REQUEST FOR PROPOSALS FOR DOMESTIC FIXED INCOME INVESTMENT ...

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REQUEST FOR PROPOSALS FOR DOMESTIC FIXED INCOME INVESTMENT ...

  1. 1. REQUEST FOR PROPOSALS FOR DOMESTIC FIXED INCOME INVESTMENT MANAGEMENT 1. Purpose. State Treasurer Kay Ivey (hereinafter “the Treasurer”) solicits proposals from qualified professional firms interested in providing fixed income investment management services (“ the Manager”) to the State of Alabama. This Request for Proposals (hereinafter “RFP”) is issued in accordance with the requirements of Section 41-16-72(4), Code of Alabama (1975). This RFP is not an offer to contract but seeks the submission of proposals from qualified, professional firms that may form the basis for negotiation of an Investment Management Agreement with one or more Fixed Income Investment Managers. We are interested in receiving proposals from both active and passive management firms. The Treasurer reserves the right to reject any or all proposals and to solicit additional proposals if that is determined to be in the best interests of the State of Alabama. 2. Background. The Treasurer is authorized in accordance with Section 41-14-30, Code of Alabama (1975), (the “Code”) to invest state funds in U.S. Treasury securities, U.S. Agency securities and agency- issued mortgage backed securities, money market mutual funds (if invested in treasury and agencies), and repurchase agreements. Since the State merit system does not provide an appropriate job classification to perform the services described in this RFP at this time, the Treasurer is considering professional management. In managing the cash operations of the State, the Treasurer is interested in maximizing earnings potential while seeking to preserve principal and to provide sufficient liquidity to meet all operating requirements. Statutorily, 80% of state funds are invested short-term in overnight repurchase agreements and bank time deposits not exceeding one year. The objective of the portfolio described in this RFP is to generate an investment return higher than the return generated on the short-term assets. The Treasurer will obtain disciplinary history, educational background and work experience of candidate firms or representatives from the Alabama Securities Commission. It is the intent of the Treasurer to do business with Alabama firms that pay Alabama taxes and employ Alabama citizens. When all factors are equal, corporations located in Alabama will be given preference. 3. Scope of Services. (a) The Manager shall develop a fixed income investment portfolio of statutorily acceptable securities. It is expected that the initial balance will be at least $50 million. The Treasurer shall establish the portion of assets to be managed and may, from time-to-time, change such portions. The services of the Manager shall be rendered in accordance with attached Investment Guidelines, Exhibit C. 1
  2. 2. (b) The Manager shall have independent discretionary authority with respect to the investment of that portion of the assets managed by the Manager, subject to the Code, Investment Guidelines and such other written limitations as the Treasurer may impose upon the Manager. (c) The Manager shall provide reporting, to include monthly valuation, monthly performance reports, major changes in investment outlook, quarterly economic forecasts, significant changes in corporate structure, and other data to the Treasurer. (d) The Manager shall document all investment transactions with the Custodian in accord with usual and customary standards of practice, and confirm all executed transactions for custodial account records. 4. Minimum Qualifications. In order to be considered for selection as a Manager, the Proposer must provide Exhibit B as documented proof that the following minimum qualifications listed below are met. (a) The Manager must be duly registered with the Securities & Exchange Commission pursuant to the Investment Advisors Act of 1940, as amended, and that such registration is current. (b) The Manager is fully licensed and registered with the Alabama Securities Commission. (c) The Manager must be qualified with the Secretary of State to conduct business in the State of Alabama. (d) The portfolio manager assigned to the Treasurer’s account must have managed domestic fixed income portfolios for at least three (3) years, as of December 31, 2004. (e) The Manager must have managed domestic fixed income securities portfolios for at least three (3) years, as of December 31, 2004. (f) The Manager must manage at least $50,000,000 in domestic fixed income securities as of December 31, 2004. (g) The Manager and its personnel must have all authorizations, permits, licenses, and certifications as may be required under federal, state or local law to perform the services specified in this RFP at the time it submits a response to the RFP. (h) The Manager must carry errors and omissions insurance or a comparable instrument to cover the firm’s negligent acts or omissions. (i) The Manager must comply with all applicable AIMR performance presentation standards. (j) The Manager will maintain sufficient procedures and capabilities to ensure the timely and accurate backup and full recovery for all computers and other data storage systems related to this Agreement. (k) The Manager has a company policy and practice of equal employment opportunity and non-discrimination based on race, creed or gender. 5. Fees. Managers shall be entitled to receive quarterly compensation. Fees shall be payable based upon the fair market value on the last business day of each quarter as reported by the Custodian appointed by the Treasurer. Your proposal must state the fees you would charge for this service according to the following schedule: 2
  3. 3. Market Value Per Annum Estimated Fees $50,000,000 market value First $ 50,000,000 0.______ % $____________ Over $50,000,000 0.______% $____________ Other 0.______% $____________ 6. Proposal Required Information. Proposals should be as thorough and detailed as possible so that your capabilities to provide the required services can be properly evaluated. To be considered, responses to this RFP must include a cover page, Exhibit A (Manager Qualifications and Experience), Exhibit B, a statement of fees, and disclosure statement. All proposals submitted in response to this RFP must include a completed Disclosure Statement as required by Section 41-16-80, et seq., Code of Alabama (1975). Copies of the Disclosure Statement, and information, may be downloaded from the Alabama Attorney General’s web site at www.ago.state.al.us/ag_items.cfm. 7. Submission of Proposals. Proposals must be received in the Office of State Treasurer Kay Ivey, Suite S-106, Alabama State Capitol, 600 Dexter Avenue, Montgomery, Alabama 36130, no later than the close of business on May 6, 2005. Provide the original plus three (3) copies. It is the responsibility of the Proposer to ensure that its proposal is timely delivered and received in the proper office on or before the deadline for responding to this RFP. The Treasurer will not consider proposals received after the date and time specified herein. The Treasurer assumes no responsibility for late delivery by the U.S. Mail, the State’s Central Mail Facility, a commercial courier service, or any other method of delivery selected by the Proposer. All proposals received by the Treasurer will be subject to public disclosure in accordance with Alabama public records laws. Email questions to daria.story@treasury.alabama.gov. During the RFP process, no other employees of the Treasurer’s Office or the Treasurer should be contacted by any individual or firm that intends to submit a response. 8. Evaluation and Selection. All proposals timely received will be reviewed and evaluated by a Selection Committee. The Committee will recommend proposals to the Treasurer that most closely meet the requirements of the RFP. The following will be used in making the selection. a. Offeror’s Qualifications – Weight 20% b. Investment Style and Management – Weight 5% c. Performance – Weight 25% 3
  4. 4. d. Fees – Weight 45% e. Located in Alabama – Weight 5% After the review and evaluation of the proposals, the Committee may recommend that the Treasurer conduct interviews. Finalists chosen for interviews, if necessary, will be notified. The Treasurer reserves the right to request a best and final offer for fees from finalists. The Treasurer will select the Manager(s) the Treasurer determines, in her sole discretion, to be fully qualified and best suited among those submitting proposals on the basis of the evaluation factors, including fees, to best meet the needs of the State of Alabama. All proposals received in response to this RFP may be rejected and the Treasurer may solicit additional proposals. Upon identification of the selected Manager, if any, the Treasurer may initiate negotiations for contract terms and conditions. The contract will incorporate reference to the requirements of the RFP and the Manager’s proposal as negotiated. It is expected that the term of the contract be for a period of two (2) years. The Treasurer shall post the RFP and the notice of award on the treasury website www.treasury.alabama.gov. It is expected that the notice of award shall be posted by June 3, 2005, and will remain posted for at least two weeks. Interested parties may monitor the progress and status of this RFP process on the Treasurer’s website. 9. Investment Management Agreement. All duties of the Manager shall be set forth in the Investment Management Agreement between the selected firm and the Treasurer. A sample Investment Management Agreement is attached as Exhibit D for informational purposes only, and is subject to changes and revisions. 4
  5. 5. Exhibit A Manager Qualifications and Experience Note: Do NOT attach pre-printed marketing/informational brochures, etc. in answer to any of the following questions unless specifically allowed in the question. Part I. Organization and Personnel 1. Provide an overview of your firm, including corporate profile, financial condition, overall business objectives, services/products offered, and strategic plans for growth. 2. Provide a complete description of the ownership structure of your firm. Include information on all “related” firms. Are there any changes pending in this structure? 3. Provide details of any past or pending litigation relating to your firm, individual personnel, or to the management of client assets. 4. Provide details of any SEC or state regulatory action taken against your firm or any of its owners/personnel. 5. Provide details of all SEC fidelity bonds, errors and omissions coverage, and any other fiduciary insurance, which your firm carries. 6. List your firm’s strengths and weaknesses? Why should your firm be considered favorably over other comparable firms? 7. Complete the following chart: Firm Fixed Total Income Total Full-time Employees Portfolio Managers Research Analysts Market Strategists/Economists Other Research Customer Service Marketing/Sales Trading Account Supervision/Performance Administration/Office Management Other __________________ TOTAL 8. Provide the number of fixed income portfolio managers added/lost over the last 3 years. 5
  6. 6. #Added #Lost 2002 2003 2004 9. Provide an organizational chart and biographies of the person/persons/or team members who will be assigned to this account, including detailed experience relevant to this type account. Part II. Investment Philosophy and Style 1. Describe your fixed income investment philosophy and style. Include a discussion of the following: a. Universe of fixed income securities considered b. Diversification/number of securities held in each portfolio c. Investment time horizon/portfolio turnover policy 2. Compare your Fixed Income Composite (that most closely resembles the portfolio described in this RFP) for the year ending December 31, 2004, with the Lehman Brothers 1-3 Year Government Index. Composite Benchmark Duration Quality Total Return Yield to Mat. Avg. Maturity Avg. Coupon Number of Issues 3. Identify the Sector Weightings for your Fixed Income Composite included in question #2 compared to the Lehman Brothers 1-3 Year Government Index as a benchmark. % Sector Weights Benchmark US Tsy US Agency Agency-Issued Mortgage Backed Other – _______________ Other- _______________ Other – _______________ TOTAL 100% 100% 4. Does the mortgage backed sector include CMO’s? If so, what percentage? 6
  7. 7. 5. How much discretion is given each fixed income portfolio manager to buy/sell securities or to construct a portfolio? 6. Describe any quantitative/qualitative factors that are used in a buy decision. In a sell decision. 7. What is the main source of research used in the portfolio management process? Are portfolio managers responsible for providing research services to the firm? If applicable, describe your reliance on in-house research in the context of personnel skills and experience. Part III. Account Management 1. Will the Treasury account be managed by an individual, or team of portfolio managers? 2. Account Size managed by your firm: Largest Fixed Income Separate Account $__________ Smallest Fixed Income Separate Account $__________ Average Fixed Income Separate Account $__________ 3. How will the asset class restrictions of the Treasury portfolio affect your investment methodology? 4. Separate Account Assets Under Management as of December 31, 2004. # Fixed $ Fixed Public Corporate Other TOTAL 5. Provide a breakdown of Fixed Income Separate Accounts by asset size as of December 31, 2004. Size of F.I. Account $ Total Assets # Accounts Under $10 million $10 to $50 million $50 to $100 million Over $100 million 6. Provide the following information on at least 3 Fixed Income Clients (including contact persons) for whom similar services as described in this RFP are provided: a. Company b. Address c. Contact 7
  8. 8. d. Telephone Number e. Length of Relationship in Years IV. Performance 1. All performance data presented should be subjected to a Level 1 verification of results and compliance; however Level 2 verification is preferable. Which are your providing in answer to the following two questions? 2. Provide performance data for your Fixed Income Composite (described in Part III). % 12MO % 1Q % 2Q % 3Q % 4Q $ Assets # Accts 2004 2003 2002 3. Provide trailing performance data, both in gross and net of fees, for your Fixed Income Composite described in this RFP for the periods 1 year, 3 years, 5 years and 10 years ending December 31, 2004. 8
  9. 9. EXHIBIT B MINIMUM QUALIFICATIONS and MISCELLANEOUS INFORMATION 1. Information Regarding Manager Name: Address: Phone Number Fax Number: 2. My Company is duly registered with the Securities & Exchange Commission pursuant to the Investment Advisors Act of 1940, as amended, and the registration is current. Yes ‪ No ‪ 3. My Company is fully licensed and registered with the Alabama Securities Commission. Yes ‪ No ‪ 4. My Company is qualified with the Secretary of State to conduct business in the State of Alabama. Yes ‪ No ‪ 5. The portfolio manager assigned to the Treasurer’s account has managed domestic fixed income portfolios for at least three (3) years, as of December 31, 2004. Yes ‪ No ‪ 6. My Company has managed domestic fixed income securities portfolios for at least three (3) years, as of December 31, 2004. Yes ‪ No ‪ 7. My Company does manage at least $50,000,000 in domestic fixed income securities as of December 31, 2004. Yes ‪ No ‪ 8. My Company and its personnel have all authorizations, permits, licenses, and certifications as may be required under federal, state or local law to perform the services specified in this RFP at the time it submits a response to the RFP. Yes ‪ No ‪ 9. My Company will carry errors and omissions insurance or comparable instrument to cover negligent acts or omissions. Yes ‪ No ‪ 10. My Company does comply with all applicable AIMR performance presentation standards. Yes ‪ No ‪ 9
  10. 10. 11. My Company maintains sufficient procedures and capabilities to ensure the timely and accurate backup and full recovery for all computers and other data storage systems related to the Treasurer’s account. Yes ‪ No ‪ 12. My Company has a company policy and practice of equal employment opportunity and non- discrimination based on race, creed or gender. Yes ‪ No ‪ 13. My company has an office location in Alabama. Yes ‪ Provide City ____________________ No ‪ 14. Primary Contact Concerning the Proposal: Name: Address: Phone Number: Email: 10
  11. 11. EXHIBIT C INVESTMENT GUIDELINES Authorized Securities: U.S. Treasury, Federal Agency, Agency-Issued Mortgage Backed, Cash Equivalent Benchmark: Lehman Brothers 1-3 Year Government Index Standard of Care: Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The standard of prudence to be used by investment officials shall be the “prudent person” and/or “prudent investor” standard and shall be applied in the context of managing an overall portfolio. Cash Equivalent Guidelines: Such investments should be prudently diversified and would include: • any instrument issued by, guaranteed by, or insured by the U.S. Government or Agency • commingled, short-term cash reserve funds managed generally in accordance with the principles set forth below • money market mutual funds which invest solely in Authorized Securities defined above • repurchase agreements where 102% Treasury security collateral is maintained and segregated at the custodian. ACTIVE MANAGEMENT Investment Objective: To produce a return, after fees, in excess of the benchmark throughout economic cycles consistent with sector limitations, inherent security risks, and prudent investment principles. Specific Guidelines: 1. Maximum exposure to agency sector shall be the agency weight within the index plus 15% 2. Duration range must be +/- 30% of the index duration 3. At time of purchase, minimum quality rating shall be AA or equivalent as rated by Moody’s and Standard and Poor’s. Debt securities downgraded below BBB or equivalent rating should be sold within 30 calendar days of such downgrade. PASSIVE MANAGEMENT Investment Objective: To produce a return, after fees, and portfolio that closely replicates the benchmark throughout economic cycles. 11
  12. 12. EXHIBIT D SAMPLE INVESTMENT MANAGEMENT AGREEMENT This Domestic Fixed Income Investment Management Agreement (the “Agreement”) is made and entered into between the State Treasurer Kay Ivey, (the “Treasurer” or “Treasury”) and *** (the “Manager”), on the signature date of each party as shown herein below adjacent thereto. The Manager acknowledges that this Agreement is not effective until the Agreement has received all requisite state government approvals. Manager shall not begin performing work under this Agreement until notified to do so by Treasurer. Manager is not entitled to compensation for work performed prior to the confirmed effective date of the Agreement. WITNESSETH WHEREAS, The Treasurer is authorized in accordance with Section 41-14-30, Code of Alabama (1975), (the “Code”) to invest state funds in U.S. Treasury securities, U.S. Agency securities and agency- issued mortgage backed securities, money market mutual funds (if invested in treasury and agencies) and repurchase agreements; and WHEREAS, the State Merit System does not provide an appropriate job classification to perform the services described in this Agreement at this time; and WHEREAS, the Treasurer has determined that it is in the best interests of the Treasury to engage qualified professionals to manage a portfolio of domestic fixed income investments of Treasury Funds in strict compliance with this Agreement, the Investment Guidelines hereof and all applicable Federal and Alabama laws; and, WHEREAS, the Manager has presented with the requisite expertise, ability and professional skill necessary to perform the services of a Domestic Fixed Income Investment Manager; now, THEREFORE, for good and valuable consideration and in consideration of the services to be performed and payments to be made, together with the mutual terms, covenants and conditions hereinafter set forth, and promises hereinafter stipulated, the parties mutually agree as follows: Section 1. Definitions. When used in this Agreement, the words and terms defined below shall have the following meanings: (a) “Permitted Investments” means the investments that may be made with State funds of the Treasury as specified in Section 41-14-30, Code of Alabama 1975. (b) “Investment Guidelines” means the Investment Guidelines attached to the Request for Proposals as Exhibit C and attached hereto as Exhibit C. Section 2. Representations and Warranties: The Manager represents and warrants as follows: (a) That it is duly registered with the Securities and Exchange Commission pursuant to the Investment Advisers Act of 1940 as amended, and that such registration is currently effective. 12
  13. 13. (b) That it is qualified with the Alabama Secretary of State to conduct business in the State of Alabama. (c) That it currently carries, and will maintain in full force and effect errors and omissions insurance covering negligent acts or omissions, which adequately covers it under this Agreement. (d) That it is a stable organization that offers appropriate incentives to investment professionals with one goal being to minimize professional turnover. (e) That its policy and practice is for equal employment opportunity and non-discrimination based on race, creed or gender. (f) That it has no present interest, nor shall it acquire any interest, which would conflict in any manner with its duties and obligations under this Agreement, provided that nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Manager to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business or to render services of any kind to any other corporation, firm, individual, or association . (g) That it has in place and will maintain sufficient procedures and capabilities to ensure the timely and accurate backup and full recovery for all computers and other data storage systems related to this Agreement. (h) That all representations of the Manager contained it its proposal dated *** **, 2005 to the Treasurer are incorporated by reference as a part hereof the same as if fully set out herein. Section 3. Effective Date and Term: The effective date of this contract is *** 1, 2005, and it will continue in effect for two years until ** 31, 2007, or when terminated according to Section 10 of this Agreement, whichever shall first occur. Section 4. Manager Services. (a) The Manager shall serve as a Domestic Fixed Income Investment Manager for the Treasury and shall develop investment portfolio in accordance with the Investment Guidelines set out in Exhibit C hereto and all applicable Alabama statutes and constitutional provisions. The Manager shall have only such duties as are set forth in this Agreement and the Investment Guidelines. (b) The Manager shall provide reporting, to include monthly valuation, monthly performance reports, major changes in investment outlook, significant changes in corporate structure, and certified annual financial statements. Manager shall also provide additional information or reports in its customary format or such other frequency or format as may be reasonably required by the Treasurer. (c) The Manager shall keep and maintain comprehensive records of all transactions relating to the assets under its management, and such records shall be made available at all reasonable times to the Treasurer and persons designated by the Treasurer. . 13
  14. 14. (d) The Manager shall document all investment transactions with the Custodian in accord with usual and customary standards of practice, the terms of this Agreement and to confirm all executed transactions for custodial account records. Section 5. Ownership of Data: The Treasury shall own all materials and data produced by or on behalf of the Treasury under this Agreement. Section 6. Taxes: The Manager, including its agents and assignees are solely responsible for, and shall pay all federal, state, or local income taxes that become payable as a result of management fees paid under this Agreement; and, shall hold harmless, defend and indemnify the Treasury and it’s officers, and the State of Alabama in regard thereto. Section 7. Standard of Performance: (a) The Manager shall discharge its duties under this Agreement and will use reasonable care in performing its obligations under this Agreement. Manager will not be in violation of this Agreement with respect to any matter as to which it has satisfied its obligation of reasonable care. (b) Manager will be liable for Customer’s damages to the extent they result from Manager’s negligence, reckless, intentional, or willful misconduct in performing its duties as set out in this Agreement Section 8. Public Access /Confidentiality: All documents, papers, letters, or other materials relating to this Agreement that are made or received by the Manager in conjunction with this Agreement, and which are required by law to be maintained, shall be made available for public access and for audit purposes for the period of time so designated by law and by the Treasurer during and after termination of this Agreement. In all other circumstances, all information furnished by either party to the other shall be treated as confidential and shall not be disclosed to third parties except as required by law or upon the written agreement signed by each party to this Agreement. Section 9. Compensation and Expenses: The Manager shall be entitled to receive quarterly compensation in United States Dollars for its services as follows: Investment Per Annum ___ First $50,000,000 0.____% $________ Over $50,000,000 0.____% $________ Other 0.____% $________ (a) Fees shall be payable based upon the fair market value on the last business day of each quarter as reported by the Custodian appointed in accordance with Section 21 of this Agreement. The fee for the initial period shall be prorated. If the Manager shall serve for less than the whole of any quarter period, its compensation as determined herein, shall be calculated and shall be payable on a pro rata basis for the period of the calendar quarter for which it has served as Manager. (b) The Manager shall submit quarterly invoices for the fees agreed upon in this Agreement to the Custodian who shall promptly pay the Manager from the income earned on the Domestic Fixed Income assets under the Manager’s control. The Custodian is authorized to deduct such fees and to remit payment to the Manager before the Custodian pays the net income to the Treasury. The Manager shall provide a detailed accounting of its fees paid under this provision to 14
  15. 15. the Treasurer on a quarterly basis and at such other times and in such form as the Treasurer may require. Section 10. Termination, Resignation, or Removal: The Manager may resign at any time by giving thirty (30) days written notice to the Treasurer. The Treasurer may remove the Manager and terminate this Agreement at any time by giving thirty (30) days written notice to the Manager. However, the contract may be terminated immediately in case of a breach of the contract by the Manager or notice of a prospective sale or merger of Manager. Upon termination, resignation, or removal, the Manager shall fully account for the administration of the assets up to the effective date of the termination, resignation, or removal. The Manager shall be entitled to receive its fees for the period through and including the effective date of the termination, resignation, or removal. There shall be no sale or purchase of securities during the 30-day notice period of this paragraph except upon the written authorization of the Treasurer, save that termination of this Agreement shall be without prejudice to the completion of transactions already initiated which will be completed by the Manager as soon as practicable. Section 11. Amendment: Any amendment to this Agreement shall be in writing executed by both parties with the same formality of this Agreement and in strict compliance with all applicable federal or State of Alabama laws. Section 12. Assignment: This Agreement is not assignable in any part, manner or circumstance. Any attempted assignment is simultaneously void and shall constitute the simultaneous termination of this Agreement. Section 13. Indemnification (a) The Manager shall indemnify, defend, and hold harmless the Treasurer, her staff, and the State of Alabama from all claims, suits, judgments, or damages including litigation costs and reasonable attorneys’ fees arising from its intentional or reckless misconduct; fraud or negligent performance by the Manager of its obligations hereunder. The Manager is entitled to prompt and timely notice of any third party claims for which indemnity is sought and shall be given the opportunity to participate in the defense of such claims. (b) No individual employee or individual agent of the State of Alabama shall be subject to or have any personal liability for the terms and conditions of this Agreement. The Manager on behalf of its respective assigns and successors, hereby waives, for all purposes, any claims now apparent or which may hereafter arise against any agent or employee of the State of Alabama for personal liability of said agent or employee on behalf of the State of Alabama including its various agencies, Treasurer s, commissions, and departments. Section 14. Jurisdiction and Venue: The validity, interpretation, and performance of this Agreement shall be controlled and construed under the laws of the State of Alabama. Jurisdiction and venue shall be in Montgomery County, Alabama for any action brought which relates to this Agreement. The sole remedy available to Manager for settlement of any and all disputes arising under the terms of this Agreement shall be limited to the filing of a claim with the Treasurer of Adjustment for the State of Alabama. Any claims against Manager will be resolved in federal or state court in Montgomery, Alabama pursuant to Alabama law. Manager and Treasurer agree that for any and all disputes arising under the Agreement, when considering settlement of such disputes, to utilize appropriate forms of non- binding alternative dispute resolution including, but not limited to, mediation by and through the Attorney General’s Office of Administrative Hearings or where appropriate, private mediators. 15
  16. 16. Section 15. Waiver. The failure of either party to object to, or to take affirmative action with respect to any conduct or performance of the other that is, or may be, in violation of the terms of this Agreement shall not constitute a waiver of the violation or breach, or of any future violation or breach. Section 16. Audits: The Treasurer reserves the right to designate persons to conduct periodic audits of the Manager’s procedures and activities. Section 17. Captions: The captions or headings in this Agreement are for convenience only and in no way define, limit, or describe the scope or intent of any provisions or sections of this Agreement. Section 18. Publication: The Treasurer is the only entity authorized to issue information for public knowledge or news releases for publication concerning the terms or performance of this Agreement. The Manager shall be entitled to refer to the Treasurer in its representative client list for marketing purposes, but not listed as a reference without prior approval. Section 19. Merit System Exclusion: The Manager is an independent contractor and nothing contained herein shall constitute or designate the Manager, or any of its agents or employees, as agents or employees of the State of Alabama or the Treasurer. The Manager, it agents or employees shall not receive any fringe benefits afforded merit system, appointed, or other regular, full or part-time employees of the State of Alabama. Section 20. Notices: All notices, requests, demands or other instruments which may be, or are required to be, given by either party to this Agreement, shall be in writing and shall be deemed given if hand delivered with a signed receipt for the Treasurer or the other party, or sent by facsimile, and confirmed as received for the Treasurer or the other party or served by an law enforcement officer or process server appointed by a valid court order, or by electronic communication (“e-mail”) with a received electronic receipt for the Treasurer or the other party or, if mailed on the fifth business day following deposit of such notice in the U. S. Mail, postage prepaid, by certified or registered mail, return receipt requested, to the other party at the address listed below, or at such other address which either party may so notify the other of in writing. Notices sent to Manager will be addressed to: Notices sent to the Treasurer will be addressed to: The Honorable Kay Ivey Alabama State Treasurer State Capitol Building Room S-106 600 Dexter Avenue P.O. Box 302510 Montgomery, AL 36130-2510 334-242-7500(Voice) 334-242-7592(facsimile) 16
  17. 17. With a copy to the Office of General Counsel J. Michael Manasco, General Counsel State Capitol Building S-106 600 Dexter Avenue P.O. Box 302510 Montgomery, AL 36130-2510 334-353-0050 (Voice) 334-353-0056 (Facsimile) Mike.manasco@treasury.alabama.gov Section 21. Custodian: The Treasurer shall appoint a Custodian to take and have possession of the assets in the assets under management. The Manager shall not be the Custodian. The Manager shall promptly furnish copies of confirmations of all executed transactions to the Custodian for all assets managed by the Manager. The Treasurer shall direct the Custodian to provide the Manager with all information that is reasonably required by the Manager to carry out its duties hereunder. Section 22. Severability: If any provision of this Agreement shall be held to be void or inoperative by a court of competent jurisdiction, such provision shall be deemed severed from the remaining provisions of this Agreement, and the remaining provisions shall remain in full force and effect. Section 23. Entire Agreement This Agreement constitutes the entire understanding of the parties and supersedes any prior express or implied written or oral agreements between them. Section 24. Not a Debt of the State: This Agreement shall not be construed as a debt of the State of Alabama as prohibited by Section 213, Ala. Const. 1901, as amended by Amendment 26. IN WITNESS WHEREOF the Treasury and the Manager have executed this instrument as of the day and year first below written. STATE OF ALABAMA TREASURY By: ______________________________ DATE: ___________________________ Kay Ivey, State Treasurer _____________________________(Manager) By: ______________________________ DATE: ___________________________ Its ______________________________ APPROVED: _________________________________ DATE: _____________________________ Bob Riley, Governor, State of Alabama 17

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