CC SR 20160315 E - Vining Sparks Custodial AgreementRANCHO PALOS VERDES CITY COUNCIL
AGENDA REPORT
AGENDA DESCRIPTION:
MEETING DATE: 03/15/2016
AGENDA HEADING: Consent Calendar
Consideration and possible action regarding approval of an agreement for Custodian
Banking/Investing Services.
RECOMMENDED COUNCIL ACTION:
(1) Adopt Resolution No. 2016-_ approving a Custodian Agreement between the
City of Rancho Palos Verdes and Vining -Sparks IBG, LP, regarding safekeeping
of certain assets and cash of the City.
FISCAL IMPACT: None
Amount Budgeted: N/A
Additional Appropriation: N/A
Account Number(s): N/A
ORIGINATED BY: Deborah Cullen, Director of Finance
REVIEWED BY: Lufti Kharuf, Aleshire & Wynder
APPROVED BY: Doug Willmore, City Manager.. -`
ATTACHED SUPPORTING DOCUMENTS:
A. Custodian Agreement (page A-1)
B. Resolution No 2016-_ (page B-1)
BACKGROUND AND DISCUSSION:
Currently, over 90% of the City's cash is invested with the State's Local Agency
Investment Fund (LAIF), with an annual yield at June 30, 2015 of 0.26°/x. The
remaining funds are invested in Certificate of Deposit Account Registry Service (annual
yield: 0.25°/x) and a money market account with Malaga Bank (annual yield: 0.30°/x).
The proposed custodian agreement enables diversification of the City's portfolio and
could increase the annual investment return. The recent CD offerings posted by Vining -
Sparks would increase the annual yield of invested funds by three times. Based on the
City's Investment Policy, the overall goal is to diversify the City's portfolio, adhering to
the Policy and striving to maintain the level of investment of all idle funds as near as
possible through optimum operation of its cash management system. The City has
determined that its investment criteria, listed in order of priority, are safety, liquidity and
yield.
The Vining -Sparks custodian agreement was first presented to City Council at the
December 15, 2015, meeting. Based on the questions and discussion regarding the
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agreement, the Council asked the Finance Advisory Committee (FAC) to review the
agreement and make a recommendation to the Council.
At the February 25, 2016, FAC meeting, the details regarding the Vining -Sparks
custodian agreement were presented to the Committee. Josh Gorham, Vice President
of Institutional Fixed Income for Vining -Sparks, was available via conference call to
answer questions from the Committee at the meeting. The Committee had several
questions and were satisfied with the answers provided. The Committee then voted
unanimously to recommend approval of the agreement. Consistent with the
Committee's recommendation, Staff intends to provide a monthly treasury report.
Vining -Sparks IBG, Limited Partnership (the "Custodian") is an investment company that
provides custodial and safekeeping services for the cash and/or assets. The Custodian
has offered to provide such services to the City pursuant to a Custodian Agreement (the
"Agreement"). The Agreement (Attachment A) is generally a standard agreement used
for all customers, and provides the terms of opening an account with the Custodian,
depositing cash and assets into such account, directing the Custodian to effect certain
transactions with such deposits (including making authorized investments in accordance
with the City's investment policy), and settlement procedures.
Although the Custodian has informed us that changes to the Agreement are rarely
approved, the City was able to secure a number of important changes for the benefit of
the City. First, the City was able to secure indemnification from the Custodian in the
event that it suffers any loss resulting from the gross negligence, recklessness, or
intentional misconduct of the Custodian. Additionally, the City will not be subject to
mandatory arbitration with the Custodian in the event of a dispute. Additionally, the
Custodian has agreed to waive all fees associated with the account.
The City Attorney has reviewed the Agreement and signed off on its terms and
conditions. The Agreement is in final form, subject to adoption of the draft Resolution
(Attachment B), which will allow for certain officers of the City to finalize the Agreement,
execute the required certificates, and proceed with the goals of the Agreement. The
authorized signers on the account will be the City Manager, Director of Finance, and
Deputy City Manager.
Pursuant to the Agreement, the Custodian will open an account or accounts for the City
into which the City may deposit cash and assets. The Custodian is required to "hold,
keep safe, and protect as custodian for the [account], on behalf of the [City], all [cash
and assets] deposited" in the accounts.' Furthermore, the Custodian is authorized to
invest such amounts in securities, as specifically instructed by authorized by the City's
Council adopted Investment Policy.
assets.
The City does retain the option to use Bank of the West for safekeeping of the City's cash and
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ALTERNATIVES:
In addition to the Staff recommendation, the following alternative actions are available
for the City Council's consideration:
Discuss the Finance Advisory Committee's recommendation and provide
other direction to Staff.
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Account Number
VINING-SPARKS IBG, LIMITED PARTNERSHIP
CUSTODIAN AGREEMENT
AGREEMENT dated as of _
PARTNERSHIP ("Custodian") and
("Customer").
between VINING-SPARKS IBG, LIMITED
1. Employment of Custodian Customer hereby employs Custodian as custodian of all assets of
Customer which are delivered to and accepted by Custodian (the "Property") pursuant to the terms and conditions set
forth herein. Without limitation, such Property shall include stocks and other equity interests of every type, evidences
of indebtedness, other instruments representing same or rights or obligations to receive, purchase, deliver or sell same
and other non-cash investment property of Customer that is acceptable for deposit ("Securities") and cash from
whatever source and in whatever currency ("Cash"). Custodian shall not be responsible for any property of Customer -
-'held or received by Customer or others and not delivered to and accepted by Custodian or any of its Sub -custodians
(as that term is defined in Section 4 below) as hereinafter provided.
2. Account Custodian agrees to establish and maintain one or more Accounts on its books in the name
of Customer (collectively, the "Account") for any and all Property consisting of Securities from time to time received
and accepted by Custodian or any of its Sub -custodians for the account of Customer. Any and all Property consisting of
Cash from time to time received and accepted by Custodian or any of its Sub -custodians for the account of Customer
shall be credited to the Account on the books of Custodian. Custodian shall have the right, in its sole discretion, to
refuse to accept any Property that is not in proper form for deposit for any reason. Customer acknowledges its
responsibility as a principal for all of its obligations to Custodian arising under or in connection with this Agreement,
notwithstanding that it may be acting on behalf of other persons, and warrants its authority to deposit in the Accounts
any Property received therefor by Custodian or its Sub -custodian and to give, and authorize others to give, instructions
relative thereto pursuant to the terms of this Agreement. Customer further agrees that Custodian shall not be subject to,
nor shall its rights and obligations under this Agreement or with respect to the Accounts, be affected by, any agreement
between Customer and any other person.
Custodian shall hold, keep safe and protect as custodian for the Account, on behalf of Customer, all Property
in the Accounts. All transactions involving the Property shall be executed or settled solely in accordance with
Instructions (as that term is defined in Section 8), except that until Custodian receives Instructions to the contrary,
Custodian will (subject to the provisions of the next paragraph relating to Securities issued outside of the United States
and collections of income in a currency other than United States dollars):
(a) collect all interest and dividends and all other income and payments, whether paid in cash or
in kind, on the Property, as the same become payable and credit the same to the Account;
(b) present for payment all Securities held in the Account which are called, redeemed or retired or
otherwise become payable and all coupons and other income items which call for payment
upon presentation to the extent that Custodian is actually aware of such opportunities and
credit the cash received to the Account;
(c) (i) exchange Securities where the exchange is purely ministerial (including, without
limitation, the exchange of temporary securities for those in definitive form and the exchange
of warrants, or other documents of entitlement to securities, for the Securities themselves);
and (ii) when notification of a tender or exchange offer (other than ministerial exchanges
described in (i) above) is received for the Account, endeavor to receive Instructions, provided
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that if such Instructions are not received in time for Custodian to take timely action, no action
shall be taken with respect thereto;
(d) whenever notification of a rights entitlement or a fractional interest resulting from a rights
issue, stock dividend or stock split is received for the Account and such rights entitlement or
fractional interest bears an expiration date, if after endeavoring to obtain Instructions such
Instructions are not received in time for Custodian to take timely action, sell in the discretion
of Custodian (which sale Customer hereby authorizes Custodian to make) such rights
entitlement or fractional interest and credit the Account with the net proceeds of such sale;
(e) execute in Customer's name for the Account, whenever Custodian deems it appropriate, such
ownership and other certificates as may be required to obtain the payment of income from the
Property;
(f) appoint brokers and agents for any of the ministerial transactions involving the Securities
described in (a) - (e), including, without limitation, affiliates of Custodian or any Sub -
custodian; and
(g) pledged Securities for the benefit of Customer, only upon Instructions of Customer, utilizing
the pledge account services of The Bank of New York as Sub -custodian.
Unless Customer provides Custodian with a contrary Instruction (see Exhibit D hereto), Custodian shall have
the authority to invest idle Cash in Custodian's possession for Customer in any of the money market funds used by
Custodian for the investment of cash, including 12b-1 funds, and Custodian may receive administration fees from a
fund sponsor. Unless authority is withheld, any cash balance of $1 or more will automatically be invested, on a daily
basis, in a money market fund selected by Custodian. Specifically, an order to purchase shares of or make a deposit
into the money market fund will be placed (x) in the case of available cash resulting from the proceeds of Securities
sales, on the next business day after settlement date, and (y) in the case of available Cash resulting from non -trade
credits (i.e., receipt of dividend or interest payments, deposited in cash into the Account) on the business day after
receipt by Custodian. All shares purchased or monies deposited pursuant to these procedures will begin earning
dividends on the business day after the order is placed. A purchase order or deposit will not be entered until free credit
balances or cash in the form of federal funds become available to Custodian. Dividends earned on money market fund
shares will be reinvested daily in such shares.
Notwithstanding the foregoing and any Instructions received in connection therewith, with respect to Securities
issued outside of the Unites States, Custodian shall not assume any responsibility with respect to coupon payment,
redemption, exchanges, or similar matters affecting such Securities, and its duties hereunder shall be limited to the
safekeeping of such Securities only. Collections of income in foreign currency are, to the extent possible, to be
converted into United States dollars as soon as practicable, and in effecting such conversions Custodian may use such
methods or agencies as it may see fit, including the facilities of its own foreign division (if any), at customary rates.
Custodian shall deliver, subject to Section 7 below, any and all Property in the Account in accordance with
Instructions and, in connection therewith, Customer will accept delivery of Securities of the same class and amount in
place of those contained in the Account.
3. Records, Ownership of Property and Statements The ownership of Property, whether held by
Custodian or a Sub -custodian or in a Securities System (as that term is defined in Section 4) in which Custodian
participates, shall be clearly recorded on Custodian's books as belonging to the Accounts and not for Custodian's own
interest. Custodian shall keep accurate and detailed accounts of all investments, receipts, disbursements and other
transactions for the Accounts. All accounts, books and records of Custodian relating thereto shall be open, upon
reasonable notice from Customer to the Custodian, to inspection and audit at all reasonable times during normal
business hours by any person designated in writing by Customer.
Subject to the election of Customer as hereinafter provided, Custodian will supply to Customer from time to
time, as mutually agreed upon, a statement in respect to any Property in the Accounts held by Custodian or by a Sub -
custodian. In the absence of the filing in writing with Custodian by Customer of exceptions or objections to any such
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statement, and in such case or upon written approval of Customer of any such statement, such statement shall be
presumed to be correct for all purposes with respect to all information set forth therein.
4. Sub -custodians and Securities Systems Customer authorizes and instructs Custodian to hold the
Property in the Accounts in custody accounts which have been established by Custodian with (a) a U.S. bank or trust
company or branch thereof located in the U.S. (individually, a "Sub -custodian"), or (b) a U.S. securities depository or
clearing agency or system in which Custodian or a Sub -custodian participates (individually, a "Securities System").
Custodian shall select in its sole discretion the entity or entities in the custody of which any of the Securities may be so
maintained or with which any Cash may be so deposited. Custodian may, at any time in its discretion, terminate the
employment of any Sub -custodian or Securities System.
5. Holding of Securities, Nominees, etc. Securities in the Account which are held by Custodian or any
Sub -custodian may be held by such entity in the name of Customer, in Custodian's or Sub -custodian's own name, in the
name of Custodian's or Sub -custodian's nominee, or in bearer form. Securities which are held by a Sub -custodian or are
eligible for deposit in a Securities System as provided above may be maintained with the Sub -custodian or the
Securities System in an account for Custodian's or Sub -custodian's customers. Custodian or Sub -custodian, as the case
may be, may combine certificates representing Securities held in the Account with certificates of the same issue held by
it as fiduciary or as a custodian. In the event that any Securities in the name of Custodian or its nominee or held by one
of its Sub -custodians and registered in the name of such Sub -custodian or its nominee are called for partial redemption
by the issuer of such Security, Custodian may, subject to the rules or regulations pertaining to allocation of any
securities depository in which such Securities have been deposited, allot, or cause to be allotted, the called portion to
the respective beneficial holders of such class of security in any manner Custodian deems to be fair and equitable.
6. Proxies, etc. If Custodian shall receive any proxies, notices, reports or other communications
relative to any of the Securities in the Account, Custodian shall as soon as practicable transmit to Customer, or notify
Customer of the receipt of, such proxies, notices, reports or other communications. Neither Custodian nor its nominees
or agents shall vote upon or in respect of any of the Securities in the Account, execute any form of proxy to vote
thereon, or give any consent or take any action (except as provided in Section 2) with respect thereto except upon the
receipt of Instructions relative thereto.
Settlement Procedures
(a) The proceeds from the sale or exchange of Securities will be credited and the cost of such
Securities purchased or acquired will be debited to the Account in accordance with applicable
industry standards. Settlement and payment for Securities received for the Account and
delivery of Securities maintained for the Account may be effected 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,
delivering securities to the purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of receiving later payment for
Securities from such purchaser or dealer. Custodian shall not be liable for any loss which
results from effecting transactions in accordance with the customary or established securities
trading or securities processing practices and procedures in the applicable jurisdiction or
market.
(b) Custodian shall not be required to comply with any Instructions to settle the purchase of any
securities for the Account, unless there are sufficient immediately available funds in the
Account, provided that if, after all expenses, debits and withdrawals ("Debits") applicable to
the Account have been made and if after all Conditional Credits, as defined below, applicable
to the Account have been made final entries as set forth in (d) below, the amount of
immediately available funds in such Account is at least equal to the aggregate purchase price
of all securities for which Custodian has received Instructions to settle on that date
("Settlement Date"), Custodian, upon settlement, shall credit the Securities to the Account by
making a final entry on its books and records.
(c) Notwithstanding the foregoing, if after all Debits applicable to the Account have been made,
there remains outstanding any Conditional Credit applicable to the Account or the amount of
immediately available funds in such Account are less than the aggregate purchase price of all
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securities for which Custodian has received Instructions to settle on the Settlement Date,
Custodian, upon settlement, may provisionally credit the Securities to the Account by making
a conditional entry on its books and records ("Conditional Credit"), pending receipt of
sufficient immediately available funds in the Account.
(d) If, within a reasonable time after the posting of a Conditional Credit and after all Debits
applicable to the Account have been made, immediately available funds at least equal to the
aggregate purchase price of all securities subject to a Conditional Credit on a Settlement Date
are deposited into the Account, Custodian shall make the Conditional Credit a final entry on
its books and records. In such case, Customer shall be liable to Custodian only for late
charges at a rate mutually agreed upon in writing by Custodian and Customer.
(e) If (i) within a reasonable time from the posting of a Conditional Credit, immediately available
funds at least equal to the resultant Debit on a Settlement Date are not on deposit in the
Account, or (ii) any Proceeding shall occur, Custodian may sell such of the Securities subject
to the Conditional Credit as it selects in its sole discretion and shall apply the net proceeds of
such sale to cover such Debit, including related late charges, and any remaining proceeds
shall be credited to the Account. If such proceeds are insufficient to satisfy such debt in full,
Customer shall continue to be liable to Custodian for any shortfall. Custodian shall make the
Conditional Credit a final entry on its books as to the Securities not required to be sold to
satisfy such Debit. Pending payment in full by Customer of the purchase price for Securities
subject to a Conditional Credit, and Custodian's making a Conditional Credit a final entry on
its books, Customer shall have no security entitlement and, unless consented to by Custodian,
no right to give further Instructions in respect of Securities subject to a Conditional Credit.
Custodian shall have the sole discretion to determine which Securities shall be deemed to
have been paid for by Customer out of funds available in the Account. Any listing on a report
to Customer of Securities which are subject to a Conditional Credit shall be deemed for
informational purposes only and such Securities shall not be deemed finally credited to the
Account; accordingly, such Conditional Credit may be reversed (any corresponding Debit
shall be canceled) by Custodian unless and until Custodian makes a final entry on its books
crediting such Securities to the Account. "Proceeding" shall mean any insolvency,
bankruptcy, receivership, reorganization or similar proceeding relating to Customer, whether
voluntary or involuntary.
(f) Customer agrees that it will not use the Account to facilitate the purchase of securities without
sufficient funds in the Account (which funds shall not include the proceeds of the sale of the
purchased securities).
(g) If Custodian in its sole discretion advances funds hereunder or there shall arise for whatever
reason an overdraft in an Account (including, without limitation, overdrafts incurred with the
settlement of securities transaction, funds transfers or foreign exchange transactions) or if
Customer is for any other reason indebted to Custodian, Customer agrees to repay Custodian
on demand the amount of the advance, overdraft or indebtedness plus accrued interest at a rate
ordinarily charged by Custodian to its institutional custody customers, but in all cases only
from legally available funds.
8. Instructions "Instructions" means instructions from Customer in respect of any of Custodian's
duties hereunder which have been received by Custodian at its address set forth in Section 13 below from an Authorized
Person authorized by Customer to give the particular class of Instructions in question or from a person reasonably
believed by Custodian to be such an Authorized Person (i) in writing (including, without limitation, facsimile
transmission, telex, or any other method whereby Custodian is able to verify with a reasonable degree of certainty the
identity of the sender of such communication or the sender is required to provide a password or other identification
code); (ii) by an oral communication (whether in person, by telephone or otherwise); or (iii) upon receipt of such other
form of instructions as Customer may from time to time authorize in writing and which Custodian agrees to accept.
Instructions in the form of oral communications shall be confirmed by Customer by tested telex or writing in the
manner set forth in clause (i) above, but the lack of such confirmation shall in no way affect any action taken by
Custodian in reliance upon such oral instructions prior to Custodian's receipt of such confirmation, or cause Custodian
to be liable for relying upon such oral communications.
An "Authorized Person" means such one or more person or persons as Customer shall have from time to
time authorized to give the particular class of Instructions in question and whose name, signature and office address
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have been filed with Custodian in a Certificate of Authorized Persons in the form attached hereto as Exhibit B (or such
other form of authorization as Custodian may reasonably require) which contains a specimen signature of such person
and designates the class of instructions which such person is authorized to give to Custodian. Custodian shall have the
right to assume, in the absence of written notice to the contrary from Customer, that any Authorized Person whose
name is on file with Custodian pursuant to this Section has been authorized by Customer to give the Instructions in
question and that such authorization has not been revoked. Customer agrees to furnish Custodian a new Certificate of
Authorized Person in the event of any change in the then present Authorized Persons. Until a new Certificate is
received, Custodian may act upon and conclusively rely on, without any liability to Customer or any other person or
entity for any losses resulting therefrom, any Instructions reasonably believed by it to be furnished by a present
Authorized Person.
9. Standard of Care Custodian shall be responsible for the performance of only such duties as are set
forth herein or contained in Instructions given to Custodian which are not contrary to the provisions of this Agreement.
Custodian will use reasonable care with respect to the safekeeping of Securities in the Account and in carrying out its
obligations under this Agreement. So long as and to the extent that it has exercised reasonable care, Custodian shall not
be responsible for the title, validity or genuineness of any Property or other property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon, and may
conclusively rely on, without liability for any loss resulting therefrom, any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed or furnished by the proper party or parties,
including, without limitation, Instructions, and shall be indemnified by Customer for any losses, damages, costs and
expenses (including, without limitation, the fees and expenses of counsel) incurred by Custodian and arising out of
action taken or omitted with reasonable care by Custodian hereunder or under any Instructions. Custodian shall be
liable to Customer for any act or omission to act of any Sub -custodian to the same extent as if Custodian committed
such act itself. With respect to a Securities System or a Foreign Sub -custodian, Custodian shall only be responsible or
liable for losses arising from employment of such Securities System or Foreign Sub -custodian caused by Custodian's
own failure to exercise reasonable care. In the event of any loss to Customer by reason of the failure of Custodian or its
Sub -custodian to utilize reasonable care, Custodian shall be liable to Customer to the extent of Customer's actual
damages at the time such loss was discovered without reference to any special conditions or circumstances. In no event
shall Custodian be liable for any consequential or special damages, lost profits or loss of business. Custodian shall be
entitled to rely, and may act, on advice of counsel (who may be counsel for Customer) on all matters and shall be
without liability for any action reasonably taken or omitted pursuant to such advice.
Without limiting the generality of the foregoing, Custodian shall not be obligated to (a) inquire into and shall
not be liable for any losses incurred by Customer or any other person as a result of the receipt or acceptance of
fraudulent, forged or invalid Securities, or Securities which are otherwise not freely transferable or deliverable without
incumbrance in any relevant market, (b) take action to collect any amount payable on Securities in default, or if
payment is refused after due demand and presentment, (c) inquire into, make recommendations, supervise, or determine
the suitability of any transaction affecting any Account, or (d) perform any duties or responsibilities not specifically set
forth in this Agreement. Custodian is authorized to supply any information regarding the Accounts which is required
by any law, regulation or rule (including regulations or rules of self-regulatory organizations) now or hereafter in effect.
In the event Customer utilizes any means of electronic communication to Custodian, Customer shall be fully
responsible for the security of Customer's transmission device, access thereto and the proper and authorized use thereof
and the initiation and application of continuing effective safeguards and Customer agrees to defend, indemnify
Custodian and hold Custodian harmless from and against any and all liabilities, losses, damages, costs, including
attorneys' fees and every other expense of every nature incurred by Custodian as a result of any improper or
unauthorized use of such device by Customer or by others on Customer's premises.
All collections of funds or other property paid or distributed in respect of Securities in the Account, including
funds involved in third -party foreign exchange transactions, shall be made at the risk of Customer. Subject to the
exercise of reasonable care, Custodian shall have no liability for any loss occasioned by delay in the actual receipt of
notice by Custodian or by its Sub -custodian of any payment, redemption or other transaction regarding Securities in the
Account in respect of which Custodian has agreed to take action as provided in Section 2 hereof. Custodian shall not be
liable for any loss resulting from, or caused by, acts of governmental authorities (whether de jure or de facto),
including, without limitation, nationalization, expropriation, and the imposition of currency restrictions; acts of war,
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terrorism, insurrection or revolution; strikes or work stoppages; the inability of a local clearing and settlement system to
settle transactions for reasons beyond the control of Custodian; hurricane, cyclone, earthquake, volcanic eruption,
nuclear fusion, fission or radioactivity or other acts of God.
Custodian shall have no liability in respect of any loss, damage or expense suffered by Customer, insofar as
such loss, damage or expense arises from the performance of Custodian's duties hereunder by reason of Custodian's
reliance upon records that were maintained for Customer by entities other than Custodian prior to Custodian's
employment under this Agreement.
Except as otherwise provided herein, Customer agrees to indemnify and hold harmless Custodian from and
against any and all costs, expenses, damages, liabilities or claims (including reasonable attorneys' and accountants' fees)
("Losses") incurred by or asserted against Customer or Custodian arising out of Custodian's action or inaction under this
Agreement. This indemnity shall be continuing obligation of Customer, its successors and assigns. Except as otherwise
provided herein, Custodian agrees to indemnify and hold harmless Customer from and against any and all Losses
incurred by or asserted against Customer arising solely out of Custodian's gross negligence, recklessness or intentional
misconduct related to this Agreement.
The provisions of this Section shall survive termination of this Agreement.
10. Fees and Expenses Customer agrees to pay to Custodian such compensation for its services pursuant
to this Agreement as may be mutually agreed upon in writing from time to time and Custodian's out -of pocket or
incidental expenses in connection with the performance of this Agreement, including (but without limitation) legal and
accounting fees. The initial fee schedule is set forth in Exhibit A attached hereto. Such fees will not be abated by, nor
shall Custodian be required to account for, any profits or commissions received by Custodian in connection with its
provision of custody services under this Agreement. Customer hereby agrees to hold Custodian harmless from any
liability or loss resulting from any taxes or other governmental charges, and any expense related thereto, which may be
imposed, or assessed with respect to any Property in the Accounts and also agrees to hold Custodian, its Sub -
custodians, and their respective nominees harmless from any liability as a record holder of Property in the Accounts.
Custodian is authorized to charge the Account and any other account of Customer with Custodian for such items. The
provisions of this Section shall survive the termination of this Agreement.
it. Customer Ownership of Securities; Security Interest Customer represents and warrants to Custodian
that either Customer owns the Securities in the Account free and clear of all liens, claims, security interests and
encumbrances (except those granted herein), or if the Securities are owned beneficially by others, Customer has the
right to pledge such Securities to the extent necessary to secure Customer's and the beneficial owner's obligations
hereunder, free of any right of redemption or prior claim by the beneficial owner. Custodian's security interest pursuant
to this Section shall be a first lien and security interest subject to no setoffs, counterclaims or other liens prior to or on a
parity with it in favor of any other party (other than specific liens granted preferred status by statute), and Customer
shall take any and all additional steps which Custodian requires to assure itself of such priority and status, including
notifying third parties or obtaining their consent to Custodian's security interest. With respect to Accounts established
in the name of third parties, Customer represents and warrants to Custodian that Customer has been duly authorized to
enter into and perform all transactions contemplated hereby and to take actions and give Instructions with legal and
binding effect upon such third parties and their respective Accounts.
In order to secure repayment of Customer's and each third party's obligations to Custodian hereunder,
Customer hereby pledges and grants to Custodian a continuing lien and security interest and right of set-off against, all
of Customer's right, title and interest in and to (a) all Accounts in Customer's name and the Property now or hereafter
held in such Accounts (including proceeds thereof), (b) each Account in respect of which or for whose benefit the
advance, overdraft or indebtedness relates and the Property now or hereafter held in such Accounts (including proceeds
thereof) and (c) any other property at any time held by it for the account of Customer. In this regard, Custodian shall be
entitled to all the rights and remedies of a pledgee under common law and a secured party under the Tennessee Uniform
Commercial Code and any laws or regulations then in effect.
12. Amendment, Modification, etc. No provisions of this Agreement may be amended, modified or
waived except in writing signed by the parties hereto. No waiver of this Agreement may be amended, modified or
waived except in writing signed by the parties hereto. No waiver of any provision hereto shall be deemed a continuing
waiver unless it is so designated. No failure or delay on the part of either party in exercising any power or right under
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this Agreement operates as a waiver, nor does any single or partial exercise of any power or right preclude any other or
further exercise thereof or the exercise of any other power or right.
Page 7 of 14
A-7
Account Number
13. Termination This Agreement may be terminated by Customer or Custodian by ninety (90) days'
notice to the other, provided that the notice by Customer shall specify the names of the persons to whom Custodian
shall deliver the Securities in the Account and to whom the Cash in the Account shall be paid. If notice of termination
is given by the Custodian, Customer shall, within ninety (90) days following the giving of such notice, deliver to
Custodian a written notice specifying the names of the persons to whom Custodian shall deliver the Securities in the
Account and to whom the Cash in the Account shall be paid. In either case, Custodian will deliver such Securities and
pay such Cash to the persons so specified, after payment of any amounts which Custodian determines to be owed to it
under Sections 2 and 10. In addition, Custodian may in its discretion withhold from such delivery such Cash and
Securities as may be necessary to settle transactions pending at the time of such delivery. If within ninety (90) days
following the giving of a notice of terminations by Custodian, Custodian does not receive from Customer a written
notice specifying the names of the persons to whom Custodian shall deliver the Securities in the Account and to whom
the Cash in the Account shall be paid, Custodian, at its election, may deliver such Securities and pay such Cash to a
bank or trust company doing business in the State of New York to be held and disposed of pursuant to the provision of
this Agreement, or may continue to hold such Securities and Cash until a written notice as aforesaid is delivered to
Custodian, provided that Custodian's obligations shall be limited to safekeeping. Notwithstanding the foregoing, if the
reason for termination of this Agreement by Custodian is the failure of Customer to pay the fees and expenses which
Customer is required to pay hereunder, the aforesaid ninety (90) day periods may, in Custodian's discretions, be
shortened to thirty (30) days, with notice thereof to Customer.
14. Notices Except as otherwise provided in this Agreement, all requests, demands or other
communications between the parties or notices in connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to the respective addresses for Custodian and Customer set forth on the
signature page of this Agreement, or at such other address as shall have been furnished by the receiving party pursuant
to the provisions hereof, and (b) shall be deemed effective when received, or, in the case of a telex, when sent to the
proper number and acknowledged by a proper answer back.
15. Governing Law; Successors and Assigns This Agreement shall be governed by the law of the State
of Tennessee and shall not be assignable by either party, but shall bind the successors in interest of Customer and
Custodian.
16. Publicity Customer shall furnish to Custodian at its address referred to in Section 14 above, prior to
any distribution thereof, copies of any material prepared for distribution to any persons who are not parties hereto that
refer in any way to Custodian or this Agreement. Customer shall not distribute or permit the distribution of such
materials if Custodian reasonably objects in writing within ten (10) business days (or such other time as may be
mutually agreed) after receipt thereof. The provisions of this Section shall survive the termination of this Agreement.
17. Arbitration; Submission to Jurisdiction Customer and Custodian agree that all controversies which
may arise between the parties concerning any transaction or construction, performance, or breach of this or any other
agreement between them pertaining to securities and other property, whether entered into prior, on or subsequent to the
date hereof, upon the mutual agreement of Customer and Custodian, may be determined by arbitration. Any arbitration
under this agreement shall be conducted pursuant to the Federal Arbitration Act and the laws of the State of
Tennessee, before the American Arbitration Association, or the National Association of Securities Dealers, Inc., or
the Municipal Securities Rulemaking Board and in accordance with the applicable rules of the selected organization.
Customer may elect in the first instance whether arbitration shall be by the American Arbitration Association, or by a
Self -Regulatory Organization of which Custodian is a member. However, if Customer fails to make such election by
registered letter or telegram addressed to Custodian at Custodian's main address, before the expiration of ten (10)
calendar days after the sending by Custodian of a written request (to Customer's then current address per Custodian
records) that Customer make such election, then Custodian may make such election. The award of arbitrators, or of
the majority of them, shall be final, and judgment upon the award rendered may be entered and enforced in any
court, state or federal, having jurisdiction. No person shall bring a putative or certified class action to arbitration,
nor seek to enforce any pre -dispute arbitration agreement against any person who has initiated in court a putative
class action, or who is a member of a putative class who has not opted out of the class with respect to any claims
encompassed by the putative class action until: (i) the class certification is denied; or (ii) the class is decertified, or
(iii) Customer is excluded from the class by the court. Such forbearance to enforce an agreement to arbitrate shall
not constitute a waiver of any rights under this Agreement except to the extent stated herein.
Page 8 of 14
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•
Account Number
No action, regardless of form, arising out of a transaction or transactions conducted in the Account, may be
brought by a customer more than one (1) year after the date that the transaction or transactions occurred in the Account,
or more than one (1) year after the date upon which the Customer had or should reasonably have had notice of the basis
of such action, whichever is later.
If the parties should seek arbitration, such arbitration is final and binding on the parties. By agreeing to such
arbitration, the parties are waiving herein their rights to seek remedies in court, including the right to jury trial. Pre -
arbitration discovery is generally more limited than and different from court proceedings. The arbitrators' award is not
required to include factual findings or legal reasoning and any party's right to appeal or to seek modification of the
ruling by the arbitrators is strictly limited. The panel of arbitrators will typically include arbitrators who were or are
affiliated with the securities industry.
Any suit, action or proceeding arising out of this Agreement, other than arbitration, shall be instituted in any
State or Federal court sitting in the City of Memphis, State of Tennessee, United States of America, and Customer
irrevocably submits to the non-exclusive jurisdiction of any such court in any such suit, action or proceeding and
waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue
of any such suit, action or proceeding brought in such a court and any claim that such suit, action or proceeding was
brought in an inconvenient forum. Customer further irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of copies thereof by certified air mail,
postage prepaid, to Customer at its address on the signature page hereof or in any other manner permitted by law,
such service to become effective upon the earlier of (i) the date fifteen (15) days after such mailing or (ii) any earlier
date permitted by applicable law. Both parties agree to waive all rights to a jury trial.
18. Confidentiality The parties hereto agree that each shall treat confidentially the terms and conditions
of this Agreement and all information provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other party hereto solely for the purpose of
rendering services pursuant to this Agreement and, except as may be required in carrying out this Agreement, shall not
be disclosed to any third party without the prior consent of such providing party. The foregoing shall not be applicable
to any information that is publicly available when provided or thereafter becomes publicly available other than through
a breach of this Agreement, or that is required or requested to be disclosed by any brokerage, bank or other regulatory
examiner of Custodian, Customer, or any Sub -custodian, any auditor of the parties hereto, by judicial or administrative
process or otherwise by applicable law or regulation. The provisions of this Section shall survive the termination of this
Agreement.
19. Severability If any provision of this Agreement is determined to be invalid or unenforceable, such
determination shall not affect the validity or enforceability of any other provision of this Agreement.
20. Entire Agreement This Agreement together with any exhibits attached hereto and the Customer
Agreement between Customer and Custodian, contains the entire agreement between the parties relating to the subject
matter hereof and supersedes any oral statements and prior writings with respect thereto. In the event of any conflict
between this agreement and the Customer Agreement, the customer Agreement shall govern.
21. Headinus The headings of the paragraphs hereof are included for convenience of reference only and
do not form a part of this Agreement.
22. Counterparts This Agreement may be executed in any number of counterparts, each of which shall
be deemed an original. This Agreement shall become effective when one or more counterparts have been signed and
delivered by each of the parties hereto.
23. Signature Authorization Customer Signatories appearing below are duly authorized officers or
agents of Customer. Customer will deliver to Custodian a duly executed Secretary's Certificate in the form of
Page 9 of 14
1 •
Account Number
Exhibit C hereto, or such other evidence of such authorization as Custodian may reasonably require, whether by way of
a certified resolution or otherwise.
IN WITNESS WHEREOF, each of the parties has caused its duly authorized signatories to execute this Agreement as
of the date first written above.
("Customer")
By:
Name:
Title:
Date:
VINING-SPARKS IBG, LIMITED PARTNERSHIP
("Custodian")
By:
Ronald D. Sting
Safekeeping Manager
Date:
Page 10 of
Custorner's address:
Attn:
Custodian's Address:
Attn.: Safekeeping Dept.
Vining -Sparks IBG, L.P.
775 Ridge Lake Boulevard
Memphis, TN 38120
A-10
Account Number
EXHIBIT A
FEESCHEDULE
(US Custody)
THIS SECTION SHALL NOT APPLY TO CUSTOMER
This Exhibit A shall be amended upon delivery by Custodian of a new Exhibit A to Customer and acceptance by
Customer and shall be effective as of the date of acceptance by Customer or a date agreed upon between Custodian and
Customer.
Account Maintenance
Per Position, Per Month $ 3.00
Transaction Fee (Security Dcposit/Withdrawal)
Inside Trade $10.00
Physicals $30.00
Transaction Fee (Security Deposit/Withdrawal)
Outside Trade $30.00
Physicals $30.00
Pledge/Release of Security $12.00
Statement of Assets $ 4.00
Registration Fee
$30.00
Wire Charge
$15.00
Check Charge
$ 5.00
Monthly Minimum Fee
$25.00
All out-of-pocket expenses will be charged directly to the Account at the time these expenses are incurred. These costs
include, but shall not be limited to, all shipping costs, telegraphic transfer fees, re-registration\transfer fees, postage,
insurance, expenses imposed by other agents, etc.
Page 10 of 14
A-11
Account Number
EXHIBIT B
CERTIFICATE OF AUTHORIZED PERSONS
(Customer - Oral and Written Instructions)
The undersigned hereby certifies that he/she is the duly elected and acting
of ("Customer"), and further certifies that the following
officers or employees of Customer have been duly authorized in conformity with Customer's Articles of Incorporation
and By -Laws to deliver oral and written Instructions to VINING-SPARKS IBG, LIMITED PARTNERSHIP
("Custodian") pursuant to the Custody Agreement between Customer and Custodian dated
that the restrictions on the ability of each of them, to deliver any class of Instructions to the Custodian, are listed below
next to the number corresponding to the number next to their name and that the signatures appearing opposite their
names are true and correct:
Name
2.
3.
4.
5.
Title Signature
Restrictions on authority of named individuals to deliver Instructions:
1.
2.
3.
4.
5.
This certificate supersedes any certificate of authorized individuals you may currently have on file.
Signature Title
Name
Date
Page 11 of 14
A-12
Account Number
EXHIBIT C
SECRETARY'S CERTIFICATE
I, ,[Name of Secretary] hereby certify that I
am the Secretary of [Customer's Name] a
[Type of Entity] organized under the laws of [Jurisdiction] ("Customer"), and as such I am
duly authorized to, and do hereby, certify that:
1. Organization, Power and Authority. Customer is duly organized and existing under the laws of the
jurisdiction of its organization, with full power to enter into this Agreement and to perform its obligations hereunder.
2. Resolutions. Resolutions have been duly adopted on behalf of Customer, which resolutions (i) have
not in any way been revoked or rescinded, (ii) have been in full force and effect since their adoption, to and including
the date hereof, and are now in full force and effect, and (iii) are the only corporate proceedings of Customer now in
force relating to or affecting the matters referred to therein, including, without limitation, confirming that Customer is
duly authorized to enter into a certain custody agreement with VINING-SPARKS IBG, LIMITED PARTNERSHIP
(the "Agreement'), and that certain designated officers, including those identified in paragraph 3 of this Certificate, are
authorized to execute said Agreement on behalf of Customer, in conformity with the requirements of Customer's
organizational documents, Bylaws, and other pertinent documents to which Customer may be bound.
3. Incumbency. The following named individuals are duly elected (or appointed), qualified, and acting
officers of Customer holding those offices set forth opposite their respective names as of the date hereof, each having
full authority, acting individually, to bind Customer, as a legal matter, with respect to all matters pertaining to the
Agreement, and to execute and deliver said Agreement on behalf of Customer, and the signatures set forth opposite the
respective names and titles of said officers are their true, authentic signatures:
Name Title Signature
EXECUTED this day of
By:
Name:
Title: Secretary
I,
certify that on this day of
20
ame of the Confirming Officer]
, 20,
] of Customer, hereby
[Name of
Secretary] is the duly elected Secretary of Customer and that the signature above is his genuine signature.
By:
Name:
Title:
Page 12 of 14
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Account Number
EXHIBIT D
CUSTOMER INSTRUCTIONS AS TO CASH
Custodian is hereby authorized and directed to treat all cash received by Custodian on behalf of Customer as follows:
PLEASE INDICATE BY CHECK MARK THE ALTERNATIVE SELECTED BY CUSTOMER
❑ Denosit in Federated Investors money market mutual fund designated by Customer
Attached (Exhibit E) is a list and a brief description of money market mutual funds (MMMF's) used by
Custodian for the investment of cash. If Customer selects this alternative, Customer must select from among
the listed MMMF's the particular MMMF into which Customer wishes its cash to be deposited. Prospectuses
of all MMMF's listed have been supplied to customer simultaneous with delivery of this Agreement, and
Customer acknowledges same by execution of this Agreement.
❑ Federated Prime Obligations Fund, CUSIP 60934N203
❑ Federated Government Obligations Fund, CUSIP 60934NI04
❑ Federated Treasury Obligations Fund, CUSIP 60934N500
❑ Remit to Customer by wire transfer
Please provide wire instructions for remittance of cash to Customer by wire transfer
Name of Bank
ABA Number
Address of Bank
Account Number
Account Name
Remit to Customer by check
Please provide instructions for remittance of cash to Customer by check
Payee Name
Payee Address
Page 13 of 14
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Account Number
EXHIBIT E
FEDERATED INVESTORS. INC.
MONEY MARKET MUTUAL FUND OPTIONS FOR SAFEKEEPING ACCOUNTS
Taxable Money Market Mutual Funds
The objective of the following funds is to seek as high a level of current income as is consistent with the preservation of
capital and the maintenance of liquidity.
Federated Prime Obligations Fund POIXX
The fund invests primarily in a portfolio of high-quality, dollar-denominated 60934N203
fixed-income securities which: (1) are issued by banks, corporations
and the U.S. government; and (2) mature in 397 days or less.
Federated Government Obligations Fund GOIXX
The Fund invests exclusively in a portfolio of short-term U.S. Treasury and government 60934N104
securities . The Fund limits its investments to those that would enable it to qualify
as a permissible investments for federally chartered credit unions.
Federated Treasury Obligations Fund TOIXX
The Fund invests exclusively in a portfolio of short-term U.S. Treasury securities 60934N500
as well as repurchase agreements collateralized fully by U.S. Treasury securities.
The Fund may also hold cash.
Please consider the investment objectives, risks, charges and expenses of money market mutual funds carefully
before investing. The prospectus provided contains this and other information about the funds. Additional
copies of the prospectus can be obtained by contacting us at 800-829-0321 or electronically by going to:
httn://www.federated investors.com
Although money market mutual funds seek to preserve the value of an investment at $1.00 per share, it is possible
to lose money by investing in a money market mutual fund.
AN INVESTMENT IN A MONEY MARKET MUTUAL FUND IS NOT A DEPOSIT OF A BANK OR ENDORSED
BY ANY BANK AND IS NOT GUARANTEED BY THE FDIC, THE US GOVERNMENT OR ANY OTHER
GOVERNMENTAL AGENCY
The above funds pay the Custodian an administrative services fee under rule 12b-lof the 1940 Investment
Company Act, additional information can be found in the prospectus provided.
Page 14 of 14
A-15
RESOLUTION NO. 2016-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RANCHO PALOS VERDES APPROVING THE FORM OF A
CUSTODIAN AGREEMENT WITH VINING-SPARKS IBG,
LIMITED PARTNERSHIP, DESIGNATING "AUTHORIZED
OFFICERS" AND TAKING CERTAIN OTHER ACTIONS
RELATING THERETO.
WHEREAS, the City of Rancho Palos Verdes (the "City") desires to ensure
certain of its property, including cash and assets of the City, are maintained safely in
accounts under the safekeeping of a custodian, invested in accordance with the City's
investment policy and subject to the City's Municipal Code, and pursuant to the direction
of the City Manager, Deputy City Manager and Finance Director; and
WHEREAS, Vining -Sparks IBG, Limited Partnership (the "Custodian") is a
nationally recognized investment company that offers such services, and has offered to
provide such services to the City subject to the terms of a Custodian Agreement (the
"Agreement"); and
WHEREAS, the Custodian has additionally agreed to waive all fees set forth in
Exhibit A to the Agreement; and
WHEREAS, the City Council now desires to approve the form of said Agreement,
and to designate the City Manager, Deputy City Manager, and Finance Director of the
City as "Authorized Persons" with the power to provide direction to the Custodian,
subject to the limitations of the Agreement, the City's Municipal Code, and the City's
investment policy.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES DOES HEREBY FIND, DETERMINE, AND RESOLVE AS FOLLOWS:
Section 1. Each of the recitals set forth above is true and correct and is
incorporated as part of this decision.
Section 2. The City Council hereby approves the form of the Agreement,
subject to a waiver by Custodian of all fees set forth in Exhibit A thereto. The City
Manager, the Deputy City Manager, and the Finance Director (collectively the
"Authorized Persons" and each an "Authorized Person"), each acting alone, are hereby
authorized and directed to execute the Agreement in said form, together with such
immaterial additions thereto or changes therein as the Authorized Person shall deem
necessary, desirable, or appropriate, and the execution of the Agreement by an
Authorized Person shall be conclusive evidence of the approval of any such additions
and changes. However, no change to the fee structure set forth in Exhibit A of the
Agreement may be made without approval by the City Council. The City Council further
authorizes the delivery and performance of the Agreement.
01203.0007/277896.1 Resolution No. 2016 -
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Section 3: The City Council hereby designates the City Manager, Deputy City
Manager, and Finance Manager as an "Authorized Person" within the meaning of
Section 8 of the Agreement, with authority to provide "Instructions" as such term is
defined in Section 8 of the Agreement; provided, however, that no Authorized Person
may provide any Instruction in conflict with the City's Municipal Code or the City's
investment policy.
Section 4: The City Council hereby directs City staff, including the Authorized
Persons, to take all actions necessary for consummation of the transactions described
herein, including executing any necessary certificates and taking any other related
actions.
PASSED, APPROVED AND ADOPTED this 15t" day of March 2016, by the
following vote:
Mayor
Attest:
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES )ss
CITY OF RANCHO PALOS VERDES )
I, Carla Morreale, City Clerk of the City of Rancho Palos Verdes, hereby certify that the
above Resolution No 2016- was duly and regularly passed and adopted by the said
City Council at a regular meeting held on March 15, 2016.
City Clerk
01203.0007/277896.1 Resolution No. 2016 -
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