section 11.02. It is not the intention of any party to this Agreement to violate any statute, regulation, ruling, judicial decision, or other legal provision applicable to this Agreement or the performance thereof. If any term of this Agreement, or any act or omission in the performance thereof, is or becomes violative of any such provision, such term, act or omission shall be of no force or effect and any such term shall be severed from this Agreement. Any such invalid term, act or omission shall not affect the validity of any other term of this Agreement that is otherwise valid, nor the validity of any otherwise valid act or omission in the performance thereof, unless such invalidity prevents accomplishment of the objectives and purposes of this Agreement. In the event any such term, act or omission is determined to be illegal or otherwise invalid, the necessary steps to remedy such illegality or invalidity shall be taken immediately by the parties. Section 11.03. Disclosure of Beneficial Owner Information Securities and Exchange Commission Rule #14b -1(c), enables corporations to learn the identity of their security holders whose securities are held by Banks and registered in "nominee" or "street" name. According to the rule, the issuing company would be permitted to use your name and related information for "corporate communication" purposes only. [ ] I do not want any name, address, and securities positions disclosed to all the companies in which I own securities that are registered in "nominee" or "street" name. or [ ] I want my name, address and securities positions disclosed to all the companies in which I own securities that are registered in "nominee" or "street' name. Section 11.04. Any controversy or claim between the parties and any claim based on or arising from an alleged tort shall at the request of either party be determined by arbitration. It shall be conducted in accordance with the Rules of the American Arbitration Association ( "AAA "). The arbitrator(s) shall resolve all claims and defenses or other matters in dispute in accordance with applicable law, including without limitation thereto, all statutes of limitation. Any controversy concerning whether an issue is arbitrable shall be determined by the arbitrator(s). judgment upon the arbitration award may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. s s IN WITNESS WHEREOF, this Agreement is executed in _ /_1°� /o���i+c , State of California, as of the date first above written. City of Newport Beach By: Z_ Title: C A�� C LIZ \- Tax Identification No. 9F �ccXX/71/ gAdianne \1528 AS TO FORM, First Interstate Bank of California By; z Title: 'LICE PRESIDENT By: Title: ASSISTANT VICE PRESIDENT 10 • • Council Agenda Item # 21 City of Newport Beach BY THE CITY COONCIL Finance Department CITY OF NEWPORT BEACH • June 1, 1995 TO: KEVIN MURPHY, CITY MANAGER APPR0V FROM: Dennis Danner, Finance Director �. �' SUBJECT: INVESTMENT ADVISOR AGREEMENT WITH C - 36S3 FIRST INTERSTATE BANK DISCUSSION: The City has received and preliminarily reviewed three proposed agreements establishing investment advisory and custodial relationships with First Interstate Bank. Pursuant to the City Council Finance Committee guidance regarding the addition of a fourth Investment Advisor, we solicited proposals • from several firms and ultimately selected First Interstate. We selected First Interstate based upon their level of expertise and experience as well as the very reasonable fee they will charge for both investment management and custodial services. The wording of the actual agreements has been a bit problematic. With the help of the City attorney, those difficulties are nearly resolved. Two of the agreements, for Management and Custody by the Bank, will be put into effect in the very near future. First Interstate will begin managing approximately 18 -20% of our Investment Portfolio. The third agreement, which is for First Interstate Bank to act strictly as a custodian for funds actually being managed by one of our other advisors, will be implemented later, if necessary. One of our other custodians (Bank of America) is divesting itself of that particular aspect of its operations, and we will need a replacement custodian. RECOMMENDATION: • It is respectfully recommended that the City Council approve the City entering into contractual relationships with First Interstate Bank for investment advisory and securities custodial services.