RES 15-683 - Authorizing Opening Safekeeping Account with US Bank RESOLUTION NO. #15-683
A RESOLUTION of the City Council of the City of Federal Way,
Washington, authorizing and directing the opening of a Safekeeping
Account with U.S.Bank N.A. (USBNA).
WHEREAS, Council passed Resolution No. 13-633 on March 5, 2013 establishing the
City of Federal Way Investment Policy; and
WHEREAS, Resolution No. 13-633 directs that the assets of the City shall be
secured through athird party custodian in the form of a Safekeeping Agreement to guard against
potential fraud and embezzlement; and
WHEREAS, Resolution No. 13-633 directs that the delivery of these securities be
evidenced by safekeeping receipts; and
WHEREAS, Council finds that verification of transferred securities will be part of the
City's annual financial audit by the State Auditor's Office; and
WHEREAS, Council finds that U.S. Bank N.A. (USBNA) is a qualified safekeeping
custodial service provider, and Council desires that USBNA hold the City's investment securities
in accordance with Resolution No. 13-633, Investment Policy 10.0, Safekeeping and Custody.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
RESOLVES AS FOLLOWS:
Section 1.Account Authorized. The Finance Director is authorized and directed to open a
safekeeping account on behalf of the City with USBNA as described in the Safekeeping Agreement
attached herein as Exhibit A.
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Section 2. Severability.If any section, sentence,clause or phrase ofthis resolution should be
held to be invalid or unconstitutional by a court of competent jurisdiction, such invalidity or
unconstitutionality shall not affect the validity or constitutionality of any other section, sentence,
clause or phrase of this resolution.
Section 3. Corrections. The City Clerk and the codifiers of this resolution are authorized to
make necessary corrections to this resolution including, but not limited to, the correction of
scrivener/clerical errors, references, resolution numbering, section/subsection numbers and any
references thereto.
Section 4. Ratification.Any act consistent with the authority and prior to the effective date of
this resolution is hereby ratified and affirmed.
Section 5. Effective Date.This resolution shall be effective immediately upon passage by the
Federal Way City Council.
RESOLVED BY THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON this 5th day of May, 2015.
CITY OF FEDERAL WAY
i
■ A O', JIM FERRELL
ATTEST:
LERK, STEPHANIE t d RTNEY, CMC
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APPROVED AS TO FORM:
CITY A RNEY, AMY JO PEARSALL
FILED WITH THE CITY CLERK: 04/30/2015
PASSED BY THE CITY COUNCIL: 05/05/2015
RESOLUTION NO.: 15-683
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EXHIBIT A
SAFEKEEPING AGREEMENT
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U.S. BANK NATIONAL ASSOCIATION
SAFEKEEPING AGREEMENT
In consideration of U.S. Bank National Association (the "Bank") continuing or now or
hereafter opening a safekeeping account or accounts for the Owner whose name appears
above under the heading"Customer Information Profile" (the "Owner"),the Bank and the
Owner agree that such accounts and any securities held in such accounts will be subject
to the following terms and conditions of this Safekeeping Agreement (the "Safekeeping
Agreement"):
1. Custody of Securities. The Bank agrees to hold and keep as custodian hereunder all
securities that Bank has agreed to accept for the account of the Owner ("Safekept
Securities") and to deliver such securities as Owner directs pursuant to the terms and
conditions of this Safekeeping Agreement. The Bank in its discretion may refuse to accept
any security for safekeeping and in any case will not accept any security for safekeeping
unless it is fully paid for or good funds are available to the Bank to payfor any such unpaid
security.
2. Owner Instructions. The Bank is authorized to accept, act upon and rely upon all
written instructions given by the Owner or those persons designated from time to
time by the Owner to the Bank as having such authority (each an "Authorized
Representative"). The Owner hereby represents and warrants that each Authorized
Representative is authorized to give instructions to the Bank. The Owner may give
written instructions to the Bank via email by sending such instructions to the Bank's
email address of record as may be designated from time to time by the Bank, and the
Bank is authorized to act upon any such transaction request received immediately
upon receipt thereof. The Bank is under no obligation to deliver to the Owner
acknowledgement that it has received such instructions via email. The Bank shall not be
liable in any manner if it executes any oral or written instruction that comes from the
Owner or its Authorized Representative. All claims for failure to properly follow the
instructions of the Owner or the Authorized Representative must be made within thirty
(30) days from the date on which the instructions were received by Bank or such claims
are expressly waived by the Owner.
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3. Security holder Information. Unless otherwise required by law or pursuant to written
instructions, in no event shall the Bank be responsible to take any action concerning any
puts, calls, conversions, exchanges, reorganizations, offers, tenders or other corporate
actions or similar matters relating to Safekept Securities other than to forward to the
Owner or its Authorized Representative all information received by the Bank relating to
any such transaction. Owner agrees that its instructions to the Bank with respect to any
such actions shall be in writing and delivered to the Bank within sufficient time for the
Bank to act thereon if any action is required. The Bank shall forward to the Owner at the
Owner's address provided to the Bank above under the heading "Customer
Information Profile" any proxies,financial statements or written notices received by the
Bank relating to Safekept Securities held on behalf of the Owner. All proxies and proxy
material received by the Bank relating to Safekept Securities are to be voted by the
Owner or per the Owner's timely written instructions to the Bank. Safekept Securities
called for redemption prior to maturity will be presented for payment provided the
trustee gives the Bank adequate notice of redemption. Should any Safekept Security be
called for partial redemption by the issuer of such security, the Bank is authorized to
accept the allocation applied by any central depository. In the event the Bank has to
allocate any redemption among its accounts,the Bank shall allot the redemption proceeds
in any manner it deems fair and equitable in its sole discretion.
4. Registration and Third Party Depositories. The Bank shall register Safekept Securities h
nominee name,and mayfrom time to time change the registration of Safekept Securities
from nominee name to the Owner's name or vice versa; provided that the Owner will
timely complete any necessary documentation provided by the Bank to change the
registration of the SafekeptSecurities.SafekeptSecurities held in nominee name maybe
deposited with Depository Trust Company or other third party depository acceptable to
the Bank. Securities that are depository eligible will be held at the depository in the
depositor's nominee name.
5. Collection of Income and Principal. The Bank shall collect and receive the interest,
principal and other income payable in connection with the Safekept Securities and shall
pay any amounts so collected or received to, or credit the account of, the Owner
specified above under the heading"USBNA Settlement Account or Wire Instructions"or
any other settlement account subsequently designated by Owner to the Bank (the
"Settlement Account"}.The Bankshall not beobligated(a)to payto or creditthe account
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of the Owner with any payment of interest, principal or other income until the Bank
receives such payment in immediately available funds or(b}to institute or participate in
any collection proceedings or other proceedings to enforce the Owner's rights relativeto
any Safekept Securities or to pursue any remedies on behalf of Owner. The Bank is
authorized to sign on behalf of the Owner any declarations, affidavits, certificates of
ownership or other documents relating to securities held by the Bank in nominee name
that are now or may hereafter be required with respect to all coupons, registered
interest, dividends or other income.
6. Settlement Account. Unless otherwise specified, Owner unconditionally authorizes,
empowers,and directs Bank(and any financial institution maintaining the Settlement
Account) to (i)debit the Settlement Account on the settlement date indicated on the
confirmation for the full amount of each transaction effected under this Safekeeping
Agreement (including all fees and charges payable hereunder), notwithstanding that
such debit may cause the Settlement Account to be overdrawn and (ii} credit the
Settlement Account with interest payments,maturity payments or other appropriate
payments. Owner represents that no party other than the individuals designated above
underthe heading "Persons Authorized to Transact Business"(or designated from time
to time by Owner to the Bank as having such authority} is required to authorize the
Safekeeping Department to debit or credit the Settlement Account. Owner authorizes
the financial institution maintaining the Settlement Account to accept debit and credit
entries to the Settlement Account until this authorization is cancelled in writing through
written notification of its termination in sufficient time and in such manner as to allow
the financial institution maintaining the Settlement Account and the Safekeeping
Department reasonable opportunity to act on it. Owner acknowledges that it has the
right to receive notice from the Safekeeping Department of a Variable Debit(as defined
below) 10 days prior to such debit, however,Owner hereby elects not to receive such
notice when the Variable Debit is between$1 and$100,000,000. "Variable Debit"means
the amount by which a debit to a Settlement Account differs from the amount of the
immediately preceding debit.
7. Return of Payments.The Owner will repay the Bank,or the Bank may credit an Owner's
settlement account,in the event that for any reason(i)the Bank is required to return to
the issuer or to a third party any payments, (ii) the Bank fails to receive from the issuer
or appropriate other party a payment the Bank paid to the Owner in respect of Safekept
Securities or(iii)the Bank must return to the issuer or appropriate other party a payment
the Bank paid to the Owner in respect of Safekept Securities.
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8. Receipt and Delivery of Securities.The Bank shall not be liable or responsible for or on
account of any act or omission of any broker or other agent designated by the Owner or,
in the absence of such designation, selected by the Bank to receive or deliver securities for
the account of the Owner.
9. Withdrawal of Securities. Any and all Safekept Securities may be withdrawn from the
Bank at any time upon a written order or receipt signed by the Owner or its Authorized
Representative. Withdrawal or delivery of securities is subject to availability (e.g., among
other reasons, securities involved in a corporate action or in frozen status, restricted
securities, or pledged securities may not be available for withdrawal or delivery).
10. Investment Advice. The Bank will not provide supervision, recommendations or
advice to the Owner in connection with the investment, purchase, sale, retention or
other disposition of the Safekept Securities.
11. Standard of Care.The Bank shall use reasonable care in carrying out its obligations under
this Safekeeping Agreement. For purposes of this Safekeeping Agreement, "reasonable
care" shall mean the same degree of care and protection that the Bank gives to its own
property.The Owner shall indemnify and hold harmless the Bank, its directors, officers,
employees and agents, for and against all claims, losses, liabilities and expenses of any
nature or kind, including,without limitation,the Bank's reasonable legal fees and any and
all expenses arising from any claim of any party resulting from any actions taken by the
Bank pursuant to this Safekeeping Agreement. The Bank shall not be liable, directly or
indirectly, for any damages or expenses arising out of the services the Bank provides in
accordance with this Safekeeping Agreement except where the Bank fails to act in good
faith or in accordance with reasonable commercial standards of the banking business. In
no event shall the Bank be liable for special, consequential or punitive damages even
when the Bank has been advised of the possibility of such damages.
12. Fees and Expenses.The Owner shall pay to the Bank such fees as shown on the Bank's fee
schedule, which may be amended from time to time by the Bank upon thirty (30) days
prior notice to the Owner. If the fee schedule is amended,the amended fees will apply to
any securities being held in safekeeping at that time. In addition, the Owner shall
reimburse the Bank for its commercially reasonable out-of-pocket expenses,including,but
not limited to: postage, insurance, registration fees,wire fees,and other fees incurred by
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the Bank in connection with the Safekept Securities and its services provided under this
Safekeeping Agreement. If the Owner fails to pay the Bank any sums due under this
Safekeeping Agreement within 30 days after a written late notice is sent to the Owner by
the Bank,the Bank shall be entitled to exercise any one or more of the following options:
a. to offset any sums due against any funds of the Owner on deposit with the
Bank;
b. to offset any sums due against any interest, principal or other income
received or to be received for the Owner's safekeeping account or accounts
maintained pursuant to this Safekeeping Agreement;
c. to terminate this Safekeeping Agreement and return the Safekept Securities
to the Owner at the Owner's expense; and
d. to avail itself of any other remedy it may have in law or in equity.
13. Record and Taxes.The Bank shall maintain records of the Owner's account and p rovide the
Owner with a Confirmation/Custody Receipt for all Safekept Securities following delivery to
the Bank and periodic statements of Safekept Securities on deposit with the Bank.The Bank
will also send to the Owner such notices and reports required by law. The Owner
understands and agrees that it is the Owner's obligation to prepare and file all required tax
returns and to pay all taxes due on any income the Bank collects for the Owner.
14. Subaccounts. In the event that the Owner notifies the Bank that the Owner's account is a
master account for multiple underlying accounts (the "Subaccounts") of the Owner's
customers or other parties,the underlying owners of the Subaccounts shall not be deemed
as third-party beneficiaries under this Safekeeping Agreement and the Bank shall have no
duties or obligations to those parties. Bank will conduct tax reporting as if the Owner,and
not the Bank, was the applicable payer of the Subaccounts and the Owner will be
responsible for all fees and penalties imposed by relevant taxing authorities due to
inaccurate reporting.
15. Amendment or Termination of Safekeeping Agreement. Except as provided in Section 12,
this Safekeeping Agreement may be amended only by written amendment executed by
both the Owner and the Bank;provided,however,this Safekeeping Agreement may also be
amended by the Bank if the Bank gives written notification of such amendment to the
Owner and the Owner does not terminate this Safekeeping Agreement within 30 days of
such notification.The Owner agrees that failure to terminate this Safekeeping Agreement
will constitute consent to such amendment. This Safekeeping Agreement may be
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terminated at any time either by the Owner or by the Bank upon written notification to the
other, whereupon all Safekept Securities shall be delivered or surrendered to the Owner
upon a written order or receipt signed by the Owner or its Authorized Representative;
provided, however,that the Bank may offset any sums due the Bank as provided in Section
12 of this Safekeeping Agreement. Such delivery and the termination of this Safekeeping
Agreement shall release the Bank from all further liability and responsibility under this
Safekeeping Agreement.
This Safekeeping Agreement shall be continuous and shall survive any temporary or
intermittent closing of any safekeeping accounts with the Bank, and shall replace and
substitute any prior agreement regarding the subject matter hereof between Bank and
Owner despite language in such prior agreement that such prior agreement was
continuous.
This Safekeeping Agreement or any of the Bank's rights and obligations hereunder shall be
assignable bythe Bank to any entity affiliated by common control with the Bank or to any
successor of the Bank upon merger, consolidation, reorganization or otherwise; this
Safekeeping Agreement shall not be assignable by the Owner.This Safekeeping Agreement
shall inure to the benefit of and be binding upon the Bank, its successors and assigns and
the Owner, his/her heirs,administrators, executors,successors and assigns.
16. Arbitration. All claims,disputes or controversies arising out of or relatingto this
Safekeeping Agreement or the breach thereof shall be settled by arbitration in
Minneapolis, Minnesota, in a manner mutually agreed to in writing by the Bank and the
Owner, or if no agreement is reached, in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (as supplemented bythe Supplementary
Procedures for International Commercial Arbitration if either party is from a country
other than the United States).The parties agree that any arbitration award shall be made
in Minneapolis, Minnesota(and shall be deemed made there even if first communicated
to or from another location) and that the United States District Court for the District of
Minnesota,shall be the appropriate and exclusive forum in which judgment upon any
award may be entered and in which any motion or petition to confirm,vacate,or modify
the award shall be filed. The parties agree that the arbitrator(s) shall apply the
substantive law of the State of Minnesota. The parties agree that the authority of the
arbitrator(s) to award damages shall be limited by Section 11of this Safekeeping
Agreement and that the arbitrator(s)shall not have any authority to award punitive
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damages, consequential damages, or attorneys' fees. In any case,judgment upon the
award rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.
17. Written Confirmations, Notices, Instructions and Other Communications. All written
confirmations, notices, instructions or other communications required or permitted
pursuant to the terms of this Safekeeping Agreement will be deemed delivered upon
receipt of fax or email by the Bank or upon five (5) business days after the date of deposit
into the United States mail, first-class postage prepaid, to the Bank at the following
address:
U.S. Bank National Association Safekeeping Department 800 Nicollet Mall, BC-MN-H18R
Minneapolis, Minnesota 55402-7020
Fax(612)303-0202
Email: Safekeeping @usbank.com
The foregoing address may be hereafter changed upon written notification given to the
Owner at the address or fax number provided above under the heading "Customer
Information Profile."
All written confirmation, notices, prospectuses, offering and disclosure documents,
shareholder communications (such as quarterly, semi-annual and annual reports, proxy
statements, etc.), instructions or other communications required or permitted pursuant
to the terms of this Safekeeping Agreement will be deemed delivered upon transmission
of fax, email or such other electronic communications to Owner, or upon five (5) business
days after the date of deposit into the United States mail,first-class postage prepaid,to
Owner at the address provided above under the heading"Customer Information Profile"
(unless and until Owner shall notify Bank in writing of a change in such address, fax
number,or email address). All written confirmations, notices, prospectuses, offering and
disclosure documents, shareholder communications (such as quarterly, semi-annual and
annual reports, proxy statements, etc.), instructions or other communications from Bank
to Owner delivered by electronic means (including, without limitation, posting to a
password protected website) shall be subject to the Terms and Conditions of Electronic
Delivery attached to this Safekeeping Agreement as Annex A,which is hereby incorporated
by reference and made a part hereof.
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