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R-02-03-14-13A2 - 4/30/2002THE STATE OF TEXAS COUNTY OF WILLIAMSON O_,wdax\CORR',gnl . dp ! IPOO24Y2d. § § DEPOSITORY AND BANKING SERVICES CONTRACT This DEPOSITORY AND BANKING SERVICES CONTRACT, hereinafter referred to as "Contract," is made and entered into by and between the City of Round Rock, Texas, a home -rule municipality situated in Williamson County, Texas, hereinafter referred to as "City /Depositor," and Bank of America, N.A., a national banking association, organized under the laws of the United States and authorized by law to do banking business in Texas and now conducting such business in said state, hereinafter referred to as "Bank." WHEREAS, City /Depositor desires to obtain banking services and a depository for its funds and to provide for those funds the highest level of safety, liquidity, and return while receiving suitable banking services at a reasonable charge; and WHEREAS, Bank is willing to provide such banking services and to act as a depository for City /Depositor's funds while providing full collateral satisfactory to City /Depositor; NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein, City /Depositor and Bank agree as follows: I BANKING AND DEPOSITORY SERVICES Bank agrees to receive and safely keep any and all public funds offered for deposit by City /Depositor and to reimburse and pay same to City /Depositor, by paying its designated officer or whoever may be lawfully entitled to receive same upon request. Bank agrees to perform banking and depository services of the types and for the charges as specified in Exhibit "A" "Bank of America Deposit Agreement and Disclosures "; Exhibit "B" "Collateral Security Agreement "; Exhibit "C" "Pledgee Agreement and Operating Circular 7 "; Exhibit "D" "Treasury Services Terms and Conditions "; Exhibit "E" "Safekeeping Agreement "; Exhibit "F" "City of Round Rock RFA for Depository Services "; and Exhibit "G" "Bank of America Response to City's RFA ", all of which are attached hereto and incorporated herein by this reference. Should there be any conflict between the terms of this contract and any of the terms of the documents contained in any exhibit attached hereto, the terms of any administrative rules of Bank, or other agreement between City /Depositor and Bank, the terms of this contract shall be final, controlling, and binding. II TERM, RENEWAL, AND TERMINATION City /Depositor, through appropriate action of its governing body, hereby designates Bank as a depository for the period beginning May 1, 2002 and continuing through April 30, 2004, and this contract shall remain in full force and effect for such stated period of two (2) years. However, this contract may be extended by mutual agreement of City /Depositor and Bank, to remain in full force and effect for a period not to exceed the period allowed by City /Depositor's Comprehensive Investment Policy. Such period shall be agreed to by the parties to this contract. Either City /Depositor or Bank shall have the right to terminate this contract prior to the expiration date by advance written notice to the other of its election to do so, and this contract shall be void from and after the expiration of ninety ( 90) days after the receipt of such notice, provided that all provisions of this agreement have been fulfilled. III DESIGNATION OF TRUSTEE City /Depositor and Bank, by execution of this contract, hereby designate the Federal Reserve Bank, hereinafter referred to as "TRUSTEE ", to hold in trust, according to the terms and conditions of this Depository Contract and the attached "Federal Reserve Bank Operating Circular 7 ", the collateral and substitute collateral described under said agreements. IV DESIGNATED OFFICER(S) During the term of this contract, City /Depositor will, through appropriate action of its governing body, designate the officer or officers who singly or jointly will be authorized to represent and act on behalf of City /Depositor in any and all matters of every kind arising under this contract and to (a) execute and deliver to Bank "Bank's Treasury Terms and Conditions" booklet agreements (including user documentation and set -up forms) covering electronic funds transfers and other treasury management services, (b) appoint and designate, from time to time, a person or persons who may request withdrawals, orders for payment or transfers on behalf of City /Depositor in accordance with the electronic fund or funds transfer agreement and addenda, and (c) make withdrawals or transfers by written instrument. The City Manager and /or the Director of Finance shall be, either jointly or individually, the designated officer to serve as the primary liaison between City /Depositor and Bank and, as the designated officer, may exercise the powers and duties as authorized by applicable law. V CONTROLLING DOCUMENT Bank's Deposit Agreement is incorporated herein for all purposes; however, to the extent that any provision therein conflicts with any provision herein, this Depository Contract will control. VI TIME DEPOSITS City /Depositor may arrange for time deposits, and Bank may accept and shall hold such deposits subject to payment in accordance with the terms of the deposit. Interest shall be calculated at the rate which Bank has bid for the particular denomination and time period of said deposit at competitive public bidding for said deposits. Time deposits will mature on or before the expiration of this contract. All time deposits that mature beyond the expiration of this contract will be at non - contractual interest rates negotiated at the time of purchase. VII COMPENSATION Bank will be compensated for any and all services rendered to City /Depositor under this contract. Bank agrees to offset monthly service fees against its customary earnings credit for balances in City /Depositor's non - interest bearing transaction accounts; provided, however, that if there is insufficient earnings credit against which such fees may be offset, City /Depositor will be charged for such services monthly. Bank's "Application and Bid for Depository Services ", including all exhibits and addenda thereto, is incorporated herein by reference. VIII COLLATERAL SECURITY All funds on deposit with Bank to the credit of City /Depositor shall be secured by collateral as provided for in the Public Funds Collateral Act of 1989 (Chapter 2257 of the Texas Government Code). The total market value of the collateral (which includes accrued interest or income to the extent it is not included in the market price) securing such deposits will be in an amount at least equal to the amount of such deposits plus the amount of any accrued interest thereon and less the amount that such deposits are insured by an agency or instrumentality of the United States government. The market value with respect to any securities (collateral) as of any date and priced on such date will be obtained from a primary dealer. When additional collateral is required to cover incremental deposits, Bank must receive the request for collateral prior to 10:30 a.m. on the day the deposits are actually received. Twenty -four (24) hours' notice is necessary on incremental deposits in excess of $3 million. IX COLLATERAL TO TRUSTEE Bank has heretofore or will immediately hereafter deliver to Trustee collateral of the kind and character above mentioned of sufficient amount and market value to provide adequate collateral for the funds of City /Depositor deposited with Bank. Said collateral or substitute collateral, as hereinafter provided for, shall be kept and retained by Trustee in trust so long as the depository relationship between City /Depositor and Bank shall exist hereunder, and thereafter so long as deposits made by City /Depositor with Bank hereunder, or any portion thereof, shall have not been properly paid out by Bank to City /Depositor or on its order. X ACCEPTANCE BY TRUSTEE Trustee will accept said collateral and hold the same in trust for the purposes herein stated as governed by attached "Application to the Federal Reserve Bank of Dallas for the Holding of Securities in Joint Safekeeping ". XI CURE OF FAILURE OR BREACH, AND SURRENDER OF COLLATERAL FOR SALE Should Bank fail at any time to pay and satisfy, when due, any check, draft, or voucher lawfully drawn against any deposit and the interest on such deposits or in any manner breach its contract with City /Depositor, then City /Depositor shall give written notice of such failure or breach to Bank, and Bank shall have three (3) business days to cure such failure or breach. In the event Bank shall fail to cure such failure or breach within three (3) business days or should Bank be declared insolvent by a Federal bank regulatory agency, it shall be the duty of Trustee, upon demand of City /Depositor (supported by proper evidence of any of the above - listed circumstances), to surrender the above - described collateral to City /Depositor. City /Depositor may sell all or any part of such collateral and out of the proceeds thereof, pay City /Depositor all damages and losses sustained by it, together with all expenses of any and every kind incurred by it on account of such failure or insolvency, or sale, accounting to Bank for the remainder, if any, of said proceeds or collateral remaining unsold. XII NOTICE OF SALE OF COLLATERAL Any sale of such collateral, or any part thereof, made by City /Depositor hereunder may be either at public or private sale; provided, however, it shall give to both Trustee and Bank at least two (2) hours' notice of the time and place where such sale shall take place, and such sale shall be to the highest bidder therefor for cash. City /Depositor and Bank shall have the right to bid at such sale. XIII SUBSTITUTION OF SECURITIES If Bank shall desire to sell or otherwise dispose of any one or more of said securities so deposited with Trustee, it may substitute for any one or more of such securities other securities of the same market value and of the character authorized herein. Such right of substitution shall remain in full force and may be exercised by Bank as often as it may desire; provided, however, that the aggregate market value of all collateral pledged hereunder, shall be at least equal to the amount of collateral required hereunder. If at any time the aggregate market value of such collateral so deposited with Trustee be less than the total sum of City /Depositor's funds on deposit with said Bank, then Bank shall immediately deposit with Trustee such additional collateral as is necessary to cause the market value of such collateral to equal the total amount of required collateral. Bank shall be entitled to income on securities held by Trustee, and Trustee may dispose of such income as directed by Bank without approval of City /Depositor. XIV RECEIPTS REOUIRED Trustee shall promptly forward to City /Depositor copies of safekeeping or trust receipts covering all such collateral held for Bank, including substitute collateral as provided for herein. XV REDELIVERY OF COLLATERAL If at any time the collateral in the hands of Trustee shall have a market value in excess of the sum of balances due City /Depositor by Bank, City /Depositor shall authorize the withdrawal of a specified amount of collateral, Trustee shall deliver this amount of collateral (and no more) to Bank, taking its receipt therefor, and Trustee shall have no further liability for collateral so redelivered to Bank. XVI CLOSE -OUT When the relationship of City /Depositor and Bank shall have ceased to exist between City /Depositor and Bank, and when Bank shall have properly paid out all deposits of City /Depositor, it shall be the duty of City /Depositor to give Trustee certificate to that effect; whereupon Trustee shall, with the approval of City /Depositor, redeliver to Bank all collateral then in its possession belonging to Bank, taking its receipt therefor. An order in writing to said Trustee by City /Depositor and a receipt for such collateral by Bank shall be a full and final release of Trustee of all duties and obligations undertaken by it by virtue of these presents. XVII INVESTMENT POLICY It is the intention of the parties hereto that City /Depositor shall retain the maximum flexibility to invest its funds prudently to earn the highest rate of return consistent with the City of Round Rock Comprehensive Investment Policy as adopted by the City Council of the City of Round Rock, Texas, and consistent with other applicable laws. XVIII NEW SERVICES City /Depositor may negotiate new services with Bank as deemed necessary by City /Depositor. The interest rate to be earned, as well as the other terms and conditions regarding the service will be mutually agreed upon by City /Depositor and Bank. Any such new service agreement will be executed in writing as an addendum to this contract. XIX SEVERABILITY If any term or provision of this contract is held to be illegal or invalid, such illegality or invalidity shall not affect the remaining provisions of the contract, which remaining provisions shall remain in full force and effect as if this contract had been executed with the illegal or invalid portion thereof eliminated. It is hereby declared the intention of the parties that they would have executed the remaining portion of this contract without including any such term, provision, part, parts, or portions which may, for any reason, be hereafter declared illegal or invalid. XX INDEMNIFICATION Bank agrees that it will use due care and diligence in all of its activities and operations authorized under this contract. Bank shall be liable to City /Depositor only for actual damages incurred as a direct result of Bank's failure to exercise reasonable care under this contract. In no event will Bank be liable for any indirect, consequential or punitive loss, damage, cost or expense of any nature (even if advised of the possibility of such loss, damage, cost or expense) including, without limitation, any economic loss or damage, expense and loss of business, profits or revenue, goodwill and anticipated savings, loss of or corruption to City /Depositor's data, loss of operation time or loss of contracts. Bank will not be responsible for the acts or omissions of City /Depositor or its officers, employees or agents (including but not limited to the amount, accuracy, timeliness or authorization of any instructions or information from City /Depositor) or the acts or omissions of any other person or entity including, but not limited to, any clearing house association or processor, any U.S. Federal Reserve Bank or any other country's central bank, any other financial institution or any supplier, and no such person or entity will be deemed to be Bank's agent. Bank will not be liable for and will be excused from any failure or delay in performing Bank's obligations under this contract if such failure or delay is caused by force majeure circumstances beyond control, including natural disasters such as earthquakes or floods, emergency conditions such as war, riot, fire, theft or labor dispute, legal constraint or governmental action or inaction, or City /Depositor's act, omission, negligence or fault. Bank will not be liable for any failure to act on Bank's part if Bank's representatives had a reasonable basis to believe and did believe that Bank's actions would have violated any law, rule or regulation. City /Depositor indemnifies and holds Bank harmless, and agrees to defend, from and against any and all liabilities, claims, costs, expenses and damages of any nature arising out of or relating to disputes or legal actions by parties other than Bank and City /Depositor concerning this contract. The obligations contained herein shall survive the termination of this contract. No indemnification herein shall apply to any costs or damages attributable to Bank's gross negligence or intentional misconduct. XXI NON - WAIVER Failure of either party hereto to insist on the strict performance of any of the provisions herein or to exercise any rights or remedies accruing hereunder upon default or failure of performance shall not be considered a waiver of the right to insist on and to enforce by any appropriate remedy strict compliance with any other obligation hereunder or to exercise any right or remedy accruing as a result of any future default or failure of performance. XXII CONFIDENTIALITY All data relating to City's business provided to Bank by City /Depository will be treated confidentially and safeguarded by Bank, using the same care and discretion that it uses with data that Bank designates as confidential, and Barik shall safeguard all funds and investments of City /Depository while such funds or investments are in the possession of or under the control of Bank. XXIII CAPTIONS The captions of this contract are for information purposes only and shall not in any way affect the substantive terms and conditions of this contract. XXIV RESERVATION Pursuant to Chapter 105 of the Texas Local Government Code, City /Depositor reserves the right to contract with other depositories for the deposit or investment of a portion of available public funds of City XXV NON - ASSIGNMENT This contract shall extend to and be binding upon the parties and their respective successors and assignees; provided, however, that the contract may not be assigned without the written consent of both parties. XXVI CONFORMANCE TO LAWS This contract and all of the transactions contemplated herein shall be governed by and construed in accordance with the laws of the State of Texas, including all applicable constitutional provisions, statutes, charter provisions, ordinances, and resolutions. Bank agrees to fully comply with all applicable laws, including but not limited to the Texas Municipal Depository Law, TEX. LOC. GOV'T CODE ANN. sec. 105.001 et seq., as amended, the Public Funds Investment Act, TEX. GOV'T CODE ANN. sec. 2256.001 et seq., as amended, and the Public Funds Collateral Act, TEX. GOV'T CODE ANN. sec. 2257.001 et seq., as amended. XXVII VENUE Pursuant to Chapter 105 of the Texas Local Government Code, venue and jurisdiction of any suit or right or cause of action arising under or in connection with this contract shall be exclusively in Williamson County, Texas, and any court of competent jurisdiction shall interpret this contract in accordance with the laws of the State of Texas. XXVIII RELATIONSHIP OF PARTIES Nothing contained in this contract shall be deemed or construed by the parties hereto or any other third party to create the relationship of principal and agent, partnership, joint venture, or of any other association whatsoever between the parties, it being expressly understood and agreed that no provision contained in this contract nor any act or acts of the parties hereto shall be deemed to create any relationship between the parties other than the relationship of City and Depository Bank as those terms are understood herein. month of authorized officers of the parties hereto. FOR DEPOSITORY BANK: FOR DEP TO Y&CPtt (Signatu (Title) ATTEST: c /7 Attachments: Executed in multiple originals on this the �� }� day of the A�r;1 ) 1RQCfott. , 2002, by the undersigned duly "Federal Reserve Operating Circular 7" "Bank of America, N.A. Application and Bid for Depository Services" "Terms and Conditions for Treasury Services" BankofAmeric . Bank of America, N.A. Member FDIC. For accounts opened in Texas. ©2000 Bank of America Corporation. ® Printed on recycled paper 43- 11- 2000B(10/00) Deposit Agreement and Disclosures Texas BankofAmerica b EXHIBIT "An Important: Please see section 17 of the Deposit Agreement for information regarding the sharing of information among Bank of America affiliated companies. Table of Contents Deposit Agreement 1. Ownership of accounts - 1 2. Powers of attorney 4 3. Claims and disputes concerning your account 4 4. Deposits 5 5. Withdrawals _ 6 6. Stop payments 10 7. Overdrafts 10 8. Customer and bank responsibilities 11 9. Service charges 13 10. Bank's right of set - off /security interest 14 11. Payment of interest 14 12. Internal accounting of balances 15 13. Time deposits 16 14. W and ACH transactions 18 15. Combined balances 19 16. Combined statement 20 17. Customer information 20 18. Transferability/assignment 22 19. Inactive accounts and abandoned property 22 20. Indemnification /limitation of liability 22 21. Recording 23 22. Waiver - 23 23. Governing law, jurisdiction and severability 23 24. Notices 23 25. Gender, singular and plural 23 26. Amendment/termination 23 Regulatory Disclosures 1. When funds are available for withdrawal 24 2. Electronic funds transfers 27 3. IRS instructions for substitute form W -9 38 Deposit Agreement This Deposit Agreement will govern all deposit accounts established with Bank of America, N.A. or one of our predecessors, and replaces and supersedes any previous deposit agreements. The words "we," "our; "us" and "bank" refer to Bank of America, N.A. The words "you," "your" and "depositor" refer to the account owner or each joint owner identified on the signature card or other account documents and each of their legal representatives. Please read this information carefully and keep it with your other account records. 1. Ownership of accounts a. Multiple -party accounts. (1) With respect to accounts of individuals, if your account as evidenced by the signature card or other account documentation is a joint account, a P.O.D. (Pay on Death) Account or Totten Trust Account, our rights and liabilities for payment of any sums on deposit in the account shall be governed by Part 1 of Chapter X1 of the Texas Probate Code, as amended from time to time. A multiple -party account may be paid upon proper request to any one or more of the parties to your account. We will not be required to inquire as to the source of funds received for deposit to a multiple - party account or to inquire as to the proposed application of any sums withdrawn from such an account. (2) "P.O.D. Account" means an account payable on request of one person during his or her lifetime and, on his or her death, to one or more designated P.O.D. payees or to one or more persons during their lifetime and on the death of all of them to one or more P.O.D. payees. (3) "Totten Trust Account" means an account in the name of one or more persons as trustee for one or more beneficiaries where the relationship is established by the form of the account and the deposit agreement with us and there are no assets of the trust other than the sums on deposit in the account. A Totten Trust Account does not include a regular trust account under a testamentary trust or a trust agreement which has significance apart from the account, or a fiduciary account arising from a fiduciary relationship such as attorney- client (4) As used in this paragraph, the term "payee" means a payee under a P.O.D. Account or a beneficiary under a Totten Trust Account. No more than three (3) persons may be designated as payees on one account. Each payee must be designated by name and should sign a signature card. If more than one person has been designated as a payee, each payee agrees that, at the time any funds become payable to the payee, unless, within thirty (30) days follow- ing the date on which the funds become payable to such payees, all payees sign and submit a written request to us that the account be closed and the funds be paid over to the payees, the account shall become a joint account with right of survivorship in each payee. (5) "Joint Account" means an account payable on request to one or more of two or more parties (whether or not there is a right of survivorship). Any joint account that you establish with us that does not denote whether more than one (1) signature is required will be deemed to require the signature of only one (I) signer to effect all transactions in connection with said account Each party to a joint account agrees that we may pay the funds in the account to or on the order of any one or more of such parties or to or on the order of the duly authorized agent of any of them without regard to whether any of such parties is incapacitated or deceased. Under certain circumstances, payment may be made to the heirs or personal representative of a deceased party. Any party, without the consent of any other party, may 1) make deposits to or withdraw funds from the account; 2) close the account; 3) obtain additional account services, including lines of credit tied to the account; 4) endorse any item payable to any one or more parties for deposit to the account (and each of you specifically autho- rizes the other parties to endorse such items for deposit); and 5) place a stop payment order with respect to any item drawn on the account by any of the parties. Each party is jointly and severally liable for payment of all proper charges against the account, including, but not limited to, overdrafts which we may choose to pay. If you are joint fiduciaries, each of you authorizes the other(s) to act indi- vidually, and such action will be considered to be the joint action of the fiduciaries. (6) Survivorship. Unless you so elect and have indicated on the signature card, time deposit receipt, or certificate of deposit that a joint account is "with right of survivorship," there shall be no right of survivorship for the parties to the account In the event a joint account is designated with right of survivorship: (a) If none of you are married to each other, funds shall be held by you as joint tenants with right of survivorship. (b) If any of you are married to each other: (i) Funds in your account that are your separate property shall be held by you as joint tenants with right of survivorship; (ii) Funds in the account that are your community property, upon the death of one of you, shall become the property of the survivor. Having chosen that funds pass `with right of survivorship," such married persons hereby jointly and severally agree to hold us harmless from any loss and liability arising in connection with such account designation and warrant that they have entered into all appropriate partitioning or other agree- ments necessary or required by law, including Part 3 of Chapter XI of the Texas Probate Code, to make such designation lawful. (c) If survivorship is designated, on the death of one party to a joint account, all sums in the account on the date of the death vest in and belong to the surviving party as his or her separate property and estate. (7) With respect to all multiple -party accounts or other accounts, we make no representation regarding the tax aspects or the legal results of opening an account in particular circumstances. (8) With respect to all multiple -party accounts, the rights of survivors shall be determined by the form of the account at your death. A change in the form of the account must be consistent with this Deposit Agreement, and such change will not be effective until it is made in writing, received and acknowledged by us during your lifetime. (9) In the event we receive written notice from a personal representative pursuant to §442 of the Texas Probate Code, we shall be entitled to rely on all figures supplied and representations made by such personal representative. b. Business and other nonpersonal accounts. If the depositor is a corporation, unincorporated association, limited liability company, professional limited liability company, limited liability partnership, fiduciary, partnership or sole proprietorship, each person signing the signature card or other account documents represents and agrees that 1) such person is fully authorized to execute all documents in the capacity stated therein; 2) such person has furnished all documents necessary to evidence that authority; and 3) the depositor will furnish any other documents in such form as we may request from time to time. We are not required to recognize any resolution affecting the account that is not on our form. Any change in authorized signers will not be effective against us until three (3) business days after our receipt of documents effecting the change provided that we may recognize such change earlier. 2. Powers of attorney We are not required to recognize any power of attorney (including a power of attorney executed pursuant to the Texas Probate Code) to act on an account. If we accept a power of attorney, we may continue to recognize the authority of your attorney in fact until we receive written notice of revocation or termination and have had a reasonable time to act upon it. We also reserve the right to restrict the types or sizes of transactions we will permit an attomey in fact to conduct, on a case -by -case basis, and may require the attorney in fact to present the original power of attorney before conducting any transaction. 3. Claims and disputes concerning your account If another person or entity makes a claim against funds in your account, or if we have reason to believe there is or may be a dispute over matters such as the ownership of the account or the authority to withdraw funds, we may, in our sole discretion, 1) continue to rely on current signature cards, resolutions or other account documents, 2) freeze all or part of the funds until the dispute is resolved to our 4 satisfaction, or 3) pay the funds into an appropriate court of law for resolution. 4. Deposits a. Items deposited. We may refuse, accept for collection only, or return all or part of any deposit. We will act as your agent in collecting any items deposited to your account in accordance with our customary practices and applicable law. Credit for an item deposited is provisional and subject to revocation if the item is not paid for any reason. We shall not be deemed to have received items sent by mail, or placed in the lobby depositories, night depositories, or any other type of depositories we operate, until after we have received actual delivery of those items sent by mail or removed the contents from such depositories. All deposits received by us after our cutoff hour or on Saturday, Sunday or a bank holiday, including items received by us through the mail or removed by us from depositories after hours, will be deemed deposited on the next banking day. Until we remove items from the depositories, we are only responsible for loss of such items caused by our gross negligence or willful misconduct. No item in the deposit shall be deemed finally paid because a portion of the deposit is deducted and withdrawn in cash. b. Verification of deposits. When we accept deposits and issue receipts, such deposits and receipts are subject to subsequent verification and correction, if necessary. If we determine that a deposit does not contain all items or cash claimed to be deposited, we may correct the error and adjust the account balance, even if you have already withdrawn all or part of the deposit. You will have the burden of proving that our records are erroneous with respect to any disputed item. c. Endorsements. If you 1) deposit an item bearing an endorsement which is outside of the area extending 1 inches from the trailing edge of the back of the item or 2) otherwise cause the endorsement of the first bank of deposit to be obscured, and this causes a delay in the return of the item, you will be responsible for any loss or expense we may incur. The trailing edge is defined as the left side of the item as viewed from the front. d. Identification of account.You will be responsible for any loss or expense caused by your failure to identify properly the account to which a deposit is made or intended to be made. e. Items returned. If a deposited item is returned to us by the bank on which it is drawn, we may accept that return and charge the item back against your account without regard to whether the other bank returned the item before its midnight deadline. At our option and without notice to you that the item has been returned, we may resubmit any returned item for payment. You waive notice of dishonor and protest, and agree that we will have no obligation to notify you of any deposited item that is returned to us. Unless prohibited by applicable law or regulation, we also reserve the right to charge back to your account the amount of any item deposited to your account or cashed for you which was initially paid by the payor bank and which is later returned to us due to an allegedly forged, unauthorized or missing endorsement, claim of alteration, encoding error or other problem which in our judgment justifies reversal of credit. We may process a copy or other evidence of a returned item in lieu of the original. f. Foreign currency. If we take an item payable in foreign currency for deposit or collection, you will bear all exchange rate risk. We will not credit the item to your account until we have received the proceeds in U.S. dollars. g. Encoding/endorsing. If you undertake to provide our endorsement or encode the amount on items deposited, you agree to adhere to any standards which are set forth in federal law. S. Withdrawals a. Limits on withdrawals. If your account is a "savings deposit" or a NOW account (interest - bearing check- ing account), as defined under federal law, it is subject to one or both of the withdrawal limitations described below. If you are not sure whether your account is subject to these limitations, please ask us, or refer to the Schedule of Fees. (1) Notice of intended withdrawal. Ordinarily you may withdraw funds from your account without giving us prior notice. Under federal law we must reserve the right to require you to give us seven (7) days' prior notice of your 6 intent to withdraw funds from savings deposits or interest - bearing checking accounts. However, this will not apply to you unless the same notice is required of all of our customers with accounts of the same type. (2) Transaction limitations. If your account is a savings deposit under federal law, you may make up to six (6) preauthorized or telephonic transfers to another of your accounts or to third parties per monthly statement cycle. Also, if your account (including any line of credit linked to it, if applicable) can be accessed by writing checks, using a debit card, or through an online or other bill payment service, no more than three (3) of these six (6) transfers may be made by such methods or any similar orders payable to third parties. The date the check or other transaction clears your account (rather than the date of the check or transaction) will deter- mine whether you have exceeded the permitted number of transactions. If you exceed these restrictions, you may incur service charges, and federal law requires us to close your account for repeated violations. The number of withdrawals made in person, by ATM, by mail or by messenger is not limited. These limitations do not apply to transfers from an account to make a payment on a loan with us or to with- drawals instituted by telephone (via check mailed to you). b. Incomplete and conditional items. If you write any item that is incomplete or conditional (such as `void after 90 days" or "not valid over $500 "), you agree that we may pay or refuse to pay such item, in our sole discretion, even though it is incomplete or the condition has not been met. c. Postdated items. Unless otherwise required by law, we reserve the right to honor or dishonor postdated items. An item is postdated if it is dated after the date it is presented for payment. Unless otherwise required by law, we will not be liable for any damages caused by premature payment of a postdated item or for any damages resulting from dishonor of a postdated item presented for payment before the date of the item. d. "Stale dated" items. We are not required to pay any item presented more than six (6) months after its date. However, we may pay such item if we do so in good faith. You agree that we are acting in good faith in paying such an item as long as there is not a stop payment request in effect when we pay the item. 7 e. Facsimile signatures. If your items are signed • using any facsimile signature or other non -manual form of signature, you acknowledge that its use is solely for your benefit and convenience. You accept sole responsibility for maintaining security over any device for affixing the signature. Such signature will be effective as your signature regardless of whether the person affixing it was authorized to do so and regardless of the means by which the actual or purported facsimile signature may have been affixed if such signature resembles the facsimile signature duly certified to or filed with us, or if such facsimile signature resembles any facsimile signature previously affixed to any item drawn on your account which was accepted and paid without timely objection. f. Multiple signers. If we establish an account for you which purports to require two (2) or more signatures on any items drawn on the account, you acknowledge that such provision is solely for your personal or internal control purposes and shall not be binding on us unless we have entered into a separate written agreement (other than the signature card or depository authority documentation). You agree that we will not be liable for paying any item lacking the required number of signatures, but bearing at least one authorized signature. g. "Payable through" or "payable at" drafts. If we present a payable through or payable at demand draft to you, you agree to return any such draft which you do not wish to pay in accordance with our schedule for return of items. You agree to reimburse us for any loss we may incur in connection with your failure to make a timely return of such draft. h. Telephone transfers. We are not obligated to accept telephone or preauthorized transfers from your account without our prior written consent i. Good faith disbursement You agree that we may disburse funds from your account in good faith reliance on documentation presented to us which purports to give any individual or entity the right to receive such disbursement and we shall not be liable to you for any such good faith disbursement. We may rely on representations of a purported trustee with respect to provisions of any inter vivos trust or testamentary trust furnished to us with respect to an account. We will not be bound by modification or other changes to a trust until we are furnished with documentation satisfactory to us. j. Liens and attachments. Following receipt by us of any notice of lien, process in attachment, garnishment or other legal proceeding relating to you or your account, whether individual or joint, we are authorized, without notice to you or any joint owner of the account, unless otherwise required by law, to withhold payment of so much of the balance in the account as may be the subject of such notice or process, and to pay such amount to the court or creditor, in accordance with applicable state or federal law, without responsibility to you or any joint owner for such withholding or payment or for refusal to honor withdrawals or checks made by you or any joint owner. Any garnishment, attachment or other levy against your account is subject to the bank's right of set -off as described in section 10, unless otherwise prohibited by law. k. Electronic presentment. Your account may be debited on the day an item is presented by electronic or other means, or at an earlier time based on notification received by no that an item drawn on your account has been deposited for collection in another financial institution. A determination of your account balance for purposes of making a decision to dishonor an item for insufficiency of available funds may be made at any time between the receipt of such presentment or notice and the time of return of the item, and no more than one such determination need be made. 1. Check cashing requirements. You agree that we may impose additional requirements we deem neces- sary or desirable on a payee or other holder who presents for cashing an item drawn on your account which is otherwise properly payable, and if that person fails or refuses to satisfy such requirements, our refusal to cash the item will not be considered wrongful. You agree that, subject to applicable law, such requirements may include (but are not necessarily limited to) physical and/or documentary identification requirements, check cashing fees, and requirements that such items may be cashed only at specified locations. 6. Stop payments If your account is one on which checks, drafts or negotiable orders of withdrawal may be drawn, you may ask us to stop payment on any such items. We may charge a fee for any stop payment order. Because items are searched for by computer, you must give us correct infor- mation about each item, including the check number, date, exact amount, payee and account on which the item is drawn. If any such information is inaccurate or insuffi- cient, or if we do not have a reasonable time to act upon the stop payment order before payment is made, we will not be responsible or liable in any way if the order cannot be executed. You understand that payment may not be stopped on any Bank of America ATM card, Check Card or similar card draft, ATM or point of sale transaction. A stop payment order, whether oral or written, is effective for at least six (6) months. At our option, we may keep the stop payment order effective for a longer period (unless you withdraw it) but we may also purge it from our records at any time after the six months expire. If you wish to ensure the continued effectiveness of a stop payment order beyond six months, you must renew it in writing prior to its expiration. An attempted renewal received after the six months have expired may be treated as a new stop pay- ment order request and will be effective only from the date we receive it. After any order ceases to be effective, we may pay the check on which payment was previously stopped. Our liability for paying an item subject to a proper and timely stop payment request is limited to the actual loss suffered. You must prove the amount of your loss to our satisfaction. For additional terms and conditions concerning stop payments, please read carefully the confirmation notice you will receive after placing a stop payment order. 7. Overdrafts We are not obligated to pay an item presented if your account does not contain sufficient collected funds, but we may pay it at our option and charge you a fee. In addition, if payment is not received for any deposited item, the amount of the item will be charged back to your account and may create an overdraft, for which we will charge you a fee. You agree to pay any amount of the overdraft together with any overdraft fees immediately upon demand. We may also charge you interest at the highest rate permitted by law. Our payment of any item which causes an overdraft on one or more occasions does not obligate us to allow such overdrafts on any future occasion. We have no obligation to notify you before we return any item unpaid because of insufficient funds, and we may charge you a fee for such return. You agree that when funds are insufficient to pay all items presented on a given day, we may pay one or more items, and return any dishonored items, in any order we deem appropriate. Currently, we process checks with the highest dollar amount first. This method may allow some of your more important items to be paid; however, it may also result in more insufficient funds fees. We also may establish different priorities or categories for checks and other items. You also agree that we may change our procedures for establishing the order of payments and returns at any time without notice to you. If you have a joint account, each of you agrees to be responsible for repayment of overdrafts and service charges caused by items written by you or any other joint owner. 8. Customer and bank responsibilities a. Prompt review of account statements. We will mail or otherwise make account statements available to you when there is activity on your account. At our option, and with no additional advance notice to you, when there is no activity on your account for one statement cycle, we may choose not to send your account statement. If you request that we hold your mail, you agree that we have made your statements and items available to you when the statement is issued. You must promptly review statements and any accompanying items and notify us promptly in writing of any dispute or difference of account for any reason, including unauthorized signature, lack of signature, alteration or other irregularity. You must report any such irregularity promptly, and in no event later than sixty (60) days after your state- ment and items were received or otherwise made available to you. You will be deemed to have received your statement five (5) business days after its date, absent proof of an earlier or later actual delivery date. Failure to report such irregularity within sixty (60) days shall preclude you from 11 recovering any amounts from us. In addition, under the law, we may be relieved of any potential liability for multiple unauthorized signatures or alterations by the same wrongdoer if you do not notify us in writing within thirty (30) days after your statement containing the first such irregularity was received or otherwise made available to you. No legal proceeding or action shall be brought by you against the bank to recover any amount alleged to have been improperly paid out of the account due to an unauthorized signature, alteration or other defect unless 1) you have given the written notice provided above, and 2) such action shall have been commenced within one (1) year after the date the statement containing such defect was made available to you. b. Check safekeeping. If your account provides for copies of your items to be held by us instead of returned to you, you specifically waive any right to receive canceled checks or other items with statements. Canceled checks and other items will be deemed to be made available to you when your statement is made available. We are under no duty to retain the original of any canceled check. We will keep the original items for a limited time, after which we will keep copies for as long as required by law. We will provide copies of checks upon written request, but we reserve the right to provide such copies upon verbal request We may charge a fee for providing such copies. You continue to be responsible for notifying us promptly in writing of any dispute or difference of account for any reason, including unauthorized signature, lack of signature, alteration, or irregularity within the time periods described above. c. Change of address. You agree to notify us promptly in writing of any change of address and the account(s) affected. We reserve the right to accept verbal notice of a change of address, and we reserve the right to change the address if we are notified by the United States Postal Service that you, or a joint owner on a joint account, have submitted a "change of address" form to the United States Postal Service. We may recognize a change provided by any joint owner on a joint account or any authorized signer on a business account, but such change shall not be binding on us until three (3) business days after our receipt. If you fail to notify us of a change of address or for any other reason a statement is returned to us, we may destroy 12 the statement and any accompanying items ninety (90) days after the statement date. d. Bank's duty of care. Because of the high volume of items we must process and the largely automated nature of such processing, you agree that we will not be considered to have failed to exercise ordinary care if we examine items pursuant to a manual or other procedure that represents a random sampling of items drawn on all accounts, or that meets certain minimum criteria which we may establish for inspection. e. Check orders. All checks, withdrawal forms, and deposit slips must be on forms obtained through us or which we approve in advance. You are responsible for verifying the accuracy of all information on such forms. Our liability, if any, for any printing errors on forms obtained through us is limited to the cost of replacement. We are not responsible for errors or losses you may incur due to improper printing on forms not obtained through us or approved by us in advance. 9. Service charges You agree to pay for various services in accordance with our Schedule of Fees, as in effect from time to time, which is incorporated in this agreement by reference. We may deduct our fee for handling incoming and outgoing wire transfers of funds from the amount of the transfer. With respect to court or administrative orders, subpoenas, summonses, tax levies, or other legal process, unless prohibited or limited by law, you agree to pay our standard charges for research and copying of documents and any other expenses we incur in complying. These may include, but are not limited to, attorney's fees. We may charge your account for any such fees and expenses without any prior notice to you We also expressly reserve the right to impose at any time an assessment on any or all of the various types of accounts offered by us, which approximates amounts we must pay periodically to the Federal Deposit Insurance Corporation (FDIC) for insurance coverage. Because our payments to the FDIC are based on total balances in accounts, we may apply the assessment against your full balance even if it exceeds the maximum amount insured by the FDIC. This assessment is subject to change from 13 time to time in the event of increases or decreases in our cost of FDIC insurance. 10. Bank's right of set -off /security interest We may use funds in any account you maintain with Bank of America, N.A. to repay any debt which is due without notice to you (other than indebtedness incurred through the use of a credit card or if otherwise not permitted by law). If we cash a third party check for you over the counter, and the check is returned to us unpaid for any reason, you authorize us to charge the check against your account without notice, provided we return the unpaid check to you. We will not be liable for dishonoring items where our exercise of our right to set-off results in insufficient funds in an account. The funds held in joint accounts may be pledged by any one of you or used to repay the debts on which any one of you is liable, whether jointly with another or individually. You agree that we may charge any such debt against your account at any time, without regard to the origin of deposits to the account or beneficial ownership of the funds. Funds held in individual accounts may be used to repay your debts, whether such debts are owed jointly with another or individually. Your debts may include 1) those owed by you arising out of another joint account of which you are a joint owner, even if they are not directly incurred by you, 2) those on which you are secondarily liable, or 3) any amounts for which we become liable to any govern- mental agency or department or any company as a result of recurring payments credited to any of your accounts after the death, legal incapacity or other termination of entitlement of the intended recipient of such amounts. If we cash a third party check for you over the counter, and the check is returned to us unpaid for any reason, you authorize us to charge the check against your account without notice, provided we return the unpaid check to you. 11. Payment of interest Please refer to the applicable Schedule of Fees for a description of the terms under which the balances in your account will earn interest Any inconsistency between this agreement and the Schedule of Fees shall be governed by 14 the Schedule of Fees. As indicated in the Schedule of Fees, checking accounts, other than interest - bearing checking accounts, (which are defined as "NOW accounts" under federal law), do not earn interest Only individuals, certain nonprofit and governmental entities and legal entities where the entire beneficial interest in the funds is held by one or more individuals are eligible to hold an interest- bearing checking account. We reserve the right to close or convert an account if we determine that the account holder is not eligible to hold an interest- bearing checking account. a. Savings deposits and interest - bearing checking accounts. Except as stated in the Schedule of Fees, interest will accrue on the collected balance in "savings deposits" and interest- bearing checking accounts at an interest rate and annual percentage yield which may change at any time. If you are not sure whether your account is a "savings deposit" or an interest -bearing checking account, please ask us or refer to the Schedule of Fees. b. Time deposits (CDs). Interest will accrue on the ledger balance in time deposits. We reserve the right, in our discretion, to pay interest on the deposit at the current base rate in effect at maturity as follows: 1) In the event that you withdraw all or a portion of the deposit from automatically renewable time deposits with terms greater than 27 days within seven (7) calendar days of the maturity date, we may pay interest for a period of up to seven (7) calendar days after maturity; or 2) In the event that you withdraw all or a portion of the deposit from time deposits with terms of 27 days or less within one (1) calendar day of the maturity date, we may pay interest for one (1) calendar day from the maturity date. 12. Internal accounting of balances — no effect on your account Your checking account will consist of two "sub - accounts" on the books of the bank: 1) either a demand deposit (noninterest- bearing) or a NOW account (interest - bearing) and 2) a savings deposit, as those terms are defined under federal law. The two will be treated as a single account for customer use, and you will see no effect. All deposits and other credits will be posted to, and checks and debits will be deducted from, the demand deposit 15 or NOW account. Whenever the demand deposit or NOW account balance exceeds a "threshold amount" (which we may establish and change at our discretion), we may transfer funds above that amount to the savings deposit As these funds are needed to pay items presented against your checking account, the appropriate amount will be transferred back to the demand deposit or NOW account, up to six times per statement cycle. If a sixth transfer is needed, the entire balance of the savings deposit will be transferred into the demand deposit or NOW account. This process may be repeated each month. For interest - bearing checking accounts, we will pay the same rate of interest on balances in both sub - accounts as described in section 11 above and in our current Schedule of Fees. Your periodic statement will show a single annual percentage yield earned on the combined balances. 13. Time deposits a. Automatic renewal. Unless otherwise indicated, all time deposit accounts are automatically renewable and will be renewed for successive terms equal to the initial term unless redeemed as provided herein. The interest rate for any renewal tens will be the applicable time deposit rate at the time of renewal, which may vary after the renewal if the account is a variable rate IRA time deposit. If at any maturity date the bank no longer offers time deposit accounts of the same term and type, the amount then on deposit will be reinvested in a new time deposit which has similar features and benefits, to the extent possible, based on account availability, Accounts that are not automatically renewable will not earn interest after the maturity date. b. Redemption. We shall have the right to redeem an automatically renewable account at the end of the term by mailing you a written notice of our intent to redeem prior to the date of such redemption. Unless we redeem the account in that manner, you may redeem within seven (7) calendar days after the maturity date for terms greater than 27 days and one (1) calendar day after the maturity date for teens of 27 days or less, and redemption will be permitted without bank penalty. c. Early withdrawal penalty. You have contracted to keep funds on deposit for the stated maturity. You may 16 not withdraw all or any part of this deposit prior to maturity except with our consent, which may be given only at the time such request for withdrawal is made. If, upon your request, we permit redemption of all or any portion of the account prior to its maturity during the initial or any renewal term, a bank - imposed interest penalty will apply: On accounts with Depositor shall forfeit an original term of an amount equal to, Less than 90 days All interest earned since the original issue or renewal date; however, if any amount is withdrawn within the rust six days after deposit, or within six days after each partial withdrawal, federal law requires us to charge a penalty of at least seven days' interest on the amount withdrawn 90 days' interest 90 days to 18 months 18 months or longer 180 days' interest We will calculate all early withdrawal penalties at the nominal interest rate being paid on the deposit. On variable rate time deposits, we will use the rate in effect at the time of withdrawal to calculate any early withdrawal penalties. The interest penalty may require a reduction in the principal sum on deposit. We may honor a request for withdrawal of all or any portion of a time deposit prior to maturity without penalty upon the death of any owner of the time deposit, or if an owner of the time deposit is determined to be legally incompetent by a court or other administrative body of competent jurisdiction. For an IRA time deposit, we may also honor a request for withdrawal without a bank penalty if the owner becomes disabled. d. Availability and reporting of interest. On CD time deposits, interest is available to you and is reported to the IRS as it is earned, whether or not it is withdrawn prior to maturity. Interest on IRA time deposits is not reported to the IRS as it is earned; interest is reported as taxable when the interest is withdrawn from the IRA. Interest earned is available for withdrawal, but will be reported to the IRS as a taxable distribution if withdrawn. 14. Wire and ACH transactions a. Governing rules. From time to time you may be a party to an Automated Clearing House (ACH) entry or a wire (funds) transfer which may be credited to or charged against your account. You agree that all wire transfers you initiate will be subject to the terms and conditions of our wire transfer agreement then in effect with respect to the type of transfer initiated. With respect to ACH transactions which you have authorized, you agree to be bound by the National Automated Clearing House Association (NACHA) Operating Rules and any local ACH operating rules then in effect. With respect to other electronic funds transfers, you agree to be bound by any rules then in effect governing the use of any system through which the funds may be transmitted including, but not limited to, Federal Reserve Board Regulation I with regard to Fedwire and the Clearing House Interbank Payments System (CHIPS) Operating Rules with regard to CHIPS. b. Notice. We will notify you of the receipt of any ACH entry or wire transfer in your account statement, but we will not provide next -day notice or any other notice. If you believe we have failed to properly credit a transfer to you, you agree to promptly notify your account officer or banking representative at the banking center where you do your principal business of all the relevant facts. c. Final payment. Any credit we give you resulting from an ACH credit entry or other wire transfer credit is provisional until we receive final payment. If we do not receive final payment, or if we credit your account by mistake, you agree that we may reverse the credit to your account or that you will otherwise reimburse us if funds in your account are not sufficient. If we receive satisfactory documentation that a credit entry was made in error, or for an erroneous amount, we may debit your account for the amount erroneously credited, or you agree to otherwise reimburse us if funds are insufficient. In the event that the payment does not become final, the originator will not be deemed to have paid you the amount of the credit. I8 d. Compensation. If you are entitled to compensa- tion for delay or improper completion of an ACH entry or wire transfer as a result of our error, our liability will be limited to the payment of interest for a period not exceeding the lesser of sixty (60) days or the period between the date of the error and the date of correction. Any such compensation will be paid in our discretion by either 1) adjusting your account balance to reflect the average balances you would have had but for the error, or 2) direct payment of an amount equal to interest at the average applicable Federal Funds rate for that period. e. Use of account numbers. You agree that payment for ACH or wire credit transfers may be made solely by reference to the account number of the recipient. Neither we nor any other financial institution making or receiving such payments are obligated to determine whether a dis- crepancy exists between the name and the account number shown on the transfer information_ 15. Combined balances You can designate certain personal and business checking accounts as your primary checking account and link other Bank of America checking, savings and time deposit accounts to your primary checking account. We use the balance in your primary checking account plus the bal- ances in all of your linked deposit accounts to calculate a combined balance during each statement period for your primary checking account. We waive the monthly mainte- nance fee on the primary checking account for each state- ment period in which the combined balance meets or exceeds the required combined balance for the primary checking account. Our Personal Schedule of Fees and Business Schedule of Fees list the required combined bal- ance for each account to which the service applies. You can elect to have account information for your linked personal accounts reported on the statement for your primary personal checking account or you can continue to receive individual statements on each linked account. Combined statements are not available for business accounts. Certain restrictions apply regarding account owner- ship and the number, location and types of accounts that 19 may be linked for combined balance service. These restric- tions include the following: For individual accounts, the owner on the primary checking account must be an owner on the linked accounts. For accounts with more than one owner, at least one of the owners on the primary checking account must be an owner on the linked account. Personal accounts and business accounts may not be linked to each other. Analyzed accounts and some fiduciary accounts may not be linked for this service. A deposit account may only be linked to one primary checking account at a time. Accounts held at banking centers in different states gener- ally may not be linked to each other. For information about combined balances or to link accounts for this service, call us at the Customer Service telephone number on your statement. Combined balance service may not be available in some states. 16. Combined statement If you use our combined balance service for personal accounts, you may elect to receive a combined statement — a monthly statement that reports activity for the accounts you have linked to your primary checking account. If you choose a combined statement, you receive one statement reflecting activity in all your linked accounts, rather than individual statements. This means that each owner of the primary checking account can review information about each linked account. You may receive your canceled checks for your primary checking account. All other linked accounts must use our check safe- keeping service. Combined statements are not available with business accounts. 17. Customer information From time to time, subject to any applicable financial privacy laws or other laws or regulations, we may provide information on you and your accounts: 1) to Chex Systems, Inc. or other account information services; 2) to anyone who we reasonably believe is conducting a legitimate credit inquiry, including, without limitation, inquiries to verify the existence or condition of an account for a third party such as a lender, merchant or credit bureau; 3) in response to any subpoena, summons, court or administrative order, or 20 other legal process which we believe requires our compliance; 4) in connection with collection of indebtedness or to report losses incurred by us; 5) in compliance with any agreement between the bank and a professional, regulatory or disciplinary body; 6) in connection with potential sales of businesses; and 7) to carefully selected service providers or third parties who help us meet your needs by providing or offering our services or their own products and services. In addition, we may share information about our experience with you with Bank of America Corporation and its sub- sidiaries and affiliated companies (`Bank of America affil- iates "). We may also share information which you have provided to us on applications or which we receive from outside sources among the Bank of America affiliates. However, you may tell us that you prefer that we not share this information by sending your request to Bank of America, P.O. Box 27025, Richmond, VA 23261 -7025, and including your name, address, phone number, account number(s) and social security number. You understand that ff you make this election, certain products or services may not be made available to you. In addition, other specific authorizations to share infor- mation for specific account relationships will not be affected by this election. You acknowledge that we pro- vide for your convenience various methods by which you can obtain information on your accounts, and that our rea- sonable security measures cannot absolutely ensure against "unauthorized" inquiries. You therefore agree that we will not be responsible for the release of information to anyone not authorized by you who has gained possession of your ATM access device or who has learned your identifying characteristics such as personal identification number (PIN), account number or Social Security number. You fur- ther agree that if you give your account number to a third person by telephone, that act authorizes that third person to initiate debits to the account even if a particular transaction was not authorized. You hereby authorize us to obtain credit and account information reports, verification of employ- ment and other information we may need in connection with your accounts at any time. 21 18. Transferability/assignment Your account is for your use only and is transferable only on our records. You may not transfer or assign your account to anyone without our written consent. We reserve the right not to acknowledge or accept attempted pledges or assignments of, or purported security interests in, any account. Transaction accounts are not assignable. 19. Inactive accounts and abandoned property If we are unable to contact you through the U.S. mail and you do not initiate activity in the account for a substantial period of time, which may be defined by applicable law or regulation, we will treat the account as being inactive. Unless otherwise prohibited by law, you agree that we may charge inactive account fees on inactive accounts in addition to regular maintenance and other applicable fees. Unless other- wise required by law, we may not pay interest on inactive interest - bearing accounts. Unless otherwise required by applicable law, you are not entitled to recover any fees or unpaid interest, even after you reestablish contact with us. In order to protect your funds, you agree that if we have deemed your account to be inactive, we may refuse to pay items drawn on or payable out of the account until you have reestablished contact with us. After your account has been inactive for a certain period of time, as determined by state law, we will transfer the balance in your account to the state as abandoned property. 20. Indemnification /limitation of liability Unless prohibited by law, you agree to reimburse us for any losses, liabilities and expenses (including attorneys' or collection agencies' fees) we may incur with respect to overdrafts or otherwise in connection with your account, except to the extent they are caused by our negligence or willful misconduct. We will not be responsible for any loss to you caused by an event which is beyond our control, including, but not limited to, natural disasters, wars, riots, strikes, computer failure, or the loss of power, communication or transportation facilities. You agree to pay our attorneys' fees and costs, in addition to any obligations described above, in the event that we shall prevail in any legal proceeding arising out of your account or this agreement. 22 21. Recording You agree that we may tape record any telephone conversations you have with us regarding your account. However, we are not obligated to do so and may choose not to in our sole discretion. 22. Waiver Either of us may waive any of our rights or the other's obligations under this agreement in a particular situation, without becoming obligated to treat future situations simi- larly. A waiver of a particular right or obligation does not constitute a waiver of any other right or obligation under this agreement. 23. Governing law, jurisdiction and severability This agreement will be governed by the laws and regulations of the State of Texas and the United States. Any lawsuit regarding your account must be brought in a proper court in the State of Texas. You hereby submit to the personal jurisdiction of the State of Texas. A determination that any part of this agreement is invalid or unenforceable will not affect the remainder of this agreement. 24. Notices All notices conceming your account are effective when mailed or delivered to the address we have for you in our central account records. If there is more than one depositor, notice to any one will be effective for all. 25. Gender, singular and plural Any references in this agreement to gender include masculine, feminine and neuter. Unless otherwise indicated by the context, any singular references include the plural and any plural references include the singular. 26. Amendment /termination We may amend this agreement, including our fee schedule, by written notice to you, such amendment to become effective not less than thirty (30) days after the mailing or delivery of the notice. Your continued use of your account after the effective date of any amendment as stated 23 in the notice, or after a reasonable time if no such date is ' stated, will constitute your acceptance of the terms of the amendment. You may terminate this agreement and your account at any time upon notice to us. In our discretion, we may require such notice to be given in writing or in person. We may terminate this agreement and close your account at any time without prior notice. If your account reaches a zero balance, we reserve the right to consider your account closed. We will have no responsibility for items which we do not pay after the account has been closed. This agreement will continue to govern matters relating to your account which arose before termination or which may arise later. Regulatory Disclosures 1. When funds are available for withdrawal a. Your ability to withdraw funds. Electronic direct deposits and incoming wire transfers will be avail- able on the day we receive the deposit. Our policy is to make funds from other types of deposits available to you no later than the fast business day after the day we receive your deposit Once they are available, you can withdraw the funds in cash and we will use the funds to pay checks you have written. For determining the availability of your deposits, every day is a business day, except Saturdays, Sundays and federal holidays. If you make a deposit in the state where your account was opened before 2:00 p.m. (12 noon for deposits at an ATM), or such later time as may be posted, on a business day that we are open, we will consider that day to be the day of your deposit. However, if you make a deposit in the state where your account was opened after 2:00 p.m. (12 noon for deposits at an ATM), or after a posted later time, or on a day when we are not open, we will consider that the deposit was made on the next business day we are open. The following applies to ATM deposits made in a state other than the state where your account was opened. If you make an ATM deposit before 12:00 noon (local time in the state where your account was opened) and before the time posted on the ATM on a business day that 24 we are open, we will consider that day to be the day of your deposit. However, if you make an ATM deposit after such times or on a day when we are not open, we will consider that the deposit was made on the next business day we are open. b. Government, cashier's and other special types of checks. Funds from the following deposits are available no later than the first business day after the day of the deposit: • U.S. Treasury checks that are payable to you. If you make the deposit in person to one of our employees, and meet any other conditions noted below, funds from the following types of deposits are available no later than the first business day after the day of your deposit: • State and local government checks that are payable to you and are deposited in an account in the same jurisdiction that issued the check. • Cashier's, certified and teller's checks that are payable to you. • Federal Reserve Bank checks, Federal Home Loan Bank checks and postal money orders, if these items are payable to you. If you meet all of the conditions for a type of deposit described above, except that you do not make your deposit in person to one of our employees (for example, if you mail the deposit), funds from these deposits will be available no later than the second business day after the day of the deposit. e. Wire transfers from business accounts. For purposes of withdrawing funds by means of outgoing wire transfers from business accounts, generally your deposits will be available by the second business day after the day of deposit for local checks and by the fifth business day after the day of deposit for non -local checks. A `local check" is one that is payable by or through a financial institution that is located in the same Federal Reserve check processing region as the physical location of the branch or proprietary ATM of the depositary bank in which the check was deposited. For assistance in distinguishing local from non -local checks, business customers should contact their relationship manager or customer service. 25 d. Other delays may apply. There are other cases when we may not make all of the funds that you deposit by check available to you by the first business day after the day of your deposit. Depending on the type of check that you deposit, funds may not be available until the fifth business day after the day of your deposit. If we are not going to make all funds from your deposit available by the first business day after the day of your deposit, we will notify you at the time you make your deposit or by mailing a notice to you. We will also tell you when the funds will be available. If your deposit is not made directly to one of our employees, or if we decide to take this action after you have left the premises, we will mail you the notice no later than the next business day after we receive your deposit or we make the decision to withhold availability. No special notice will be provided with respect to the availability of funds under the time frames discussed in sections b and c, above. If you will need the funds from a deposit immediately, you should ask us when the funds will be available. In addition, funds you deposit by check may be delayed for a longer period under the following circumstances: 1) We believe a check you deposit will not be paid; 2) you deposit checks totaling more than S5,000 in any one day; 3) you redeposit a check that has been returned unpaid; 4) you have overdrawn your account repeatedly in the last six months; or 5) there is an emergency, such as failure of communications or computer equipment. We will notify you if we delay your ability to withdraw funds for any of these reasons, and we will tell you when the funds will be available. They will generally be available no later than the eleventh business day after the day of your deposit. e. Special rules for new accounts. If you are a new customer, the following special rules may apply during the first 30 days your account is open. Funds from electronic direct deposits to your account will be available on the day we receive the deposit. Funds from deposits of cash, wire transfers and the first $5,000 of a day's total deposits of cashier's, certified, teller's, travelers and federal, state, and local government checks will be available no later than the first business day after the day 26 of your deposit, if the deposit meets certain conditions. For example, the checks must be payable to you, and deposited in person to one of our employees. The excess over $5,000 will be available by the ninth business day after the day of your deposit. If your deposit of these checks (other than a U.S. Treasury check) is not made in person to one of our employees, the first $5,000 will not be available until the second business day after the day of the deposit. Funds from all other check deposits generally will be available no later than the ninth business day after the day of your deposit. However, we may place longer holds on certain items for other reasons, such as large deposits (see "Other delays may apply," above). 1. Holds on other funds. If we cash a check for you that is drawn on another financial institution, we may withhold the availability of a corresponding amount of funds that are already in your account. Likewise, if we accept for deposit a check that is drawn on another financial institution, we may make funds from the deposit available for withdrawal immediately but delay your ability to withdraw a corresponding amount of fsmds that you have on deposit in another account with Bank of America or one of its affiliate banks. In either case, these funds will be available in accordance with our policy described in this disclosure for the type of check which was cashed or deposited. 2. Electronic Funds Transfers a. General information. If we issue you an ATM card, debit card or other device or code (an "access device ") to access funds in your account(s), you agree to use such device only in the manner and for the purposes we authorize. Should you attempt to use the device in any other manner or for any other pmpose, we may reject the transaction, or in our discretion we may complete it without incurring any obligation to honor the same type of transaction on future occasions. We reserve the right not to issue an access device to any customer, and we may also terminate access device privileges with or without cause or notice unless otherwise required by law b. Bank of America policy regarding unauthorized transactions on consumer (personal) accounts involving 27 ATM cards, Check Cards or similar cards (debit cards). Subject to the terms and conditions described in this section b a consumer will incur no liability for an unautho- rized transaction (as defined below) on a personal account, if the transaction involves a Bank of America ATM card, Check Card or similar card — for example, lost/stolen card or unauthorized use of card number. In most situations, this Bank of America policy gives consumers greater protection than is required by law, effectively superseding the consumer liability provisions of Regulation E which are explained in section c(1) below. In administering the above policy, the following terms and conditions shall apply: (1) Excluded transactions. This policy does not apply to any unauthorized electronic fund transfer on a consumer account which does not involve one of the types of cards described above; such claims are instead subject to the normal Regulation E consumer liability provisions. This policy also does not apply to transactions involving any business- purpose card or account (whether such account is accessed by a business or personal card or otherwise); liability in these cases is governed by the applicable Bank of America agreement(s)/disclosure(s). (2) "Unauthorized" defined A transaction is consid- ered "unauthorized" if it is initiated by someone other than you (the cardholder) without your actual or apparent authority, and you receive no benefit from the transaction. A transaction is not considered "unauthorized" if 1) you furnish the card, card number or other identifying informa- tion to another person and expressly or implicitly give that individual authority to perform one or more transactions, and the person then exceeds that authority, or 2) for any other reason we conclude that the facts and circumstances do not reasonably support a claim of unauthorized use. (3) Other considerations. We reserve the right to deny you the benefit of this policy 1) if we ask you for a written statement, affidavit or other information in support of our claim, and you do not provide it within the time requested or within a reasonable time if no date is stated, or 2) under any other unusual circumstances, not otherwise covered above, where we deem such denial appropriate. 28 (4) Limitation of bank's liability. Unless otherwise pro- vided by law, the liability of Bank ofAmerica under this policy is limited to reimbursing consumers for the face amount of any unauthorized transaction, subject to the terms and condi- tions set forth herein, and Bank ofAmerica shall not be liable for any claims of special, indirect or consequential damages. (5) Your legal rights. If your claim does not meet the prescribed conditions for reimbursement under the above policy, you still retain any consumer rights you may have under applicable law (including possible limitations on your liability) as described in section c(1) below, and we will automatically reexamine the claim in accordance with those rights. c. Regulation E disclosures. The following sections contain important information about your rights, and potential liability for unauthorized transfers of funds, with respect to certain types of transactions govemed by the federal Electronic Fund Transfer Act and the related Regulation E of the Federal Reserve Board. Subject to certain exclusions described below, this information applies to accounts established primarily for personal, family or household purposes ( "consumer accounts "), but not to accounts used for business purposes or accounts of non - business associations and other entities. These disclosures generally apply to fund transfers, deposits, cash withdrawals and purchases made with any ATM card, debit card or other device or code which accesses a consumer account, and to direct deposits and some types of preauthorized and telephone initiated transfers involving consumer accounts. They do not apply to debits which the bank is authorized to make from your account for service charges and other fees, to preauthorized automatic transfers you have instructed the bank to make to another of your (or a family member's) Bank of America accounts or toward payment of a Bank of America loan, and to certain other types of consumer transactions which are excluded from Regulation E. If you have received, or receive in the future, a separate agreement and disclosure in connection with the issuance of a particular type of access device, please refer to that information as it may include additional important details. 29 (1) Consumer's liability for unauthorized transfers. Tell us AT ONCE if you believe your Bank of America ATM card, Check Card or similar card ( "card ") or your personal identification number (PIN) has been lost or stolen. Telephoning is the best way of keeping your possible losses down. If you tell us within two business days after you team of the loss or theft, you can lose no more than $50.00 for all unauthorized electronic funds transfer (as defined in Federal Reserve Board Regulation E) or a series of related unauthorized transfers should someone use your card without your permission. If you do NOT tell us within two business days after you leam of the loss or theft of your card or PIN and we can prove we could have stopped someone from using your card without your permission if you had told us, you could lose as much as $500. Losses could include the money in your account plus any advances on the credit line linked to your account. Also, if your statement shows transfers that you did not make, tell us at once. If you do not tell us within 60 days after the statement was mailed to you, you may not get back any money you lost after the 60 days if we can prove that we could have stopped someone from taking the money if you had told us in time. If a good reason (such as a long trip or a hospital stay) kept you from telling us, we will extend the time periods. Remember, do not write your PIN on your card or carry your PIN with you to reduce the possibility of someone using your card without your permission. (2) Telephone number and address to be notified in the event of unauthorized transfer and lost or stolen Bank ofAmerica cards. If you believe your card is lost or stolen or that someone has transferred or may transfer money from your account without your permission, you must notify us immediately by calling the number listed below. If unauthorized activity occurs on the card, then you agree to cooperate during the investigation and to complete a Lost/Stolen Card and Fraud Claims Report or similar affidavit. 30 Write to. Telephone: Bank of America EFT Coordinator 1.800.247.6262 CA5- 701 -14 -01 P.O. Box 7559, #7405 San Francisco, CA 94120 -9614 (3) Business days. Our business days are Monday through Friday, except legal holidays. Transfers may be posted the following business day, depending on the location and time of the transfer. (4) Types of transfers. You may designate up to a total of 15 consumer accounts to be accessed by your card. These accounts can be any mix of checking, savings and line of credit accounts on which you are an authorized signer. With a Bank of America ATM card, at least one of the designated accounts must be a deposit account, for example, checking or savings. A Check Card requires that the primary account be a checking account. You must designate one "primary" checking and one "primary" savings account on any card with multiple checking and/or savings accounts. (a) Account access at Bank of America ATMs. You may use your card to: (i) Withdraw cash from designated checking and savings accounts. (ii) Make deposits to designated checking and savings accounts.* (iii) Transfer funds between designated checking, savings and line of credit accounts. (iv) Get a cash advance on designated line of credit accounts. (v) Make electronic payments to designated line of credit accounts from designated checking and savings accounts. (vi) Verify the balance of designated checking, savings and line of credit accounts. (vii) Get interim statements on designated checking and savings accounts.* (viii)Make payments, by envelope, to bank loans. *Deposits and statements at Bank of America ATMs are limited to certain ATMs located in Arkansas, Florida, Georgia, Illinois, 31 'loin, Kansas, Maryland, Missouri, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and Washington, D.C. Note: All transactions may not be available at all ATMs. Your account access may be limited to withdrawals, balance inquiries and transfers between your "primary" checking and "primary" savings accounts at certain Bank of America ATMs . (b) Account access at ATMs in the PLUS', PULSE., PRESTOS, AFFN° and Visa' (Check Card only) net- works other than Bank ofAmerica ATMs. You may use your card to: (i) Withdraw money from your "primary" checking and 'primary" savings accounts. (ii) Transfer funds between your "primary" checking and "primary" savings accounts. (iii) Verify the balance of your "primary checking and 'primary" savings accounts. (c) Account access for purchases. You can use your Bank of Arnerica ATM card or similar card to make purchases at any merchant displaying the Interlink, AFFN°, PRESTO° or PULSE° symbol. Your Check Card or similar card can be used to make purchases at PULSE. and Visa° merchants worldwide. The amount of your purchases is automatically deducted from your "primary" checking account. (d) Preauthorized transfers. You may use a preauthorized transfer to: (i) Transfer funds between your designated checking, savings and line of credit accounts. (ii) Pay certain bills d from your designated checking or savings accounts. (iii) Receive certain automatic deposits to your designated checking or savings accounts from third parties. We are not liable if we have not received the direct deposit or preauthorized debit instruction in sufficient time to process the request on its due date. We may cancel the direct deposit or preauthorized debit service you receive at any time. 32 (e) Telephone transfers. You may use the telephone to transfer funds between your checking or savings accounts. (1) Computer and other types of transfers. In addition to the types of transfers described above, Bank of America periodically introduces new methods by which you may make funds transfers, such as by personal computer. In some cases, you will receive, or may already have received, a separate agreement and Regulation E disclosures for the particular type of access device, containing details about the kinds of transfers which are available, any limitations on trans- fers, service fees, and other important information. Examples include (where these services are offered *) the Bank of America PC Banking and Bill Payment Service Agreement and Disclosure, the Bank of America Access Identifier Agreement and Disclosure and, when it becomes available, a new agreement and disclosure governing our planned internet banking service. Note: All services may not be available at all ATMs and other authorized facilities, and withdrawal limitations at certain ATMs and certain other authorized facilities may differ. 'Please note that some forms of access may not be available, or may not be immediately available, to all Bank ofAmerica customers in all areas. (5) Limits on transfers and service fees. You may make cash withdrawals each day up to the lesser of the available balance or $700 with a Bank of America ATM card or Check Card, or up to $1,000 with a Gold Check Card. Premier Banking and Private Banking cus- tomers may make cash withdrawals up to $1,000 with a Bank of America ATM card, Check Card or Gold Check Card or $1,500 with a Platinum Check Card. The daily limit on purchases made at Interlink, AFFN PRESTO® PULSE' and Visa' merchants is the lesser of the available balance or $1,000 with a Bank of America ATM card ($1,500 for Premier Banking and Private Banking customers), 52,500 with a Check Card ($10,000 for Premier Banking and Private Banking cus- tomers) or $5,000 with a Gold Check Card or 515,000 with a Platinum Check Card. 33 You will not be charged an ATM transaction fee when you use a Bank of America ATM card or Bank of America Check Card at ATMs where Bank of America or affiliated bank names are displayed. You may pay a fee at ATMs that do not display the Bank of America name. For specific charges relating to ATM card transactions, see the Miscellaneous Schedule of Fees for Personal Accounts. (6) Foreign transactions. If you use your card to obtain cash or to purchase goods or services in another country, the amount of the charge in foreign currency will be converted to a U.S. dollar amount by the applicable network (e.g., Visa", MasterCard', etc.). In making this conversion, the network will use the procedures set forth in its operating regulations. Conversion to U.S. dollars may occur on a date other than the date of the transaction; therefore, the currency conversion rate may be different from the conversion rate in effect on the transaction date. We may receive a portion of the currency conversion rate. See the agreement and disclosure that you receive with your card for details. (7) Preauthorization holds, When you use your card at a point of sale location or when you use the card or other network enhancement feature of the card to obtain goods or services or to obtain cash, the merchant may attempt to obtain pteauthorization from us for the transaction. We place a three (3) business day hold on your account for the amount of the preauthorization request (which may vary in some cases from the amount of the actual purchase, depending on the merchant's request). If the preauthoriza- tion request varies from the amount of the actual transac- tion, payment of the transaction will not remove the hold, which will remain on the account until three (3) business days have expired. This hold may affect the availability of funds from your deposit account to pay checks or for other electronic funds transfers. We will not be responsible for damages for wrongful dishonor if any item is not paid because of the hold. (8) Customer} right to receive documentation. (a) Terminal transfers. You will get a receipt at the time you make any transfer to or from your account using one of our Bank of America ATMs or any ATM displaying the PLUS °, PULSE °, AFFN or 34 PRESTO* symbol. However, this receipt is not final since each transaction, if accepted, is subject to verification by us. If there is a conflict between the receipt and our records, our records will control. (b) Preauthorized credits. If you have arranged to have direct deposits made to your account at least once every 60 days from the same person or company, you can call us at 1.800.247.6262 to find out whether or not the deposit has been made. (c) Periodic statements. You will get a monthly account statement (unless there are no transfers in a particular month). In any case, you will get a statement at least quarterly. (9) Preauthorized transfers. (a) Right to stop payment and procedure for doing so. If you have told us in advance to make regular payments out of your account, you can stop any of these payments. Here's how: call us at 1.800.247.6262 or write Bank of America, Customer Service Center, P O. Box 831547, Dallas, TX, 75283 -1547. You must notify us in time for us to receive your request three (3) business days or more before the payment is scheduled to be made. If you call, we may also require you to put your request in writing and get it to us within 14 days after your call. You must tell us the exact amount of the payment you have stopped, as well as other identifying information which we will request. If written confirmation is required, the oral stop payment order shall cease to be binding 14 days after it has been made. (b) Notice of varying amounts. If these regular pay- ments vary in amount, the person you are going to pay will tell you, ten (10) days before each payment, when it will be made and how much it will be. (You may choose instead to get the notice only when the payment would differ by more than a certain amount from the previous amounts, or when the amount would fall outside certain limits that you set) (c) Liability for failure to stop payment. If you order us to stop a preauthorized payment three (3) business days or more before the transfer is scheduled, and you have given us the information requested, including 35 but not limited to the exact amount of the payment, we will be liable if we fail to stop payment for your damages proximately caused by ow failure to stop the payment. (10) Liability for failure to make transfers. If we do not complete a transfer on time or in the correct amount according to our agreement with you, we will be liable for your losses or damages. However, there are some exceptions. We will not be liable, for instance: (a) If, through no fault of ours, you do not have enough money in your account to make the transfer. (b) If the transfer would go over the credit limit on your credit line. (c) If the ATM where you are making the transfer does not have enough cash. (d) If the ATM was not working properly and you knew about the breakdown when you started the transfer. (e) If circumstances beyond our control (such as fire or flood) prevent the transfer, despite reasonable precautions that we have taken. (f) lithe funds are subject to legal process or other encumbrance restricting such transfer. (g) If an account becomes dormant, in which case we may eliminate the card access to that account. There may be other exceptions stated in our agreement with you or permitted by law. (11) Account information disclosure. We will disclose information to third parties about your account or transfers you make: (a) Where it is necessary for completing transfers; (b) In order to verify the existence and condition of your account for a third party, such as a credit bureau or merchant; (c) In order to comply with government agency or court orders; (d) If you give us your written permission; or (e) As otherwise required or permitted by law or government regulation. (12) Error resolution procedure. In the case of errors or questions about our electronic transfers for Bank of America MasterCard. or Visa° cards, call us at 1.800.732.9194 or write us at Bank of America Card Services, P.O. Box 2493, 36 Norfolk, VA 23501. For Bank of America ATM cards and Check Cards, call 1.800.247.6262 or write Bank of America, EFT Coordinator, CA5- 701- 14 -01, P. 0. Box 7559, 67405, San Francisco, CA 94120 -9614. Call or write as soon as you can if you think your statement or receipt is wrong or if you need more informa- tion about a transfer listed on the statement or receipt. We must hear from you not later than sixty (60) days after we send you the FIRST statement on which the problem or error appeared. (a) Tell us your name and account number. (b) Describe the error or the transfer you are unsure about, and explain as clearly as you can why you believe it is an error or why you need more information. (c) Tell us the dollar amount of the suspected error. If you tell us orally, we may require that you send your complaint or question in writing within ten (10) business days. We will tell you the results of our investigation within ten (10) business days after we hear from you and we will correct any error promptly. If we need more time, however, we may take up to 45 days to investigate your complaint or question, or up to 90 calendar days if the alleged error involves an electronic fund transfer resulting from a point- of-sale debit card transaction, or a transaction initiated outside a state, territory or possession of the United States. If we decide to do this, we will recredit your account within ten (10) business days for the amount you think is in error, so that you will have use of the money during the time it takes us to complete our investigation. If we ask you to put your complaint or question in writing and we do not receive it within ten (10) business days, we may not recredit your account. If we decide that there was no error, we will send you a written explanation within three (3) business days after we finish the investigation. You may ask for copies of any documents that we use in our investigation. If you are a new customer, for electronic fund transfers occurring during the first 30 days after the first deposit is made to your account, the applicable time periods for action by us are 20 business days (instead of 10) and 90 calendar days (instead of 45). 37 (13) Merchant acceptance. Bank of America has no liability or responsibility if for any reason, your card is not honored at any establishment. (14) Miscellaneous. These disclosures apply only to electronic funds transfers that are subject to the Electronic Fund Transfer Act. WARNING: As part of the security system for the protection of your card and PIN, we may use hidden cameras and other security devices to determine who is using a card at an ATM. 3. IRS instructions for substitute form W - 9 (Section references are to the Internal Revenue Code.) The bank's signature card, along with this disclosure, represents a substitute form for IRS Form W -9. For interest - bearing accounts, you are required to furnish your correct Taxpayer Identification Number (TIN) on the bank's signa- ture card, and I) to certify that the TIN you are furnishing is correct (or that you are waiting for a number to be issued), 2) to certify that you are not subject to backup withholding, and 3) to claim exemption from backup withholding if you are an exempt payee. Fumishing your correct TIN and making the appropriate certifications will prevent certain payments from being subject to backup withholding. Your account's interest and any backup withholding will be reported to the IRS under the TIN you indicate on the bank's signature card. a. How to obtain a TIN. If you do not have a TIN, apply for one immediately. To apply, get Form SS -5, Application for a Social Security Number Card (for individuals) from your local office of the Social Security Administration, or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), from your local Internal Revenue Service office. If you do not have a TIN, write "Applied For" on the bank's signature card. Generally, you will then have 60 days to obtain a TIN and furnish it to the requester. If the requester does not receive your TIN within 60 days, backup withholding, if applicable, will begin and continue until you furnish your TIN to the requester. For reportable interest or dividend payments, the payer must exercise one of the following options concerning backup withholding during this 60 -day period. Under option 1), a payer must 38 backup withhold on any withdrawals you make from your account after seven business days after the requester receives this form back from you. Under option 2), the payer must backup withhold on any reportable interest or dividend payments made to your account, regardless of whether you make any withdrawals. The backup withholding under option 2) must begin no later than seven business days after the account is opened. Under option 2) the payer is required to refund the amounts withheld if your certified TIN is received within the 60 -day period and you were not subject to backup withholding during that period: Note: Writing `Applied For" on the form means that you have already applied for a TIN OR that you intend to apply for one in the near future. As soon as you receive your TIN, complete a Form W -9, include your TIN, sign and date the form, and return it to the bank. b. What is backup withholding? Persons making certain payments to you are required to withhold and pay to the IRS 31% of such payments under certain condi- tions. This is called "backup withholding." Payments that could be subject to backup withholding include interest, dividends, broker and barter exchange transactions, rents, royalties, nonemployee compensation, and certain payments from fishing boat operators, but do not include real estate transactions. If you give the requester your correct TIN, make the appropriate certifications, and report all your taxable interest and dividends on your tax return, your payments will not be subject to backup withholding. Payments you receive will be subject to backup withholding if: (1) You do not famish your TlN to the requester, or (2) The IRS notifies the requester that you furnished an incorrect TIN, or (3) You are notified by the IRS that you are subject to backup withholding because you failed to report all your interest and dividends on your tax return (for reportable interest and dividend accounts only), or (4) You fail to certify to the requester that you are not subject to backup withholding under (3) above (for reportable interest and dividend accounts opened after 1983 only), or (5) You do not certify your TIN. This applies only 39 to reportable interest, dividend, broker, or barter exchange accounts opened after 1983, or broker accounts considered inactive in 1983. For other payments, you are subject to backup with- holding only if (1) or (2) above applies. Certain payees and payments are exempt from backup withholding and information reporting. See Payees and payments exempt from backup withholding, below, if you are an exempt payee. c. Payees and payments exempt from backup withholding. The following is a list of payees exempt from backup withholding and for which no information reporting is required. For interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in (I) through (13), and a person registered under the Investment Advisers Act of 1940 who regularly acts as a broker are exempt. Payments subject to reporting under sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in items (1) through (7), except that a corporation that provides medical and health care services or bills and collects payments for such services is not exempt from backup withholding or information reporting. Only payees described in items (2) through (6) are exempt from backup withholding for barter exchange transactions, patronage dividends, and payments by certain fishing boat operators. (I) A corporation. (2) An organization exempt from tax under section 501(a), or an individual retirement account (IRA), or a custodial account under 403(b)(7). (3) The United States or any of its agencies or instrumentalities. (4) A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. (5) A foreign government or any of its political subdivisions, agencies or instrumentalities. (6) An international organization or any of its agencies or instrumentalities. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S. or a possession of the U.S. 40 (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment commu- nity as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section 664 or described in section 4947. Payments of dividends and patronage dividends generally not subject to backup withholding also include the following: • Payments to nonresident aliens subject to withholding under section 1441. • Payments to partnerships not engaged in a trade or business in the U.S. and that have at least one nonresident partner. • Payments of patronage dividends not paid in money. • Payments made by certain foreign organizations. Payments of interest generally not subject to backup withholding include the following: • Payments of interest on obligations issued by individuals. Note. You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct TIN to the payer. • Payments of tax - exempt interest (including exempt - interest dividends under section 852). • Payments described in section 6049(b)(5) to nonresident aliens. • Payments on tax -free covenant bonds under section 1451. • Payments made by certain foreign organizations. • Mortgage interest paid by you. Payments that are not subject to information reporting are also not subject to backup withholding. For details, 41 see sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A, and 6050N, and the regulations under such sections. d. Exempt payees and payments. If you are exempt from backup withholding, you should complete a Form W -9 to avoid possible erroneous backup withholding. Enter your correct TIN. Indicate "Exempt" and sign and date the form. If you are a nonresident alien or foreign entity not subject to backup withholding, give the requester a completed Form W -8, Certificate of Foreign Status. e. Penalties (I) Failure to furnish TIN. If you fail to furnish your correct TIN to a requester, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Civil penalty for false information with respect to withholding. If you make a false statement with no reasonable basis that results in no imposition of backup withholding, you are subject to a penalty of $500. (3) Criminal penalty for falsifying information. Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. (4) Misuse ofTlNs. If the requester discloses or uses TINs in violation of federal law, the requester may be subject to civil and criminal penalties. f. Privacy act notice. Section 6109 requires you to furnish your correct taxpayer identification number (TIN) to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acqui- sition or abandonment of secured property, or contributions you made to an individual retirement arrangement (IRA). The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are required to file a tax return. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a TIN to a payer. Certain penalties may also apply. 42 What name and number to For this type of account: 1) Individual 2) Two or more individuals (joint account) 3) Custodian account of a minor (Uniform Gift to Minors Act) 4) a. The usual revocable savings trust (grantor is also trustee) b. So- called trust account that is not a legal or valid trust under state law 5) Sole proprietorship For this type of account. 6) Sole proprietorship 7) A valid trust, estate, or pension trust 8) Corporate 9) Association, club, religious, charitable, educational, or other tax- exempt organization 10) Partnership 11) Broker or registered 12) Account with Dept. of Agriculture in the name of a public entity (such as a state or local government, school district, or prison) that receives agricultural program payments 43 give the requester Give name and Social Security number of The individual The actual owner of account or, if combined funds, the first individual on account' The minor' The grantor- trustee' The actual owner' The owner' Give name and Employer ID number of The owner' Legal entity' The corporation The organization The partnership The broker or nominee The public entity List fist and circle the name of the person whose number you furnish. Circle the minor's name and furnish the minor's SSN. Show your individual name. You may also enter your business name. You may use your SSN or EIN. `List first and circle the name of the legal trust, estate, or pension trust (Do not furnish the TIN of the personal representative or trustee unless the legal entity itself is not designated in the account title.) Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. This COLLATERAL SECURITY AGREEMENT is made and entered into on the date last herein written by and between the City of Round Rock, Texas, hereinafter called "Depositor ", and Bank of America, N.A., a national banking association, organized under the laws of the United States and authorized by law to do banking business in the state of Texas, hereinafter called "Bank ". Background Depositor, through action of its governing body, has designated Bank as a depository for public funds of the Depositor. During the term of this Collateral Security Agreement, the Depositor will, through appropriate action of its governing body, designate the officer, or officers, who singly or jointly will be authorized to represent and act on behalf of the Depositor in any and all matters of every kind arising under this Collateral Security Agreement. Bank's Deposit Agreement is incorporated herein for all purposes; however, to the extent that any provision therein conflicts with any provision herein, this Collateral Security Agreement will control. All funds on deposit with Bank to the credit of the Depositor are required to be secured by Collateral as provided in the state statute: Texas Government Code Section 45.151- 404.109, 2256.001- 2257.083; (hereinafter referred to as the "Public Funds Law "). To perfect the security interest of the Depositor in the Collateral pledged by the Bank, a Federal Reserve Bank or a third party financial institution, acceptable to both parties, will hold the Collateral in a custody account for the benefit of the Depositor. Such Federal Reserve Bank or third party financial institution is hereafter referred to as "Trustee." o,vemccmmw,emositowunzmmi mft COLLATERAL SECURITY AGREEMENT EXHIBIT NOW, THEREFORE, in consideration of the foregoing, and for other consideration the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows: I. In accordance with the terms of this Collateral Security Agreement, Bank hereby pledges to Depositor, and grants to Depositor a security interest in, those assets owned by Bank and held by Trustee for the benefit of Depositor (hereinafter, the "Collateral "), to secure the deposits held by Bank for Depositor as required by the Public Funds Law. II. The total market value of the Collateral (which includes accrued interest or income to the extent it is not included in the market price) will be in an amount at least equal to such amount as is required under the Public Funds Law. When additional Collateral is required to cover incremental deposits, Bank must receive the request for Collateral prior to 9:30 a.m. Mountain Time or 10:30 a.m. Central Time. Twenty -four (24) hours' notice is necessary on incremental deposits that will result in the deposit of additional Collateral in excess of $3 million. The Bank will notify Depositor by facsimile on the day that additional Collateral is deposited. The market value of any security held as Collateral will be obtained from a primary dealer. The Bank will provide a monthly Collateral report at no charge. The report shall include, at a minimum, the par value, the market value, interest rate, maturity date, and description of each security pledged as of the last business day of the month. III. Bank has heretofore or will immediately hereafter deliver to Trustee Collateral of the kind and character permitted by the Public Funds Law of sufficient amount and market value to provide adequate Collateral for the funds of Depositor deposited with Bank. The Collateral or substitute Collateral, as hereinafter provided for, shall be kept and retained by Trustee in trust so long as the depository relationship between Depositor and Bank shall exist hereunder. IV. Bank shall cause Trustee to accept the Collateral and hold the same in trust for the purpose herein stated. V. Should Bank fail at any time to pay and satisfy, when due, any check, draft, or voucher lawfully drawn against any deposit, or in case Bank becomes insolvent or in any manner breaches its contract with Depositor, Depositor shall give written notice of such failure, insolvency or breach to Bank, and Bank shall have ten (10) days to cure such failure, insolvency or breach. In the event Bank shall fail to cure such failure, insolvency or breach within ten (10) days, it shall be the duty of Trustee, upon demand of Depositor (supported by proper evidence of any of the above - listed circumstances), to surrender the Collateral to the Depositor. Depositor may sell all or any part of the Collateral and out of the proceeds thereof pay Depositor all damages and losses sustained by it, together with all expenses of any and every kind incurred by it on account of such failure or insolvency, or sale, accounting to Bank for the remainder, if any, of the proceeds or Collateral remaining unsold. VI. Any sale of the Collateral, or any part thereof, made by Depositor hereunder may be either at public or private sale; provided, however, Depositor shall give to Bank ten (10) days' written notice of the time and place where such sale shall take place, and such sale shall be to the highest bidder therefor for cash. Depositor and Bank shall have the right to bid at such sale. VII. If Bank shall desire to sell or otherwise dispose of any one or more of the securities so deposited with Trustee, it may substitute for any one or more of such securities other securities of the same market value and of the character authorized herein. Such right of substitution shall remain in full force and may be exercised by Bank as often as it may desire; provided, however, that the aggregate market value of all Collateral pledged hereunder, shall be at least equal to the amount of Collateral required hereunder. If at any time the aggregate market value of such Collateral so deposited with Trustee shall be less than the total amount required under the Public Funds Law, Bank shall, upon request of Depositor, deposit with Trustee such additional Collateral as may be necessary to cause the market value of such Collateral to equal the total amount of required Collateral. Bank shall be entitled to income on securities held by Trustee, and Trustee may dispose of such income as directed by Bank without approval of Depositor. VIII. Bank shall cause Trustee promptly to forward to Depositor copies of safekeeping or trust receipts and /or activity reports covering all the Collateral, including substitute Collateral as provided for herein. Ix. If at any time the Collateral in the hands of Trustee shall have a market value in excess of the required amount of Collateral, the Depositor shall authorize the withdrawal of a specified amount of Collateral and Trustee may deliver this amount of Collateral (and no more) to Bank, taking its receipt therefor, and Trustee shall have no further liability for Collateral so redelivered to Bank. X. Either Depositor or Bank shall have the right to terminate this Agreement by advance written notice to the other of its election to do so, and this Agreement shall be void from and after the expiration of sixty (60) days after the receipt of such notice, provided all provisions of this agreement have been fulfilled. The Bank will automatically terminate this Agreement when a Depositor has not required Collateral coverage for one year. The Depositor will be notified of this termination at the following address and /or telephone number and /or fax: ADDRESS: ADDRESS: CITY, STATE, ZIP CODE: TELEPHONE NUMBER: FAX NUMBER: When the relationship of depositor and bank shall have ceased to exist between Depositor and Bank, and when Bank shall have properly paid out all deposits of Depositor, it shall be the duty of Depositor to give Trustee written notice to that effect; whereupon Trustee shall, with the approval of Depositor, redeliver to Bank All Collateral then in its possession belonging to Bank, taking its receipt therefor. XII. Any notice required to be given to Bank in writing shall be sufficient if delivered to the following address: Roberta L. Harper Senior vice President Bank of America Liability Management 901 Main Street, TX1- 492 - 63 - 04 Dallas, TX 75202 -3714 (214) 209 - 2804 - - phone (214) 209 - 2019 - - fax collateral .managernent @bankofamerica.co The Bank may change the above address by notifying Depositor by facsimile or by such other means as is consistent with Bank's usual means of notification to Depositor. This agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors. XIV. No amendment or modification of this Agreement or waiver of any right hereunder shall be binding on any party hereto unless it is in writing arid is signed by all of the parties hereto. Executed in ulti le originals on this the day of the month of l ,2002, by the undersigned duly authorized officers of the parties hereto. FOR BANK: FOR DEPOSITOR: ATTEST: (Signature)' (Title) -+ 1r�i�'r + *G XIII. 0,11kb linf2,' 2 1Yuldokel___' �� 155G r � AS 2r/n�E y y To: Attn: Carol -Ann Bogue (Print name) (Print name) (Print name) Federal Reserve Bank of Boston 600 Atlantic Ave. Boston MA 02106 Pledgee Agreement Date: MARCH 22, 2002 We, the City of Round Rock, agree to the terms of Appendix C of your Operating Circular 7, dated August 27, 2001, as it may be amended from time to time with respect to the account on your books designated as - CITY OF ROUND ROCK We further agree that you may accept securities from the Pledgor as a replacement of, or in substitution for, those securities presently held (please check one): with prior approval without prior approval provided that the replacement or substitution does not reduce the aggregate par amount of securities held in custody for us. We authorize you to use the following call -back procedure for securities transactions pertaining to this account (please check one): We certify that the individuals listed below may take authoritative action on our behalf with respect to the account, including a direction to release collateral from the account. You may rely on the authority of these individuals with resp cL to a count until we otherwise notify you. David Kautz,Finance Dir. (Prim name) (Title) Jerry Galloway,Asst Fin. (Signature) four -party cat -back 4/1/02 (512)218 -5400 (Date) (Telephone) 4/1/02 (512) 218 -5400 (Print name) (711b8)r e c t o r. Signature) (Date) (Telephone) (Title) (Signature) (Date) ;Telephone) (Title) (Signature) (Date) (Telephone) (Title) (Signature) (Date) (Telephone) The Undersigned hereby certifies that he /she is the present lawful incumbent of the designated public office. Pledgee City of Round Rock Name of governmental unit 221 E. Main Street Street Address EXHIBIT nd, State of � E `J County of W /LLJ4-/Y11O/0 // , On this 3 day of f4Ai JO , 200a/ before me personally appeared 1PA7'1,REufSt' to me personally known or satisfactorily proven, who by me duly swom, did depose an say that he/she resides at 40g W 4 , in the City of r�a.'A)L) an in the State of ' that hefshe is the (1 /ry /MAW 4E4 (Thiel of u. ' / • .', • ., and that he/she executed this document on behalf of - the eil y of 'AII t 1/7 1 , Tx before me. (Signature of Notary) eke /JMJ& ,V,Q -MJ62, (Print name of Notary) My commission expires on ?' c (Date) Round Rock, TX 78664 City, State, Zip Code 03 Official nature Dat Robert L. Bennett, Jr., City Manager Printed Name and Title CHRISTINE R. WUIN Z MY COMMISSION EXPIRES Mosta 2005 Table of Contents Operating Circular 7 BOOK -ENTRY SECURITIES ACCOUNT MAINTENANCE AND TRANSFER SERVICES Page 1.0 Purpose, Scope and Effect of this Circular 1 2.0 Governing Regulations 1 3,0 Definitions 1 4.0 Securities Account Maintenance 2 4.1 Securities Account Location and Identification of the Administrative Reserve Bank 2 4.2 Unrestricted Securities Accounts 3 4.3 Restricted Securities Accounts 3 5.0 Terms of Access 4 6.0 The Roles of the Reserve Banks in a Book -Entry Securities Transfer 4 7.0 Execution of Transfers 4 7.1 Debits and Credits 4 7.2 Conditions of Access 5 7.3 Format and Content of Transfer Messages 5 8.0 Security Procedures 6 9.0 Settlement of Book -Entry Securities Transfers 6 10.0 Limitations on Transfers of Book -Entry Securities 6 10.1 General Restrictions on Transfers 6 10.2 Amount Limitations on Transfers 6 10.3 Improper Use of the Reversal Code 7 11.0 Transfer Hours and Extensions 7 12.0 Notices 7 13.0 Requesting As -of Adjustments 8 Table of Contents operating Circular 7 BOOK -ENTRY SECURITIES ACCOUNT MAINTENANCE AND TRANSFER SERVICES Table of Contents (continued) Page 14.0 Transfer and Securities Account Maintenance Fees 8 14.1 Fees 8 14.2 Billing of Fees 8 15.0 Emergency Conditions 8 15.1 Failure of a Participant's Equipment 8 15.2 Failure of Reserve Bank Equipment 8 16.0 Limitations on Liability 9 17.0 Multiple Master Accounts 9 18.0 Right to Amend 9 19.0 Effect of this Circular on Previous Circulars 9 Appendices Appendix A — Applicable Regulatory Citations Governing Book -Entry Securities of Agencies, Instrumentalities, and Establishments of the United States 10 Appendix B — Fedwire Operating Hours For Book -Entry Securities Transfers 11 Appendix C — Custody Agreement For Book -Entry Securities 12 Appendix D — Automated Claim Adjustment for Mortgage- Backed Securities 16 Operating Circular 7 Federal Reserve System 1.0 PURPOSE, S CO S AND TH EFFEC CIRCULAR 1.1 This Operating Circular ("Circular") sets forth the terms under which the Federal Reserve Bank of (City) main- tains Securities Accounts and effects Transfers of Book -Entry Securities for Participants. By maintaining a Securities Account, a Participant agrees to all the provisions of this Circular, as amended from time to time. Capitalized terms are defined in Paragraph 3. 1.2 Each Reserve Bank has issued a Circular No. 7 identical to this one. 2.0 GOVERNING REGULATIONS 2.1 This Circular incorporates by refer- ence the current provisions of the regula- tions listed in Appendix A as such regula- tions are amended from time to time. 3.0 DEFINITIONS 3.1 For purposes of this Circular, the following definitions apply. 3.2 Administrative Reserve Bank with respect to a Participant means the Reserve Bank in whose District the Participant is located. 3.3 Board means the Board of Governors of the Federal Reserve System. 3.4 Book - Entry Security means a marketable security issued in electronic form by the United States Government (the "Treasury"), any agency or instrumen- tality thereof, certain international organiza- Operating Circular No. 7 January 7, 2002 1. Fedwire is a registered service mark of the Federal Reserve Banks. tions, or others, that the Reserve Banks have determined is eligible to be held in a Securities Account and is eligible for Transfer. 3.5 The Fedwire Book - Entry Securities transfer system (" Fedwire means the electronic facility operated by the Reserve Banks for maintaining Securities Accounts and for effectingTransfers. 3.6 Free Transfer means a Transfer that does not involve any credit or debit to a Master Account other than a transaction fee. 3.7 Master Account means an account with reserve and /or clearing balances on the books of a Reserve Bank.A Master Account is a Funds Account for purposes of the regulations listed in Appendix A. A Master Account does not contain Book - Entry Securities. 3.8 On - Line Access means a connection for the transmission of a Transfer Message directly to or from a Reserve Bank by elec- tronic data transmission, excluding facsimile and oral transmission by telephone. 3.9 On - Line Participant means a Participant with On - Line Access. 3.10 Off - line Access means a connection other than On -Line Access for sending and receiving Transfer Messages to or from a Reserve Bank such as by written, facsimile, or telephone voice instruction. 3.11 Off - line Participant means a Participant with Off -line Access. 3.12 Participant means an entity that maintains a Securities Account with a Reserve Bank in the entity's name. Subject to the Reserve Banks' and the Board of Operating Circular 7 2 Governors risk reduction policies, where applicable, entities authorized by law, regulation, policy, or agreement to be Participants include: (a) depository institutions as defined in Section 19(b)(1)(A) of the Federal Reserve Act, as amended (12 U.S.C. §461(b) (1) (A)); (b) agencies and branches of foreign banks as defined in Section 1(b) of the International Banking Act of 1978, as amended (12 U.S.C. § §3101(1) and (3)); (c) member banks of the Federal Reserve System pursuant to Regulation H issued by the Board (12 C.F.R. Part 208); (d) the Treasury and any entity specifi- cally authorized by Federal statute to use the Reserve Banks as fiscal agents or depositories; (e) entities designated by the Secretary of the Treasury in accordance with Section 15 of the Federal Reserve Act (12 U.S.C. §391); (f) foreign central banks, foreign mone- tary authorities, foreign governments, and certain international organizations; (g) entities authorized under Section 25, Paragraph 3, and Section 25A of the Federal Reserve Act (12 U.S.C. § §601 (Third), 611); and (h) any other entity authorized by a Reserve Bank to use Fedwire Book - Entry Securities services. 3.13 Receiver means the Participant receiving a Book -Entry Security as a result of a Transfer. 3.14 Reserve Bank means one of the 12 Federal Reserve Banks and its branches. 3.15 Restricted Securities Account means a Securities Account used for pledg- ing Book -Entry Securities to a pledgee on the books of a Reserve Bank in accordance with this Circular. 3.16 Securities Account means an account at a Reserve Bank containing Book -Entry Securities. 3.17 Sender means the Participant sending a Transfer Message. 3.18 Transfer means the electronic move- ment over Fedwire of a par amount of Book -Entry Securities by debit to the designated Securities Account of the Sender and by credit to the designated Securities Account of the Receiver, or by debit to one Securities Account of a Participant and credit to another Securities Account of that same Participant, in which case that Participant is both a Sender and a Receiver. A Transfer is either a Free Transfer or a Transfer Against Payment. 3.19 Transfer Message means an instruc- tion of a Participant to a Reserve Bank to effect aTransfer. 3.20 Transfer Against Payment means a Transfer that is effected with a credit to the Master Account of the Sender and a debit to the Master Account of the Receiver, for the amount of the payment. 3.21 Unrestricted Securities Account means a Securities Account used to main- tain Book -Entry Securities for a Participant and does not include a Restricted Securities Account. 4.0 SECURITIES ACCOUNT MAINTENANCE 4.1 SECURITIES ACCOUNT LOCATION AND IDENTIFICATION OF THE ADMINISTRATIVE RESERVE BANK 4.1.1 A Participant may have one or more Securities Accounts at its Administrative Reserve Bank. subject to the terms required by the Administrative Reserve Bank. Securities Accounts may be restricted or unrestricted. 412 A Participant's Administrative Reserve Bank is the Reserve Bank in whose district the Participant is located. For purposes of Operating Circular 7 this Circular, a Participant is located in the Federal Reserve District as determined under the procedure described in 12 C.ER. Part 204 even if the Participant would not otherwise be subject to Part 204.A foreign central bank Sender or Receiver is located in the Second Federal Reserve District. 4.2 UNRESTRICTED SECURITIES ACCOUNTS 4.2,1 A Participant may hold Book -Entry Securities it owns, as well as Book -Entry Securities it holds for the account of its customers, in one or more Unrestricted Securities Accounts. Regardless of the com- bination or number of Unrestricted Securities Accounts maintained by a Participant, all Book -Entry Securities held in an Unrestricted Securities Account are held by a Reserve Bank for, and subject to, the sole order of the Participant. 4.2.2 A Reserve Bank does not reflect in its records any interest of a Participant's customers in Book -Entry Securities held by the Reserve Bank for the Participant in an Unrestricted Account, and is not responsible for the accuracy or content of the records of a Participant with respect to Book -Entry Securities held by the Participant for the account of its cus- tomers. A Participant shall not represent to its customers that the Reserve Bank's records reflect the interests of the Participant's customers. 4.2.3 Any name used by a Participant or a Reserve Bank to identify an Unrestricted Securities Account is for convenience only and does not alter the Reserve Bank's right to treat the Participant as exclusively enti- tled to exercise the rights and powers with respect to the Book -Entry Securities in such Securities Accounts. 4.3 RESTRICTED SECURITIES ACCOUNTS 4.3.1 A Participant may hold Book -Entry Securities pledged as collateral in one or more Restricted Securities Accounts. Credits of Book -Entry Securities to, and debits from, Restricted Securities Accounts may require the intervention of the Reserve Bank and may require the approval of the pledgee. 4.3.2 Restricted Securities Accounts include, but are not limited to, the following: (a) Restricted Securities Accounts in which the Reserve Bank holds Book - Entry Securities in its individual capacity: (i) as collateral for advances (includ- ing extension of intra -day credit) by the Reserve Bank to the Participant; (ii) as collateral to secure the exer- cise of trust powers within a state or deposits of funds of public entities (including states, municipalities, and other political subdivisions — see Appendix C); (iii) as collateral for bankruptcy funds on deposit with the Participant pur- suant to 11 U.S.C. §345; and (iv) for such other purposes as the Reserve Bank may designate; and (b) Restricted Securities Accounts in which a Reserve Bank holds Book -Entry Securities in its capacity as fiscal agent of the United States: (i) as collateral to secure balances held by the Participant in Treasury Tax and Loan accounts under 31 C.FR. Part 203, as amended from time to time (Treasury Circular 92); (ii) as collateral for revenues and funds of the United States, and any funds the deposit of which is subject to the control or regulation of the United States or any of its officers, agents, or employees pursuant to 31 C.F.R. Part 202, as amended from time to time (Treasury Circular 176); (iii) as security in lieu of a surety on penal or other bonds, pursuant to 31 C.F.R. Part 225, as amended from time to time (Treasury Circular 154); and (iv) for such other purposes as the Secretary of the Treasury may approve, subject to Treasury circulars or other relevant instructions. Operating Circular 7 4 4.3.3 Proceeds of Book -Entry Securities, including interest payments on Book-Entry Securities, held in a Restricted Securities Account at maturity or call may be held by a Reserve Bank in a non - interest - bearing account until substitute collateral is posted or the pledge is released. 5.0 TERMS OF ACCESS 5.1 Each Participant is responsible for all access to, and all debits and credits to, its Securities Accounts and its Master Account. A Participant may use the services of a third -party service provider, as described in and subject to Paragraph 18 and Appendix C of Operating Circular 6 on Funds Transfers through Fedwire. 5.2 A Participant must maintain a Master Account at a Reserve Bank to be a Sender or a Receiver of Transfers Against Payment; the Administrative Reserve Bank reserves the right: (1) to require a Participant to maintain a balance in its Master Account or to pledge collateral sufficient at all times to cover Transfers Against Payment for which the Participant is the Receiver, (2) to limit a Receiver to Free Transfers, or (3) to limit Transfers Against Payment or to reject Transfer Messages. 5.3 A Participant that does not have or is not permitted to have a Master Account in its own name may only be a Sender or a Receiver of Free Transfers, and must desig- nate a correspondent (on a form provided by the Administrative Reserve Bank) with a Master Account on a Reserve Bank's books which shall be credited for principal and interest payments on Book -Entry Securities, and debited for transaction fees as described in Paragraph 14; a Reserve Bank will reject Transfer Messages for Transfers Against Payment to a Participant that does not have a Master Account or that is only permitted to be a Receiver of Free Transfers, 6.0 THE ROLES OF THE RESERVE BANKS IN A BOOK -ENTRY SECURITIES TRANSFER 6.1 A Participant's Administrative Reserve Bank may instruct any other Reserve Bank concerning the other Reserve Bank's han- dling of aTransfer Message affecting the Participant's Securities Account(s) and Master Account. 7.0 EXECUTION OF TRANSFERS 7.1 DEBITS AND CREDITS 7.1.1 Book -Entry Securities are credited to a Participant's Securities Account in accor- dance with Reserve Bank policies and, when relevant, the regulations and policies of the issuers of the Book -Entry Securities, including whenever a Participant: (a) is a Receiver, or receives Book -Entry Securities moved from the TREASURY DIRECT System (described at 31 C.F.R. Part 357.20 er seq.) to its Securities Account; (b) purchases Book -Entry Securities on original issue; or (c) converts eligible definitive securities to book -entry form or from one book - entry form to another book -entry form (e.g, stripping and reconstituting). 7.1.2 Book -Entry Securities are debited to a Participant's Securities Account in accordance with Reserve Bank policies, and when relevant the instruction of the issuer, including whenever: (a) a Reserve Bank effects aTransfer for a Participant that is a Sender, or a Participant requests that Book - Entry Securities be moved into the TREASURY DIRECT System; (b) Book -Entry Securities held in a Securities Account mature or are called for redemption; or Operating Circular 7 5 (c) a Participant converts eligible Book - Entry Securities to bearer or registered definitive securities or from one book - entry form to another book -entry form (e.g, stripping and reconstituting). 7.1.3 The Sender's Master Account is cred- ited and the Receiver's Master Account is debited for the amount specified by the Sender in any Transfer Against Payment sent by the Sender, 7.1.4 The Sender and the Receiver of a Transfer irrevocably authorize and instruct the Reserve Bank(s) involved in the Transfer to debit the Sender's designated Securities Account and credit the Receiver's desig- nated Securities Account for the par amount of the Book -Entry Securities, and to credit the Sender's Master Account and debit the Receiver's Master Account for the payment in the case of a Transfer Against Payment. 7.1.5 If a Transfer is returned in accor- dance with this Circular, the Sender and the Receiver of theTransfer irrevocably authorize and instruct the Reserve Bank(s) involved in the Transfer to debit and credit the Senders and the Receiver's Securities Accounts and their corresponding Master Accounts in order to offset any debits or credits previously made in connection with the Transfer. 7.2 CONDITIONS OF ACCESS 7.2.1 The Reserve Banks provide Participants with On -line Access or Of -line Access but reserve the right to terminate a Participant's access without prior notice. 7.2.2 The Reserve Banks may record by audio recording device any telephone call relating to aTransfer. 7.2.3 A Participant, whether on -line or off -line, shall indemnify the Reserve Banks for any loss incurred by a Reserve Bank as a result of the Participants delay in sending or receiving aTransfer, if the delay results from the Participants failure to be able to send or receive a Transfer to or from the Reserve Banks. 7.2.4 On -Line Access. An On -line Participant must manage its access in order to receive timely acknowledgment of cred- its and debits to its Securities Accounts and its Master Account during Fedwire operat- ing hours. If a Participant fails to manage its communications connection in such a man- ner, a Reserve Bank may limit any attempts to send acknowledgments of credits and debits to the Participants computer. In such cases, the Participant should dial into the Reserve Bank's computer when its connec- tion is reestablished. 7.2.5 Off -line Access. A Sender must pro - vide Transfer Messages in writing, by fac- simile transmission, or by telephone under an authorized name on file with the appro- priate Reserve Bank handling the off -line Transfers.The Reserve Bank shall call the Participant's place of business to verify a Transfer Message or other instruction and may require verification of all Transfer Messages or other instructions. 7.3 FORMAT AND CONTENT OF TRANSFER MESSAGES 7.3.1 A Transfer Message must be in the media and format the Reserve Banks pre- scribe.A Reserve Bank will not act on instructions in aTransfer Message other than information required by the format specifications.The Reserve Banks are not responsible for the accuracy of a routing number contained in or verbally supplied from a publication, list or automated file issued or maintained by a Reserve Bank if the routing number becomes inaccurate after the effective date of the publication, list, or automated file, 7.3.2 A Transfer Message must use the identifying number of the Sender and the Receiver associated with its head office in the Administrative Reserve Bank's District or, for a Sender or Receiver authorized to have Securities Account(s) with multiple Reserve Banks, the appropriate identify- ing number associated with the Securities Account on the books of a Reserve Bank other than the Administrative Reserve Bank. If the appropriate identifying number is not used, the Transfer will be rejected. Operating Circular 7 6 7.3.3 If aTransfer Message does not designate which Securities Account of the Receiver is to be credited, the Transfer will be rejected. 7.3.4 A Reserve Bank is entitled 10 rely on any Transfer Message or instruction (whether or not authorized) that it reason- ably believes to be genuine. 8.0 SECURITY PROCEDURES 8.1 A Participant shall prevent any disclo- sure, except on a "need to know' basis, of any aspects of the security procedures agreed to by it with a Reserve Bank.The Participant shall notify a Reserve Bank immediately if the confidentiality of these security pro- cedures is compromised, and shall act to prevent the security procedure from being further compromised. 9.0 SETTLEMENT OF BOOK -ENTRY SECURITIES TRANSFERS 9.1 Finality. Unless aTransfer is rejected in accordance with this Circular, all debits and credits in connection with aTransfer become final at the time the debits and credits are posted to both the Sender's and the Receiver's Securities Accounts and, in the case of Transfer Against Payment, their corresponding Master Accounts. Notice of the Transfer is conclusive evidence that the debit(s) and credit(s) were made.Transfers may be reversed only by a separate Transfer effected by a Transfer Message using the reversal code, or Transfers may be returned by the Administrative Reserve Bank in accordance with Paragraph 7.2.5(b). A Reserve Bank reserves the right to debit or credit Securities Accounts (without further authorization or instruction) to correct any Transfer errors. 9.2 Subject to Paragraph 4.3.3, and unless otherwise instructed by the issuer, the Reserve Bank credits payments of principal and interest on Book -Entry Securities to the Participants (or, subject to prior writ- ten agreement on a form provided by a Reserve Bank, its correspondent's) Master Account on the due date (or the next business day, if the payment date falls on a weekend or holiday) to the extent there are available funds of the issuer. 9.3 Credits of principal and interest payments on Book -Entry Securities to a Master Account are final, subject only to a Reserve Bank's right to debit or credit the Master Account (without further authorization or instruction) to correct any payment errors. 10.0 LIMITATIONS ON TRANSFERS OF BOOK -ENTRY SECURITIES 10.1 GENERAL RESTRICTIONS ON TRANSFERS 10.1.1 Transfers are not authorized on or after the date of maturity of a particular issue, or on or after the redemption date of a bond or note that has been called for redemption. Certain issues may contain restrictions which do not allow Transfers for a specified time period prior to maturity. 10.1.2 A Reserve Bank will not accept instructions from a Sender (or a Receiver) to credit (or debit) a correspondent's Master Account for a payment in connection with aTransfer Against Payment. 10.2 AMOUNT LIMITATIONS ON TRANSFERS 10.2.1 There is a par amount maximum of $50 million for Transfers (the "Limit "). The Limit applies to all Transfers, as well as to transfers with the Federal Reserve's Open Market Desk, except as provided in Paragraph 10.2.2.A Reserve Bank will reject aTransfer Message with a par amount greater than the Limit. 10.2.2The Limit onTransfers does not apply to: (a) transactions, including the original issuance of Book -Entry Securities and requests to strip and reconstitute Book - Entry Securities, to or from a Reserve Operating Circular 7 Bank in its capacity as fiscal agent of the United States, Federal and Federally - sponsored agencies, or international organizations; and (b) Debits or credits to Restricted Securities Accounts on a Reserve Bank's books. 10.2.3 Participants should establish proce- dures to ensure that large Transfers are not delayed until late in the day. Specifically, each Participant should encourage its cus- tomers to provide delivery instructions to it as soon as practical after a trade is executed and to deliver Book -Entry Securities as soon as (par amount) lots of Book -Entry Securities at the Limit are in position. 10.3. IMPROPER USE OF THE REVERSAL CODE 10.3.1 A Participant must not send a Transfer Message for the first time during the rever- sal period by using the reversal code. A Receiver of such an improper Transfer that is unable to reverse it by a reversing Transfer Message to the Sender may request an as -of adjustment as discussed in Paragraph 13.1. 10.3.2 No misuse of the reversal code has occurred if a Transfer effected by a Transfer Message sent initially and properly during the origination period using the origination code is reversed one or more times by a Transfer Message using the reversal code. However, a Reserve Bank will not handle any request for compensation arising from such a use of the reversal code; this must be handled directly by the Sender and the Receiver. 11.0 TRANSFER HOURS AND EXTENSIONS 11.1 A Reserve Bank effects Transfers in accordance with the schedule of operat- ing hours in Appendix B. However, the Reserve Banks may decide in their sole discretion to open or close Fedwire at an earlier time, or to extend Fedwire, to facil- itate special market needs.The Reserve Banks may also close Fedwire early on certain days when the United States Government securities market observes partial- or full -day holidays.Annually, the Reserve Banks will issue a notice iden- tifying these early close days, and, in addi- tion, will issue a reminder to all Participants approximately two weeks in advance of each early close day. 11.2 A Participant requiring an extension of Fedwire operating hours should contact its Administrative Reserve Bank as soon as possible.A request for an extension received less than twenty minutes before the scheduled Fedwire closing time will not be granted. An extension may be granted only if (a) there is a failure of Reserve Bank and /or Fedwire network equipment; (b) there is a significant operating prob- lem at a bank or major dealer; or (c) the extension is deemed necessary, in the Administrative Reserve Bank's view, to prevent market disruption (i.e., the dollar value of delayed transfers exceeds $500,000,000). 11.3 When requesting an extension, the Participant will be required to state the dollar amount and volume of unprocessed Transfer Messages and to assess the severity of any operating problems. 11.9 Every extension of Fedwire is broad- cast electronically to all Reserve Banks and all On -line Participants. 12.0 NOTICES 12.1 The Reserve Bank sends to a location specified by a Participant a notice following each credit or debit to the Participant's Securities Account(s).The notice is not a negotiable or a transferable receipt but is merely confirmation of a completed Transfer. The Reserve Bank sends an On -line Participant an electronic notice, and an Off - Line Participant a printed notice, of each debit or credit to its Securities Account(s), The Reserve Bank also attempts to notify an Off -Line Participant by telephone of each debit or credit to its securities account resulting from a secondary market Transfer. The Reserve Bank will make no attempt to Operating Circular 7 8 notify an Off -Line Participant by telephone regarding either of the two following types of transactions (1) the credit of securities received upon original issue since the issuer has already notified the participant of the securities to be deposited; (2) the debit of securities at maturity or when called for redemption. 12.2 After 3:30 p.m. eastern time (absent an extension of Fedwire), each On -line Participant is provided with: (a) a summary of funds debited or cred- ited to the Participant's Master Account as a result of Transfers Against Payment; and (b) a summary of net balances for each Book -Entry Security issue for which there was activity. 12.3 Each Participant also receives infor- mation detailing principal and /or interest payments credited to its (or its correspon- dent's) Master Account. 12.4 A Participant must notify the Reserve Bank in writing of an exception to any notice, summary, or statement as soon as possible (in no event later than 10 calendar days from the date of the notice, summary, or statement). 13.0 REQUESTING AS -OF ADJUSTMENTS 13.1 A Participant may request that its Administrative Reserve Bank make an as -of adjustment for improper use of the reversal code, and for delays and operational errors caused by a Reserve Bank.The Participant must submit written documentation sup- porting the request within two business days of the transaction giving rise to the request. 14.0 TRANSFER AND SECURITIES ACCOUNT MAINTENANCE FEES 14.1 FEES 14.1.1 The fees imposed for non - Treasury Book -entry Securities services are listed in the Reserve Banks' fee schedule as amended from time to time. Fees are not assessed for the following Restricted Securities Accounts, nor for Transfers affecting the following Restricted Securities Accounts:TreasuryTax and Loan (TT &L), Loans and Discounts, and Circular 176. 14.2 BILLING OF FEES 14.2,1The Participant's (or, subject to prior written agreement on a form provided by a Reserve Bank, its correspondent's) Master Account is debited for fees for Treasury Book -Entry Securities daily.These fees are assessed by Treasury and may not be offset against earnings credits. 14.2.2 Fees for Book -Entry Securities other than Treasury Book -Entry Securities are billed monthly and debited to the Partic- ipant's (or, subject to prior written agree- ment on a form provided by a Reserve Bank, its correspondent's) Master Account.These fees may be offset against earnings credits. 14.2.3A Participant that does not have a Master Account is not relieved of its liability for any fees it incurs by using Fedwire. 15.0 EMERGENCY CONDITIONS 15.1 FAILURE OF A PARTICIPANT'S EQUIPMENT 15.1.1 On -line Participants are responsible for developing their own contingency and recovery plans, such as back -up computer and operations facilities, to ensure their abil- ity to continue Fedwire operations in the event of equipment failure or other opera- tional interruption.The Reserve Banks assume no responsibility for providing any back -up access facilities for Participants. 15.2 FAILURE OF RESERVE BANK EQUIPMENT 15.2.1 In the event of an emergency or failure of a Reserve Bank's computer or operations facilities,Transfers may be delayed until the emergency or failure is resolved. During extended disruptions, the Reserve Bank's Fedwire operations may be relocated to a back -up site. Participants Operating Circular 7 9 should refer to the Reserve Bank's contin- gency guidelines regarding Participant requirements and responsibilities during contingency operations. 15.2.2 On -line Participants should be pre- pared to reconcile their positions up to the point of the failure under the Reserve Bank's instructions. 15,2.3 A Reserve Bank will notify On -line Participants of an operating problem at another Reserve Bank and, should the problem be deemed critical, will give instructions to On -line Participants. 16.0 LIMITATIONS ON LIABILITY 16.1 The Reserve Banks are not liable for the insolvency, neglect, misconduct, mistake, or default of any other entity or person, including a Participant. Except as otherwise specifically provided herein, the account - holding Reserve Bank is liable only for the actual direct loss sustained by the immediate Participants to a transaction proximately caused by the Reserve Banks' failure to exercise ordinary care or act in good faith: with respect to Reserve Bank liability to such Participants, only the Reserve Bank holding the Sender's account is liable to the Sender and only the Reserve Bank holding the Receiver's account is liable to the Receiver.The amount of a Reserve Bank's liability to a Participant is limited to no more than the dollar amount of the transaction plus rea- sonable interest and incidental expenses, unless the Participant's claim is based on delay of a transaction in which case the Reserve Bank's liability is limited to rea- sonable interest and incidental expenses. In no event shall a Reserve Bank be liable for consequential, indirect, incidental or special damages (including lost profits), however derived, and regardless of whether the Reserve Bank has been informed of the possibility thereof. 16.2 In addition to the liability of an account - holding Reserve Bank, a Reserve Bank handling an off -line Transfer is liable to its immediate Participant for the actual direct losses resulting from the Reserve Bank's handling of the Transfer, that are proximately caused by the Reserve Bank's failure to exercise ordinary care or act in good faith, subject to the first, third, and fourth sentences of Paragraph 16.1. 16.3 The Administrative Reserve Bank may in its discretion satisfy an obligation of any of the Reserve Banks to pay interest hereunder by providing an as -of adjustment or by paying compensation. 17.0 MULTIPLE MASTER ACCOUNTS 17.1 Under certain circumstances a Participant may have multiple Master Accounts at its Administrative Reserve Bank with each Master Account having associated Securities Accounts and /or one or more Master Accounts at Reserve Banks other than its Administrative Reserve Bank with each Master Account having associated Securities Accounts. 17.2 Notwithstanding any provision of this Circular, during any period when a Participant is authorized to maintain Securities Accounts at multiple Reserve Banks, any debit or credit made pursuant to this Circular will be made to the Securities Account and Master Account associated with the identifying number of the Participant used in the Transfer. 18.0 RIGHT TO AMEND 18.1 The Reserve Banks reserve the right to amend this Circular at any time without prior notice. 19.0 EFFECT OF THIS CIRCULAR ON PREVIOUS CIRCULARS 19.1 This Circular amends and supersedes all prior Reserve Bank operating circulars on book -entry securities account mainte- nance and transfer services including any supplements or appendices thereto issued prior to August 27, 2001. 10 Appendix A APPLICABLE REGULATORY CITATIONS GOVERNING BOOK -ENTRY SECURITIES OF AGENCIES, INSTRUMENTALITIES, AND ESTABLISHMENTS OF THE UNITED STATES • 12 C.F.R. Part 615, Subpart 0 (Farm Credit System). • 12 C.ER. Part 615, Subpart R (Farm Credit System Financial Assistance Corporation). • 12 C.F.R. Part 615, Subpart S (Federal Agricultural Mortgage Corporation). 12 C.FR. Part 987 (Federal Home Loan Banks). 24 C.ER. Part 81 Subpart H (Federal Home Loan Mortgage Corporation). • 24 C.ER. Part 81, Subpart H (Federal National Mortgage Association). • 12 C.ER. Part 987 (Financing Corporation). • 12 C.F.R. Part 1511 (Resolution Funding Corporation). • 31 C.ER. Part 354 (Student Loan Marketing Association), • 18 C.ER. Part 1314 (TennesseeValleyAuthority). 31 C.ER. Part 357, Subpart B (United States Department of the Treasury). Appendix B FEDWIRE OPERATING HOURS FOR BOOK -ENTRY SECURITIES TRANSFERS' ON -LINE TRANSFERS Opening of Fedwire' 8:30 a.m. (ET) Closing Time for Transfer Originations' 3:15 p.m. (ET) Closing Time for Transfer Reversals` 3:30 p.m. (ET) Closing Time for Repositions Against Payment' 4.30 p.m. (ET) Closing Time for Repositions Free of Payment' 7:00 p.m. (ET) OFF -LINE INSTRUCTIONS Begin accepting instructions 9:00 a.m. (ET) Cut -off for accepting instructions for current days processing" 1:30 p.m. (ET)' Cut -off for accepting instructions for future days processing 4:00 p.m. (ET) 1. The Reserve Banks observe standard legal holidays which include:All Saturdays,A11 Sundays, New Year's Day (January 1), Martin Luther King's Birthday (third Monday in January), Presidents Day (third Monday in February), Memorial Day (last Monday in May), Independence Day (July 4), Labor Day (first Monday in September), Columbus Day (second Monday in October),Veterans' Day (November 11),Thanksgiving Day (fourth Thursday in November), and Christmas Day (December 25). If January 1, July 4, November 11, or December 25 fall on a Sunday, the next following Monday is a standard Reserve Bank holiday. 2. The Reserve Banks may decide, in their sole discretion, to open or dose Fedwire at an earlier rime, or extend Fedwire, to facilitate special market needs. Reserve Banks may also dose Fedwire early on certain days when the United States Government securities market observes partial- or full -day holidays. Annually this Bank will issue a notice identifying these early close days and, in addition, will notify all Participants of each scheduled early dosing approximately two weeks In advance of the closing. 3. Only available in NBES, "Reposition against payment" means the transfer of Book -Entry Securities against payment between two accounts of the same Participant, 4. An attempt will be made to process Off -line instructions received after the cut -off time, but cannot be guaranteed. The requesting Participant will be notified if the Transfer Is not effected. 5. A Reserve Bank. in its sole discretion, may extend this cutoff hour. 11 This Appendix sets forth the terms under which this Bank holds Book -Entry Securities in custody for the benefit of a state or local government or unit thereof to which the securities have been pledged. Unless otherwise agreed in writing between this Bank and a Pledgee, this Appendix applies only to Book -Entry Securities pledged for the purposes specified in Paragraphs 4.3.2(a)(ii) of this Operating Circular ( "Circular" ).This Appendix constitutes an agreement, as described in the Applicable Regulations, regarding the security interest of a non - Participant in Book -Entry Securities held by a Participant on the books of this Bank. Each Reserve Bank has issued an Appendix C to Circular No. 7 identical to this one. 1.0 DEFINITIONS In addition to the terms defined in the Circular, the terms defined in this Paragraph have the following meanings when used in this Appendix. (a) (b) (c) Pledged Security means a Book -Entry Security that is held to a Restricted Securities Account. (d) Pledgee means the state or local government or unit thereof, to which Book- Entry Securities have been pledged. Pledgor means the Participant that has pledged the Book -Entry Securities. (e) Appendix C CUSTODY AGREEMENT FOR BOOK -ENTRY SECURITIES Applicable Regulations means the regulations of issuers of Book -Entry Securities listed in Appendix A to this Circular. Collateral Transaction means the pledge of Book -Entry Securities by a Pledgor to a Pledgee; the release of Pledged Securities to a Pledgor; or the substitution of the same par value amount of new Pledged Securities for existing Pledged Securities that are released to the Pledgor. 2.0 GOVERNING LAW 2.1 The Bank provides custodial services in accordance with Paragraph 4.3.2(a)(ii) of the Circular and this Appendix. The Banks rights and obligations in providing custodial services pursuant to this Appendix are governed solely by the Circular, this Appendix, and the Applicable Regulations. 2.2 Pledgor and Pledgee warrant that a pledge of Book -Entry Securities marked on the books of the Bank under the provisions of this Appendix is in accordance with applicable law. If any provision of any bond, security or pledge agreement between Pledgor and Pledgee, or any subsequent waiver, modification or amendment of such agreement, imposes any duties on this Bank that are inconsistent with the provisions of this Appendix, the provisions of this Appendix govern. Provisions of state law that are inconsistent with, or in addition to, the provisions of this Appendix are not binding on this Bank unless otherwise agreed in writing. 2.3 Under the Applicable Regulations, the security interest of a Pledgee is perfected by this Bank's marking the security interest on its books, and the security interest has priority over any other interest in the Pledged Securities, other than a security interest of the United States. 12 3.0 ESTABLISHMENT OF RESTRICTED SECURITIES ACCOUNT 3.1 This Bank will establish a Restricted Securities Account for the benefit of a Pledgee once the Pledgee has agreed to the terms of this Appendix and has provided such other information as may be required by the Bank. Existing Pledgees may be required to execute a new agreement with the Bank but, in the absence of such new agreement, are deemed to have agreed to the pro- visions of this Appendix by continuing to hold Pledged Securities with the Bank. Forms for this purpose are available from the Bank. 3.2 By initiating a Collateral Transaction, a Pledgor agrees to all the provisions of this Appendix, as amended from time to time. 4.0 COLLATERAL TRANSACTIONS 4.1 A Collateral Transaction is initiated by the Pledgor and, except for the pledge of new Pledged Securities, requires the prior approval of the Pledgee or its authorized representative. Collateral Transaction requests and Pledgee authorizations are subject to verification procedures the Bank specifies from time to time. 4.2 If a Pledged Security is unacceptable as collateral to a Pledgee, the Pledged Security will not be released to the Pledgor without the authorization of the Pledgee. The Bank assumes no responsibility to determine if a Pledged Security is acceptable to the Pledgee. 4.3 A Pledgee may provide the Bank with written standing instructions to permit substitutions of like par value amounts of Pledged Securities without the consent of the Pledgee. A substitution transaction involving a lesser par value amount of Pledged Securities requires Pledgee authoriza- tion for the release of Pledged Securities. In the case of a substitution involving a pay -down Book -Entry Security, par value refers to the outstanding book value of the securities at the time of a substitution transaction. 4.4 The Bank issues a confirmation to the Pledgee and the Pledgor for each Collateral Transaction. The confirmation is conclusive evidence of the Collateral Transaction reflected therein. 5.0 INTEREST PAYMENTS AND OTHER PROCEEDS 5.1 Pursuant to Paragraph 9.2 of the Circular, the Bank credits payments of interest on the Pledged Securities to the Pledgor until the Bank receives (i) a written certification from the Pledgee or its authorized representative that the Pledgor is in default under any underlying pledge or security agreement between the Pledgor and the Pledgee, and (ii) written instructions directing the Bank to hold the interest payments.The Bank holds the interest payments in a non - interest - bearing account until collected in accordance with Paragraph 6 of this Appendix. 5.2 The Bank holds proceeds of Pledged Securities (other than interest payments) in a non- interest- bearing account. pursuant to Paragraph 4.3.3 of the Circular, until: 13 (a) Pledged Securities are deposited in substitution for the proceeds or the proceeds are released in accordance with Paragraph 4 of this Appendix; or (b) the proceeds are collected in accordance with Paragraph 6 of this Appendix. 6.0 COLLECTION OF PLEDGED SECURITIES AND PROCEEDS 6A If the Pledgee or its authorized representative certifies in writing to the Bank that the Pledgor is in default under any underlying pledge or security agreement between the Pledgor and the Pledgee, and certifies that the Pledgee has satisfied any notice or other requirement to which the Pledgee is subject, the Pledgee may instruct the Bank in writing to transfer specific amounts and issues of Pledged Securities and, if applicable, specific amounts of interest payments or other proceeds of Pledged Securities not previously credited to the Pledgor or otherwise released, to designated accounts on the books of this Bank or another Reserve Bank. 6.2 Promptly after receiving such certifications and instructions, the Bank will make the transfer instructed by the Pledgee. 6.3 The Bank is not required to obtain the consent of the Pledgor for any such transfer and assumes no responsibility for determining the validity of a Pledgee's declaration of the Pledgor's default or of the underlying pledge or security agreement between the Pledgor and the Pledgee. 7.0 PROHIBITED ACTS 7.1 Notwithstanding any other provision of this Appendix or the Circular to the contrary, the Bank is not required to perform any act directed or required by the Pledgee if the Bank is prohibited from performing the act by law or by court order. 8.0 LIMITATIONS ON BANK'S LIABILITY AND DUTIES 8.1 The Bank is liable only for the actual direct loss sustained by a pledgee or pledgor proximately caused by the Reserve Bank's failure to exercise ordinary care or act in good faith in performing its duties under this Appendix. In no event shall the Reserve Bank be liable for consequential, indirect, incidental or special damages (including lost profits), however derived, and regardless of whether the Reserve Bank has been informed of the possibility thereof. Both the Pledgee and the Pledgor release and forever discharge the Bank from all other claims, demands, and liability of the Pledgee or the Pledgor, or both, in connection with the Bank's performance of its duties under this Appendix and indemnify the Bank for any claims of other parties, including costs of litigation and reasonable attorneys' fees, with respect to Pledged Securities held by the Bank. 8.2 In particular, but not exclusively, the Bank has no duty to: (a) act as escrow agent or in any other capacity not expressly provided for in this Appendix; (b) determine the validity of the pledge of securities by the Pledgor to the Pledgee, including whether any required bond, pledge, or security agreement has been executed; 14 (c) monitor the value of a Pledged Security, or the declining book value of a pay -down Pledged Security subsequent to its pledge, or ensure that the type, amount, or value of a Pledged Security is that which is required under state or local law; (d) verify ownership, validity, or legality of the Pledged Securities; (e) pay assessments as provided under state or local law; (f) give notice of maturity, call, exchange offer, or the like, affecting the Pledged Securities; (g) carry insurance against loss of the Pledged Securities; or (h) inquire into the existence or continuance of the powers or authority of a public official who is the Pledgee or is acting for the Pledgee or the successors in office to or any person repre- sented to the Bank as authorized to act on behalf of the Pledgee. However, the Bank may require a certificate from the proper authority showing that the public official, or any person represented to the Bank as authorized to act on behalf of the Pledgee, is and continues to be so authorized. 9.0 DISPUTES In the event of notice of a conflicting claim with respect to Pledged Securities, the Bank may hold the Pledged Securities, including interest and proceeds, pending settlement of the dispute either by agree- ment of the parties or by order of a court of competent jurisdiction. 10.0 TERMINATION OF AGREEMENT OR PLEDGE SECURITIES ACCOUNT 10.1 The Bank or the Pledgee may terminate this Agreement and close any Restricted Securities Account established under this Appendix by giving not less than 30 calendar days advance writ- ten notice of termination to the other party and to the Pledgor. 10.2 The Bank may release Pledged Securities held by the Bank to the Pledgor at the end of the 30 day period. However, if, within the 30 day period, the Bank (a) receives written instructions from the Pledgor to otherwise dispose of the Pledged Securities and (b) the Pledgees separate writ- ten approval thereof, the Bank will dispose of the Pledged Securities in accordance with these instructions. 10.3 If, by reason of a merger or otherwise, a Pledgor's Book -Entry Securities account is transferred to another Reserve Bank, the Pledged Securities held by this Bank will be transferred to the other Reserve Bank, with 30 calendar days prior notice to affected Pledgees. If Pledged Securities are transferred to this Bank pursuant to this provision, this Bank will hold the Pledged Securities pursuant to the terms of this Appendix and the existing Pledgee Agreement with the transferor Reserve Bank but may require a new Pledgee agreement. 11.0 FEES The Pledgor shall pay any fees for services provided under this Appendix, as announced by the Bank from time to time. 12.0 AMENDMENT The Reserve Banks reserve the right to amend this Appendix at any time without prior notice. 15 Appendix D AUTOMATED CLAIM ADJUSTMENT FOR MORTGAGE - BACKED SECURITIES This Appendix sets forth the terms under which a Reserve Bank offers Automated Claim Adjustment for mortgage- backed securities. 1.0 DEFINITIONS 1.1 As used in this Appendix: (a) ACAP means the automated claim adjustment process as set forth in this Appendix D. (b) ACAP Account means the account that the ACAP Feature uses to effect transfers in connection with Claim Adjustments. (c) ACAP Feature means the function of the Fedwire Book -Entry Securities System used to effect Claim Adjustments. 16 (d) Aggregate Amount or Aggregate Amount of Claims means the net debit or credit amount of all Claims payable on a particular banking day with respect to a Participant's Securities Account as a Sender or Receiver for Transfers as reported by the Reserve Bank in a notification to the Participant pursuant to Paragraph 2.3 hereof. (e) Beneficiary Date means the date on which the interest accrual for a Book -Entry Security ends. (f) Claim means the amount the Sender of aTransfer Message owes to the Receiver as the result of a Beneficiary Date that occurs on or after the Contract Date and before a later Settlement Date for the Transfer. (g) Claim Adjustment means the process in which the Reserve Bank debits the Sender's Master Account or the Master Account of its correspondent, and credits the Receiver's Master Account or the Master Account of its correspondent, to settle Claims arising from Transfer Messages that invoke the ACAP Feature for Fail Tracking service. (h) Contract Date means the date specified by the Sender in aTransfer Message as the date agreed upon for settlement of the Transfer. (i) Fail Tracking means the process in which the Reserve Bank identifies aTransfer with a Settlement Date after the specified Contract Date as specified in the associated Transfer Message. (j) Payment Date means the date on which payments of principal and /or interest are made with respect to a Book -Entry Security. (k) Record Date means the date established by the issuer of a Book -Entry Security on which the holder of record is identified for the payment of principal and /or interest. (I) Settlement Date means the date on which the Reserve Bank processes aTransfer Message (also known as the clearance date). 1.2 Defined terms used in this Appendix that are not defined in section 1.1 hereof have the meanings set forth in Operating Circular 7. 2.0 FAIL TRACKING 2.1 Initiation and Authorization of Service 2.1.1 A Sender invokes the ACAP Feature for Fail Tracking services by sending a Transfer Message that includes a Contract Date in accordance with the format prescribed by the Reserve Banks.The Fail Tracking service is not available for aTransfer Message indicating that the Transfer is to be identified as a repurchase agreement. 2.1.2 By including a Contract Date in the prescribed format in aTransfer Message, the Sender authorizes and instructs the Reserve Bank to use the ACAP Feature to perform Fail Tracking services with respect to the Transfer Message.The Fail Tracking services so authorized include identifying a Claim in accordance with Paragraph 2.2 hereof and settling the Aggregate Amount of Claims in accordance with Paragraph 3.0 hereof. 2.1.3 If the Sender uses a correspondent pursuant to Paragraph 5.3 of Operating Circular 7, the Sender warrants that it has instructed and authorized its correspondent to accept any debit or credit Aggregate Amounts in accordance with Paragraph 3.0 hereof. 2.2 Fail Tracking Claim Identification and Determination of Aggregate Amount of Claims 2.2.1 For each Transfer Message that invokes the ACAP Feature, the Reserve Bank shall determine whether the Settlement Date is later than the Contract Date specified in the Transfer Message. When the Settlement Date is later than the specified Contract Date, the Reserve Bank shall deem the Transfer to be a fail transaction. 2.2.2 The Reserve Bank shall identify for adjustment a Claim in a fail transaction for each Beneficiary Date falling on or after the Contract Date but before the Settlement Date. A Claim shall not be identified, however, for a Beneficiary Date with an associated Payment Date that is more than six months before the Settlement Date. 2.2.3 For a Beneficiary Date with an associated Payment Date prior to the Settlement Date, the Reserve Bank shall process a Claim Adjustment on the next banking day. For a Beneficiary Date with an associated Payment Date subsequent to the Settlement Date, the Reserve Bank shall process a Claim Adjustment on that Payment Date. 2.3 Notification of Claims 17 2.2.4 The amount of a Claim shall be the amount of principal and /or interest payable on the Beneficiary Date with respect to the transferred Book -Entry Securities. 2.2.5 The Reserve Bank shall aggregate the amount of the Claims to be debited with respect to a Participant's Securities Account as Sender with the amount of the Claims to be credited with respect to the same Participant's Securities Account as Receiver to determine the Aggregate Amount of Claims with respect to that Participant's Securities Account for that banking day. 2.3.1 The Reserve Bank shall provide notice of a Claim pursuant to this paragraph 2.3 to each Participant affected by that Claim. 2.3.2 The notice shall include: the date of the Claim Adjustment; the amount of each Claim, identifying the Transfer Message to which it pertains; and the Aggregate Amount of Claims, whether debit or credit, for that Participant's Securities Account. 2.3.3 The Reserve Bank shall provide notice hereunder to a Participant using the same medium by which it notifies the Participant of Immediate Principal and Interest. 3.0 EFFECTING AGGREGATE AMOUNTS OF CLAIMS 3.1 Rejecting a Claim or Aggregate Amount 3.1.1 The Reserve Bank processing Claims may elect not to make Claim Adjustments for a Participant, and the Reserve Bank holding the Participant's Master Account may reject a Participant's debit Aggregate Amount, if: the Participant has failed, been suspended, been closed, or the like; or, in the opinion of the Reserve Bank holding the Participant's Master Account, the Participant does not, or will not at the end of the day, have in its Master Account a balance of actually and finally collected funds sufficient to cover its debit Aggregate Amount. 3.1.2 The Reserve Bank processing Claims may elect not to make Claim Adjustments for a Participant through a correspondent, and the Reserve Bank holding the correspondent's Master Account may reject a Participant's debit Aggregate Amount, if: the correspondent has failed, been suspended, been closed, or the like; or, in the opinion of the Reserve Bank holding the correspondent's Master Account, the correspondent's does not, or will not at the end of the day, have in its Master Account a balance of actually and finally collected funds sufficient to cover its debit Aggregate Amount. 3.2 Posting Debits 3.2.1 By 2:00 p.m. ET each banking day, the Reserve Bank shall attempt to process each debit Aggregate Amount to the Participant's or correspondent's Master Account prior to processing any credit Aggregate Amounts. If a debit passes all edits and is not rejected, the Participant's or correspondent's Master Account shall be debited the full amount of the debit Aggregate Amount and the Reserve Bank shall immediately credit the ACAP Account the same amount. A debit made to a Master Account and a credit made to the ACAP Account under this paragraph shall each be final and irrevocable at the time it is made. If a debit Aggregate Amount is rejected, it shall be handled in accordance with paragraph 3.3, but the Reserve Bank shall continue to process other debit Aggregate Amounts. 3.3 Rejected Debit Aggregate Amount 18 3.3.1 If a debit Aggregate Amount is rejected, the Reserve Bank processing Claims shall promptly notify the Participant or the correspondent that the debit has been rejected. The Participant or correspondent may arrange to deposit additional funds to its Master Account. By 2:30 p.m. ET the Reserve Bank will again attempt to process the debit Aggregate Amount. If at that time the debit Aggregate Amount passes all edits and is not rejected, the Master Account of the Participant or correspondent Participant shall be debited the amount of the debit Aggregate Amount and the Reserve Bank shall immediately credit the ACAP Account the same amount. A debit made to a Master Account and a credit made to the ACAP Account under this paragraph shall each be final and irrevocable at the time it is made. 3.3.2 If a debit Aggregate Amount for one or more Participants or correspondents is again rejected, however, the Reserve Bank shall cancel processing of the original group of Aggregate Amounts.The Reserve Bank shall debit the ACAP Account the amount of each debit Aggregate Amount that had resulted in a credit to the ACAP Account, and credit the same amount to the Master Account of the Participant or correspondent with the original debit Aggregate Amount.A debit made to the ACAP Account and a credit made to a Master Account under this paragraph shall each be final and irrevocable at the time it is made. 3.3.3 If the Reserve Bank cancels processing, the Reserve Bank shall remove from the ACAP Feature all of the Claims (both debits and credits) included in the Aggregate Amounts rejected on the second attempt and redetermine the Aggregate Amounts for the remaining Participants and correspondents.The Reserve Bank shall notify the remaining Participants that the Aggregate Amounts have been recalculated and provide updated information in accordance with Paragraphs 2.3.2 and 2.3.3. 3.3.4 The Reserve Bank shall then restart the process of effecting the Aggregate Amounts of Claims. If this process again does not result in full funding of the ACAP Account in accordance with Paragraph 3.4, the Reserve Bank may, in its sole discretion, elect to again delete the Claims Aggregate Amounts that were rejected, recalculate Aggregate Amounts, and start the process again, or cancel the process of effecting Aggregate Amounts for the day. 3.3.5 If the Reserve Bank cancels the process of effecting Aggregate Amounts for a banking day, the Reserve Bank shall notify all Participants of the cancellation. A Participant whose Claims were not adjusted on the scheduled banking day, either because its Claims were removed under Paragraph 3.3.3 or because processing was cancelled for the day, shall make or seek payment of the Claims directly to or from the other Participant. 3.4 Posting Credit Aggregate Amounts 3.4.1 The ACAP Account is fully funded once the balance in the ACAP Account is equal to the sum of all debit Aggregate Amounts. Once the ACAP Account has been fully funded, the Reserve Bank shall debit the ACAP Account the amount of each credit Aggregate Amount, and the Participant's or correspondent's Master Account shall be immediately credited in the same amount. Each such debit to the ACAP Account and credit to a Master Account shall be final and irrevocable at the time it is made. 4.0 LIMITATIONS ON RESERVE BANK'S LIABILITY AND DUTIES; INDEMNIFICATION 4.1 Limitations on Duties and Liability of Reserve Banks 4.1.1 The Reserve Banks are not liable for the insolvency, neglect, misconduct, mistake or default of any other entity or person, including a Participant or a correspondent. Except as otherwise specifically provided herein, the account - holding Reserve Bank is liable only for the actual direct loss sustained by the immediate Participants or correspondents using Claim Adjustment services proximately caused by the Reserve Banks' failure to exercise ordinary care or act in good faith. With respect to this liability, only the Reserve Bank holding the Sender's account is liable to the Sender and only the Reserve Bank holding the Receiver's account is liable to the Receiver.The amount of a Reserve Bank's liability to a Participant or correspondent is limited to no more than the dollar amount of a Claim Adjustment plus reasonable interest and incidental expenses, unless the Participant's or correspondent's claim is based on delay of a Claim Adjustment, in which case the Reserve Bank's liability is limited to reasonable interest and incidental expenses. In no event shall a 19 5.0 FEES 4.1.2 In the event of an emergency or failure of a Reserve Bank's computer or operations facilities, Claim Adjustments may be delayed until the emergency or failure is resolved. During extended disruptions, the Reserve Bank's Fedwire operations may be relocated to a back -up site. Participants and correspondents should refer to the Reserve Bank's contingency guidelines regarding Participant requirements and responsibilities during contingency operations. 4.1.3 A Participant using the ACAP Feature shall defend, indemnify, and hold the Reserve Banks harmless from any claim, loss, liability, cost, or expense, made against them by any person, including but not limited to Participant's correspondent, or incurred by them, including but not limited to attorneys' fees and expenses of litigation, resulting from the Participant's use of the ACAP Feature or the other services provided under this Appendix, or the acts or omissions of the Participant or Its agents, including but not limited to the Participant's correspondent, excluding only: (i) any claim, loss, liability, cost, or expense arising solely out of a Reserve Bank's failure to act in good faith or exercise ordinary care, and (ii) a direct loss to the Reserve Bank holding the Participant's or correspondent's Master Account resulting from an overdraft in that account caused by a final and irrevocable debit under this Appendix. 5.1 The fees for the services provided under this Appendix are listed in the Reserve Bank's fee schedule as amended from time to time and shall be debited as provided in Paragraph 14 of Operating Circular 7. 6.0 AMENDMENT Reserve Bank be liable for consequential, indirect, incidental or special damages (including lost profits) however derived, and regardless of whether the Reserve Bank has been informed of the possibility thereof. 6.1 The Reserve Banks reserve the right to amend this Appendix at any time without prior notice. 20 Terms and Conditions Treasury Services EXHIBIT BankofAmeric% Authorization and Agreement for Treasury Services Each of the undersigned is an officer, owner, principal or other authorized individual of the organization specified below (the "Client"). The Client has received Bank of America's Treasury Services Terms and Conditions Booklet (the "Booklet ") and agrees to adhere to the Booklet, any applicable User Documentation, set -up forms and related documents and other disclosures provided to the Client with regard to the provision of one or more Services from one or more of Bank of America Corporation's subsidiary banks. The subsidiary banks and Services covered by this Booklet are listed on the accompanying List of Banks and Services, which we may change from time to time. Each banking institution listed on the accompanying List of Banks and Services wilt be a "Bank" for purposes of the Booklet once such banking institution begins to provide any Service to the Client The Booklet constitutes a separate agreement between the Client and each Bank, now or in the future, when the :Bank provides any Service. Capitalized terms used in this Authorization and Agreement form, not otherwise defined, have the meanings given to them in the Booklet. For Clients that are U.S. legal entities, guidelines for completion: • If Client is a corporation, then an authorized officer other than the officer who signs the Authorization and Agreement Certification must sign this foray • If Client is a partnership, limited liability company, limited liability partnership or sole proprietorship, then all general partners, all members or the proprietor must sign this form unless Client's organizational or constituent documents specify otherwise; • If Client is a governmental entity, the Treasurer must sign this form, unless Client's charter specifies otherwise. Client must complete the following "Authorization and Agreement Certification." 3 /z5/o2_ Date [stn. Robert A. Stluka, Jr, Mayor [Print Name] [Prim Tine] The following addresses may be used for giving notices in connection with this Booklet except as you or we provide the other different addresses to be used in conjunction with your accounts or particular Services. Address for Client Notices: City of Round Rock Attn: Director of Finance 221 East Main Street Round Rock, TX 78664 and, if filled in, the following: Telephone: (_5_12 ) 218 -5400 Fax: ( 512) 218 -5442 After signing below, the Client may from time to time request the Bank to provide any of the Services described in the Booklet. The Client may begin to use any such Service, subject to the Bank's approval, once the Bank has received from the Client all required and properly executed forms and the Client has successfully completed any testing or training requirements. The Booklet supersedes other agreements between the Client and the Bank, as described under the "General Matters" heading in the Booklet, with regard to the provision of Services. Each of the undersigned warrants that the Client has taken all action required by its organizational or constituent documents to authorize the undersigned to execute and deliver on behalf of the Client this "Authorization and Agreement" form and any other documents the Bank may require with respect to a Service. The undersigned is authorized to enter into all transactions contemplated by the provision of Services to the Client. These may include, but are not limited to, giving the Bank instructions with regard to Electronic Funds Transfer Services and designating employees or agents to act in the name and on behalf of the Client. City of Round Rock, Texas (CLIENT'S LEGAL NAME) [Signature] [Print Name] [Fora Tine] Address(es) for Bank Notices: Bank of America Corporation Documentation Management (CA4- 706 - 04-07) PO Box 27128 Concord CA 94527 -9904 Fax: 925.675.7131 Telephone: ( Fax: ( ) 0 Authorization and Agreement Certification The undersigned certifies that the signature appearing on the previous page for Client is the true signature of a person authorized to execute the form on behalf of Client, and further certifies that the undersigned has full authority to execute this Certification. The Bank is entitled to rely upon this certification until written notice of its revocation is delivered to the Bank.. Guidelines for completion: • If Client is a corporation, the chairman, president, chief executive officer, chief financial officer, treasurer, corporate secretary or an assistant corporate secretary who did not sign the Authorization and Agreement for Treasury Services must sign this Certification; • If Client is a partnership, limited liability company or limited liability partnership, one of the general partners or members must sign this Certification; • If Client is a governmental entity, the entity's counsel must sign this Certification. Sole proprietors do not need to complete this Certification. Note: If Client Is not a U.S. legal entity, it is not required to complete this Certification. 3/Z5/02_ Dated: City of Round Rock, Texas (CLtEN'{ LEGAL NAME) Stephan L. Sheets City Attorney [Print Name) [Print TAN] City Manager All City of Round Rock City of Round Rock Director of Finance All Treasury Services Delegation of Authority Form This form is optional and is to be used when you wish to delegate authority to sign various authorization forms to someone other than the person who signed the "Authorization and Agreement" form in the front of this Booklet By signing below, you authorize the incumbent of the specified position listed in Section A or each person listed in section B below, acting alone, to execute documents that we may request, and any amendments or renewals thereof, pertaining to the use of Services, including, but not limited to, designating one or more persons (which may include himself or herself) authorized to initiate, amend, cancel, confirm or verify the authenticity of instructions to us for Services, whether given orally, electronically or by facsimile instructions, and to revoke any authorization granted to any such person, as he or she deems appropriate_ The signer of this form has the same authority described above for each Service with us, unless otherwise specified. We are entitled to rely upon this delegation until written notice of its revocation is received by us. Guidelines for completion: Fill out either section A or section B, or both, depending on your needs. • To delegate authority to any person holding a specific title, fill out section A. • To delegate authority to specific individuals byname, fill out section B. For each name or title, indicate "All" in the "Service" column if the person or title has authority to sign documents for all Services which you receive from us. Otherwise, indicate specific Services for which the person or title has authority. For each name or title, indicate the entity or entities for which the person or title has authority to sign documents. Client Authorization Instructions: The same person who signed the "Authorization and Agreement for Treasury Services" form must sign this "Treasury Services Delegation of Authority" form. A. TO DELEGATE AUTHORITY TO ANY PERSON HOLDING SPECIFIC POSITIONS Title Service B. TO DELEGATE AUTHORITY TO SPECIFIC INDIVIDUALS CLIENT AUTHORIZATION Name Service Entity Robert A. Stluka, Jr. Mayor [Print Name] [Print Title] Specimen Signature City of Round Rock (CLIENT'S LEGAL NAME) Table of Contents 7 Introduction 9 Treasury Services 9 Account Reconcilement 9 Automated Clearing House (ACH) 11 Automated Clearing House (ACH) Authorization - Receive 12 Check lssuance 13 CheckTruncation 13 Client- Printed Drafts 14 Coin and Currency 15 Collection Letters 15 Commercial Deposits 16 Controlled Balance Accounts 17 Controlled Disbursement 18 Disbursement Image 19 Electronic Bill Payment Consolidation 20 Electronic Data Interchange (EDI) 20 Information Reporting 20 Lockbox 21 Money Market Investment 22 Online Stop Payment 23 Positive Pay 24 Tax Payments 27 Wire Transfer and International Electronic Funds Transfers 31 MicroTrade Services 31 Standby and Import Letters of Credit 33 Export Letters of Credit 33 Collections 33 Information Reporting 34 Supplemental Limitation of Liabilities and Indemnification for all Microtrade Services 35 General Provisions 35 Changes to a Service 35 Communications 3s Confidentiality 37 Facsimile Signatures 37 General Matters 38 Governing Law 38 Limitation of Liabilities 39 Overdrafts 40 Payment for Services 40 Protection from Third Parties 41 Representations and Warranties 41 Resolution of Disputes 42 Software License 46 Termination 47 Glossary of Terms a All rights reserved. None of the enclosed material may be reproduced or published without permission. Introduction Thank you for choosing the Bank of America Corporation group of financial institutions for your worldwide treasury management business needs. We appreciate the opportunity to serve you. If you have any questions about our extensive array of treasury services (including the locations where each service is available) or about this Booklet, please contact your Treasury Services representative. Capitalized terms used in this Booklet are defined in the Glossary. The terms "we ", "us" and "our" refer to each of the Bank of America Corporation subsidiary banks which provide you with a particular Service under the terms of this Booklet. This Booklet contains the terms and conditions under which we provide you with worldwide treasury services. It is used in conjunction with the Account Agreement which covers account terms and conditions. Please read this Booklet carefully and keep it for your records. By signing and returning the "Authorization and Agreement" form in the front of this Booklet, you agree to the "General Matters" section of this Booklet, which contains the terms and conditions applicable to all Services. You also agree to those portions of the "Treasury Services" and "MicroTrade Services" sections of this Booklet which contain the specific terms and conditions that relate to the Services that we provide to you. If you would like an additional Service, it will be covered by the terms and conditions of this Booklet once we have approved your use of the Service. You may begin using the Service when we have received all required and properly executed forms and you have successfully completed any testing or training requirements. Whenever you use any of the Services covered by this Booklet, you agree to be bound by these tcrms and conditions and to follow the procedures in the applicable Materials. We may change the terms and conditions upon 30 days' prior written notice to you. Your continued use of any Service, after the effective date of the change, will indicate your agreement to the change. 0 Ili Treasury Services We offer a wide variety of treasury services. Each Service has many features and options. Your Treasury Services representative will be happy to describe these to you and to recommend those that will best meet your needs. A list of Banks and Services is enclosed with this Booklet. This list includes the names of each Bank of America Corporation financial institution offering Services under this Booklet and the names under which we currently offer those Services. Please contact your Global Treasury Services representative at any time if you wish to receive an updated list. Account Reconcilement Our Account Reconcilement Services will help you reconcile and manage the credit and debit activity in your accounts. Detailed information regarding such Services is available in the applicable User Documentation. Your use of an Account Reconcilement Service does not affect any of your obligations, which are described in the applicable Account Agreement, to discover and report with respect to your accounts (including joint accounts where permitted): (1) unauthorized signatures, alterations or endorsements on checks, and (2) unauthorized Requests and other discrepancies. Your use of this Service or our receipt of information associated with this Service does not increase our duty with respect to accounts or the payment of checks. Automated Clearing House (ACH) This section applies only to ACH Services within the United States of America and does not apply to cross- border ACH transactions and other International Electronic Funds Transfers which are covered by the "Wire Transfers and International Electronic Funds Transfers" section in this Booklet. Our ACH Services allow you to transfer funds to or from your accounts by initiating Entries which may be sent through the ACH system or processed directly to accounts with us. We may send Entries to any ACH processor selected by us or directly to another bank. Each ACH Service is described in the applicable User Documentation. You authorize us to issue Depository Transfer Checks (DTCs), as instructed by you or as reasonably determined by us to be appropriate. The capitalized ACH terms appearing in italics below are defined in the NACHA Rules. Compliance with NACHA Rules and Laws You agree to comply with the NACHA Rules for all Entries, whether or not an Entry is sent through the ACH network. You act as Originator and we act as Originating Depository Financial Institution (ODFI) with respect to Entries. You will deliver Entries to us as provided in the User Documentation and the NACHA Rules. The NACHA Rules govern if they conflict with this Booklet, except that the file specification requirements in the User Documentation govern if they conflict with the NACHA Rules. Where a preauthorized debit Entry from a consumer's account varies in amount from the previous debit Entry, you will comply with the notice requirements set forth in the NACHA Rules, the Electronic Funds Transfer Act and Regulation E of the Board of Governors of the Federal Reserve System, as applicable. 10 Authorized Persons Before using an ACH Service, you give us a written list, in a form acceptable to us, of the persons authorized by you to verify the authenticity of Entries and Reversal /Deletion Requests in accordance with the Security Procedure and to perform certain other duties in connection with such Service. Security Procedure You agree to use the Security Procedure, if any, when you deliver Entries or Reversal /Deletion Requests to us. The purpose of the Security Procedure is to verify the authenticity of Entries and Reversal /Deletion Requests delivered to us in your name and not to detect errors in the transmission or content of Entries. You represent and warrant each time you use a Service that, in view of your requirements, the Security Procedure is a satisfactory method of verifying the authenticity of Entries and Reversal /Deletion Requests. You agree we may act on any Entries or Reversal /Deletion Requests the authenticity of which we have verified through the use of the Security Procedure. Warranties Each time you use an ACH Service, (i) you warrant that you have obtained appropriate authorization from each Receiver and the Entries conform to the authorization and comply with the NACHA Rules, and (ii) you make the same warranties to us as we make under Section 2.2 (or any successor section) of the NACHA Rules. Payment with Respect to Entries We generally debit your account for credit Entries (including debit Reversals) on the settlement date, unless you are prefunding your Entries. Prefunding means that you pay for all credit Entries by such time before the settlement date as we may specify. At our discretion, we may at any time without notice require payment before we process your Entries. Even if we have done so in the past, we are not obligated to process any Entries without having first been paid by you, but, if we do, the amount is immediately due and payable without notice or demand. You will pay us for the amount of any returned debit Entries (including rejected debit Entries), any adjustment Entries or any returned DTCs, which we previously credited to your account. You agree that we do not need to send a separate notice of debit Entries or DTCs which are returned unpaid. Reports containing information regarding returned debit Entries and returned DTCs are available. Acting on Entries We send Entries to the ACH processor for settlement on the Effective Entry Date shown on the Entries, provided we receive the Entries by the applicable processing deadlines specified in the User Documentation for the ACH Service being used. We may treat Entries that we receive after a deadline as if received on the next Business Day. Entries will be deemed received by us when we receive the complete file at the location specified in the User Documentation. Rejection of Entries We may reject any Entry if it does not comply with the requirements of this Booklet or the applicable User Documentation, including certain ACH processing limits described in the User Documentation, or which we have been unable to verify through use of the Security Procedure. We may also reject any Entry if it may be returned for any reason under the NACHA Rules or if you breach your payment obligations for any ACH Service. Notice of rejection is given to you by telephone, by electronic means, by facsimile or by mail within the time period specified in the User Documentation. Notices of rejection will be effective when given. We are not liable for the rejection, and we are not obligated to pay you interest for the period before you receive the notice of rejection. If any Entry is rejected, it is your responsibility to correct any Entry you intend to resubmit. Reversal or Deletion We have no obligation to cancel or amend Entries after we receive them. If you send us a Reversal /Deletion Request and we are able to verify the authenticity of the Reversal /Deletion Request using the Security Procedure, we will make a reasonable effort to act on your request. We will not be liable to you if such Reversal /Deletion Request is not effected. You agree to indemnify us in connection with any such Reversal /Deletion Request as provided in UCC 4A. Your obligations under this provision will survive termination of any ACH Service. Provisional Payments You agree to be bound by the provision of the NACHA Rules that payment of a credit Entry by the Receiving Depository Financial Institution (RDFI) to the Receiver is provisional until the RDFI receives final settlement for the Entry. If final settlement is not received, the RDFI is entitled to a refund from the Receiver of the amount credited. This means that the Receiver will not have been paid. Payment by us for any debit Entry or returned credit Entry or credit Reversal is provisional until we receive final settlement for the Entry. If final settlement is not received, we are entitled to a refund, and we may charge your account for the amount credited. We may delay the availability Many amount credited for a debit Entry or credit Reversal if we believe that there may not be sufficient funds in your account to cover chargeback or return of the Entry or Reversal. Inconsistency of Name and Number An RDFI can make payment to a Receiver solely on the account number, even if the name in the Entry differs from the name on the account. We may send an Entry to an RDFI based solely on the bank identifying number, even if you provide us with a different RDFI name. Notice of Account Statement Discrepancies Information concerning Entries will be reflected in your account statements and, in some cases, in written or electronic advices and reports produced through one of our Information Reporting Services. You must send us written notice, with a statement of relevant facts, within 14 days after you receive the first notice or statement indicating a discrepancy between our records and yours. If you fail to give the required notice, we will not be liable for any loss of interest or for any compensation for any other loss or cost relating to an unauthorized or erroneous debit to your account or because of any other discrepancy in the notice or account statement. You must notify us promptly by telephone, confirmed in writing, if you learn or discover from any source other than a statement, advice or report from us of information concerning an unauthorized or erroneous debit to your account. Automated Clearing House (ACH) Authorization — Receive This section applies only to ACH Authorization— Receive Services for Entries received in the United States of America. With the ACH Authorization---Receive Services, you provide us with the authorization criteria for Entries you desire to receive for debit or credit to your account. We return automatically any Entry which does not meet your criteria. Check lssuance We may also return an Entry for any reason that an Entry may be returned under the NACHA Rules. The ACH Authorization— Receive Services do not apply to transactions between you and us, and we may pay Entries which you have authorized us to originate to your account (e.g., loan or credit card payments), whether or not you have included these in your authorization criteria. We may also pay any Entries, reversals or adjustments which we are required to accept under the NACHA Rules, operating circulars or any other applicable rule, guideline or regulation. You provide authorization criteria in a manner and form acceptable to us. In your authorization criteria you may specify a maximum amount or a fixed amount for the Entries. In either case, you must specify the amount in dollars and cents. You agree to comply with the NACHA Rules for all Entries. Under the NACHA Rules, credit Entries are provisional and may be revoked prior to final settlement. If the credit Entry is revoked before final settlement and we don't receive final settlement, we may charge your account for any amount credited. The person who sent the credit Entry is considered not to have paid you. if this happens, we do not send a separate notice; we notify you of these credits and charges on your account statement. When an ACH Authorization— Receive Service is terminated for any reason, we will no longer be obligated to monitor Entries against your authorization criteria, and we will receive and accept or return Entries to your account in accordance with our normal procedures. You still have the right to return Entries in accordance with the NACHA Rules. With our Check Issuance Services, you may request us to create checks on your behalf drawn on either accounts maintained by you with us or accounts designated and owned by us. Authorized Persons Before using a Check Issuance Service, you give us a written list, in a form acceptable to us. of the persons authorized by you to perform certain duties in connection with such Service. Security Procedure You agree to use the Security Procedure when you deliver Check Issuance Requests or electronically transmit Stop Payment Requests to us. The purpose of the Security Procedure is to verify the authenticity of Check Issuance Requests and Stop Payment Requests delivered to us in your name and not to detect any errors in the transmission or content of these messages. You represent and warrant each tune you use a Check Issuance Service that, in view of your requirements, the Security Procedure is a satisfactory method of verifying the authenticity of Check Issuance Requests and such Stop Payment Requests. You agree we may act on any Check Issuance Request and any electronically transmitted Stop Payment Request the authenticity of which we have verified through use of the Security Procedure. Stop Payment Requests Generally, you may send us a Stop Payment Request with respect to a check drawn on an account designated and owned by us only if the check is lost, stolen or destroyed. In such case, you must complete and provide us with a declaration of loss and indemnity agreement reasonably acceptable to us. if you wish to stop payment on a check drawn on an account you maintain with us, you must make your request as provided in the applicable Account Agreement. Your Responsibilities You must create and transmit to us a Check Issuance Request for each check you want us to issue on your behalf. You must make certain that each Check Issuance Request conforms in form and substance to the requirements, including cutoff times on a Business Day, described in the applicable User Documentation. You must retransmit any Check Issuance Request or other message initially transmitted to us through a Service if you have not received an acknowledgment message from us within the time period specified in the applicable User Documentation. You must ensure that Collected and Available Funds, sufficient to cover the total of all checks issued, are on deposit in your account. We will debit your account to cover such checks when we receive your Check Issuance Request. CheckTruncation With our Check Truncation Services, we store copies of your canceled checks on microfilm or other media and destroy the checks. You do not receive your canceled checks. We will, however, provide a copy of any such check that you request for up to seven years from the date the check is paid. To request a copy, you give us the Magnetic Ink Character Recognition (MICR) serial number, account number, exact amount (dollars and cents) of the check, statement reference number, if any, and posting date. We may also ask you for other information. Special services such as microfilm or review of dates, dollar amounts, serial numbers or signatures may not be available in connection with a Service. Notwithstanding the Limitation of Liabilities section of this Booklet, if we are unable to provide a copy of a check as requested by you under a Service, our liability is limited to your actual damages hut not more than the amount of the check. Client — Printed Drafts With our Client — Printed Drafts Services, you use our Software on your computer to print drafts drawn on either accounts maintained by you with us or accounts designated and owned by us. Authorized Persons Before using a Client — Printed Draft Service, you give us a written list, in a form acceptable to us, of the persons authorized by you to perform certain duties in connection with such Service. Security Procedure You agree to use the Security Procedure when you deliver Payment Advices or electronically transmit Stop Payment Requests to us. The purpose of the Security Procedure is to verify the authenticity of Payment Advices and Stop Payment Requests delivered to us in your name and not to detect any errors in the transmission or content of these messages. You represent and warrant each time you use a Client — Printed Draft Service that, in view of your requirements, the Security Procedure is a satisfactory method of verifying the authenticity of Payment Advices and such Stop Payment Requests. You agree we may act on any Payment Advice or electronically transmitted Stop Payment Request the authenticity of which we have verified through use of the Security Procedure. Coin and Currency Stop Payment Requests Generally, you may send us a Stop Payment Request with respect to a draft drawn on an account designated and owned by us only if the draft is lost, stolen or destroyed. In such cases, you must complete and provide us with a declaration of loss and indemnity agreement reasonably acceptable to us. If you wish to stop payment on a draft drawn on an account you maintain with us, you must make your request as provided in your Account Agreement. Your Responsibilities You must verify the contents of each shipment of blank draft stock and sign and return to us the receipt accompanying each shipment or notify us ofany discrepancies. You must notify us immediately if any draft stock is lost or stolen. You will be liable for any damages arising out of the loss or theft of any draft stock received by you. You must create and transmit to us a Payment Advice for each draft you issue using a Service. You must make certain that each draft, Payment Advice and electronically transmitted Stop Payment Request conforms in form and substance to the requirements, including cutoff tines on a Business Day, described in the applicable User Documentation. You must retransmit any Payment Advice, electronically transmitted Stop Payment Request or other message initially transmitted to us through a Service if you have not received an acknowledgment message from us within the time period specified in the applicable User Documentation. Our Responsibilities Once we receive the Payment Advice, we will transfer funds from your account with us to the bank account on which the draft is drawn. We will provide you with blank draft stock and the necessary Software. Payment with Respect to Drafts You agree you will not issue any drafts using a Service that would cause your applicable account balance, according to your records, to be exceeded. if your records and ours disagree regarding the account balance, our records will control for purposes of these Services, You must ensure that Collected and Available Funds, sufficient to cover the total of all drafts issued, are on deposit in your account before the time stated in the applicable User Documentation. Our Coin and Currency Services allow you to place orders for coin and currency from our cash vaults and, where available, to exchange paper currency for rolled coins and currency at our automated banking centers. Before using a Coin and Currency Service, you give us a written list at our request, in a form acceptable to us, of the persons authorized by you to place coin and currency orders and to perform certain other duties in connection with a Service. If you pick up your coin and currency order from one of our cash vaults, you must contract separately with an armored carrier service that is acceptable to us to provide for the transportation of cash orders. Armored carriers are your agents. You authorize us to act upon any request for coin or currency made in accordance with this Booklet and the procedures described in the applicable User Documentation. Collection Letters In connection with any cash ordered from our cash vaults using a Service, we are authorized to debit your account on the day the coin and currency are delivered to you or your designated agent or to the depository facility you and we have agreed upon. We will have no obligation to release a coin and currency order unless there are sufficient Collected and Available Funds in the appropriate designated account to pay for such order at the time scheduled for delivery of cash to you or your agent. Our Collection Letter Services let you send us drafts, checks and travelers checks (as used in this section, "items ") denominated in U.S dollars and drawn on Canadian banks and foreign currency items in the currencies specified in the applicable User Documentation. You must prepare a transmittal letter, in a form acceptable to us, for those items you want us to process for collection and send such letter and items to us in accordance with the applicable User Documentation. You agree that you will send to us for collection only items which are either U.S. dollar items drawn on Canadian banks or foreign currency items in the currencies specified in the applicable User Documentation. We will send each item you send us to the bank on which such item is drawn or to a correspondent bank. We will pay you, at our then prevailing buying rate for the applicable currency, for each item on the Business Day on which we receive payment for each such item from either the bank on which it is drawn or a correspondent bank. We will deduct all service fees and charges, plus any correspondent bank fees and charges, from the amount of any payment to you for such items. We will send you a written advice showing the applicable buying rate, and fees and charges for each item we process as a collection item through use of a Collection Letter Service. Commercial Deposits With our Commercial Deposits Services, you may make deposits of coin and currency, checks and other payment instruments to one of our designated banking centers (which may include an automated banking center), depository facilities (which may include a night depository facility), processing centers or cash vaults. If these deposits are delivered by you or your agent before the cutoff time specified in the applicable User Documentation, we will give you same -day provisional credit for such deposits, subject to later verification by us and our availability schedule. Banking center deposits that are immediately verified are covered under your Account Agreement. Your Responsibilities You agree to prepare all deposits accurately and in good faith and to follow the procedures for preparation, packaging and delivery of deposits according to the applicable User Documentation. For deposits made to an automated banking center, you will automatically be provided a receipt. In all other cases, in order to receive a receipt of deposit, you must provide a duplicate deposit slip in addition to the number of original deposit slips required by us to process the deposit. We will stamp this duplicate deposit slip and return it to you. In all cases, deposits are subject to later verification by us. If you use an armored carrier to transport your deposits, you must contract separately with an armored carrier service that is acceptable to us. For deposits made to one of our cash vaults, we may require you to use an armored carrier. Armored carders are your agents. Our Responsibilities We receive your deposit and credit your account for the amount declared by you on the deposit slip, subject to later verification by us. If we find an error when we verify your deposit, and the error is less than our applicable standard adjustment amount, no correction to the deposit will be made. If the error exceeds our standard adjustment amount, we will debit or credit the amount of the error to the deposit account listed on the deposit slip, unless you and we agree otherwise in writing. Our standard adjustment amount is subject to change from time to time. We give you same -day provisional credit for deposits delivered before the cutoff time on a Business Day. For deposits delivered after the cutoff time or on a non - Business Day, we give you provisional credit on the next Business Day. Controlled Balance Accounts Our Controlled Balance Accounts Services let you control the transfer of funds between accounts with us. Zero balance accounts, also known as ZBAs, are covered under these Services. These Services may be restricted to certain account types, Transfers you make from a U.S. - domiciled money market account using these Services are considered preauthorized transfers, are counted toward the six transactions you are permitted each month and may not be made to a checking account with an overdraft credit facility. You may instruct us to make either date - related (where available) or balance - related transfers as described below. Once you instruct us to transfer funds between accounts, transfers begin on a mutually agreeable date or, for accounts domiciled in the United States of America, either immediately or on the date you specify. With a date - related transfer, funds are transferred in one direction between accounts. We transfer funds on the dates and for the amounts that you specify. If a date you specify is a non - Business Day, we make the transfer on the next Business Day. With a balance- related transfer, you may hare funds transferred to an account when the balance falls below a certain amount; or from an account. when the balance rises above a certain amount; or both. We transfer the amount required to meet the account balance you specify. You may elect to have funds transferred to or from accounts of another company /organization using a Service. You agree that for each such account, the company /organization will provide us with its written authorization, in a form acceptable to us, for such transfers. However, you do not need to provide us such written authorization if (i) the other company /organization's accounts are domiciled in the United States of America, and (2) you represent and warrant that such other company /organization is a U.S. Subsidiary and that it has authorized us to transfer funds between its accounts and your accounts. Controlled Disbursement Our Controlled Disbursement Services provide information to you each Business Day so that you can fund the total amount of (1) controlled disbursement checks presented that Business Day, and (2) where the option is available, controlled disbursement ACH debits and any other electronic debits to which we agree and which are posted that Business Day. Accounts We make the Controlled Disbursement Services available through multiple Controlled Disbursement Points in different parts of the United States of America. These Points are identified on the List of Banks and Services. Subject to our approval in each case, you may use such Service through one or more of those Points. For each Controlled Disbursement Point you use, you maintain one or more Deposit Accounts with us. We may restrict your use of any Controlled Disbursement Service with regard to checks issued to individuals. For certain Controlled Disbursement Points, as more fully described in the applicable User Documentation, you may (1) draw checks bearing those respective Points' routing numbers directly on a Deposit Account, and (2) where the option is available, initiate or authorize third parties to initiate ACH debits and subject to special agreement, other electronic debits to the Deposit Account. (For electronic debits to a Deposit Account, you must use the appropriate funds transfer Service approved by us.) For a certain other Controlled Disbursement Point, we authorize you to draw checks on accounts we maintain at such Point; then we debit your DepositAccount(s) in the amount(s) of the checks which are paid. With these Services, you have no account or contractual relationship with such Controlled Disbursement Point. You will not access our accounts maintained at such Point in any other manner, including, but not limited to, automatic debit arrangements cleared through an automated clearing house network or through wire transfers. On each Business Day, we will inform you by the time specified in the applicable User Documentation of the total amount of debits presented for payment that day at or through a Controlled Disbursement Point and any other amounts required to be deposited in the corresponding Deposit Account(s) to cover such debits. On each such Business Day, prior to the time stated in the applicable User Documentation, you must ensure that sufficient Collected and Available Funds are on deposit in the Deposit Account(s) to cover such amounts. If we attempt to post a debit to a Deposit Account for the amount due and determine there are insufficient funds in the Deposit Account, we may dishonor or instruct the pertinent Controlled Disbursement Point to dishonor some or all of the checks then pending payment and/or, as appropriate, return or reject any electronic debit pending settlement. We may, however, in our sole discretion, allow an overdraft so some or all of such checks or electronic debits will be paid or settled. If we do so, we are not obligated to allow any such overdraft in the future. If, for any reason, we fail to provide you with timely notice of the required funding amount for a Deposit Account, and if you fund such Deposit Account according to the procedures (including funding amount and time) described in the applicable User Documentation, we will post to the Deposit Account, or instruct the Controlled Disbursement Point to post to our account, all checks presented for payment, and electronic debits received for settlement, that day. If the required funding amount nonetheless exceeds the amount funded by you and you have insufficient funds in the Deposit Account to cover the required amount, we will overdraw the Deposit Account and advance funds to cover the excess. if we advance our own funds, you will repay us by the cutoff time specified in the applicable User Documentation on the next Business Day along with interest on such funds as specified in our schedule of charges for business account services or as otherwise agreed. if you do not, we may dishonor, or instruct the Controlled Disbursement Point to dishonor, some or all of the checks then pending final payment and/or, as appropriate, return or reject any electronic debit pending settlement even if the Deposit Account has sufficient Collected and Available Funds to cover such debits. We may require you to maintain a specified minimum amount in any Deposit Account for which we permit you to use automated clearing house transfers to fund that Account. If you use facsimile signatures on checks drawn on an account at a Controlled Disbursement Point, your use of such signatures is subject to the "Facsimile Signatures" section of this Booklet. Stop Payments You may request stop payments on checks drawn under a Controlled Disbursement Service by following the procedures specified in the applicable User Documentation or applicable Account Agreement. Also, you may use an Online Stop Payment Service, which is subject to the "Online Stop Payment" section of this Booklet. if you use telephone, mail or facsimile transmission to request a stop payment, you agree that your Stop Payment Request is subject to the terms described in the Account Agreement for requesting stops by telephone or mail. If some, but not all, of the information in your Stop Payment Request matches a check which has been presented for payment (for example, the Magnetic Ink Character Recognition (M [CR) serial numbers match and the dollar amounts do not match), we may contact you to request a decision on whether or not to pay the check. If any such suspect check is not to be paid, you must promptly instruct us not to pay, or to direct a Controlled Disbursement Point not to pay, the suspect check. If you do not, the suspect check may be paid. Disbursement Image Our Disbursement Image Services will make available to you digital images of checks and drafts paid against specified accounts. Such images may be made available to you by online transmission or by CD -ROMs containing images you may access using image CD -ROM Software. Check and draft itnages will be made available to you at such times as you request and to which we agree. If an image of a check or draft is missing or is illegible, we will provide you with a microfilm copy upon your request. Your request must include the account number, the check serial number, the exact amount (dollars and cents) of the payment and the date the payment was made. We may assess a fee for copies provided to you. We will not be liable for failure to provide copies by a given time or for failure to provide copies we are not reasonably able to provide. Notwithstanding the "Limitation of Liabilities" section of this Booklet, we will not be liable for damages arising under any Disbursement Image Service in excess of the amount of the check, draft or miscellaneous debit giving rise to your damage claim. Any such claim must include the account number, the check serial number, the exact amount (dollars and cents) of the payment, the date the payment was made, the name of the payee, a detailed explanation of how the claimed loss occurred and the name, address and phone number of the payee to whom you cannot prove payment was made. Notwithstanding the "Termination" section of this Booklet, in the case of a Disbursement Image Service using CD -ROMs, termination of such Service upon 30 days' notice may not be effective earlier than the first day of the statement period immediately following the statement period during which such notice is given. Electronic Bill Payment Consolidation Ou Electronic Bill Payment Consolidation Service consolidates, reformats and delivers remittance information and other data related to payments received from Bill Payment Service Providers for credit to your account. Detailed information regarding a Service is available in the applicable User Documentation. You agree that you will authorize Bill Payment Service Providers to deliver payments, remittance information and other related data to us in order for us to provide this Service to you. You may also elect to have information of another company /organization reported through this Service. If you do so, you agree that you and the other company /organization will authorize the Bill Payment Service Providers to deliver payments, remittance information and other related data to us in order for us to provide this Service to you. Remittance information and other data related to payments will be delivered to you in a mutually acceptable form and manner. I f you are unable to post any payments to your customers' accounts, you must promptly return such payments to us. You shall pay us immediately for the amount of any returned payments which we previously credited to your account. Electronic Data Interchange (EDI) Our EDI Services allow you to disburse funds and; or deliver payment- related information to your trading partners, electronically or by paper, by sending payment requests or payment - related information to us as described in the applicable User Documentation. These Services also allow you to access payment- related and remittance- related information in mutually acceptable formats received from your trading partners or customers and, where available, to match specified receivables and payables against payments. Sending Payments and Related Information When you wish to pay your trading partners, you transmit a data file to us, containing instructions for your payments, in the format and by the cutoff times specified in the applicable User Documentation. When we receive a file from you under an EDI Service, we perform certain edits on the data, translate it into the appropriate format and send the data to the payment system specified by you, except that we may use any means of transmission, funds transfer system, clearing house or intermediary bank we reasonably select. On the specified dates, we issue your payments in the required formats. Payment requests originated via the EDI Services will be subject to the terms and conditions for the underlying payment Services (Check Issuance, ACH and /or Wire Transfer and International Electronic Funds Transfer) as described in their respective sections of this Booklet. Receiving Remittance Information Remittance information can be delivered to you in a mutually acceptable form and manner and will be covered under the "Information Reporting" section of this Booklet. m 20 Information Reporting Our Information Reporting Services make certain account, transaction and related information available to help you control and manage your accounts. This may include information generated from other Services you use. Detailed information regarding an Information Reporting Service is available in the applicable User Documentation. Accounts of Other Companies /Organizations You may elect to have accounts of another company reported to you with any of our Information Reporting Services. You agree that, for each such account, the company/ organization will provide us with its written authorization, in a form acceptable to us, for us to make that company /organization's account information available to you. However, you do not need to provide us with such written authorization if (1) the other company /organization's accounts are domiciled in the United States of America and (2) you represent and warrant that such other company /organization is a U.S. Subsidiary and that it has authorized us to make its account information available to you. Accounts at Other Banks You may also elect to have your accounts, or accounts of another company /organization, maintained at another financial institution reported through certain of our Information Reporting Services. If you do so, you agree that you and the other company /organization will authorize the other financial institution to make the reporting information available to us and to take all other actions necessary for us to provide Information Reporting Services to you. Lockbox Our Lockbox Services involve processing only checks and other payment instruments, such as drafts, that are received at a Lockbox Address, which excludes without limitation cash, stock certificates and tangible valuables. With a Lockbox Service, you instruct your customers to mail checks and other payment instruments you want to have processed under a Service to the Lockbox Address. We and /or our agents will have unrestricted and exclusive access to the mail sent to the Lockbox Address. If we receive any mail containing your lockbox number at our Lockbox operations location (instead of the Lockbox Address), we may handle the mail as if it had been received at the Lockbox Address. Processing We will handle checks received at the Lockbox Address according to the applicable Account Agreement, applicable User Documentation and our availability schedule, as if the checks were delivered by you to us for deposit to your designated account, except as modified by this Booklet. We will open the envelopes picked up from the Lockbox Address and remove the contents. Checks and other documents contained in the envelopes will be inspected and handled in the manner specified in the set -up documents for the applicable Lockbox Address. We capture and report information related to the lockbox processing, where available, if you have specified this option in the set -up documents. We will endorse all checks that we process on your behalf and deposit them in the account you designate for the applicable Service. If we process an unsigned check as instructed in the set -up documents, and the check is paid, but the account owner does not authorize payment, you agree to indemnify us, the drawee bank (which may include us) and any intervening collecting bank for any liability or expense incurred by us or such other bank due to the payment and collection of the check. If this option is available and if you instruct us not to process a check bearing a handwritten or typed notation "Payment in Full" or words of similar import on the face of the check, you understand that we have adopted procedures designed to detect checks bearing such notations; however, we will not be liable to you for losses you suffer if we fail to detect checks bearing such notations. Each Business Day, we will prepare and send remittance materials (images via Internet and /or paper packages) relating to the Lockbox Address to you at the address you specify for that Lockbox Address, unless we agree otherwise. The material will include, but is not limited to, any checks not processed in accordance with the set -up documents plus information regarding the deposit for the day. For the wholesale Lockbox Service, the package will also include invoices and other materials received at the Lockbox Address. Acceptable Payees For the Lockbox Address, you will provide to us the names of Acceptable Payees. We will process a check only if it is made payable to an Acceptable Payee and if the check is otherwise proccssable. You warrant that each Acceptable Payee is either you or your affiliate. If an Acceptable Payee is your affiliate, then you also warrant that such Acceptable Payee has authorized checks payable to it to be credited to the account you designate for a Lockbox Service. We may require written authorization from any such Acceptable Payee. We may treat as an Acceptable Payee any variation of any Acceptable Payee's name that we deem to be reasonable. Money Market Investment Our Money Market Investment Services allow you to instruct us to buy, sell and hold for your account shares of the mutual funds designated by you on a set -up document we provide to you. When you direct us to make a share purchase or sale, we will debit or credit your designated account with us. You will not direct us to make a share purchase unless there are Collected and Available Funds in such account sufficient to make full cash payment. You will not direct us to sell any shares unless you own the shares and we are holding them for you under a Money Market Investment Service. We will hold and account for shares on your behalf separately from any other shares we may hold. Any dividends on shares we hold for you will be posted to your account when we receive them. We will place orders for shares only on a Business Day and a day on which the New York Stock Exchange is open for business and received by us before the time specified in the applicable User Documentation. Orders received after such time shall be processed on the next Business Day on which the New York Stock Exchange is open for business. You authorize us to place and withdraw orders, to combine your order with orders of other customers and to take such other steps as we consider reasonable to carry out your directions. We reserve the right to refuse any of your directions. You acknowledge that we have not provided investment advice to you and you have made an independent investigation concerning the merits of the shares that we will purchase, hold and sell for you. You acknowledge that the shares are not a deposit with, or an obligation of, or guaranteed or endorsed by us, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Transactions in the shares will be reported to you in periodic statements. Each statement will be conclusive unless you object in writing within 14 days after your receipt of the statement. The absence of an objection from you will constitute a complete waiver of all claims you may have with respect to such transactions or the statement. In the event a Money Market Investment Service is terminated, we will promptly liquidate the shares and pay the net proceeds to you. Online Stop Payment Our Online Stop Payment Services allow you to electronically place or cancel a Stop Payment Request. This is in addition to your ability to make Stop Payment Requests in person, by telephone or in writing as described in your Account Agreement. A Stop Payment Request will not be effective until we review our records for the time period specified in the applicable User Documentation, determine that the check has not been paid during that period and respond to you with an online status of your request of "accepted" (rather than "rejected" or "pending "). A Stop Payment Request terminates at the end of the period designated in the applicable User Documentation, unless the Stop Payment Request is renewed or canceled earlier. A Stop Payment Request is canceled automatically when the account on which the check is drawn is closed or transferred. Requesting Stop Payments You will include in each Stop Payment Request the Magnetic Ink Character Recognition (MICR) serial number and exact amount (dollars and cents) of the check for which payment is being stopped and the account number on which the check is drawn. You understand and agree that we can only stop a check that shows exactly the same MICR serial number and amount as that included in the related Stop Payment Request since our computer system identifies a check on the basis of the MICR serial number and the exact amount of the check. You will review your account statements prior to transmitting any Stop Payment Request. You will not transmit any Stop Payment Request relating to a check that has been shown to be paid on such statements. In some cases, we may pay a check even if a Stop Payment Request is in effect. For example, if one of our branches (or banking centers) or affiliates becomes a "holder in due course" of the check that you asked as to stop, we may still pay the check. The procedures for placing and acknowledging Stop Payment Requests are described in the applicable User Documentation. If you use any Online Stop Payment Services with respect to an account connected to a Controlled Disbursement Service, you must follow the procedures in this section rather than the Stop Payment procedures in the "Controlled Disbursement Services" section. Positive Pay Our Positive Pay Services allow you to identify exception items, to request photocopies and 'or electronic images of exception items and to instruct us whether to pay or return those items On each Business Day, we provide you with a report of checks presented to as for payment on the prior Business Day and which we have identified as exceptions, as more fully described in the applicable User Documentation. Exceptions are determined by comparing checks presented to us (either by other depository institutions or, where applicable, for cashing at one of our banking centers) with lists of checks issued or canceled by you which you transmit electronically to us by the time specified in the applicable User Documentation. Alternatively, you may choose an option under which we report all checks presented for payment. In that case, we will treat all such checks as exception items. You must notify us the same day we report exception items to you, by the deadline specified in the applicable User Documentation, which checks you want us to pay or which to dishonor and return, according to the default procedures in effect for you. If you fail to notify us by the deadline, we will handle the exception items in the manner described under the default procedures. Where available, you may choose the default procedure. Where required, you will indicate which checks you want us to return are deemed by you to be fraudulent, Our deadline, default procedures and procedures for acknowledging pay and return requests are described in the applicable User Documentation. In order to assist you in making a pay/no-pay decision on exception items, you may request a copy of any exception item. Authorized Persons Before using a Positive Pay Service, you give its a written list, in a form acceptable to us, of the persons authorized by you to perform certain duties in connection with such Service. Online Option You may access the daily reports of exception items via one of our online systems. Using that system, you must then notify us which exception items to pay or which to return, You may request photocopies of exception items, which we will fax to you, as more fully described in the applicable User Documentation. Where available, you may arrange to receive and display electronic images of exception items. Manual Option We provide you with a report of exception items. You must then notify us which items to pay or which to return. Acknowledgments You authorize us to return checks or to pay checks in accordance with your instructions and the default procedure in the applicable User Documentation. We will have no liability for payment of a check which is unauthorized or fraudulent if (i) the check is included in a report of exception items, (u) you have not selected a return default for exception items, and (iii) you do not give us timely instructions to return the check. You acknowledge that our Positive Pay Services do not preclude our standard check processing procedures, which may cause a check to be dishonored even if your instructions or the default procedure does not otherwise require as to return such check. Tax Payment If you decline to use a Positive Pay Service offered by us, you also acknowledge that we have no liability for cashing, in good faith, a check presented at one of our banking centers even if such check would otherwise be an exception item. We will use reasonable efforts under the circumstances to respond promptly to proper requests for copies of exception items, but you acknowledge that our failure to provide copies does not extend the deadlines by which you must notify us of your pay /no -pay decisions. Our Tax Payment Services allow you to instruct tts, using a touchtone telephone or our Software on your computer, to pay any of your taxes which are reported or filed using the tax forms as more fully described and specified in the applicable User Documentation. Based on your Tax Payment Instructions, we prepare and remit your tax deposits. Each of these Services is described in the applicable User Documentation. Security Procedure You agree to use the Security Procedure, if any, when you deliver Tax Payment Instructions and, as provided in the applicable User Documentation, cancellation requests to us. The purpose of the Security Procedure is to verify the authenticity of Tax Payment Instructions or cancellation requests and not to detect errors in the transmission or content of these messages. You represent and warrant each time you use a Tax Payment Service that, in view of your requirements, the Security Procedure is a satisfactory method of verifying the authenticity of these messages. You agree that we may act on any Tax Payment Instructions or, as provided in the applicable User Documentation, cancellation requests, the authenticity of which we have verified through the use of the Security Procedure. Cutoff Times You must comply with the deadlines specified in the applicable User Documentation for initiation of Tax Payment Instructions. If a Service allows you to scnd instructions to us after the cutoff time, or on a non- Business Day, we may treat these instructions as if we received them on the next Business Day. Communication Expense and Risk Transmission of Tax Payment Instructions to us will be at your expense, except that we may provide a toll -free number telephone service. If that service is disrupted for any reason, you have the responsibility and risk of using alternative means of communicating Tax Payment Instructions to us accurately and in time for us to perform any Tax Payment Service. Required Information You will furnish us with all required information and authorizations at the times, in the manner and with the content specified in the applicable User Doctunentation. Tax Forms and Remittances After we have received complete Tax Payment Instructions from you, we prepare the related tax forms (which may be on a magnetic tape or by electronic transmission as authorized by the Internal Revenue Service or other tax authority, as applicable) for submission to the appropriate tax authority. If permitted by the input method, you may specify a settlement date in accordance with the User Documentation. If you use a touchtone phone as your input method, you may request a specified settlement date by calling the designated customer representative for the applicable Tax Payment Service. For purposes of these Services, settlement date means the date you specify that the taxing authority's account is to be credited. If you do not specify a settlement date, we will pay the amount you specify on or before the tax due date. If you specify the settlement date, payment will be made on the settlement date, Account Debits If you do not specify a settlement date, we debit your account for any tax payment on the Business Day of transmission. If you specify a settlement date, we generally debit your account on the settlement date unless you are prefunding your tax payments. Prefunding means that you pay for all tax payments by such time before the settlement date as we may specify. At our discretion, we may at any time without notice debit your account on the Business Day that Tax Payment Instructions are transmitted to us (or on any other later date). If we debit the funds on the transmission date (or any other date before the payment date), we hold the funds as a deposit liability to you, and not as trust funds, until the date when we remit the funds to the appropriate tax authority. We will not pay you interest on the funds. We reserve the right to debit your account and to make a tax payment on your behal earlier than the tax due date if the information in your Tax Payment Instruction is unclear or inadequate to permit us to determine the later due date under the applicable Tax Payment Service or if we otherwise reasonably decide that any delay in the payment of the tax may expose you to liability for a tax penalty. In such cases, we will not be I iable to you for any lost use of funds. Rejection of Instructions We may reject your instructions during or immediately after transmission to us if they do not comply with the requirements of this Booklet or the applicable User Documentation or if we have been unable to verify them through use of the Security Procedure. You will be informed of any such rejection only as specified in the applicable User Documentation, and no other notice of rejection will be provided. In addition, we may decline to perform any Tax Payment Service or to report any tax, file any tax form, or pay any related tax for you, even if we have received instructions to do so, if the tax payment and our related service fees and charges exceed the Collected and Available Funds on deposit in your account or your ACH processing limit. If we reject a Tax Payment Instruction for that reason, we will promptly notify you by telephone or facsimile transmission in which case we will not be liable to you for the tax payment, any interest on the amount of your tax liability, or for any tax penalty imposed on you in connection with the tax liability. You agree that these means of communication are a reasonable means of notifying you Cancellation Subject to the provisions in the User Documentation, you may cancel a Tax Payment Instruction prior to disconnection of the telephone call in the case of an instruction initiated by touchtone telephone or prior to transmission to us of an instruction initiated through your computer. Thereafter, a Tax Payment Instruction may be canceled only if: • The tax payment has not been remitted, credited or otherwise made available to a tax authority; • A request to cancel provides sufficient information for us to effect the request; and • The request is received by us by telephone or, at the option of either you or us, in writing (including facsimile transmissions) in time (but in no event later than the deadline specified in the applicable User Documentation) to afford us a reasonable opportunity to effect the request. m Overpayments If we make an overpayment of your tax liability due to our error, we will recredit your account for the amount of the overpayment, and you agree to take such actions as we reasonably request to obtain a refund of the overpayment and to arrange for payment of such refund to us. In any event, you agree to repay us for any overpayment upon the earlier of (i) your recovery of such overpayment, or (ii) the application of the related tax credit to another of your tax payment obligations. Records and Notice of Errors We will provide you with statements and confirmations containing information about your tax payments in accordance with and subject to the applicable User Documentation. Nothing in this Booklet relieves you of any duty imposed by law or contract regarding the maintaining of records or from employing adequate audit, account and review practices customarily followed by similar businesses. You will promptly review for accuracy all records, information and statements delivered from time to time to you by us. You must send us written notice, with a statement of relevant facts, within 14 days after you receive the first notice or statement indicating a discrepancy between our records and yours. If you fail to give the required notice, we will not be liable for any loss of interest or for any compensation for any other loss or cost relating to an unauthorized or erroneous debit to your account or because of any other discrepancy in the notice or account statement. You must notify us promptly by telephone, confirmed in writing, if you learn or discover from any source other than a notice or statement from us of information concerning an unauthorized or erroneous debit to your account. Supplemental Limitation of Liabilities For each Tax Payment Service, this section supplements the "Limitation of Liabilities" section of this Booklet. If any Tax Payment Service is interrupted for any reason and you are unable to complete transmission of your Tax Payment Instruction to us, you will not be relieved of your obligation to make any tax payment otherwise contemplated to be made by such Service. We will not incur any liability if you fail to make any required tax payment by other means in the event of such interruption. Notwithstanding the "Limitation of Liabilities" section of this Booklet with respect to tax penalties, our liability under a Tax Payment Service is limited to the amount of penalty actually imposed on you by the Internal Revenue Service, or by the appropriate tax authority for our failure solely by reason of our negligence, to report any tax or file any tax form or make any tax payment on time. Wire Transfer and International Electronic Funds Transfers This section applies to our U.S. domestic and worldwide wire transfer services and to our International Electronic Funds Transfer Services outside the United States of America. It does not apply to ACH Services within the United States of America, which are covered in the "Automated Clearing House (ACH)" section of this Booklet. Wire Transfer and International Electronic Funds Transfer Services permit you to transfer funds electronically and, as appropriate, to transmit related messages as more fully described in the applicable User Documentation. These transfers are typically from your accounts with us to other accounts at our bank, at our affiliated banks or at other eligible banks. These transfers may also include transfers to your accounts with us from your accounts at other banks. These transfers may be made according to a specific request from you or according to your standing instructions (which may include daily sweeps from your accounts at our affiliated banks to your account with us). They also may be low -value batch payments made according to multiple requests within a single electronic data file for transfers to or from your accounts. If a Request involves a currency other than the currency in which the relevant account is denominated, your funds will be exchanged for such other currency at a current rate of exchange on or before the transfer date in accordance with our normal procedures. Currency exchange rates fluctuate over time, and you acknowledge and accept the risks of such fluctuations between the time you initiate a Request and the time the transfer is either completed or is unwound duc to a cancellation, an amendment, a rejection or a return. Multibank Service The Multibank Service permits you to relay through us your instructions to another bank to wire transfer funds from one of your accounts held at that other bank. We will reformat your request for SWIFT and relay it by SWIFT to the appropriate bank, subject to the Business Day schedules for us, SWIFT, and the paying bank. Before using the Multibank Service, you must provide us with the account number and bank name for each account to be debited using this Service. You also must provide the bank holding the debit account with express, written authorization (with a copy to us where requested) to act on SWIFT payment instructions that we send to it under this Service. You agree that we may rely on that authorization until we have had a reasonable opportunity to act 00 notice that it has been revoked. Multibank requests are not payment orders to us, and we have no obligation to execute, transmit or accept any payment orders made to us under the Multibank Service. We reformat and transmit your payment order to another bank, and we have no duty to do so if your request is defective, incomplete, erroneous or inconsistent with the terms of this Booklet. We may act on your Multibank requests as we reasonably consider appropriate notwithstanding any error, omission, defect or lack of clarity in its terms and even if the requests appear to duplicate other Multibank requests. You agree that your indemnity of us, as set forth in the "Protection from Third Parties" section of this Booklet, applies to any claims by another bank based on our sending a Multibank request containing any error, omission, defect or lack of clarity. If you wish to cancel or amend a payment order set forth in a Multibank request, you must contact the bank to which the payment order is directed and act in accordance with its procedures. Reports on Multibank requests which we have processed will be included m an Information Reporting Service which you have arranged to use. D Compliance with Rules and Laws You agree to comply with all applicable payment system rules, including the national payment system rules and any other applicable laws and regulations of the receiving country of your transaction. You also agree to comply with the authorization and notice requirements applicable to any Request to debit another person's account. Authorized Persons Before using a Wire Transfer or international Electronic Funds Transfer Service, you give us a written list, in a form acceptable to us, of the persons authorized by you to perform certain duties in connection with such Service. Security Procedure You agree to use a Service in accordance with the relevant Security Procedure, if any. The purpose of the Security Procedure is to verify the authenticity of Requests delivered to us in your name and not to detect errors in the transmission or content of Requests. You represent and warrant each time you use a Wire Transfer or International Electronic Funds Transfer Service that, in view of your requirements, the Security Procedure is a satisfactory method of verifying the authenticity of Requests. You agree that we may act on Requests, even if they are unauthorized, if we act in good faith and comply with the applicable Security Procedure and any written agreement with you restricting our action on Requests. In such cases, we may enforce or retain your payment to us for such Requests; provided, however, we may not enforce or retain payment if you prove that the unauthorized Requests were not caused by a person (i) entrusted at any time to act for you with respect to Requests or the applicable Security Procedure, (ii) who obtained access to your premises, computer equipment or transmitting facilities, or (iii) who obtained, from a source controlled by you, information (such as keys and passwords) which facilitated breach of the applicable Security Procedure. Account Debits You must have Collected and Available Funds in your account which, when added to funds that may be made available under a line of credit, are sufficient to cover your Requests. You may initiate a Request only if the offsetting debit to your account, including the available line of credit, will not cause you to exceed the account balance according to your records. If your records and ours disagree regarding the account balance, our records will control for purposes of our processing the Request. You are obligated to pay us the amount of any Request once we act on, other than to reject, your Request. At our discretion, we may at any time without notice require payment before we process your Request. Even if we have done so in the past, we are not obligated to process any Request without having first been paid by you, but, if we do, the amount is immediately due and payable without notice or demand. Prior to initiating any Wire Transfer Request to debit an account of a third party, you must provide us with documents, in a form acceptable to us, evidencing the third party's authorization. You will pay us for the amount of any returned or rejected debit transactions, or any adjustments, which we previously credited to your account, lf, for any Business Day, we receive more than one Request and/or other items payable from your account, we may debit your account for such Requests and items in any sequence we determine in our sole discretion. Acting on Requests We will use any means of transmission, funds transfer system, clearing house or intermediary bank we reasonably select to transfer funds. After we receive a Request by the applicable processing deadline (as specified in the applicable User Documentation), but no later than the value date stated in your Request (if such date is not earlier than the day such Request is received), we will act upon such Request by making applicable accounting entries or by transmitting payment instructions to the applicable bank or other party. If applicable, our acting on your Request will also be subject to the Business Day schedule of any of our banking centers or affiliates holding an account to be debited or credited under a Service. We may treat Requests we receive after a deadline as if we received them on the next Business Day. International Electronic Funds Transfers will be deemed received by us when we receive the complete electronic data file at the location specified in the applicable User Documentation. Rejection of Requests We may reject any Request which does not comply with the requirements of this Booklet or the applicable User Documentation, including any processing limits described in such User Documentation, or which we have been unable to verify through use of the Security Procedure. We also may reject any Request which exceeds the Collected and Available Funds (including funds made available under a line of credit) on deposit with us in the applicable account. We may also reject any Request if it may be returned for any reason under the applicable national payment system rules of the receiving country of your transaction. Notice of rejection is given to you by telephone, by electronic means, by facsimile or by mail. Notices of rejection will be effective when given. Cancellation or Amendment We have no obligation to cancel or amend Requests after we receive them or to cancel or amend any particular funds transfer requested by a standing instruction which is in effect. If you send us a Request instructing us to cancel or amend a prior Request and we are able to verify the authenticity of the cancellation or amendment Request using the Security Procedure, we will make a reasonable effort to act on that Request, but we will not be liable if it is not effected. You agree to indemnify us against and hold us harmless from any and all liabilities, claims, costs, expenses and damages of any nature, including Legal Expenses, that we incur in connection with your Request to amend or cancel. Your obligations under this provision will survive termination of these Wire Transfer and International Electronic Funds Transfer Services. Provisional Payments Payment by us for any transaction we credit to your account is provisional until we receive final settlement for the transaction. If final settlement is not received we are entitled to a refund and we may charge your account for the amount credited. We may delay the availability of any amount credited for a transaction if we believe that there may not be sufficient funds in your account to cover chargeback or return of the transaction. m 30 Inconsistency of Name And Number A beneficiary's bank (including us when we are the beneficiary's bank) may make payment to a beneficiary based solely on the account or other identifying number. We or an intermediary bank may send a Request to an intermediary bank or to a beneficiary's bank based solely on the bank identifying number. We, any intermediary bank, and any beneficiary's banks may do so even if the Request includes names inconsistent with the account or other identifying number as long as the inconsistency is not known by us or such other bank. Neither we or any other bank has a duty to determine whether a Request contains an inconsistent name and number. Notice of Account Statement Discrepancies Information concerning payments made pursuant to your Requests will be reflected in your account statements and, in some cases, in written or electronic advices and reports produced through one of our Information Reporting Services. You must send us written notice, with a statement of relevant facts, promptly after you receive the first notice or statement indicating a discrepancy between our records and yours. If you fail to give the required notice w ithin 14 days, we will not be liable for any loss of interest or for any compensation for any other loss or cost relating to an unauthorized or erroneous debit to your account or because of any other discrepancy in the notice or account statement. You must notify us promptly by telephone, confirmed in writing, if you learn or discover from any source other than a statement, advice, or report from us of information concerning an unauthorized or erroneous debit to your account. MicroTrade® Services Our MicroTrade Services allow you to (1) instruct us to issue standby and import letters of credit and guarantees, (ii) instruct us to advise you of our receipt or confirmation, or the payment, of your export letters of credit, (iii) initiate collections, and (iv) access reports on letter of credit transactions, collections and banker's acceptances. Detailed information regarding each Service is found in the applicable User Documentation. Standby and Import Letters of Credit Our Import MicroTrade Letters of Credit Service allows you to request us, by electronic or fax transmission, to issue an import or standby letter of credit or a guarantee. Each letter of credit or guarantee which we agree to issue will be for your account or the account of another entity you designate. Each commercial letter of credit we issue will be subject to the UCP, and each standby letter of credit we issue will be subject to the ISP98. As a condition to our agreement to issue a letter of credit or guarantee, we may require you to make a cash deposit with us as security for your obligations to us. A letter of credit may be issued by any of our offices within or outside the United States of America. A guarantee may be issued by any of our offices outside the United States of America. Your Responsibilities You represent and warrant to us as of the date of issuance of each import letter of credit and each drawing that: • You or the importer has obtained all import and export licenses, registrations, filings and approvals required by any governmental authority for the goods and documents described in the letter of credit. • The transactions underlying the letter of credit arc not prohibited under the foreign asset control or other regulations of the United States of America or the applicable laws of any other jurisdiction. You will obtain, or cause to be obtained, insurance covering fire and other usual risks on all goods described in each import letter of credit issued by us. You will reimburse us upon demand all monies paid by us under or in respect of each such letter o credit or guarantee, including payments on any draft, acceptance, order, instrument or demand drawn or presented under the letter of credit or guarantee. You will pay us on demand interest on all amounts paid by us or any other drawee under each letter of credit or guarantee from the date of such payment until we receive reimbursement at a rate per annum specified in the applicable User Documentation. You will reimburse us in the currency in which the letter of credit 0 guarantee is denominated (or, at our option, the equivalent of the denominated currency amount in U.S. Dollars or the currency of the country in which the letter of credit or guarantee was issued at the rate of exchange quoted by us in the city in which the letter of credit or guarantee was issued for the sale of the denominated currency against U.S. Dollars or such other currency on the date on which the denominated currency amount is paid by us). Regardless of the expiration of the letter of credit or guarantee, you will remain liable for all such amounts until we are released from liability to all persons entitled to draw or demand payment under the letter of credit or guarantee. You will pay us Legal Expenses incurred by us in connection with each letter of credit or guarantee including, without limitation, our defense of any proceeding initiated by you to enjoin payment or negotiation by us of a letter of credit or guarantee even if you are awarded such relief, provided only that we have acted in good faith in defending such action. If you request the issuance of a letter of credit or guarantee listing one of your Subsidiaries or another entity as the account party, each such request will be considered a request by you for the issuance of a letter of credit or guarantee, and you will assume all liabilities and obligations with respect to such letter of credit or guarantee. You represent and warrant to us that you will derive substantial economic benefit from each underlying transaction relating to each request for the issuance of a letter of credit or guarantee listing your Subsidiary or another person as the account party. Your obligations under each letter of credit or guarantee will not be released or discharged if: • We attempt to collect any payment under such letter of credit or guarantee directly from the Subsidiary or such other entity. • Any bankruptcy, reorganization, insolvency, receivership, moratorium or other such action affecting creditors generally is filed by or against the Subsidiary or such other entity. • We receive payment from the Subsidiary or such other entity, but it is subsequently rescinded or must be returned by us. Our Responsibilities If we accept your request, we will issue the import or standby letter of credit as described in your electronic or fax transmission and pursuant to this Booklet and the UCP (with regard to import letters of credit) and ISP98 (with regard to standby letters of credit). If we accept your request, we will issue the guarantee as described in your electronic or fax transmission and pursuant to this Booklet. We will pay each commercial letter of credit pursuant to its terms, this Booklet and the UCP. We will pay each standby letter of credit pursuant to its terms, this Booklet and the 1SP98. We will pay each guarantee pursuant to its terns and this Booklet. Change of Law or Regulation lf, subsequent to the issuance date of a letter of credit or guarantee, we determine that the introduction of or any change in the interpretation of any law, rule, regulation or guideline or the request of a central bank or other governmental authority will increase our costs relative to our providing the Import MicroTrade Letters of Credit Service, as set forth below, then, on demand, you will pay us additional amounts sufficient (as determined by us) to compensate us for such increased cost. Such increased costs could include: (i) reserve, deposit, assessment or similar requirements, or (ii) increases in capital adequacy requirements. Deposit on Termination Event If there occurs an event which permits us, under the "Termination" section of this Booklet, to erminate this Service immediately, you will deposit with us, on demand and as cash security for your obligations to us, an amount equal to the aggregate undrawn amount of the letters of credit and guarantees issued by us in the same currency as the letter of credit or guarantee, or, at our option, its equivalent in U.S. Dollars or the currency of the country in which the letter of credit or guarantee was issued. You will not withdraw any amount so deposited except to the extent such amount exceeds the undrawn and unreimburscd amount of the letters of credit and guarantees. If the amount deposited by you under this Booklet for a letter of credit is in a currency different than the currency in which the letter of credit or guarantee is payable and the amount so deposited becomes less than the value of the undrawn amount of the letter of credit or guarantee because of any variation in rates of exchange, you will deposit with us additional amounts in such other currency so that the total amount deposited by you under this Booklet is not less than the equivalent value of the undrawn amount of the letter of credit or guarantee, determined by using the rate of exchange quoted by us on the date of our latest demand. Export Letters of Credit Our Export MicroTrade Letters of Credit Service allows us to advise you by electronic transmission of (i) our receipt of any export letter of credit naming you as beneficiary, (ii) our confirmation of any such letter of credit, and (iii) any payment made pursuant to a drawing under any such letter of credit. You may elect to have export letters of credit of a Subsidiary or other entity reported to you with our MicroTrade Export Letters of Credit Service. You agree that the Subsidiary or other entity will provide us with a written authorization, in a form acceptable to us, for us to make that Subsidiary or other entity's information available to you. Collections Our MicroTrade Collections Service allows you to initiate a collection (as that term is defined in the Uniform Rules for Collections) by delivering an instruction to a collecting bank. The instruction will be on a form prescribed by us, but we will not have any responsibility or liability for the terms and conditions of any instruction; you accept all such responsibility and liability. Each collection will be governed by the Uniform Rules for Collections. You will promptly transmit to us a copy of the completed collection form and, upon our request, will provide to us copies of the underlying documentation. You represent and warrant to us as of the date you transmit the instruction form to us that the collection is not prohibited under the foreign asset control or other regulations of the United States of America or the applicable laws of any other jurisdictions. Upon our receipt of any payment of a collection, the amounts received (less related charges, disbursements and /or expenses) will be paid to you. except that if we are required to return any such payment received upon the insolvency, bankruptcy or reorganization of the presenting bank or collecting bank or other third party or for any other reason, you will repay to us the amount returned together with interest thereon from the date of payment by us at the rate specified by us in our schedule of charges. Unpaid items and related documents received by us may be returned to you by regular mail at the address specified in the Authorization and Agreement Certification form which accompanied this Booklet or such other address as may be notified by you in writing. Information Reporting We will make available to you, subject to the terms of the "Information Reporting" section of this Booklet, reports on import, export and standby letter of credit transactions and banker's acceptances, as more fully described in the applicable User Documentation. Supplemental Limitation of Liabilities and Indemnification for All MicroTrade Services For each MicroTrade Service, this section supplements the "Limitation of Liabilities" section of this Booklet. You have sole responsibility for determining the level of security you require and assessing the suitability of the security procedures for these Services. We have no duty to investigate the authenticity of any application, instruction or other communication you provide us using a MicroTrade Service. Also, we will have no liability to you for acting upon any application, amendment or other communication purportedly transmitted by you, even if such application, amendment or message: • Contains inaccurate or erroneous information. • Constitutes unauthorized or fraudulent use of a MicroTrade Service. • Includes instructions to pay money or otherwise debit or credit any account, • Relates to the disposition of any money, securities or documents. • Purports to bind you to any agreement or other arrangement with us or with other persons or to commit you to any other type of transaction or arrangement. We are authorized, but not obliged, to rely upon and act in accordance with any application. instruction, consent or other communication by fax or other electronic transmission (including without limitation any transmission by use of our Software or the Internet) received by us purporting to be a communication on your behalf without inquiry on our part as to the source of the transmission or the identity of the person purporting to send such communication and regardless of the circumstances prevailing at the time of such communication. We are also authorized, but not obliged, to rely upon and act in accordance with any application, instruction. consent or other communication by telephone, purporting to be a communication on your behalf by an authorized person designated by you. General Provisions Changes to a Service You may request us at any time to change the processing instructions for any Service. We are not obligated to implement any requested changes until we have had a reasonable opportunity to act upon them. In making changes, we are entitled to rely on requests purporting to be from you. For certain changes, we may require that your requests be in writing, in a form and manner acceptable to us, or be from an authorized person you designate. In addition, certain requests for changes may be subject to our approval. Communications Confidentiality Any written notice or other written communication to be given under the terms of this Booklet will be addressed to the applicable address specified on the Authorization and Agreement form you return to us, except as you or we specify otherwise in writing in conjunction with your accounts or particular Services. Notices are effective upon receipt, except as otherwise provided in this Booklet or any Materials. You agree that we may electronically monitor and/or record any telephone communications with you in those countries which permit that practice. If our records about any such communication are different from yours, our records will govern. Uwe allow you to use electronic mail to initiate Payment Requests or other instructions, your use of such electronic mail with respect to a Service will be subject to the terms and conditions of this Booklet and will comply with the applicable User Documentation. Our Obligation We acknowledge that information we obtain from you in connection with any Service we provide to you under the terms of this Booklet may be confidential. We will maintain the confidentiality of such information in accordance with our normal procedures for safeguarding customer information and the policy reflected in the Bank of America Corporation Code of Ethics. Your Obligations You acknowledge our claim to proprietary rights in the Materials and that the Materials constitute our "trade secrets" or trade secrets of our licensors or vendors. You understand that all Materials are confidential and you will: • Safeguard the Materials at all times. • Establish and maintain procedures to assure the confidentiality of the Materials and any password or code subsequently changed by you. • Use the Materials only for the purposes for which we provide them. • Notify us promptly by telephone, confirmed in writing, if any Materials are lost or their confidentiality is compromised. You will not, nor will you allow anyone else to, do any of the following without our prior consent • Disclose any Materials to any person or entity, except to your employees and agents with a need to know the Materials. m • Make any copies, in whole or in part, of any Materials in whatever form or medium (electronic, printed or otherwise) in which thcy may exist from time to time, except as provided in the "Software License" section. • Translate, reverse engineer, disassemble or decompile any Software or security devices. These confidentiality obligations continue after a Service you arc using is terminated. You have sole responsibility for the custody, control and use of all Materials. You agree that no individual will be allowed to initiate a request or other instruction contemplated in this Booklet or to have access to any Materials without proper supervision and strict security controls. We will be fully protected in relying on the correct user identification codes and passwords, as described in the relevant User Documentation. General This section does riot limit either party's ability to disclose information (i) that the other party has approved by prior writing for disclosure; (ii) that is disclosed to its professional advisors or auditors; (iii) that becomes public other than through a breach of these confidentiality obligations, (iv) that was in its possession or available to it from a third party prior to its receipt of it in connection with any Service, (v) which is obtained by it from a third party who is not known by it to be bound by a confidentiality agreement with respect to that information, (vi) as required or requested by any securities exchange or regulatory body to which either party is subject or submits, or (vii) as otherwise required to be disclosed by law or by legal or governmental process. In addition, you agree (i) that we may disclose to our offices, banking affiliates and agents with a need to know any information we obtain about you, and (ii) that those offices, affiliates and agents may disclose such information as permitted under the immediately preceding paragraph. You acknowledge and agree that data processing related to Services covered by this Booklet and your associated accounts may take place in countries other than those where you and your accounts with us are located. You furthcr understand that information concerning your relationship with us may be available on our electronic data system both for information management purposes and in order to enable you to benefit from our electronic banking services. You understand and agree that, as a result, your banking relationship information may be available to some of our officers outside the country or countries where you and your accounts are located and you waive the banking secrecy laws, if any, of such country or countries with respect to such information. Neither party will use the other's name or refer to the other party directly or indirectly in any solicitation, marketing material, advertisement, news release or other release to any publication without receiving the other party's specific prior written approval for each such use or release, except that we may use your name as a reference in service proposals if we obtain your prior oral approval for such use. These obligations continue after any Service you are using is terminated. Facsimile Signatures General Matters In some countries, businesses use a machine- imprinted and /or rubber - stamped facsimile signature (each generally called a facsimile signature) as a convenient method for signing checks, documents and other items. If you choose to use a facsirnile signature, you must provide us with a specimen facsimile signature of each person authorized to do so. You are responsible for any withdrawal from your account that bears or appears to us to bear your facsimile signature, regardless of by whom or by what means the signature was placed on the check. If you choose to use a facsimile signature, you are responsible even if you have not presented us with a specimen facsimile signature, or if the size, color or style of the check, or the size, color or style of the facsimile signature is different from that of the check or facsimile signature you use. We may pay the withdrawal and debit your account for it. You agree to compensate us for all losses, claims, damages or expenses, including Legal Expenses, that result front our payment of a withdrawal bearing a facsimile that resembles your facsimile signature. You are responsible for taking security measures and implementing procedures to prevent the forgery, theft or fraudulent or unauthorized use of your facsimile signature. Agreement This Booklet constitutes and represents the entire agreement between you and us regarding the Services we provide you anywhere in the world and supersedes and extinguishes all prior agreements, understandings, representations, warranties and arrangements of any nature (including requests for proposals and other sales material), whether oral or written, between you and as relating to any such Service (including any International Treasury Services Terms and Conditions booklet, but excluding the current Account Agreement). This Booklet will be controlling in the event of any conflict between it and any relevant User Documentation, any other document or written or oral statement (including hut not limited to any Account Agreement, except as applicable law requires otherwise). Current User Documentation is available upon request. This Booklet is binding upon each of your and our respective successors and permitted assigns. You may with our prior written consent, assign any of your rights or duties described in this Booklet. This Booklet is not for the benefit of any other person, and no other person has any right under this Booklet against you or us, and nothing contained in this Booklet creates any agency, fiduciary, joint venture or partnership relationship between you and us. NOTICE OF FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN TIIE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. General Obligations We are responsible only for performing the Services expressly provided for in this Booklet. We may contract with an outside vendor in providing any of these Services. With respect to any Service, we will provide you with assistance by telephone at the numbers and during the hours specified by us in writing from time to time. m Governing Law You are responsible for maintaining the security of your data and ensuring that it is adequately backed up. We are not responsible for your loss of your data. Oral Instructions We may rely on oral instructions from any person who identifies himself or herself by a name which is included on a written list from you of persons authorized to give such instructions. You will update this list from time to time as necessary to reflect any changes in authorized persons. Except as otherwise expressly stated in this Booklet, we are not required to act on any instruction from any person or to give notices to any person. Severability; No Waiver If any provision of this Booklet or the application of any such provision to any person or set of circumstances is determined to be invalid, unlawful, void or unenforceable to any extent, the remainder of this Booklet, and the application of such provision to persons or circumstances other than those as to which it is determined to be invalid, unlawful, void or unenforceable, are not impaired or otherwise affected and continue to be valid and enforceable to the fullest extent permitted by law. No delay or failure to exercise any right or remedy under this Booklet is deemed to be a waiver of such right or remedy. No waiver of a single breach or default under this Booklet is a waiver of any other breach or default. Any waiver under this Booklet must be in writing. With respect to each Service. this Booklet is governed by and interpreted according to (i) U.S. federal law, and (ii) the law of (A) the state in the United States of America in which the account (or the principal account, in the case of multiple accounts) associated with such Service is located or, if there is no such state or no account associated with such Service, (B) the State of New York, without reference to the principles of conflicts of law of the U.S. and of such state. If you are headquartered, or are using a Service, outside the United States of America, you must appoint an agent for service of process in England, Hong Kong or Singapore, and you irrevocably agree that any writ, summons, order, judgment or other document relating to or in conjunction with any proceeding, suit or action may be served on you in such jurisdiction. Limitation of Liabilities All Services Other Than Electronic Funds Transfer Services We are liable to you only for actual damages incurred as a direct result of our failure to exercise reasonable care in providing a Service. Electronic Funds Transfer Services For Requests and Entries which are subject to UCC 4A, we are liable only for damages required to be paid under UCC 4A or the Fedwire Regulation, as applicable, except as otherwise agreed in this Booklet. For all Requests and Entries not subject to UCC4A and for all other obligations under the Electronic Funds Transfer Services sections, our liability is limited to actual damages, resulting directly from our willful misconduct or our failure to exercise reasonable care, not exceeding the following, as applicable: (i) in case of an excessive debit to your account, the amount of the excess plus compensation equivalent to interest; (ii) in case of payment to an account not Overdrafts specified by you, the amount of the payment plus compensation equivalent to interest; (iii) in case of any delay m crediting a debit Entry or DTC to your account, the amount of compensation equivalent to interest for the period of delay; or (iv) in all other cases, the actual damages incurred by you. You will use reasonable efforts to assist us in recovering the amount of any overpayment for which we are liable. If we are obligated to pay interest compensation, we will pay such compensation or credit your account, as we determine, upon your written request. We calculate compensation for the relevant period as specified in the Account Agreement or as advised by your customer services representative. If you transmit a Request to as by way of a funds - transfer system or other third -party communications system not specifically required by us, the system is deemed to be your agent for that purpose. We are not liable to you for any discrepancy between the terms you transmit to such system and the terms which it then transmits to us. All Services In no event will we be liable for any indirect, consequential or punitive loss, damage, cost or expense of any nature (even if advised of the possibility of such loss, damage, cost or expense), including, without limitation, any economic loss or damage, expense and loss of business, profits or revenue, goodwill and anticipated savings, Toss of or corruption to your data, Toss of operation time or loss of contracts. We will not be responsible for the acts or omissions of you or your officers, employees or agents (including but not limited to the amount, accuracy, timeliness or authorization of any instructions or information from you) or the acts or omissions of any other person or entity, including but not limited to any clearing house association or processor, any U.S. Federal Reserve Bank or any other country's central bank, any other financial institution or any Supplier, and no such person or entity will be deemed our agent. We will not be liable for and will be excused from any failure or delay in performing our obligations for any Service if such failure or delay is caused by circumstances beyond our control, including any natural disaster (such as earthquakes or floods), emergency conditions (such as war, riot, fire, theft or labor dispute), legal constraint or governmental action or inaction, breakdown or failure of equipment, breakdown of any Supplier, or your act, omission, negligence or fault. We also will not be liable for any failure to act on our part if we reasonably believed that our action would have violated any law, rule or regulation. With respect to a Service, we may, at our sole discretion, allow an overdraft to occur in your account. Except as we agree or advise you otherwise in writing, you must repay us immediately, without demand, the amount of such overdraft plus any overdraft charges. In such cases, the fact that we previously allowed an overdraft to occur does not obligate us to do so in the future. Additional terms and conditions contained in your Account Agreement may apply. 40 Payment for Services You must maintain and designate account(s) with us which we will use for debiting or crediting with respect to all payments and deposits and related adjustments and charges. Except as otherwise provided you must have Collected and Available Funds on deposit in your account(s) sufficient to cover such obligations. For purposes of satisfying your payment obligations, we may consider any overdraft line of credit or other arrangement you have with us. Service Charges You will pay us for each Service you use according to our schedule of charges currently in effect for you, except as we agree otherwise (in writing) from time to time. At your request, we will provide you a copy of the current schedule of charges for the applicable Service. All charges are subject to change upon 30 days' prior written notice to you (unless otherwise agreed in writing), except that any increase in charges to offset any increase in fees charged to us by any Supplier for services used in delivering any Service may become effective in less than 30 days. You will pay us for Software support in excess of that contemplated in the "General Provisions" sections of this Booklet. The charges for such extra support will be as specified by us before such charges are incurred or as otherwise agreed by you and us from time to time. We will, on a monthly basis, debit your account with us for payment of charges due, unless you arrange another payment procedure acceptable to us. Taxes All Service charges are exclusive of sales, value -added and use taxes, stamp and other duties and other governmental charges imposed on any Service or Materials and not based on our net income. Such taxes, duties and charges are payable by you. Protection from Third Parties You will indemnify us against and hold us harmless from and defend us against any and all liabilities, claims, costs, expenses and damages of any nature (including Legal Expenses) arising out of or relating to disputes or legal actions by parties other than you and us concerning any Service. The obligations contained in the preceding sentence will continue after a Service you are using is terminated. This section does not apply to any cost or damage attributable to our gross negligence or intentional misconduct. Representations and Warranties On and as of each day we provide any Service to you, you represent and warrant to us that: • Your agreement to each provision contained in this Booklet is a duly authorized, legal, valid, binding and enforceable obligation; • The debiting of any account as provided in this Booklet is not inconsistent with any restriction on the use of that account; • All approvals and authorizations required to permit the execution and delivery of the Agreement and Authorization form and any other necessary documentation, and the performance and consummation by you of the transactions contemplated under each Service, have been obtained, including but not limited to due authorization from each applicable third party to allow you to transfer funds and access information from such party's account; and • Your performance of your obligations will not violate any law, regulation, judgment, decree or order applicable to you. Resolution of Disputes We try to resolve our clients' Service problems or disputes as quickly as possible. In most cases, we can resolve a problem by telephone. Any dispute or controversy concerning your use of Services described in this Booklet will be decided by arbitration conducted in the United States of America (except as you and we expressly agree otherwise) in accordance with the United States Arbitration Act (Title 9, U.S. Code) under the Commercial Arbitration Rules of the American Arbitration Association. Under these procedures, the dispute is submitted to a neutral person for determination in place of a trial before ajudge or jury. Judgment upon the award made by the arbitrator may be entered in any court having jurisdiction. Without regard to the foregoing, any dispute or controversy that arises from an Electronic Funds Transfer Service will be decided by ajudge without a jury in a United States of America federal or state court (except as you and we expressly agree otherwise in writing). This means that in these instances you waive any right to a trial by jury in any action or proceeding and agree that such action or proceeding will be tried before a judge without a jury. Either you or we may exercise self -help remedies or obtain provisional or ancillary remedies from a court. You or we may exercise or obtain these remedies at any time, even while the arbitration or trial by a judge is pending. By exercising or obtaining any such remedies, neither you nor we waive the right to request that a dispute or controversy be decided by arbitration or trial by ajudge. Software License This section applies to all Software we provide to you after you return the Agreement and Authorization form unless we provide you a separate license agreement for specific Software (including a "click- wrap" license Software you may obtain from us by downloading from our website). Notwithstanding anything to the contrary in the "General Matters" section of this Booklet, the software licenses granted to you under this "Software License" section are governed by and interpreted according to the laws of the State of California without reference to its principles of conflicts of law. License For each Software application we provide to you for one or more Services, we grant you a non-exclusive, nontransferable license for the use of that Software and its related Materials. Each license is granted solely for use in object code form only in connection with one or more Services. You may use the Software only in accordance with the applicable User Documentation. The Software, its source code, the related Materials and all copyright, patent, trademark, trade secret and other rights in them are and will remain the exclusive property of us or our licensors. You will secure and protect the Software (including all copies) in a manner consistent with the maintenance of our rights and those of our licensors. In order to protect those rights, you will reproduce and incorporate copyright notices and all other proprietary legends prescribed by as in any permitted copies. You may not remove, obscure or otherwise tamper with or alter, any such notices or legends affixed to or otherwise contained in the Software or related Materials or copies. You will also take appropriate action to instruct and obl igate your representatives who are permitted access to the Software (including copies) to comply with your obligations to protect the Software. We are obligated to provide you only with those updates. upgrades or new releases of Software which we make generally available to our other customers who license the same Software. Any corrections, updates, upgrades or new releases that we provide to you must be installed by you promptly or by such later time as we specify, and will he deemed part of the Software upon delivery to you. We will provide support only for the most current version of Software we have provided to you. You will, at your expense, cause a cotputer to be installed and kept in good condition and working order at your site for use of the Software. The computer and its components must be equipment which is acceptable as specified by us from time to time We may assist you with the installation of Software on your computer and with the training of persons who will use the Software, but we will not bear any responsibility for the proper installation and use of the Software. Except as you and we may agree otherwise, you will be deemed to have accepted the Software upon its installation and upon our having made such training available to you. You may not (i) sell, assign, transfer, license, sublicense or publish the Software or copies of the Software, or (ii) disclose, display or otherwise make available the Software or copies thereof to third parties without our express approval. You may not copy, or allow anyone else to copy, the Software or related Materials, except that you may make two copies for backup and archival purposes. You may not electronically distribute, or allow anyone else to electronically distribute, Software except from the network server on which it is installed to workstations on that network. You will provide us written notice each time you make a permitted copy of Software (except for backup or archival copies) or electronically distribute it to a workstation, indicating the location and date of the copy or distribution. We may audit your site to confirm compliance with this "Software License" section if you fail to make the reports called for or if we reasonably believe you are using unauthorized copies of Software. You may not alter, repair, modify or adapt any Software or related Materials, including. but not limited to, translating, reverse engineering, decompiling, disassembling or creating derivative works from it. You agree to inform our client support unit of all errors, difficulties or other problems with the Software of which you become aware. We will make reasonable efforts to fix or provide workarounds for material reported errors and to provide you with support and consultation concerning the Software. The reasonable effort, support and consultation will be such as we, in our sole discretion, determine. You will cooperate with us in the expeditious resolution of such errors, difficulties or other problems by providing us, on request, a listing of input, output and all other data which we may reasonably request in order to reproduce operating conditions similar to those present when such errors, difficulties or other problems were discovered. You may move the Software to another computer replacing the one on which the Software was originally installed or to another site, but only after you give us written notice, specifying the new computer and site. We will have reasonable access to Software while it is at your site to provide assistance or to verify the status or location of Software. A license to Software and related Materials will terminate automatically if you fail to comply with the terms of the license or any other material provision in this Booklet or if the Services for which you are using the Software are terminated. In addition, in the event of a breach of your confidentiality obligations with respect to the Software, we may seek any remedy provided by law or equity. Limited Warranty /Disclaimers You acknowledge that the Software has not been produced to meet your specific requirements and has not been tested in every possible combination and operating environment. You are responsible for satisfying yourself that the Software is satisfactory for your purposes. You further understand and agree that we make no representation concerning the completeness, accuracy, operation or performance of the Software or its compatibility with any hardware. You acknowledge that the operation of the Software may not be uninterrupted or error -free. We warrant that the Software will substantially conform to the documentation provided with the Software for a period of 60 days after delivery to you provided that: (i) the Software is used by you in strict compliance with the terms of this Booklet and the related Materials, (ii) the Software is not modified in any way by you and (iii) you promptly notify us and reproduce for us any defects, errors or bugs in the Software. We will use reasonable efforts to correct or work around any Software errors reported by you or at our discretion; but in any event, if our efforts are unavailing, we will accept return of the Software and refund any license fees paid by you. You agree that the foregoing is your sole and exclusive remedy for breach of warranty and our sole obligation in connection with the performance or operation of the Software and related Materials. Except as specifically stated above and notwithstanding any other provision in this Booklet or otherwise, we make no representation or warranty, express or implied, written or oral, and, to the full extent permitted by law, disclaim all other warranties including, but not limited to, the implied warranties of merchantability or fitness for a particular purpose, regarding the Software, the related Materials and all other property, services or rights covered by this Booklet. Except as otherwise provided in our indemnity to you with respect to Software infringement claims, you agree to indemnify, defend at your expense and hold us and our licensors and agents harmless from all losses, damages, liabilities, claims, costs and expenses (including Legal Expenses) in connection with any claims, suits or proceedings in any way related to your use of the Software; provided, however, your indemnity does not apply to any losses, damages, liabilities, claims, costs or expenses attributable to our gross negligence or intentional misconduct. In no event will we be liable for any indirect, consequential or punitive loss, damage, cost or expense of any nature (even if advised of the possibility of such loss, damage, cost or expense), including, without limitation, any economic loss or damage, expense and loss of business, profits or revenue, goodwill and anticipated savings, loss of, or corruption to your data, loss of operation time or loss of contracts. To the extent permitted by applicable law, and except as otherwise provided in this section, we will not be liable for damages of any kind arising out of the use of or inability to use, the Software or accompanying documentation. You agree that the United Nations Convention on International Sales of Goods will not apply to our provision to you or your use of any Software. Neither you nor we limit or exclude our liability to the other for death, personal injury, willful misrepresentation, willful default or fraud. Infringement Indemnity Notwithstanding your indemnity of us in the "Protection from Third Parties" section of this Booklet, we will defend at our own expense or settle any action brought against you to the extent it is based on a claim that your use of the Software and /or Materials provided by us to you pursuant to this Booklet infringes any Berne Convention country copyright or any United States of America or United Kingdom patent, trade secret or trademark of any third party, and we will pay all costs and damages finally awarded in any such action. Our obligation is subject to (i) prompt notice from you of any such claim or action, (ii) your not having made any admission of liability or agreed to any settlement or compromise, (iii) your providing to us, in a prompt and timely manner, the documents, information and assistance we reasonably request, (iv) our having sole control of defending such claim or action, (v) your having used the current version of the Software and Materials, as provided to you by us, in compliance with the terms of this Booklet and the related Materials, and (vi) our obligations under this indemnity being our only obligations to you with respect to any infringement claim in connection with your use of the Software. Export Controls You understand and acknowledge that our obligations to provide the Software, technical assistance, any media in which any of the foregoing is contained, training and related technical data (collectively "Data ") will be subject in all respects to all applicable laws and regulations as shall from time to time govern the export or diversion of certain products and technology to and from certain countries. You warrant and agree that you will comply in all respects with the export and reexport restrictions applicable to the Data shipped to you and will otherwise comply with all applicable laws and regulations governing export and diversion of the Software and technical data in effect from time to time. Supplemental Image CD -Rom Software License Provisions This subsection supplements this "Software License" section with respect to Software we provide you for the Disbursement Image Service under which we provide you with CD -ROMs and shall control in the event of conflict between it and the balance of the Software License section. We warrant for a period of 45 days after the CD -ROM creation date appearing on the CD -ROM that such CD -ROM itself will be free of defects in material and workmanship. If we provide you a CD -ROM which contains a media defect or is unreadable in its entirety, you must notify us within the 45 -day period. Our disclaimer of warranties in this "Software License" section applies to CD -ROMs as well as to the Software and related Materials. You may not electronically distribute the Image CD -ROM Software to any workstation other than the one for which such Software is originally installed on your site. Notwithstanding anything to the contrary in the "Termination" section of this Booklet, if a Disbursement Image Service under which we provide you with CD -ROMs is terminated for a reason other than your breach of this "Software License" section, you may continue to use the Software for such Service after termination of such Service for six months, or for such longer period as we approve, subject to the terms of this "Software License" section or such other software license agreement as we, at our election, require you to sign for this purpose. At the end of such six -month or longer period, the license for your use of the Software for such Disbursement Image Service will then terminate automatically. Supplemental Image (Positive Pay) Software License Provisions This subsection supplements this "Software License" section with respect to Software we provide you for the Image Positive Pay Service and shall control in the event of conflict between it and the balance of the "Software License" section. You may not electronically distribute the CCR (C Compression Routines) Software for Windows 3.1 provided to you in connection with the Image Positive Pay Service to any workstation other than the one for which such Software is originally installed on your site. Supplemental PC ACH Software License Provisions This subsection supplements this "Software License" section with respect to Software we provide you for the PC ACH Service and shall control in the event of conflict between it and the balance of the "Software License" section. The Software can only be used for creation of ACH transactions to be originated by us. You may not export the Software outside the United States of A merica. Termination Either you or we may terminate any or all Services upon 30 calendar days' prior written notice to the other party. Notwithstanding the foregoing sentence, we may terminate any or all Services effective immediately, and we will send you notice of the termination, if any of the following occurs: • You breach any of the terms and conditions in this Booklet or any other agreement with us; • You terminate, liquidate or dissolve your business or dispose of a substantial portion of your assets; • You fail generally to pay your debts as they become due; • You, voluntarily or involuntarily, become the subject of any bankruptcy, insolvency, reorganization or other similar proceeding; • You initiate any composition with your creditors; or • Any guaranty of your obligations to us terminates, is revoked or its validity is contested by the guarantor, or any of the events set forth in the above five bullet points attributable to you occur to the guarantor. If a Service you are using is terminated for any reason, you will do the following: • Immediately stop using any Materials relating to the terminated Service; • Erase or delete any Software we have provided relating to the terminated Service to the extent it is stored in your computers; and • At our option, either return to us or destroy all Materials relating to the terminated Service and certify to us that you have done so. These obligations will continue after a Service you are using has been terminated. Termination ofa Service you use does not affect your payment obligations for services we provide to you before the Service is terminated. Also, termination of any Service you use does not release you or us from any of our respective obligations which arose or became effective before such termination. Glossary of Terms The following are some important terms that appear in this Booklet. Acceptable Payee. Your name and any other payee name you provide to us as an acceptable payee for checks to be processed under the Lockbox Service. Account Agreement. The current signature card, International Account Agreement or SAOTC and the publication(s), as amended from time to time, we provide you containing terms and conditions applicable to each deposit, savings or current account for which you use a Service. Bill Payment Service Provider. Any entity, which may include us, you authorize to deliver payments, remittance information and other related data from your customers to us for the Electronic Bill Payment Consolidation Service. Business Day. Each day on which the bank or bank office providing or facilitating a Service is open for business related to that Service. Check issuance Request. Using the Check Issuance Service, a message transmitted from you to us requesting us to issue a check on your behalf drawn on either accounts you maintain with us or accounts designated and owned by us. Collected and Available Funds. Funds in an account equal to the ledger balance minus float which, in our reasonable determination, are not subject to a hold, dispute or legal process preventing their withdrawal. Controlled Disbursement Point. Each bank office designated by us through which checks issued under the Controlled Disbursement Service will be cleared or routed. Deposit Account. One or more demand deposit accounts maintained by you with us and used in connection with our Controlled Disbursement Service. Depository Transfer Checks (DTCs). Depository transfer checks and preauthorized checks to debit Receivers' accounts to accomplish the same purpose as debit Entries. (Receiver is defined in the NACHA Rules.) Effective Entry Date. The date specified, in accordance with the NACHA Rules, on the Entry by the Originator on which the Originator intends the Entry to be settled. (Originator is defined in the NACHA Rules.) Electronic Funds Transfer Services. ACH Services, International Electronic Funds Transfer Services and Wire Transfer Services. Entries. Entries has the meaning provided in the NACHA Rules and also includes any data for Entries and any prenotification. Fedwire. The funds transfer system owned and operated by the Federal Reserve Banks of the United States of America, but excludes the system for making automated clearing house transfers. Fedwire Regulations. Subpart B of Regulation J of the Board of Governors of the Federal Reserve System of the United States of America, as amended from time to time. International Account Agreement. A form of Account Agreement used in some countries. International Electronic Funds Transfer Services. Electronic payment services for transfers to or from your account outside the United States of America or to or from your account in the United States of America to a different receiving country. These services include low -value batch payments made according to multiple requests within a single electronic data file. International Electronic Funds Transfer Services exclude ACH Services within the United States of America and exclude Wire Transfer services. ISP98. The rules of the "International Standby Practices 1998" published by the Institute of International Banking Law & Practice. Legal Expenses. Reasonable lawyer's fees, allocated costs of staff counsel (unless prohibited by applicable law), fees and expenses of litigation and any other fees and expenses incurred in enforcing any provision of this Booklet. Lockbox Address. The post office address we assign to you or we accept from you for the Lockbox Service. Materials. The Software, user identification codes, passwords, codes, keys, test keys, security devices, embedded algorithms, digital signatures and certificates, other similar devices and information, User Documentation and related documentation we provide to you. NACHA Rules. The rules of the National Automated Clearing House Association (including any other clearing house rules applicable to automated clearing house transactions), as amended from time to time. Payment Advice. Using the Customer - Printed Drafts Services, an electronic message transmitted by you to us advising us that you have created a draft. Request. A request by means permitted under the relevant Wire Transfer or International Electronic Funds Transfer Service to transfer funds to or from a specified account or beneficiary (including standing instructions) or to amend or cancel a prior request to transfer funds. Reversal /Deletion Request. A request for a Reversal or a request to delete a previously delivered Entry. Reversals. Data for reversing Entries. SAOTC. Each form of Standard Account Opening Terms and Conditions used in certain countries as an Account Agreement. Security Procedure. Unless we agree otherwise with you, the applicable security procedure described in the Materials for your data delivery type or Service for verifying the authenticity of Entries. Requests, Reversal /Deletion Requests, Payment Advices, Check Issuance Requests, Stop Payment Requests or Tax Payment Instructions. Service. With respect to a Bank of America Corporation banking institution, a treasury management service provided in a specific Rank location and covered by this Booklet. Software. The programs and data files provided by us for use on a computer in connection with one or more particular Services. Stop Payment Request. A message you send us using the Online Stop Payment Services, the Check Issuance Services or the Client- Printed Drafts Services to request that payment be stopped on a check or draft which, in the case of the Online Stop Payment Services, must be drawn on an eligible account you have with us. Subsidiary. Any entity in which more than 50 percent of the ownership interest is owned, directly or indirectly, by you. The term "Subsidiary" does not include affiliates or other entities in which 50 percent or less of the ownership interest is owned, directly or indirectly, by you. Supplier. Any private or common carrier communication or transmission facility, any time- sharing supplier or any mail or courier service. SWIFT. The international electronic message- transfer service known as the Society for Worldwide Interbank Financial Telecommunication_ Tax Payment Instruction. An instruction by means permitted under the relevant Tax Payment Service to pal any taxes using any of the tax forms specified in the applicable User Documentation. UCC 4A. Article 4A of the Uniform Commercial Code— Funds Transfers, as adopted by the state in the United States of America whose law applies to a Service, as amended from time to time. UCP. The Uniform Customs and Practices for Documentary Credits, 1993 Revision, ICC Publication No. 500 or such later revision as may be adopted by the International Chamber of Commerce and be in effect on the date the subject letter of credit is issued. Uniform Rules for Collections. The Uniform Rules for Collections, ICC Publication No. 522, or such later revision as may be adopted by the International Chamber of Commerce and be applicable to a collection. User Documentation. Any written information we provide you, including information in electronic format. as amended from time to time, which contains detailed instructions regarding the use of a Service, as provided by a particular banking ccnter or office. User Documentation may vary from one jurisdiction to another. Current User Documentation is available upon your request. As of January 1, 2001, the following Banks and Services are covered by the Bank of America Treasury Services Terms and Conditions Booklet: BANKS SERVICES LIST OF BANKS AND SERVICES FOR USE WITH THE TREASURY SERVICES TERMS & CONDITIONS (THE BOOKLET) In the United States of America: Bank of America NA in Arizona, Arkansas, California, District of Columbia, Florida, Georgia, Idaho, Illinois, Iowa, Kansas, Maryland, Missouri, Nevada, New Mexico, New York, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Virginia and Washington Outside of the United States of America: Bank of America NA in Australia, Belgium, France, Germany, Greece, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Jersey, Korea (South), Netherlands, Pakistan, People's Republic of China, Philippines, Singapore, Switzerland, Taiwan, Thailand, United Kingdom and Vietnam Bank of America Canada Bank of America Malaysia Berhad Bank of America S.A. (Spain) Once you open an account with us, the following treasury management services may be provided according to the terms and conditions in the Booklet. Services may be offered by various Bank of America Corporation Banks or branches under any of the names given above. To find out which services are offered by a specific bank or location, please contact your Treasury Services representative. FOR SPECIFIC SECTIONS COVERING: REFER TO THIS SECTION: I PAGE: Account Reconcilement Account Reconciliation Inquiry Bank of America Direct (Account Reconciliation) Deposit Reconciliation Electronic Account Reconcilement (EREC) Fine SorUCheck Fine Sort Full Account Reconcilement Paid Checks Microfilm Paid Item Reconciliation Partial Account Reconcilement Pay/2 Range Account Reconcilement Account Reconcilement Account Reconcilement Account Reconcilement Account Reconcilement Account Reconcilement Account Reconcilement Account Reconcilement Account Reconcilement Account Reconcilement Account Reconcilement Account Reconcilement 9 9 9 9 9 9 9 9 9 9 9 Automated Clearing House Services ACH Initiation (Corporate to corporate payments & receipts, corporate to consumer payments & receipts, concentration, tax payments) ACH Auditor ACH Transmissions ACH Manager AIIPay(ACH) BAMTRAC® (ACH) Cash Express Automated Clearing House Automated Clearing House Automated Clearing House Automated Clearing House Automated Clearing House Automated Clearing House 9 9 9 9 9 9 Insert for 00 -35 -0455 NSB 07/1999 (v1/01) 1 Bank ofAmerica, . FOR SPECIFIC SECTIONS COVERING: 1 REFER TO THIS SECTION: 1 PAGE: CashPay (ACH origination of Direct Deposit) Automated Clearing House 9 CashPay (Employee Account) See CashPay Deposit Account Agreement Cross Border ACH Wire Transfer & International EFT 27 ENCORE+ for Windows ACH Automated Clearing House 9 MICROCA$H ® Automated Clearing House 9 PC ACH for Windows Automated Clearing House 9 The Payment Network (ACH /AIIPay) Automated Clearing House 9 WANDA® Electronic Service (Payments - Single ACH) Automated Clearing House 9 ACH Cash Concentration Lockbox/ACH Concentration Automated Clearing House 9 Multibank Cash Concentration Automated Clearing House 9 ACH Tax Payments BAMTRAC® (ACH) Automated Clearing House 9 ACH Manager Automated Clearing House 9 ENCORE+ for Windows ACH Automated Clearing House 9 PC ACH for Windows Automated Clearing House 9 BankAmeriTaxS Tax Payments 24 Express Tax Tax Payments 24 ACH Authorization — Receive ACH Receive 11 DirectPay ACH- Receive 11 Electronic Bill Payment Authorization ACH- Receive 11 Electronic Payment Authorization (EPA) Filter ACH- Receive 11 PayOnly ACH- Receive 11 Check Issuance AIIPay(Checklssuance) Check lssuance 12 Check Payments Check Issuance 12 Enterprise Gateway (Check Issuance) Check Issuance 12 FX Wires and Drafts (Drafts) Check Issuance 12 Global Cheque (MicroWire) Check Issuance 12 The Payment Network (Checks) Check Issuance 12 Check Truncation Check Safekeeping /Check Storage /Check Truncation Check Truncation 13 Electronic Check Truncation (ECK) Check Truncation 13 Client Printed Drafts WANDA® Checkwriter Client Printed Drafts 13 WANDA® Foreign Drafts (WANDA® Electronic Service) Client Printed Drafts 13 Coin and Currency Automated Business Center (Automated Change Coin and Currency 14 Dispensers) Change Orders - Banking Centers Coin and Currency 14 Coin and Currency Requisitions /Change Orders Coin and Currency 14 Money Manager Coin and Currency 14 Commercial Deposits Automated Business Center (Deposits) Commercial Deposits 15 Cash Vault Deposits Commercial Deposits 15 Dash Deposit Commercial Deposits 15 Deposits Delivered to a Bank Processing Center (Cash Commercial Deposits 15 Letters) Night Depository Commercial Deposits 15 Quick Business Deposit® Commercial Deposits 15 Insert for 00 -35 -0455 NSB 07/1999 (v1/01) 2 BankofAmerica. �� FOR SPECIFIC SECTIONS COVERING: I REFER TO THIS SECTION: 1 PAGE: Communications Electronic Mail Communications 35 Investment Transfer Requests (Electronic Mail) Communications 35 Loan Payment/Advance Requests (Electronic Mail) Communications 35 Controlled Balance Accounts - Collection /Disbursement Transfer Service Controlled Balance 16 Controlled Balance Accounts Controlled Balance 16 Depository Plus Controlled Balance 16 Total Funds Roundup Controlled Balance 16 Zero Balance Accounts Controlled Balance 16 Controlled Disbursement Note: Only the Controlled Disbursement arrangements at the following sites are covered under this booklet: Ashville, North Carolina Controlled Disbursement 17 DeKalb, Georgia Controlled Disbursement 17 Northbrook, Illinois Controlled Disbursement 17 Walnut Creek, California Controlled Disbursement 17 Witchita Falls, Texas Controlled Disbursement 17 Tallahassee, Flordia Controlled Disbursement 17 Vandalia, Missouri Controlled Disbursement 17 Stop Payments Via telephone, facsimile, or in writing for Controlled Disbursement 17 Controlled Disbursement accounts Disbursement Image Access Bank of America Direct (Image Access) Disbursement Image Access 18 Check Image Inquiry Disbursement Image Access 18 Disbursement Image Access Disbursement Image Access 18 Image OnSite CD -ROM Disbursement Image Access 18 Image OnSite Plus CD -ROM Disbursement Image Access 18 PerfectView Plus Disbursement Image Access 18 Electronic Bill Payment Consolidation Electronic Biller Concentration Electronic Bill Pmt Consolidation 19 RapidPay Electronic Bill Pmt Consolidation 19 Electronic Data Interchange AIIPay Electronic Data Interchange 19 Electronic Commerce Electronic Data Interchange 19 Enterprise Gateway Electronic Data Interchange 19 File Transfer Electronic Data Interchange 19 The Payment Network Electronic Data Interchange 19 Facsimile Signatures Facsimile Signatures 37 Foreign Collection Letters WANDA® Foreign Collections Collection Letters 15 Information Reporting Previous Day Information Reporting (Balance and Activity Reporting, Summary and Detail Reporting) BAMTRAC® Previous Day Service Information Reporting 20 BAMTRAC® for Windows Information Reporting 20 Bank of America Direct Information Reporting 20 ENCORE+ Previous Day Service Information Reporting 20 ENCORE+ for Windows Information Reporting 20 Electronic Reconciliation Information Reporting 20 Wanda Information Reporting Information Reporting 20 Current/Intraday Information Reporting BAMTRAC® Current Day Service Information Reporting 20 tnsert for 00 - 35 - 0455 NSB 0711999 (v1f01) 3 Bank of America, �� FOR SPECIFIC SECTIONS COVERING: I REFER TO THIS SECTION: I PAGE: BAMTRAC® for Windows nformation Reporting 20 Bank of America Direct nformation Reporting 20 The Collection Network nformation Reporting 20 Comprehensive Receivables nformation Reporting 20 Deposit Source Reporting nformation Reporting 20 Electronic Account Analysis /Account Analysis Statement nformation Reporting 20 ENCORE+ Current Day Service ENCORE+ for Windows nformation Reporting 20 Enterprise Gateway (Information Reporting) nformation Reporting 20 Global /International Account Reporting nformation Reporting 20 Information Manager nformation Reporting 20 Item Inquiry nformation Reporting 20 Merged Accounts Receivable (MARI /MARC) nformation Reporting 20 Multi Bank Reporting nformation Reporting 20 The Payment Network (Information Reporting) nformation Reporting 20 Receipts Manager nformation Reporting 20 Receipts On -Line nformation Reporting 20 Receipts On -Line Direct nformation Reporting 20 WANDA® Information Reporting nformation Reporting 20 Lockbox Image Lockbox Lockbox 20 Receivables Matcher Lockbox 20 Scannable Wholesale Lockbox Lockbox 20 Wholesale Lockbox Lockbox 20 MicroTrade ®IBankW i ndow® Direct Collections Collections 33 Advising Export Letters of Credit 33 Export Letters of Credit Export Letters of Credit 33 Acceptance Reports Information Reporting 33 BAMTRAC® for Windows — ITB/TSR Information Reporting 33 Export Reports Information Reporting 33 Import Reports Information Reporting 33 Standby Reports Information Reporting 33 Commercial Applications Standby & Import Letters of Credit 31 Guarantee Standby & Import Letters of Credit 31 Import Applications Standby & Import Letters of Credit 31 Standby Applications Standby & Import Letters of Credit 31 Money Market Investments Money Market Investment Service Money Market Investment Service 21 Online Stop Payments BAMTRAC® Online Stop Payments Online Stop Payments 22 BAMTRAC® Stop Pay + Online Stop Payments 22 Bank of America Direct (Stop Payments) Online Stop Payments 22 ENCORE+ & ENCORE+ for Windows Stop Payments Online Stop Payments 22 Online Stop Payments, Stop Pay + Online Stop Payments 22 Positive Pay BAMTRAC® (Reverse Positive Pay) Positive Pay 23 Bank of America Direct (Image Positive Pay) Positive Pay 23 Bank of America Direct (Positive Pay) Positive Pay 23 Insert for 00 -35 -0455 NSB 07/1999 (v1 /01) 4 BankofAmeric . FOR SPECIFIC SECTIONS COVERING: 1 REFER TO THIS SECTION: 1 PAGE: ENCORE+ Positive Pay Positive Pay 23 ENCORE+ Reverse Positive Pay Positive Pay 23 Event Notification Positive Pay 23 Image Positive Pay Positive Pay 23 Manual Positive Pay Positive Pay 23 Online Positive Pay /Auto Check Pay Positive Pay 23 Positive Pay Positive Pay 23 SWIFT Positive Pay Positive Pay 23 Teller Positive Pay Positive Pay 23 Thru Check (Reverse Positive Pay) Positive Pay 23 WANDA® Checkwriter (Positive Pay) Positive Pay 23 WANDA® Image Positive Pay Positive Pay 23 Stop Payments Stop Payments Via telephone, facsimile, in writing or in person See Deposit Account Agreement Wire Transfer & International Electronic Funds Transfer Account/Book Transfer BAMTRAC® Account/Book Transfer Wire Transfer & International EFT 27 ENCORE+ Wire Initiation Wire Transfer & International EFT 27 ENCORE+ for Windows Wire Initiation Wire Transfer & International EFT 27 Wire Initation AIIPay(Wire Transfer) Wire Transfer & International EFT 27 BAMTRAC® Cross Currency Payments (on GBS) Wire Transfer & International EFT 27 BAMTRAC® Global Funds Transfer (Wires) Wire Transfer & International EFT 27 BAMTRAC® Global Money Transfer Service Wire Transfer & International EFT 27 ConnectWire Wire Transfer & International EFT 27 Cross Border ACH Wire Transfer & International EFT 27 ENCORE+ for Windows Wire Initiation Service Wire Transfer & International EFT 27 ENCORE+ Wire Initiation Service Wire Transfer & International EFT 27 Enterprise Gateway (Wires) Wire Transfer & International EFT 27 FX Wires and Drafts (Wires) Wire Transfer & International EFT 27 Global Funds Transfer (Wires) Wire Transfer & International EFT 27 Global Money Transfer Service Wire Transfer & International EFT 27 International Electronic Funds Transfer Wire Transfer & International EFT 27 Oral Funds Transfer Wire Transfer & International EFT 27 Pay /2 Electronic Funds Transfer Wire Transfer & International EFT 27 Telephone FX and US Dollar Wire Transfers Wire Transfer & International EFT 27 The Payment Network (Wires - Outgoing) Wire Transfer & International EFT 27 WANDA® Electronic Service (Payments -Funds Transfers) Wire Transfer & International EFT 27 WANDA® Payments (Funds Transfer) Wire Transfer & International EFT 27 WANDA® Payments (FX Payments) Wire Transfer & International EFT 27 WANDA® (Multi -Bank Funds Transfer Service) Wire Transfer & International EFT 27 Wire Direct Link Wire Transfer & International EFT 27 Reverse Funds Transfer Wire Transfer & International EFT 27 SafeWire Wire Transfer & International EFT 27 Standing Instructions /Standing Order Transfers Wire Transfer & International EFT 27 Insert for 00 -35 -0455 NSB 07/1999 (v1/01) 5 BankofAmerica. .�� Bank ofAmerica 33- 04- 1110N5B 9 -1999 EXHIBIT ;s tr Safekeeping nEn Agreement 1. This safekeeping egmeorent (the - Agreement ") is an acknowledgment that the Bank of America entity named on the face of this Agreement ( "Bank ") or its agents hold for the account of the customer ( "Customer) the securities or oche pmperty listed herein ("Custodial Property) n a safekeeping amount ( "Safekeeping Account "). The secumitis or other property shall be identified as those belonging solely to the Customer for which they are held and shall not be commingled with those of the Bank. This Agreement also constitutes the entire agreement between the parties with regard to Custodial Proper ty. If this Agreement is reported lost, destroyed or stolen, or if Bank surrenders any part of Custodial Property to Customer, Bank may, in its discretion, issue a new safekeeping agreement which may contain different or additional terms 2. Bank shall have no responsibility to determine the validity, genuineness, or alteration of any Custodial Property, or to advise Customer regarding the purchase, retention, redemption, sale, exchange or deposit in connection with a rem e.ni>anon of Custodial Property. Bank is not responsible for securing insurance to server the loss of Custodial Property Bank will only be responsible to exercise ordinary came in connection with Custodial Property. Bank shall not be liable for loss or damage Caused by or related to, directly or indirectly, causes beyond the control of Bank 1. Bank agrees to forward for payment nteen coupons or bonds that are Custodial Property as they mature and to receive interest, dividends and other income or proceeds from the sale of Custodial Property and to make disposition of such interest and other income or proceeds in accordance with the instructions of Customer. Any monies received as proceeds from the sale of suds secrnitis or collected as interest or otherwise will be credited as directed by Customer, micas otherwise requited by law or governed by a pledge It is the responsibility of Customer to designate an account to receive such monies. Customer agrees that the designated account will be styled in the same manner as the Safekeeping Arcotmt, with the same names. as reflected on the front of this Agreement All payments and credits are subject to final payment Bank shall not be obligated to credit or pay such proceeds until such time as finally collected funds are received by Bank In the event Bank advances proceeds and reedits them to Customer or Customers account prior to cotection and Bank does not receive such proceeds from the paying agent within a reasonable time thereafter, as determined by the Bank Bank may, in its sole discretion, those the repayment from Customer of time credited proceeds upon demand Bank shag have the right to debit Customer's account designated to receive payment or Customer's Safekeeping Account, or to retain proceeds from future collections or debit any other account maintained by Customer at Bank or at an affiliate of Bank, including amry afftiate or subsidiary of BankAmerica Corporation If necessary, to effect such repayment. 4. It Customer's rspwvbility to notify Bank when any bond or other security that is Custodial Property is called for redemption. Bank will naerrise reasonable rare in the identifica- tion and processing of bonds or other aennities that are C todial Property called for redempt ion. but Bank assumes no responsibility for malting any independent investigation In connection with the redemption_ In the event any Custodial Property is held for the benefit of Customer in the name of a nominee or in book entry (non-oertifitated) form at a Federal Reserve Bank or at a desirg corporation and is raged for partial hemp &m. Bank is authorized In is sole discretion to determine Customer's pmoportonate share of the proceeds Bona such redemption in the event Bards receives proceeds that belong to more than one person. 5. Bank is authorized to sign on behalf of Custom any declamations, affidavits onlifirates of ownership or other documents that are now or may (hereafter be required with aespert to • s, all coupon registered interest, dividends or other income on Custodial Property. and Customer agrees to reimburse indemnify and hold Bank harmless from any and a0 loss, claim. damage or expense (including attorneys' fees) as a result of the execution of any such documents C will notify Bank of any change in mailing aldrsa 6. Bank will surrender or otherwise dispose of Custodial Property upon receipt of appropriate instructions from Customer with or without surrender of this Agreement If Safekeeping Account is in the name of an individual Customer. Bank will act only upon the instructions of such individual Customer. In the event the Safekeeping Account s in more than one nonce, in whatever form, unless Customer mains a different arrangement with the Bank, it s the mention of Customer that Bank may act upon the Instructions of any one of the named Customers on the Safekeeping Account Bank shall have the authority to require positive identifiation of the indivldua(s) before surrendering Custodial Property. Pledged sermitls that are Custodial Property are subject to the ode and direction of the pledgee named on the reverse side hereof and the written consent of pledgee by any means, includ- ing facsimile. must be received by Bank before release an be made Notwithstanding the foregoing, Bank disdains any duty to monitor or to give notice of any change in the princi- pal of any declining balance securities described in this Agreement and hereby gives notice that principal on such securities shall be paid to is customer notwithstanding any pledge thereof In the event Custesner is a corporation or financial ivsUtoton. any and all Custodial Property may be released upon the written order of such officer or officers authorised by resolu- tion of the board of directors of Customer. Customer shall furnish Bank a ratified copy of such resolution and a specimen signature of each oil so authortrsd and furnish Bank certified copim of any resolution changing such authority. For Customers other than those desei red in the previous two paragraphs of this section it will be the responsibility of Customer to provide Bank with appropriate documentation of authorization to act on behalf of Customer n connection with this Agreement_ Unless survivorship pmv sloe are indicated on the front of this Agreement, rights of survivorship shall not be governed by this Agreement In such event rights to Custodial Property on the death or incapacity of Cnstomv shall be determined by operation of law, bncludieg provisions that determine which Jurisdiction's laws apply Customer indemnifies and holds Bank handles from am and all deins ressultng from the failure of Customs to i suuet Bank or to enter into appropriate agreements with nest to survivorship provi- sions, or with respect to the styling of the Safekeeping Account or of any Custodial Property held in the Safekeeping Account 7. Customer shall pay Bank fees and reimburse Bank for expenses incurred in accordance with Bank's established schedule of safekeeping fees as amended from time to time Bank shall be authmU.ed m is discretion to charge such fees and expenses to any account maintained by Customer at Bank. including Customers Safekeeping Account, or at any attuned entity of Bank or at an affiliate or subsidiary of BankAmerica Corporation, if necessary Bade is also authorized to debit such sa0whs for the casts and expenses of pwchass and sales nude upon the Instructions of Customer and for any other items chargeable in connection with Safekeeping Account Customer agrees to pay all casts of collection for amours which Customer Is indebted under this Agreement Including Banks reasonable attorney's fees 9. This dournent constitutes the entire agreement between Customer and Bank and shall be valid and binding on Customer and deemed cared in all respects unless Customer notifies Bank within ten (10) days after receipt of this Agreement Except as provided in section 6, this Agreement shall be governed by and construed in accordance with the laws of the State in which the maw office of the Bank named on the front of this Agreement is located. Bank reserves the right to correct this Safekeeping Agreesnent at any time, in case of error. 9. With respect to any Instructions from Customer authorizing the receipt of securities or other property In connection with transactions between Customer and a tied party, Bank shall have no duty to advise Customer of the failure to receive such property, or to take steps to obtain delivery of such property from third paries either against payment or free of pay- ment With respect to any instructions authorizing the delivery of securiti s or other property n connection with transactions between Customer and thied parties Bank shall have no duty to timely delser to securitisor if payment is involved, to credit Customers account unless proper and timely authorization is received -by Banc on a schedule established and amended by Bank from time to time - 10. This Agreement null bane to the benefit of Bank's successors and assigns This Agreement may be amended from time to time by the agreement of Customer and Bank or by Bank and a copy of any amendment wed be provided to Customer. This Agreements terminable at the option of ether Customer or Bank upon demand by written nonce to the other party. Upon termination. all Custodial Property will be promptly delivered as directed by Customer. 11. Custodial Property shall be maintained by Bank at Bank of Americ N.A. (the man office of which is located In Charlotte. North Carolina) or, in Bank's sole discretion, at a third party custodian or affiliated depository institution. ANY SUCH ARRANGEMENT WILL BE DEEMED ACCEPTABLE UNLESS CUSTOMER NOTIFIES BANK IN WAITING. 12. Customer consents to the exchange of confidential and non - confidential information about the Customer and Customer's Safekeeping Account by and among Bank and its affiliated and related entities including, without limitation, Banc of America Securities, LLC and affiliates and subsidiaries of BankAmerica Coporatar. Customer also authorizes such related entities of Bank to transfer Custrxbal Property or to debit or credit Customer's account or accounts at such related entitles in connection with transacli00 pursuant to this Agreement 13. Customer represents that the execution of this Agreement, the services provided hereunder, and if applicable the location of the Customers securities outside of the state in which the.Custouer s located do not violate any statue, regulation, or other reotdetlon under which the customer is bound Customer further moments that it has obtain any and all regulatory approvals necessary to execute and accept services under this Agreement 19. Bank shall not be liable for any action taken by it or any of is directors, officers, agues or employes in accordance with this Agreement Customer agrees at all dims to save and hold harmless, and to defend and indemnify Bank is officers, directors, employees, agents, and attorneys against all actions, proceedings liabilities damns, demands loses, outlays damages or expenses including in-house and outside legal fees of every nature and character as may arise or be made against the Bank or such person may in any way incur in defending or prosecuting. settling or discontinuing any such pot teedingo actions or clans, except for damages to "as outlays clams or proceedings arising out of or attributable to the gross negligence or willful misconduct of the Bank or such person, as the case may be. 15. Bank agrees to sane and hold harmless and indemnify Customer for any loss of securities occasioned by the gross negligence or dishonesty of Bank's officers or employers, or any burglary. robbery, theft or mysterious disappearance. including loss by damage or destruction In the event such a loss should occur, the Bank shall promptly replace such securities or the value of any loss of rights or privileges resulting from the loss of securities 1 CITY OF ROUND ROCK, TEXAS REQUEST FOR APPLICATIONS DEPOSITORY AND BANKING SERVICES EXHIBIT L INTRODUCTION The City of Round Rock, Texas, ( "City ") invites qualified banks, credit unions and savings associations doing business in the City to submit applications for the purpose of serving as the City's depository for a period of two (2) years. A. Submitting Applications An Application shall be submitted in a sealed envelope bearing the title "City of Round Rock Depository Application" along with the Applicant's official name, address and representative's name, title and telephone number. Return a completed application form (Attachment A - 2 pages) along with any additional attachments. Applications shall arrive in the office of the Director of Finance at City Hall, 221 E. Main Street, Round Rock, Texas 78664 -5299, by 3:00 P.M. on Tuesday January 29, 2002, at which time Applications will be opened and the names of the Applicants announced. Late Applications will not be considered. Late Applications, if properly identified, will be retumed unopened. Due to certain restrictions, the City of Round Rock is not able to accept electronically submitted bids at this time. B. Right to Reject Applications The City reserves the right to reject any or all Applications and to waive any non - material irregularities or informalities. The City Manager and Director of Finance are designated either jointly or individually to act on behalf of the City in transacting all business or supporting agreements necessitated by the Depository and Banking Services contract. Chapter 105 of the Local Government Code (attached hereto as Schedule E) provides for procedures whereby the City may receive applications for the performance of depository services ( "Application ") from one or more banks, credit unions, or savings associations ( "Applicant(s) "). The Director of Finance ( "Director ") will review the Applications and make a recommendation to the City Council to designate one or more Applicants as the City's depository or depositories (Depository "). In reviewing the Applications, the Director, consistent with the policy guidelines adopted by the City Council regarding the selection of the Depository, will consider the terms and conditions for the performance of depository services, including the type and cost of services to be provided to the City. Depository Services Application, Page 1 C. Authorization II. SPECIFICATIONS A. Background In order to assist the Director in reviewing and evaluating the Applications, Applicants shall comply with and provide the information set forth in the following Specifications. Failure to provide the requested information may disqualify the Applicant from consideration for designation. The City reserves the right to reject any or all Applications, waive any non - material irregularities or informalities, and negotiate one or more depository services contracts ( "Contract "). Questions regarding these Specifications may be directed to: David Kautz Director of Finance City of Round Rock 221 E. Main Street Round Rock, TX 78664 (512) 218 -5400 The individuals listed above may be contacted by telephone or visited for clarifications of the specifications only. No authority is intended or implied that specifications may be amended or alterations accepted prior to application opening without written approval of the City of Round Rock. Jan. 7, 2002 (Mon) Specifications available for Applicants Jan. 29, 2002 (Tues) Applications return deadline to the office of the Director of Finance at City Hall. Applications opened and Applicants announced in the Council Chambers at 3:00 PM. Feb. 28, 2002 (Thurs) 7:00 P.M.; Regular City Council Meeting. City Council will consider the selection of one or more Depositories Mar. 4, 2002 (Mon.) Pre - service meeting with City staff and Depository representatives April 1, 2002 (Mon.) Effective date of Contract(s). In order to be considered and selected as the City's Depository, Applicants shall have the following minimum qualifications: 1. Applicants shall have a full service branch within the City which serves the citizens of Round Rock. 2. Deposits shall be insured up to the legal limit by the FDIC. Deposits in excess of FDIC coverage shall be fully collateralized in compliance with V.T.C.A. Government Code, §2257.001 et seq, a copy of which is attached hereto as Schedule D. Depository Services Application, Page 2 B. Application Schedule of Events C. Qualifications for Applicants Elaine S. Wilson Accounting Supervisor City of Round Rock 221 E. Main Street Round Rock, TX 78664 (512) 218 -5444 3. Applicants shall give evidence of their creditworthiness by supplying the City with a copy of the latest financial statements which were filed with the regulatory agency which has authority over the Applicant. Quarterly and/or annually published reports shall also be submitted to the Director throughout the term of the Contract. Applicants shall also include their most current Sheshunoff (or other similar rating agency) credit ratings and shall provide these ratings quarterly throughout the term of the Contract. Members of bank holding companies should also include corporate annual financial reports. 4. Applicants shall provide a copy of their Disaster Recovery Plans for the City's review. D. Selection of the Depository The Contract(s) for the Depository will be negotiated with the Applicant(s) offering the most favorable terms and conditions, customer service, experience, and price for the handling of City funds and banking services offered to the City. E. Jerm of Contract The Contract will be for a period of two (2) years commencing April 1, 2002, and ending March 31, 2004, or until such time as a successor Depository is selected, whichever occurs last. Service charge rates during this Contract Period shall not increase. However, should the Depository decrease any rates offered to their Commercial customers (as published in the Depository's fee schedule) during the course of the Contract period, these decreases shall also apply to the City. The City shall, at its sole option and for any reason, have the right to terminate the Contract at any time after one year, with ninety (90) days written notice advising Depository of the City's intent to terminate the Contract. The Contract may be extended up to an additional three (3) year term, provided both parties agree in writing to do so prior to the expiration of the original Contract. The extended Contract shall be for the original terms and conditions, plus any mutually approved changes. Depository Services Application, Page 3 F. Required Services Depository Services; The Depository shall provide customary depository services including, but not limited to, accepting deposits, providing for the safekeeping of those deposits, paying checks upon demand, and other services as needed from time to time. The Depository shall maintain all accounts, reports, and records regarding all City transactions for the period of time required by applicable law. The Depository shall be expected to prepare such other reports, accounts and records which may, from time to time, be required by the City in order to properly discharge its duties. The Depository shall be required to provide both vault services as well as local branch services for deposits of the City. The Depository shall designate a Relationship Officer from the Public Funds or Treasury area as a single point of contact for the City. Vault Services: The Depository shall provide central vault services to the City. Depository shall provide the location(s) of cash vaults where armored delivery of deposits will be accepted along with the cut -off times for same -day ledger credits. State how and when validation of vault deposits will be made to the City (e.g. email, same -day fax, next -day fax, next -day validated deposit slips, etc.). State whether vault will accept loose coins for deposit and whether it will provide required bags for these loose coin deposits (e.g. canvas bags). Also, state what types of bags are required for acceptance by the vault (e.g. plastic bags, canvas bags, etc). Provide procedures for encoded checks and a copy of your current availability schedule on how float is calculated. Depository shall provide thorough pricing for the Vault Services area. Branch Services; The Depository shall provide certain services at the local Round Rock branch. The local branch shall cash City of Round Rock payroll checks for City employees. The local branch shall accept loose coins for verification and deposit, provide change orders as needed, and accept deposits as necessary from time to time. Provide thorough pricing for these and any other Branch Services which may benefit the City. Bank Card Services: The City of Round Rock currently uses Global Payments as their processor of Mastercard and Visa receipts. The City will cover these services in a separate bid at a later date. However, the Depository must allow Global Payments to debit/credit City of Round Rock accounts as authorized by the City. Returned Item Services: All returned items shall be presented twice for payment prior to return to the City. State whether Depository offers detailed retum item data transmissions, email, or images via the Web to provide quicker notification to your customers. If so, provide a list of all available types of notifications along with what details of the item are included (e.g. check number, check date, reason for return, etc.). If not, state whether Depository plans to offer any of these services in the near future. Provide types of services and timeline of their offering. Provide thorough pricing for these and any other Return Item Services which may benefit the City. Monthly Statements /Account Reconciliation Services: The Depository shall provide detailed month -end cutoff statements showing all debit and credit activity, balances, interest and service charge information. Statements shall be provided to the City no later than ten (10) calendar days following the end of month cut -off. Depository shall provide full and partial reconciliation services to the City. Cancelled checks shall be returned on CD -Rom for all major operating accounts as requested. For those accounts on account reconciliation, a cleared checks list reporting check number, check amount cleared and cleared date should be included in an electronic format along with the account reconciliation reports. State how long Depository retains physical cancelled checks and if there are any additional check safekeeping fees associated with this service. State if cancelled check copies can be viewed/requested online or via the Web. Provide thorough pricing for all Account Reconciliation Services. Stop Payments: The Depository shall provide an online method (via modem or Web) for placing stop payment orders, with fax requests as an offline backup method. State how long stop payments remain in effect for each method (if different) and provide thorough pricing for each method. Give any deadlines for same day action for both online and offline methods. State whether the online system has query capabilities to verify payment of a check prior to placing a stop payment order. Also include amount of history available in this verification process. Depository Services Application, Page 4 Information /Balance Reporting Services• The Depository shall provide Information/Balance Reporting services via modem and/or Web. Depository shall provide both current and previous day reporting capabilities. Provide hours of accessibility and how often information is updated. Describe 1) what type of current day data is available, 2) how many days of history can be accessed and retained by City, and 3) if the system allows inquiry by date range. Describe levels and types of security for users of the system as well as security procedures used to protect the City's data. State whether Depository offers Internet capabilities for delivery. If not, state Depository's timeline for this service. Provide thorough pricing for all Information/Balance Reporting Services. Provide all hardware /software requirements. Include whether any Depository proprietary software provided for this service can be operated in a local area network (LAN) or wide area network (WAN) environment. Controlled Disbursement Services: The Depository shall provide controlled disbursement accounts to the City. Depository shall state the proposed location these accounts clear through and its relationship to the depository (e.g. branch, correspondent, etc). State if this location is a high dollar group sort (HDGS). Depository shall state notification time(s) and methods for daily clearings, funding options, and how adjustments will be presented (e.g. next day or same day adjustments). If more than one notification is made, state the average percentage of items that are received at each presentment. State the average percentage of dollars that are received at each presentment. Provide thorough pricing on all Controlled Disbursement Services. Provide all hardware /software requirements. Include whether any Depository proprietary software provided for this service can be operated in a LAN or WAN environment. Positive Pay Services: The Depository shall provide electronic positive pay services to prevent check fraud. Depository shall state the types of data transmissions accepted and how manual issues and deletes can be reported to Depository. Depository shall state how "Paid Not Issued" (PNI) reports are delivered, the deadline for PNI notifications to the City, and the deadline for the City's pay decisions. Depository shall state if check images are available in conjunction with the PNI report, and if so, how they are delivered (e.g. fax, Web). State if MICR errors are deleted before PNI reports are delivered. Please provide thorough pricing on all Positive Pay Services. Provide all hardware /software requirements. Include whether any Depository proprietary software provided for this service can be operated in a LAN or WAN environment. Wire Transfer Services: The Depository shall provide online Federal Reserve wire transfer services via modem and/or Web with telephone transfers as a backup method. Indicate levels and types of security along with the number of users available with each method. State whether Depository uses set security codes and capabilities, whether City has system administrator capabilities, or a combination of both. State how long it takes to make changes to authorized users. State how much time is required to set up new repetitive wires on the online system (e.g. same day, 24 hours). Include pricing for each method for repetitive, semi - repetitive, non - repetitive, and internal transfers. Also include opening hours and cut -off times for same day execution of outgoing wires, cut -off times for incoming domestic wires for same day credit, and warehousing capabilities of future -dated wires. State if Depository allows daylight overdraft wires and if there is any additional charge for executing daylight overdraft wires. State how the City will be notified of a failed wire and the expected average timeframe for the notification (e.g. same day, 24 hours). State whether ACH payments can be initiated through the wire transfer system. Provide thorough pricing on all Fed -Wire Transfer Services. Provide all hardware /software requirements. Include whether any Depository proprietary software provided for this service can be operated in a LAN or WAN environment. Depository Services Application, Page 5 ACH Services: The City currently has a direct deposit payroll program as well as a direct debit program for its Utility department. Depository shall list available methods for sending these transactions (direct transmission, PC based system, etc). Include location, hours of operation and cut -off times for the ACH unit for initiation of ACH transactions. State Depository's security and verification procedures for ACH file initiation. Include Depository's process for stop payment and reversal of ACH items. Describe Depository's ACH return process (e.g. notification, posting). State whether Depository can automatically redeposit ACH items returned for insufficient or uncollected funds. If so, state how these entries are posted to the City's account. If not, please state if this is a service Depository will be initiating in the near future and what the timeline is for this service. The City also receives ACH items from various agencies where ACH addenda information needs to be retrieved. State if Depository can provide this information, by what method it may be obtained, and the pricing for this service. Include thorough pricing for all ACH Services. Provide all hardware /software requirements. Include whether any Depository proprietary software provided for this service can be operated in a LAN or WAN environment. Safekeeping Services: The Depository shall provide safekeeping services for investment securities purchased by the City. Securities will be purchased on a Delivery vs. Payment method only per the City of Round Rock Investment Policy (attached hereto as Schedule C). State how authorizations for security purchases /sales are accepted by the Depository's safekeeping department (e.g. fax, email). Provide thorough pricing for all Safekeeping services. Miscellaneous: The Depository may be required during the term of the Contract to provide: (1) two -part deposit slips, and (2) plastic deposit bags. Depository shall provide a list of preferred vendors for check and or deposit slip orders and plastic deposit bags. State whether Depository allows for alternative 3` party vendors besides those provided. Please provide current pricing for each vendor. Overdraft Protection. Although none is anticipated, overdraft balances shall be calculated at a stated Overdraft (OD) interest rate. Please provide Depository's Public Funds OD rate. Additional Services. Applicants may offer any additional services that are not specified in these specifications. The City shall have the right to negotiate new accounts or services which are newly offered to the general public during the term of the Contract. Such accounts or services shall be offered at rates not to exceed those offered to Depository's commercial customers. Additional Accounts. The City reserves the right to open additional demand accounts as needed during the term of the Contract. Depository Compensation. The City shall maintain balances to compensate the bank in part for services provided. Earnings credit for these balances shall be reflected on the monthly analysis statement. Please specify Depository's method of calculating its Earnings Credit Rate (ECR). Include how the ECR is applied (e.g. collected balance before or after reserves). The City will pay all approved fees and charges once a month. The Depository shall provide a timely, detailed analysis report for all account charges by category for City verification purposes. Please state whether Depository can offer electronic presentment of the monthly analysis statement and if there is any additional charge for this service. Electronic presentment is not mandatory but would be beneficial. Depository Services Application, Page 6 Any exceptions to or deviations from these specifications shall be fully described and explained on a separate page, labeled as such, and attached to this Application. G. Collateralization of Public Funds Collateral for City Funds. To ensure the protection of the City's funds, a Collateral Security Agreement ( "Security Agreement ") shall be entered into between the City, Depository, and the Third Party Safekeeping Agent. The Security Agreement shall be structured in accordance with statutory and regulatory agency requirements. In accordance with the Government Code, §2257.001 et seq, (see Schedule D) all City monies held by the Depository above the FDIC insurable limits shall be collateralized with securities pledged to the City at 102% of the current market value. The amount of collateral will be determined by the City. State any maximum dollar amount of collateral Depository is willing to provide. An average of one million dollars ($1,000,000) is kept pledged at all times. Investments which may be pledged to secure City funds are governed by Chapter 105, Local Government Code (Schedule E) and Chapter 2257, Government Code (Schedule D). In addition to the foregoing, all monies shall be collateralized in accordance with the City of Round Rock Investment Policy (Schedule C). The City reserves the right to reject any pledged collateral that the Depository may wish to pledge. The Depository shall provide a monthly report of all securities pledged against the City's deposits. Provide thorough pricing on Collateral Services. Release of Collateral. No collateral will be withdrawn, released or substituted without the prior written consent of the City Director of Finance or his designated deputies. The City will release collateral only if the City is satisfied that such collateral is not needed as security for the City's deposits. Additions to Collateral. In the event the amount of City funds on deposit with the Depository exceeds at any time 102% of the current market value of the collateral securing such deposits, the Depository shall immediately pledge additional acceptable collateral to make up the deficiency. it r f k ping All securities pledged shall be held in the custody of an independent third party agent designated by and mutually approved by the City and Depository. The Third Party Agent shall provide a monthly report, including market values, showing all securities it holds pledged to the City. For purposes of evaluating each application, the City will use $400,000 as an average balance to determine interest earnings. However, this does not commit the City to maintaining balances at this level. Depository Services Application, Page 7 H. Earned Interest Evaluations I. Exceptions to Specifications J. Attachments The following attachments are hereby made a part hereof by reference: 1. Attachment A (2 pages) - Depository Services Application Form Depository Services Application, Page 8 K. Schedules The following schedules are hereby made a part hereof by reference: 1. Schedule A (1 page) — Summary & Statistics 2. Schedule B (2 pages) — Proforma Analysis Activity 3. Schedule C (17 pages) - City of Round Rock Investment Policy 4. Schedule D (10 pages) - V.T.C.A. Government Code Chapter 2257 5. Schedule E (12 pages) - Texas Local Govt. Code Chapter 105 1. The undersigned bank, credit union or savings association (hereinafter called Applicant), for the privilege of acting as Depository of the City of Round Rock, Texas, and in consideration of the required services specifications, supporting schedules, and attached activity shall prepare and attach to this Application a pro -forma analysis statement in accordance with its proposed pricing. 2. Applicant names the following Public Funds or Treasury Officer as the Relationship Officer for the City of Round Rock: Name: Title: Phone number: Email address: Depository Services Application, Page 9 ATTACHMENT A CITY OF ROUND ROCK DEPOSITORY SERVICES APPLICATION FORM 3. Attach separate pages with information regarding any and all fees and services affecting this Application as requested in the Required Services section. Also include any information regarding fees and services which you feel may benefit the City not specifically mentioned in the required services section. 4. Attach a copy of the latest financial statement which Applicant filed with the regulatory agency which has authority over the Applicant, a current credit ratings report, along with a corporate annual financial report for Applicant's holding company. 5. Provide a copy of Applicant's Disaster Recovery Plans. 6. Provide copies of all agreement forms and statements that are expected to be executed if the Contract is awarded to Depository, including, but not limited to: Collateral Services Agreement Wire Transfer Agreement Automatic Clearing House Agreement Banking Services Agreement Treasury Services Agreement APPLICANT: BY: TITLE: (Authorized Signature) ADDRESS: CITY, ST.: TELEPHONE: DATE: Depository Services Application, Page 10 (Typed or Printed Name) Controlled Disbursement Agreement Balance Reporting Agreement Safekeeping Agreement Positive Pay Agreement Terms & Conditions Statement Depository Services Application, Page 11 SCHEDI JLE A Summary & Statistics The City of Round Rock, Texas is a home -rule chartered municipality located just north of Austin. The City has what is called a Manager - Council form of government. Today, there are over 62,000 individuals calling Round Rock home, along with Dell Computers and the Round Rock Express minor league baseball team. The City has experienced tremendous growth over the past decade. This has led to a need for more efficient Depository services. The City of Round Rock has a certified cash manager on staff to work with its Depository in the ever - changing world of treasury management. The City currently has seven (7) interest - bearing checking accounts, a controlled disbursement account, along with two (2) non- interesting bearing accounts. The accounts consist of two (2) main Operating accounts, a Payroll account, a Health Claims account, three (3) Debt Service accounts, and two (2) grant accounts. Two of the City's accounts currently use Positive Pay services. The City has six to ten (6 -10) departments which ship deposits to vault services. The Utility department also encodes their checks for deposit. The controlled disbursement account averages 36 items cleared per day at an average of $248,000. The City's treasury area currently uses electronic balance reporting, online Fed - wires, and direct transmission of ACH and Positive Pay files. Please see the attached proforma activity for more details on the City's current activity. The City is looking to its future Depository to help migrate to more efficient methods of receipts and disbursements. For example, the City is looking to completely automate its payroll disbursement process. Currently, the City's payroll system uses both checks and direct deposit disbursements. The City would like to eliminate payroll checks completely within the next year or two. The City is also looking in the future to offer Internet payment capabilities, using "RCK" collections services, and converting check payments to ACH items. Our new Depository will need to be capable of assisting in the implemention of these services for the City. The City looks forward to working with its Depository over the next few years in developing these services. Service Description Monthly Average Commerical Acct. Maintenance 10 Signature Restriction Maintenance 8 Signature Restriction Activities 528 Debits Posted 1,046 Credits Posted 156 Return Items 37 Re- Clears 86 Item Encoding 2,098 On -Us Items 577 Local Items 695 Local FED /RCPC Items 6,012 Texas Cities Items 5,312 Other Texas Items 3,775 Transit Items 2,615 Pre - Encoded Item Rejects 112 Electronic Credit Posted 130 Electronic Debit Posted 90 Deposit Correction (Proof) 2 Funds Xfer- Outgoing Repetitive 8 Funds Xfer- Outgoing Non - Repetitive 0 Funds Xfer- Outgoing Semi - Repetitive 4 Funds Xfer - Internal Repetitive 12 Funds Xfer - Internal Semi - Repetitive 1 Funds Xfer- Incoming 8 Funds Xfer Maintenance 8 ACH Cr/Dr 2ec'd. 149 ACH Transmission 10 ACH Reporting Fax per page 7 ACH t -NOCs via Autofax 4 ign Two + Days 1,316 ign One Day 51 ACH DR ign Two + Days 868 ACH DR 'ign One Day 43 ACH Support Maintenance 2 - Addenda 43 _ -_ Translation 28 Branch Deposit Branch Strap Rec Branch Change Order Processed Branch Coin Rolls Rec On -Us Cashed Checks (Payroll) Security Redemption N Yr CO O N CO N u7 Safekeeping Acct Maintenance Sfkp. Maint per Issue Portfolio Evaluations/Thousands DTC Transaction FRB Transaction City of Round Rock, Texas Account Analysis Proforma Activity Page 1 of 2 Service Description Monthly Average coin bags only deposits Full Bags Vault adjustments Vault Mixed deposits Bank Acct. Reporting Maint. Bank Acct. Reporting # of Accts. Current Day Accounts Current Day Items Previous y Items EDI Report CL EDI per Line Controlled Disbursement Acct Maint Controlled Disb. Relationship Maint Controlled Disbursement Fee Image Keeping -CD Rom Image Safekeeping-per item Paid List :conciliation Mo. Maint. Paid List - econ - Monthly Disks Paid List Reconciliation Postage Cont Disb. Debit Posted Cont Disb. Credit Posted Positive Pay Maintenance Non - Positive Pay items paid Positive Pay items paid Positive Pay No Issue Stop Payment - Online Online Check Research -1st Acct Online Check Research -Addtl Accts O N CI N 0 .- N .- v- ,- Nf t l f m c'0 .— 0 co m N Collateral Fees SCHEDULE Ft City of Round Rock, Texas Account Analysis Proforma Activity Average Ledger Balances YTD 2001 592,598 Average Net Collected Balances 362,396 Page 2 of 2 invpa12001 City of Round Rock, Texas Investment Policy September 27, 2001 City of Round Rock, Texas Investment Policy September 27, 2001 Section Page 1. Introduction 3 II. Scope and Legal Requirements 3 Scope State Statute Delegation of Authority III. Investment Objectives 4 Safety of Principal Maintenance of Adequate Liquidity IV. Standard of Care 5 V. Investment Strategy 5 VI. Authorized Investments 5 Authorized Investments Unacceptable Investments Protection of Principal Diversification by Investment Type Diversification by Investment Maturity VII. Relationships With Financial Institutions and Firms 8 Depositories Selection and Compliance of Investment Providers VIII. Custodial Safekeeping 9 IX. Depository and Contractual Trading Requirements 10 Wire Transfer Authorizations Collateralization Requirement X. Portfolio Valuation and Reporting 10 Reporting Internal Controls External Audit XI. Quality and Capability of Investment Management 12 Training Limitation of Liability Ethics XII. Review and Amendment 12 XIII. Conclusion 12 Appendix Investment Strategy 13 Addendum A 17 Page 2 "7'm not as concerned about the return on my principal as I am about the return of my principal." I. Introduction City of Round Rock, Texas Investment Policy September 27, 2001 Will Rogers The Investment Policy of the City of Round Rock, Texas, is adopted in accordance with Chapter 2256, Texas Government Code, the Public Funds Investment Act. This Policy establishes guidelines for the Investment Officers with regard to how City funds will be invested. This Policy also establishes guidelines for periodic review and reporting of the investments. II. Scope And Legal Requirements A. Scope This Investment Policy for the City of Round Rock, Texas applies to the financial assets of all funds, including the following City funds: 1) General Fund 2) Special Revenue Funds 3) Debt Service Funds 4) Capital Project Funds 5) Enterprise Funds 6) Internal Service Funds 7) Trust and Agency Funds 8) Reserve Fund 9) Any new funds created by the City and any funds managed by the City of Round Rock, Texas, as trustee or agency, unless exempted by law. In addition to this Policy, bond Page 3 funds established by bond ordinances shall be managed by their governing ordinances and all applicable State and Federal Law. B. State Statute All funds covered by this Investment Policy shall be invested in accordance with the Public Funds Investment Act of 1987 as amended from time to time. (Texas Government Code, Ch. 2256.) C. Delegation of Authority The Director of Finance, the Assistant Director of Finance, the Accounting Manager, and the Accounting Supervisor are hereby designated as the Investment Officers of the City of Round Rock, Texas, and are responsible for investment decisions and activities consistent with this Investment Policy. The Investment Officers shall be responsible for all transactions and compliance with the internal controls, insure all safekeeping, custodial, and collateral duties consistent with this Investment Policy, as well as establishing and maintaining written procedures for cash management. The Investment Officers shall maintain timely, accurate and systematic records of all investments, maturities and earnings. Bonding of all staff with financial signatory authority is required and such bonding requirements will also apply to those individuals authorized to place, purchase or sell investment instruments. Bonding will protect the public against loss from possible embezzlement and malfeasance. III. Investment Objectives A. Safety of Principal The primary objective of all investment activity is the preservation of capital and the safety of principal in the overall portfolio. Each investment transaction shall seek to ensure first that capital losses are avoided, whether they have resulted from securities defaults or erosion of market value. With foremost emphasis on safety of principal (i.e. avoidance of capital losses), the Investment Officers will ensure that preservation of capital and protection of principal in the overall portfolio is maintained. Speculation is prohibited. Page 4 B. Maintenance of Adequate Liquidity The investment portfolio will remain sufficiently liquid to meet the cash flow requirements that might be reasonably anticipated. Liquidity shall be achieved by matching investment maturities with anticipated cash flow requirements; investing in securities with active secondary markets; and maintaining appropriate portfolio diversification. IV. Standard of Care Investments shall be made with judgment and care, under prevailing circumstances, that a person of prudence, discretion and intelligence would exercise in the management of the person's own affairs, not for speculation, but for investment, considering the probable safety of capital and the probable income to be derived. The standard of care shall be applied to the context of managing the overall portfolio. V. Investment Strategy In conjunction with the annual Policy review, the City Council shall review the separate written investment strategy for each of the City's funds. The investment strategy must describe the investment objectives for each particular fund according to the following priorities: 1) Investment suitability, 2) Preservation and safety of principal, 3) Liquidity, 4) Marketability prior to maturity of each investment, 5 Diversification and 6) Yield. VI. Authorized Investments A. Authorized Investments The following is a list of authorized and legal investment options: Page 5 1) Obligations of the United States or its agencies and instrumentalities; 2) Direct obligations of the State of Texas or its agencies and instrumentalities; 3) Other obligations the principal and interest of which are unconditionally guaranteed or insured by, or backed by the full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities; 4) Obligations of states agencies, counties, cities and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firm not less than "A" or its equivalent. 5) Certificates of Deposit as authorized under Section 2256.010 Public Funds Investment Act. 6) Repurchase Agreements which are fully collateralized and are as authorized under Section 2256.011 Public Funds Investment Act. 7) Commercial Paper as authorized under Section 2256.013 Public Funds Investment Act. 8) No -Load Money Market Mutual Funds as authorized under Section 2256.014 Public Funds Investment Act. 9) Investment Pools as authorized under Section 2256.016 Public Funds Investment Act and, provided the Investment Pools are in compliance with the requirements of the Public Funds Investment Act and, provided objectives of the pool include a stable net asset value of $1.00. B. Unacceptable Investments This Policy bestows the authority upon the Investment Officer to determine certain investment instruments as unsuitable for the City even though those investments may be authorized by this Policy and/or the Public Funds Investment Act. Additionally, certain investments are expressly prohibited by the Public Funds Investment Act. An investment that requires a minimum rating under this Policy and/or the Public Funds Investment Act does not qualify as an authorized investment during the period the investment does not have the minimum rating. The City shall take all prudent measures that are consistent with its Investment Policy to liquidate an investment that does not have the minimum rating. C. Protection of Principal Page 6 The City shall seek to control the risk of loss due to the failure of a security issuer or grantor. Such risk shall be controlled by investing only in the safest types of securities as defined in this Policy; by qualifying the broker, dealer and financial institution with whom the City will transact; by collateralization as required by law; and through portfolio diversification by maturity and type. The purchase of individual securities shall be executed "delivery versus payment" through the City's safekeeping agent. By so doing, City funds are not released until the City has received, through the safekeeping agent, the securities purchased. D. Diversification by Investment Type Diversification by investment type is primarily intended to reduce the credit risk inherent to a particular issuer or investment type. The City will diversify its investments by security type and institution. With the exception of U.S. Treasury securities and authorized pools, and the percentage limitations listed below, no more than 50% of the City's total investment portfolio will be invested in a single security type or with a single financial institution. Investment Type Portfolio Limitation 1) U.S. Government Agencies and Instrumentalities 50% 2) States and their Agencies, Counties, Cities and 35% Other Political Subdivisions of a State 3) Commercial Paper 20% Bond proceeds may be invested in a single security or investment if the Investment Officers determine that such an investment is necessary to comply with Federal arbitrage restrictions or to facilitate arbitrage recordkeeping and calculation. E. Diversification by Investment Maturity In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the funds. Maturity guidelines by fund are as follows: 1) Operating Funds Maturity Limitation: The weighted average days to maturity for the operating fund portfolio shall be less than 300 days and the maximum allowable maturity shall be three years. 2) Capital Project Funds Page 7 Maturity Limitation: Funds used for construction programs have reasonably predictable draw down schedules. Therefore, investment maturities shall generally follow the anticipated cash flow requirements. Bond proceeds (excluding reserve and debt service funds) shall generally be limited to the cash flow requirements or the "temporary period" as defined by Federal tax law. During the temporary period bond proceeds may be invested at an unrestricted yield. After the expiration of the temporary period, bond proceeds subject to yield restriction shall be invested considering the anticipated cash flow requirements of the funds and market conditions to achieve compliance with the applicable regulations. 3) Debt Service Funds Debt Service Funds shall be invested to ensure adequate funding for each consecutive debt service payment. Maturity Limitation: The Investment Officers shall invest in such a manner as not to exceed an "unfunded" debt service date with the maturity of any investment. An unfunded debt service date is defined as a coupon or principal payment date that does not have cash or investment securities available to satisfy said payment. 4) Debt Service Reserve Funds Market conditions, Bond Ordinance constraints and Arbitrage regulation compliance will be considered when formulating Reserve Fund strategy. Maturity Limitation: Maturities shall generally not exceed the call provisions of the Bond Ordinance and shall not exceed the final maturity of the bond issue. All Debt Service Reserve Fund investment maturities shall not exceed five years. City funds that are considered "bond proceeds" for arbitrage purposes will be invested using a more conservative approach than the standard investment strategy when arbitrage rebate rules require refunding excess earnings. All earnings in excess of the allowable arbitrage earnings will be made available for any necessary payments to the U.S. Treasury. VII. Relationships With Financial Institutions and Firms A. Depositories Depositories shall be selected through the banking service procurement process, which shall include a formal request for proposals no less than every five (5) years. In selecting the depository, the creditworthiness of institutions shall be considered and the Investment Officers Page 8 shall conduct a comprehensive review of prospective depositories' credit characteristics and financial history. The City depository contract and other financial relationships for banking services are outside the scope of this Investment Policy. B. Selection And Compliance Of Investment Providers An investment firm offering to engage in an investment transaction with the City must execute a written instrument stating that the qualified representative has received and thoroughly reviewed the Investment Policy of the City. The qualified representative also must acknowledge that the firm has implemented reasonable procedures and controls to preclude transactions conducted between the City and the firm that are not authorized by the City's investment policy, except to the extent that this authorization is dependent on an analysis of the makeup of the City's entire portfolio, or requires an interpretation of subjective investment standards.. The Investment Officers may not acquire or otherwise obtain any authorized investment from a person who has not delivered to the City an instrument in substantially the form described above. The following institutions or firms may qualify under this section: 1) Security Dealers and Dealer Banks which are the approved and designated Dealers of the Federal Reserve Bank of New York "Primary Dealers ". 2) Security Dealers, Dealer Banks and Savings and Loans which are not designated as "Primary Dealers" but which are approved individually by the City Council. 3) Banks and Savings and Loans Associations domiciled in the State of Texas (for the placement of insured and collateralized certificates of deposit). Addendum A is the list of brokers /dealers who have qualified and are hereby approved to conduct business with the City as required by Section 2256.025 of the Public Funds Investment Act. The qualified broker /dealer list must be reviewed and approved at least annually VIII. Custodial Safekeeping To protect against potential fraud and embezzlement, investments shall be secured through third party custody and safekeeping procedures. All security purchases and trades conducted for the City of Round Rock will be settled and protected by the City's third party custodial agent. The City shall contract with a third party custodial agent for the safekeeping of securities either owned by the City as part of its investment portfolio or held as collateral to secure deposits or repurchase agreements. The use of the Delivery Versus Payment (DVP) procedure will be continually used for investment securities transactions, purchases and sales. The City shall authorize the release of DVP funds only after its safekeeping agent has received securities or receipt for same into the City's safekeeping account. Page 9 Safekeeping procedures shall be reviewed annually by the independent auditor. IX. Depository and Contractual Trading Requirements A. Wire Transfer Authorizations Whenever possible, the City will use pre - formatted wire transfer to restrict the transfer of funds to pre- authorized accounts only. Dual authorization forms shall be in continual use for all wire transfers. Secondary authorization for all wires will be required by the City. 13. Collateralization Requirement The City, in accordance with state statute, requires all City funds held by financial institutions above the FDIC insurable limit to be collateralized with securities pledged to the City. Those securities shall have a market value equaling at least 102% of the market value of City funds held and shall be placed with a third party custodial agent. Collateral may be substituted or released only with the written authorization of an Investment Officer. Allowable collateral may consist of those securities or instruments permitted as suitable investments under the Public Funds Collateral Act (Texas Government Code, Ch. 2257) Financial institutions serving as City Depositories will be required to sign a Depository Agreement with the City. The "Security for Deposits" portion of the Agreement shall define the City's rights to the collateral in case of default, bankruptcy or closing and shall establish a perfected security interest in compliance with Federal and State regulations, including: 1. the Agreement must be in writing 2. the Agreement has to be executed by the Depository and the City contemporaneously with the acquisition of the asset; 3. the Agreement must be approved by the Board of Directors or the loan committee of the Depository and a copy of the meeting minutes must be delivered to the City; 4. the Agreement must be part of the Depository's "official record" continuously since its execution. X. Portfolio Valuation And Reporting A. Reporting Page 10 As required by law, the Investment Officers shall submit a written investment report, prepared in accordance with GAAP, signed by each Investment Officer of the City within a reasonable time after the end of each fiscal quarter to the City Council detailing the investment position for the previous quarter. Quarterly market values will be obtained from the City's financial advisor, or other source believed to be reliable, in order to monitor the portfolio's position. 1.) For pooled investments - a. the report must state the beginning book value and market value of the pool portfolio for the reporting period, b. changes to the book value and market value during the reporting period c. the ending book value and market value of the portfolio and d. the fully accrued interest for the reporting period. 2.) For separately invested assets - a. the report must state the book value and market value for each investment at the beginning and end of the reporting period b. the report also must disclose the stated maturity date for each separate investment and c. must show the specific fund from which moneys were received to purchase the investment. 3.) The report must state compliance of the investment portfolio with the City's Investment Strategy and relevant provisions of the Public Funds Investment Act. B. Internal Controls The Investment Officers shall establish a system of internal controls, which shall be documented in writing and reviewed periodically by the City auditors. The controls shall be designed to prevent and control losses of public funds arising from fraud, employee error, misrepresentation by third parties, unanticipated changes in financial markets or imprudent actions. Dual controls of all investment activities will consistently be maintained by the Investment Officers. The Investment Officers shall develop and maintain written administrative procedures for the operation of the investment and cash management program, consistent with this Investment Policy. C. External Audit In accordance with the Public Funds Investment Act, in conjunction with the City's annual financial audit, a compliance audit of management controls on investments and adherence to the City's established investment policies shall be performed. An annual review of the City's quarterly reports will also be performed by an independent auditor with the results being presented to the City Council. Page 11 XL Quality and Capability of Investment Management A. Training It is the City's policy to provide training required by the Public Funds Investment Act Section 2256.008(a)(2) through courses and seminars offered in compliance with the Act in order to insure the quality and capability of the Investment Officers in making investment decisions. B. Limitation of Liability The Investment Officers acting in accordance with this Policy and the City's Investment Strategy and exercising due diligence shall be relieved of personal responsibility for an individual security's performance provided that deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse development. C. Ethics The Investment Officers involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Furthermore, in accordance with the Public Funds Investment Act, an Investment Officer who has a personal business relationship with a firm or is related to individuals seeking to sell to the Investment Officer must disclose such relationships in accordance with Section 2256.005 of the Public Funds Investment Act. XII. Review and Amendment This Policy shall be reviewed annually by the City Council. Amendments must be approved by the Investment Officers and adopted by the City Council. XIII. Conclusion The Investment Officers will adhere to this Investment Policy in all investment decisions for the City of Round Rock, Texas. The City will review the Investment Policy every year because of the dynamic nature of the financial markets. If changes are necessary because of changes to the financial markets and State law, the City Council will consider the changes recommended by the Investment Officers. Page 12 City of Round Rock, Texas Investment Strategy In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not exceed the anticipated cash flow requirements of the funds. The investment strategy for all funds is established according to the following priorities: 1) Investment suitability, 2) Preservation and safety of principal, 3) Liquidity, 4) Marketability prior to maturity of each investment, 5) Diversification and 6) Yield. Investment guidelines by fund -type are as follows: 1. Operating Funds The current operating funds are used for day -to -day operating activities and, accordingly, require short-term liquidity. Suitability - Any investment eligible in the Investment Policy is suitable for the Operating Funds. Safety of Principal - All investments are to be of high quality instruments with no perceived default risk. Market price fluctuations will, however, occur. By managing the weighted average days to maturity for the Operating Funds portfolio to less than 300 days and restricting the maximum allowable to three years, the price volatility of the overall portfolio will be minimized. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. An efficient market is generally defined as a s bid -asked price relationship being no greater than 1/4 of 1 percent of principal value. Liquidity - Short term investment pools and money market mutual funds shall provide daily liquidity and may be utilized as a competitive yield altemative to fixed maturity investments. . Page 13 Reserves established in accordance with the City's cash reserves policy or designated for specific purposes and time frames may be invested for longer terms. Diversification - Diversified investment maturities shall provide monthly cash flow based on the anticipated operating needs of the City. Short term investment pools, money market mutual funds and staggered maturities of securities shall provide timely liquidity and may be utilized. Yield - Attaining a competitive market yield for comparable security -types and portfolio restrictions is the desired objective. The comparative yield of a like -term treasury bill shall be the minimum yield objective. 2. Debt Service Funds Suitability - Any investment eligible in the Investment Policy is suitable for the Debt Service Funds. Safety of Principal - All investments are to be of high quality instruments with no perceived default risk. Market price fluctuations will, however, occur. By managing the Debt Service Fund's portfolio to not exceed the debt service payment schedule, the market risk of the overall portfolio will be minimized. Marketability - Securities with active and efficient secondary markets are not necessary as the event of an unanticipated cash requirement is not probable. Liquidity - Short term investment pools and money market mutual funds shall provide daily liquidity and may be utilized as a competitive yield alternative to fixed maturity investments. Diversification - Short term investment pools, money market mutual funds and staggered maturities of securities shall provide timely liquidity and may be utilized. Yield - Attaining a competitive market yield for comparable security -types and portfolio restrictions is the desired objective. The comparative yield of a like -term treasury bill shall be the minimum yield objective. 3. Capital Project Funds Suitability - Any investment eligible in the Investment Policy is suitable for the Capital Improvement Funds. Safety of Principal - All investments are to be of high quality instruments with no perceived default risk. Market price fluctuations will, however, occur. By managing the Capital Project Page 14 Fund's portfolio to anticipate the construction and or acquisition cash flow requirements, the market risk of the overall portfolio will be minimized. Marketability - Securities with active and efficient secondary markets are necessary in the event of an unanticipated cash requirement. Liquidity - Funds used for construction programs have reasonably predictable draw down schedules. Therefore, investment maturities shall generally follow the anticipated cash flow requirements. Because of the potential for variance from the anticipated draw down schedule and actual expenditures most investment securities shall have active and efficient secondary markets. Investment pools and money market mutual funds are suitable for providing readily available funds. Diversification - Diversified investment maturities shall provide monthly cash flow based on the anticipated operating needs of the City. Short term investment pools, money market mutual funds and staggered maturities of securities shall provide timely liquidity and may be utilized. Bond proceeds may be invested in a single security or investment if the Investment Officers determine that such an investment is necessary to comply with Federal arbitrage restrictions or to facilitate arbitrage recordkeeping and calculation. Yield - Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The comparative yield of a like -term treasury bill shall be the minimum yield objective. 4. Debt Service Reserve Funds Suitability - Any investment eligible in the Investment Policy is suitable for the Debt Service Funds. Bond ordinance constraints and insurance company restrictions may create issue - specific considerations in addition to the Investment Policy. Safety of Principal - All investments are to be of high quality instruments with no perceived default risk. Market price fluctuations will, however, occur. By managing the Debt Service Reserve fund's portfolio to not exceed five years or maturity provisions or, generally, the call provisions of the bond issue, the market risk of the overall portfolio will be minimized. Marketability - Securities with active and efficient secondary markets are not necessary for Debt Service Reserve funds. Liquidity - Debt Service Reserve funds have no anticipated expenditures. Therefore, liquidity up to the maturity date or call date is of minor importance. Page 15 Diversification - Market conditions and the arbitrage regulations influence the attractiveness of staggering the maturity of fixed rate investments for Debt Service Reserve funds. At no time shall the final debt service payment date of the bond issue be exceeded in an attempt to bolster yield. Yield - Attaining a competitive market yield for comparable security-types and portfolio restrictions is the desired objective. The comparative yield of a like -term treasury bill shall be the minimum yield objective. Arbitrage regulations should be heeded in investing for yield. Page 16 CITY OF ROUND ROCK, TEXAS TH 1, ZED T S BR 1 1 : LER 1. First Southwest Company* 1700 Pacific Avenue, Suite 1300 Dallas, TX 75201 -4652 800 -575 -3792 2. Salomon Smith Barney 221 W. 6"' Street, Suite 1400 Austin, TX 78701 512- 481 -3735 3. Merrill Lynch, Inc. 2121 San Jacinto, llth Floor Dallas, TX 75201 800 -574 -1610 4. First Tennessee Bank, N.A. 5949 Sherry Lane, Suite 810 Dallas, TX 75225 800 - 804 -6309 5. Deutsche Banc Alex. Brown Primary Dealer 200 Crescent Court, 5"' Floor Dallas, TX 75201 214 - 740 -7772 6. APS Financial Corporation 2550 Gray Falls, Suite 350 Houston, TX 77077 888 -567 -0900 *Financial Advisors Addendum A Primary Dealer Primary Dealer Page 17 CHAPTER 2257. COLLATERAL FOR PUBLIC FUNDS SUBCHAPTER A. GENERAL PROVISIONS Sec. 2257.001. Short Title This chapter may be cited as the Public Funds Collateral Act. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.002. Definitions In this chapter: (1) "Bank holding company" has the meaning assigned by Section 31.002(a), Finance Code. (2) "Control" has the meaning assigned by Section 31.002(a), Finance Code. (3) "Deposit of public funds" means public funds of a public entity that (A) the comptroller does not manage under Chapter 404; and (B) are held as a demand or time deposit by a depository institution expressly authorized by law to accept a public entity's demand or time deposit. (4) "Eligible security" means: (A) a surety bond; SCHEDULE (B) an investment security; (C) an ownership or beneficial interest in an investment security, other than an option contract to purchase or sell an investment security; (D) a fixed -rate collateralized mortgage obligation that has an expected weighted average life of 10 years or less and does not constitute a high -risk mortgage security; or (E) a floating - rate collateralized mortgage obligation that does not constitute a high -risk mortgage security. (5) "Investment security" means: (A) an obligation that in the opinion of the attorney general of the United States is a general obligation of the United States and backed by its full faith and credit; (B) a general or special obligation issued by a public agency that is payable from taxes, revenues, or a combination of taxes and revenues; or 1 (C) a security in which a public entity may invest under Subchapter A, Chapter 2256. or (6) "Permitted institution" means: (A) a Federal Reserve Bank; (B) a clearing corporation, as defined by Section 8.102, Business & Commerce Code; (C) a bank eligible to be a custodian under Section 2257.041; (D) a state or nationally chartered bank that is controlled by a bank holding company that controls a bank eligible to be a custodian under Section 2257.041. (7) "Public agency" means a state or a political or governmental entity, agency, instrumentality, or subdivision of a state, including a municipality, an institution of higher education, as defined by Section 61.003, Education Code, a junior college, a district created under Article XVI, Section 59, of the Texas Constitution, and a public hospital. (8) "Public entity" means a public agency in this state, but does not include an institution of higher education, as defined by Section 61.003, Education Code. (9) "State agency" means a public entity that (A) has authority that is not limited to a geographic portion of the state; and (B) was created by the constitution or a statute. (10) "Trust receipt" means evidence of receipt, identification, and recording, including: (A) a physical controlled trust receipt; or (8) a written or electronically transmitted advice of transaction. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.48(a), eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch. 914, Sec. 5, eff. Sept. 1, 1995; Acts 1997, 75th Leg., ch. 254, Sec. 1, eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 891, Sec. 3.22(4), eff. Sept. 1, 1997; Acts 1997, 75th Leg., ch. 1423, Sec. 8.70, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 62, Sec. 7.63, eff. Sept. 1, 1999. Sec. 2257.0025. High -Risk Mortgage Security (a) For purposes of this chapter, a fixed -rate collateralized mortgage obligation is a high -risk mortgage security if the security: (1) has an average life sensitivity with a weighted average life that 2 (A) extends by more than four years, assuming an immediate and sustained parallel shift in the yield curve of plus 300 basis points; or (B) shortens by more than six years, assuming an immediate and sustained parallel shift in the yield curve of minus 300 basis points; and (2) is price sensitive; that is, the estimated change in the price of the mortgage derivative product is more than 17 percent, because of an immediate and sustained parallel shift in the yield curve of plus or minus 300 basis points. (b) For purposes of this chapter, a floating -rate collateralized mortgage obligation is a high -risk mortgage security if the security, (1) bears an interest rate that is equal to the contractual cap on the instrument; or (2) is price sensitive; that is, the estimated change in the price of the mortgage derivative product is more than 17 percent, because of an immediate and sustained parallel shift in the yield curve of plus or minus 300 basis points. Added by Acts 1997, 75th Leg., ch. 254, Sec. 2, eff. Sept. 1, 1997. Sec. 2257.003. Chapter Not Applicable to Deferred Compensation Plans This chapter does not apply to funds that a public entity maintains or administers under a deferred compensation plan, the federal income tax treatment of which is governed by Section 401(k) or 457 of the Internal Revenue Code of 1986 (26 U.S.C. Sections 401(k) and 457). Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.004. Conflict With Other Law This chapter prevails over any other law relating to security for a deposit of public funds to the extent of any conflict. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.005. Contract Governs Legal Action A legal action brought by or against a public entity that arises out of or in connection with the duties of a depository, custodian, or permitted institution under this chapter must be brought and maintained as provided by the contract with the public entity. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. SUBCHAPTER B. DEPOSITORY; SECURITY FOR DEPOSIT OF PUBLIC FUNDS Sec. 2257.021. Collateral Required 3 A deposit of public funds shall be secured by eligible security to the extent and in the manner required by this chapter. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.022. Amount of Collateral (a) The total value of eligible security to secure a deposit of public funds must be in an amount not less than the amount of the deposit of public funds: (2) reduced to the extent that the United States or an instrumentality of the United States insures the deposit. (b) The value of a surety bond is its face value. (c) The value of an investment security is its market value. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.023. Collateral Policy (a) In accordance with a written policy approved by the governing body of the public entity, a public entity shall determine if an investment security is eligible to secure deposits of public funds. (1) the security of the institution that obtains or holds an investment security; and (1) increased by the amount of any accrued interest; and (b) The written policy may include: (2) the substitution or release of an investment security; (3) the method by which an investment security used to secure a deposit of public funds is valued. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.024. Contract for Securing Deposit of Public Funds (a) A public entity may contract with a bank that has its main office or a branch office in this state to secure a deposit of public funds. (b) The contract may contain a term or condition relating to an investment security used as security for a deposit of public funds, including a term or condition relating to the: (1) possession of the collateral; (2) substitution or release of an investment security; (3) ownership of the investment securities of the bank used to secure a deposit of public funds; and (4) method by which an investment security used to secure a 4 deposit of public funds is valued. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1999, 76th Leg., ch. 344, Sec. 5.006, eff. Sept. 1, 1999. Sec. 2257.025. Records of Depository (a) A public entity's depository shall maintain a separate, accurate, and complete record relating to a pledged investment security, a deposit of public funds, and a transaction related to a pledged investment security. (b) The comptroller or the public entity may examine and verify at any reasonable time a pledged investment security or a record a depository maintains under this section. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.16, eff. Sept. 1, 1997. Sec. 2257.026. Change in Amount or Activity of Deposits of Public Funds A public entity shall inform the depository for the public entity's deposit of public funds of a significant change in the amount or activity of those deposits within a reasonable time before the change occurs. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. SUBCHAPTER C. CUSTODIAN; PERMITTED INSTITUTION Sec. 2257.041. Deposit of Securities With Custodian (a) In addition to other authority granted by law, a depository for a public entity other than a state agency may deposit with a custodian a security pledged to secure a deposit of public funds. (b) At the request of the public entity, a depository for a public entity other than a state agency shall deposit with a custodian a security pledged to secure a deposit of public funds. (c) A depository for a state agency shall deposit with a custodian a security pledged to secure a deposit of public funds. The custodian and the state agency shall agree in writing on the terms and conditions for securing a deposit of public funds. more; (d) A custodian must be approved by the public entity and be: (1) a state or national bank that: (A) is designated by the comptroller as a state depository; (B) has its main office or a branch office in this state; and (C) has a capital stock and permanent surplus of $5 million or 5 (2) the Texas Treasury Safekeeping Trust Company; (3) a Federal Reserve Bank or a branch of a Federal Reserve Bank; or (4) a federal home loan bank. (e) A custodian holds in trust the securities to secure the deposit of public funds of the public entity in the depository pledging the securities. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 1010, Sec. 1, eff. June 17, 1995; Acts 1997, 75th Leg., ch. 891, Sec. 3.17, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 344, Sec. 5.007, eff. Sept. 1, 1999. Sec. 2257.042. Deposit of Securities With Permitted Institution (a) A custodian may deposit with a permitted institution an investment security the custodian holds under Section 2257.041. (b) If a deposit is made under Subsection (a) (1) the permitted institution shall hold the investment security to secure funds the public entity deposits in the depository that pledges the investment security; (2) the trust receipt the custodian issues under Section 2257.045 shall show that the custodian has deposited the security in a permitted institution; and (3) the permitted institution, on receipt of the investment security, shall immediately issue to the custodian an advice of transaction or other document that is evidence that the custodian deposited the security in the permitted institution. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.043. Depository as Custodian or Permitted Institution (a) A public entity other than a state agency may prohibit a depository or an entity of which the depository is a branch from being the custodian of or permitted institution for a security the depository pledges to secure a deposit of public funds. (b) A depository or an entity of which the depository is a branch may not be the custodian of or permitted institution for a security the depository pledges to secure a deposit of public funds by a state agency. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.044. Custodian as Bailee (a) A custodian under this chapter or a custodian of a security pledged to an institution of higher education, as defined by Section 61.003, Education Code, whether acting alone or through a permitted institution, is for all purposes the bailee or agent of the public entity or institution depositing the public funds with 6 the depository. (b) To the extent of any conflict, Subsection (a) prevails over Chapter 8 or 9, Business & Commerce Code. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.045. Receipt of Security by Custodian On receipt of an investment security, a custodian shall: (1) immediately identify on its books and records, by book entry or another method, the pledge of the security to the public entity; and (2) promptly issue and deliver to the appropriate public entity officer a trust receipt for the pledged security. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.046. Books and Records of Custodian; Inspection (a) A public entity's custodian shall maintain a separate, accurate, and complete record relating to each pledged investment security and each transaction relating to a pledged investment security. (b) The comptroller or the public entity may examine and verify at any reasonable time a pledged investment security or a record a custodian maintains under this section. The public entity or its agent may inspect at any time an investment security evidenced by a trust receipt. (c) The public entity's custodian shall file a collateral report with the comptroller in the manner and on the dates prescribed by the comptroller. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.18, eff. Sept. 1, 1997. Sec. 2257.047. Books and Records of Permitted Institution (a) A permitted institution may apply book entry procedures when an investment security held by a custodian is deposited under Section 2257.042. (b) A permitted institution's records must at all times state the name of the custodian that deposits an investment security in the permitted institution. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.048. Attachment and Perfection of Security Interest (a) A security interest that arises out of a depository's pledge of a security to secure a deposit of public funds by a public entity or an institution of higher education, as defined by Section 61.003, Education Code, is created, attaches, and is perfected for all purposes under state law from the time that the 7 custodian identifies the pledge of the security on the custodian's books and records and issues the trust receipt. (b) A security interest in a pledged security remains perfected in the hands of a subsequent custodian or permitted institution. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. SUBCHAPTER D. AUDITS AND EXAMINATIONS; PENALTIES Sec. 2257.061. Audits and Examinations As part of an audit or regulatory examination of a public entity's depository or custodian, the auditor or examiner shall: (1) examine and verify pledged investment securities and records maintained under Section 2257.025 or 2257.046; and (2) report any significant or material noncompliance with this chapter to the comptroller. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff. Sept. 1, 1997. Sec. 2257.062. Penalties (a) The comptroller may revoke a depository's designation as a state depository for one year if, after notice and a hearing, the comptroller makes a written finding that the depository, while acting as either a depository or a custodian: and (1) did not maintain reasonable compliance with this chapter; (2) failed to remedy a violation of this chapter within a reasonable time after receiving written notice of the violation. (b) The comptroller may permanently revoke a depository's designation as a state depository if the comptroller makes a written finding that the depository: (1) has not maintained reasonable compliance with this chapter; and (2) has acted in bad faith by not remedying a violation of this chapter. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff. Sept. 1, 1997. Sec. 2257.063. Mitigating Circumstances (a) The comptroller shall consider the total circumstances relating to the performance of a depository or custodian when the comptroller makes a finding required by Section 2257.062, including the extent to which the noncompliance is minor, isolated, temporary, or nonrecurrent. 8 (b) The comptroller may not find that a depository or custodian did not maintain reasonable compliance with this chapter if the noncompliance results from the public entity's failure to comply with Section 2257.026. (c) This section does not relieve a depository or custodian of the obligation to secure a deposit of public funds with eligible security in the amount and manner required by this chapter within a reasonable time after the public entity deposits the deposit of public funds with the depository. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff. Sept. 1, 1997. Sec. 2257.064. Reinstatement The comptroller may reinstate a depository's designation as a state depository if (1) the comptroller determines that the depository has remedied all violations of this chapter; and (2) the depository assures the comptroller to the comptroller's satisfaction that the depository will maintain reasonable compliance with this chapter. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 891, Sec. 3.19, eff. Sept. 1, 1997. SUBCHAPTER E. EXEMPT INSTITUTIONS Sec. 2257.081. Definition In this subchapter, "exempt institution" means: (1) a public retirement system, as defined by Section 802.001; or (2) the permanent school fund, as described by Section 43.001, Education Code. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 6.31, eff. Sept. 1, 1997. Sec. 2257.082. Funds of Exempt Institution An exempt institution is not required to have its funds fully insured or collateralized at all times if (1) the funds are held by (A) a custodian of the institution's assets under a trust agreement; or (B) a person in connection with a transaction related to an investment; and 9 (2) the governing body of the institution, in exercising its fiduciary responsibility, determines that the institution is adequately protected by using a trust agreement, special deposit, surety bond, substantial deposit insurance, or other method an exempt institution commonly uses to protect itself from liability. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. Sec. 2257.083. Investment; Selection of Depository This chapter does not: (1) prohibit an exempt institution from prudently investing in a certificate of deposit; or (2) restrict the selection of a depository by the governing body of an exempt institution in accordance with its fiduciary duty. Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993. 10 SCHEDULE F CHAPTER 105. DEPOSITORIES FOR MUNICIPAL FUNDS SUBCHAPTER A. GENERAL PROVISIONS Sec. 105.001. Definitions In this chapter: (1) "Bank" means a state bank or a national bank that has its main office or a branch office in this state. (2) "Credit union" means a state credit union or federal credit union domiciled in this state. (3) "Demand deposit" means a deposit of funds that may be withdrawn on the demand of the depositor. (4) "Depository" means the bank, credit union, or savings association selected by the municipality to provide depository services. (5) "Time deposit" means a deposit of funds subject to a contract between the depositor and the depository under which the depositor may not withdraw any of the funds by check or by another manner until the expiration of a certain period following written notice of the depositor's intent to withdraw the funds. (6) "Depository services" means the receipt and disbursement of funds by a depository in accordance with the terms of a depository services contract. (7) "Depository services contract" means a contract executed by a municipality and a depository containing terms and conditions relating to the depository services to be provided by the depository. (8) "Designated officer" means the treasurer of a municipality or other officer of the municipality so designated by the governing body of a municipality. (9) "Federal credit union" means a credit union organized under the Federal Credit Union Act (12 U.S.C. Section 1751 et seq.). (10) "Federal savings association" means a savings and loan association or a savings bank organized under federal law. (11) "National bank" means a banking corporation organized under the provisions of 12 U.S.C. Section 21. (12) "Savings association" means a savings association or savings bank organized under the laws of this state, another state, or federal law that has its main office or a branch office in this state. Text of subsec. (13) as amended by Acts 1999, 76th Leg., ch. 62, 1 Sec. 105.002. Funds Affected Sec. 7.79 (13) "State bank" has the meaning assigned by Section 31.002(a), Finance Code. Text of subsec. (13) as amended by Acts 1999, 76th Leg., ch. 344, Sec. 5.008 (13) "State bank" means a bank organized under the laws of this state or another state. (14) "State credit union" means a credit union organized under Subtitle D, Title 3, Finance Code. (15) "State savings association" means any savings and loan association or savings bank organized under the laws of this state. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 914, Sec. 9, eff. Sept. 1, 1995. Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.79, eff. Sept. 1, 1999; Acts 1999, 76th Leg., ch. 344, Sec. 5.008, eff. Sept. 1, 1999. This chapter applies to the funds, including school funds, of any municipality or any department or agency of the municipality. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. SUBCHAPTER B. ESTABLISHMENT OF DEPOSITORY Sec. 105.011. Depository Authorized (a) Before awarding a depository services contract to a depository, the governing body of a municipality shall receive applications for the performance of depository services from one or more banks, credit unions, or savings associations . (b) The governing body may consider the application of a bank, credit union, or savings association that is not doing business within the municipality if, (1) the bank, credit union, or savings association maintains a place of business within the state and offers within the state the services required by the depository services contract; and (2) the governing body, prior to giving the notice required by Section 105.012, has adopted a written policy expressly permitting the consideration of applications received by the municipality from a bank, credit union, or savings association that is not doing business within the municipality, after taking into consideration what is in the best interest of the municipality in establishing a depository. (c) The designated officer shall request, receive, and review applications for the performance of depository services. The 2 designated officer shall present the specifications of each application to the governing body who will then select a depository. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1989, 71st Leg., ch. 1, Sec. 14(a), eff. Aug. 28, 1989; Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.012. Notice (a) The designated officer shall give notice to banks, credit unions, and savings associations requesting the submission of applications for the performance of depository services. (b) The notice must contain: (1) the name and address of the designated officer receiving the applications; (2) the date and time the applications are to be received by the designated officer; and (3) the date, time, and place the governing body of the municipality will consider the selection of one or more depositories. (c) Notice of the request shall be published at least once no later than 21 days prior to the deadline for receipt of applications for depository services contracts (i) in a newspaper of general circulation in the municipality and (ii) in a financial publication of general circulation published within this state; provided, that the notice required by clause (ii) shall not be required if the governing body has not adopted the written policy described in Section 105.011. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.013. Application The designated officer may not consider an application if it is received after the date specified in the notice for receiving applications by the designated officer. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.014. Review of Applications In reviewing the applications, the designated officer shall consider the terms and conditions for the performance of depository services, including the type and cost of services to be provided to the municipality, consistent with any policy guidelines adopted by the governing body regarding the selection of one or more depositories. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.015. Selection of Depository 3 (a) The governing body of a municipality may authorize the designated officer to execute on the municipality's behalf one or more depository services contracts. (b) The governing body may reject any of the applications and readvertise if all applications are rejected. (c) The conflict of interests provisions of Section 131.903 apply to the selection of the depositories. Added by Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Renumbered from Sec. 105.014 and amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1993, 73rd Leg., ch. 268, Sec. 25, eff. Sept. 1, 1993. Sec. 105.016. Designation of Depository (a) The governing body shall designate, by an order recorded in its minutes, the bank, credit union, or savings association to serve as a depository for the municipality's funds. (b) If a bank, credit union, or savings association selected as a municipal depository does not provide security by the deadline prescribed by Section 105.031, the selection of the bank, credit union, or savings association as a depository is void, and the governing body may consider the application it deems to be the next most advantageous depository services application. Added by Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Renumbered from Sec. 105.015 and amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.017. Term of Depository Contract A municipality may approve, execute, and deliver any depository services contract whose term does not exceed five years. The depository services contract may only contain terms and conditions approved by the governing body of the municipality. Added by Acts 1993, 73rd Leg., ch. 234, Sec. Sec. 105.018. Additional Services 4 1, eff. Sept. 1, 1993. In addition to depository services, a municipality may contract with financial institutions, including banks, credit unions, and savings associations, for additional financial services under a separate contract if the governing body of the municipality determines that additional financial services are necessary in the administration, collection, investment, and transfer of municipal funds. Added by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. SUBCHAPTER C. SECURITY FOR FUNDS HELD BY DEPOSITORY Sec. 105.031. Qualification as Depository (a) The bank or savings association, to qualify as a municipal depository, must, not later than five days before the commencement of the term of the depository services contract, provide security for the municipal funds to be deposited in accordance with the terms of the depository services contract. (b) Chapter 2257, Government Code governs the type, level, substitution, possession, release, and method of valuation of the security necessary to secure the deposit of municipal funds (c) The bank, credit union, or savings association may use personal bonds, surety bonds, or any combination to secure municipal funds only if each personal bond and surety bond is specifically approved by the governing body of the municipality or its designated officer. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 76, Sec. 5.95(12), eff. Sept. 1, 1995. Sec. 105.032. Personal Bond (a) One or more personal bonds executed and filed with the governing body of the municipality or its designated officer, payable to the municipality, qualify as security under this subchapter if who (1) the bonds are signed by at least five solvent sureties (A) own unencumbered real property in the state that has a value at least equal to the amount of the bonds and that is not exempt from execution under the constitution and other laws of this state; or (B) have an aggregate net worth at least equal to the amount of the bonds; and (2) the bonds are approved by the governing body or its designated officer. (b) When a bond is filed for approval under Subsection (a) (1)(A), the sureties shall also file with the governing body a statement containing: (1) a description of the unencumbered and nonexempt real property sufficient to identify the secured property; and (2) a fair estimate of the value of each tract of real property listed, including the value of any improvements on the property. (c) When a bond is filed for approval under Subsection (a)(1)(B), the sureties shall also file with the governing body or designated officer of the municipality an itemized and verified financial statement showing that the aggregate net worth of the sureties is at least equal to the amount of the bonds. (d) After the governing body approves a personal bond, it shall be filed with the secretary and the designated officer of the municipality. The statement required by Subsection (c) shall be attached to the bond. 5 Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.033. Surety Bond (a) One or more bonds issued and executed by one or more solvent surety companies authorized to do business in this state, payable to the municipality and filed with the secretary and the designated officer of the municipality, qualify as security under this subchapter if the bonds are approved by the governing body. (b) After the governing body approves a surety bond, it shall be filed with the secretary and the designated officer of the municipality. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987, Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.034. Conditions to Acting as Depository (a) The depository shall: (1) keep the municipal funds covered by the depository services contract; (2) perform all duties and obligations imposed on the depository by law and under the depository services contract; (3) pay on presentation all checks drawn and properly payable on a demand deposit account with the depository; (4) pay all transfers properly payable as directed by a designated officer; (5) provide and maintain security at the level required by the provisions of Chapter 2257, Government Code; and (6) account for the municipal funds as required by law. (b) Any suit brought in connection with a depository services contract must be tried in the county in which the city hall of the municipality is located. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 76, Sec. 5.95(12), eff. Sept. 1, 1995. SUBCHAPTER D. MAINTENANCE AND MODIFICATION OF SECURITY Sec. 105.051. Maintenance of Security (a) A depository services contract shall contain terms and conditions relating to the possession, substitution, or release of security, including: (1) requiring the depository to execute a new bond or pledge additional securities for the deposit of municipal funds; (2) substituting one security for another; 6 (3) releasing securities pledged by a depository in excess of the amount required by this chapter; (4) the time period in which such addition, substitution, or release of security by a depository may occur; and (5) other matters relating to the possession, substitution, or release of security the municipality considers necessary for its protection. (b) If a depository fails for any reason to comply with the requirements governing the possession, substitution, or release of security, the governing body may select a new depository in the manner provided in this chapter. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.052. Solvency of Personal Surety (a) At least twice each year while a personal bond securing municipal deposits is in effect, the designated officer of the municipality shall investigate the solvency of each surety on the bond. The governing body of the municipality or its designated officer may require a surety to make an itemized and verified financial statement accurately showing the surety's financial position and, if the bond requires the surety to own real property, identifying each tract of real property owned by the surety and stating its value. (b) The governing body of the municipality shall require a depository to provide a new bond meeting the requirements of this chapter if a financial statement provided under Subsection (a) indicates that: (1) a surety is insolvent; (2) a surety's net worth is less than the amount required by this chapter; (3) the assets listed are depreciated or their value is in any way impaired; or (4) real property required by the bond has been disposed of or encumbered and the value of the remaining unencumbered and nonexempt real property is insufficient to meet the requirements of this chapter. Added by Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Renumbered from Sec. 105.055 and amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.053. Solvency of Surety Company and Adequacy of Securities At any time the governing body of the municipality considers it necessary for the protection of the municipality, the governing body may direct the designated officer to investigate the solvency of a surety company that issues a bond on behalf of a municipal depository or investigate the value of securities pledged by a 7 depository to secure municipal funds. Added by Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Renumbered from Sec. 105.056 and amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.054. Surrender of Interest on Securities Except as provided for in the collateral policies of the municipality adopted in accordance with Chapter 2257, Government Code, on request of a municipal depository, the municipality shall surrender, when due, interest coupons or other evidence of interest on securities deposited by the depository with the governing body if the securities remaining pledged by the depository are adequate to meet the requirements of this chapter and of the governing body. Added by Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Renumbered from Sec. 105.057 and amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(12), eff. Sept. 1, 1995. SUBCHAPTER E. DEPOSITORY ACCOUNTS Sec. 105.071. Character and Amount of Deposits (a) The governing body of the municipality may determine and designate in the depository services contract the character and amount of municipal funds that will be demand deposits. However, the municipality has the right to maintain other investments of municipal funds in accordance with the investment policy adopted by the municipality. (b) The designated officer may contract with a depository for interest on time deposits, including, without limitation, certificates of deposit, at any legal rate under federal or state law, rule, or regulation. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.072. Investments The provisions of Chapter 810, Acts of the 66th Legislature, Regular Session, 1979 (Article 4413(34c), Vernon's Texas Civil Statutes), and Subchapter A, Chapter 2256, Government Code shall govern the investment of municipal funds. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993; Acts 1995, 74th Leg., ch. 76, Sec. 5.95(11), eff. Sept. 1, 1995. Sec. 105.073. Deposit of Funds Not later than 60 days from the date the governing body of the municipality designates a depository in accordance with the provisions of Section 105.016, the designated officer of the municipality shall transfer to the depository all the municipal funds covered by the depository services contract under the control of the designated officer. The designated officer of the municipality shall as soon as practicable also deposit in the 8 depository to the credit of the municipality any money covered by the depository services contract received after the depository is designated. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.074. Payment of Funds (a) The funds of the municipality may be paid out of a depository only at the direction of a designated officer. (b) Except as provided in Subsection (g), a designated officer may draw a check on a depository only on a warrant signed by the mayor and attested by the secretary of the municipality. (c) If there is sufficient money in a fund in a depository against which the proper authority has drawn a warrant, the designated officer on presentation of the warrant shall draw a check on the depository in favor of the legal holder of the warrant, retain the warrant, and charge the warrant against the fund on which it is drawn. The designated officer may not draw a warrant on a fund in a depository unless the fund has sufficient money to pay the warrant. (d) A designated officer may not draw a check on any funds designated in the depository services contract as time deposits until notice has been given and the notice period has expired under the terms of the contract with the depository. (e) The mayor and secretary of the municipality may not draw a warrant on a special fund in a depository or under the control of the designated officer that was created to pay the bonded indebtedness of the municipality other than to pay the principal of or interest on the indebtedness or to invest the fund as provided by law. (f) The designated officer may not pay or draw a check to pay money out of a special fund that was created to pay the bonded indebtedness of the municipality other than to pay the principal of or interest on the indebtedness or to invest the fund as provided by law. (g) Notwithstanding the provisions of Subsections (b) through (f), the governing body of a municipality may adopt procedures: (1) governing the method by which the designated officer is authorized to direct payments from the funds of the municipality on deposit with a depository; (2) governing the method of payment of obligations of the municipality, including payment by check, draft, wire transfer, or other method of payment mutually acceptable to the municipality and the depository; and (3) the governing body determines are necessary to ensure the safety and integrity of the payment process. (h) If a municipality adopts procedures in accordance with Subsection (g), a copy of the adopted procedures shall be filed 9 with the depository. The designated officer and the depository shall agree upon record- keeping safeguards and other measures necessary to ensure the safety and integrity of the payment process. The safeguards must be approved by the governing body of the municipality if the governing body finds that the safeguards are consistent with and do not contravene the procedures adopted under Subsection (g). Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.075. Checks Payable at Depository Checks drawn by the treasurer of the municipality against municipal funds on deposit are payable by the depository at its place of business in the municipality. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Sec. 105.076. Debts Payable Other Than at Municipal Treasury The governing body of the municipality may direct the designated officer to withdraw from a depository and deposit money sufficient to pay a bond, coupon, or other indebtedness of the municipality at a place other than at the municipal treasury if by its terms the indebtedness is payable on maturity or upon redemption prior to maturity at the other location. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. SUBCHAPTER F. LIABILITY AND REPORT OF DESIGNATED OFFICER Sec. 105.091. Liability of Designated Officer (a) The designated officer is not responsible for any loss of municipal funds through the negligence, failure, or wrongful act of a depository. This subsection does not release the designated officer from responsibility for a loss resulting from the official misconduct of the designated officer, including a misappropriation of the funds, or from responsibility for the funds until a depository is selected and the funds are deposited. (b) A designated officer who diverts money from an interest and sinking fund or who applies money in that fund for a purpose other than as permitted by Section 105.074(f) is: (1) subject to a penalty of not less than $500 or more than $1,000; and (2) liable for the amount of money that is diverted. (c) The state is entitled to recover a penalty imposed under Subsection (b)(1). The amount of diverted money that is recovered under Subsection (b)(2) shall be paid into the municipal treasury to the credit of the fund from which it was diverted. (d) The attorney general or the district attorney of the district in which the designated officer resides, or the county 10 attorney in a county that is not served by a district attorney, may institute suit against the designated officer and the sureties on the designated officer's official bond to recover the amounts described by Subsection (b). Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1999, 76th Leg., ch. 227, Sec. 6, eff. Sept. 1, 1999. Sec. 105.092. Report by Designated Officer In conjunction with the publication of the annual financial statement of the municipality, the designated officer shall prepare a report which shall describe in summary form: (1) the amount of receipts and expenditures of the municipal treasury; (2) the amount of money on hand in each fund; (3) the amount of bonds becoming due for redemption that require action; (4) the amount of interest to be paid during the next fiscal year; and (5) any other information required by law to be reported by the designated officer. Acts 1987, 70th Leg., ch. 149, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1993, 73rd Leg., ch. 234, Sec. 1, eff. Sept. 1, 1993. CHAPTER 106. MUNICIPAL CHILD SAFETY TRUST FUND Sec. 106.001. Creation of Child Safety Trust Fund in Certain Municipalities A child safety trust fund shall be created in the treasury of a municipality with a population of more than 850,000. Added by Acts 1995, 74th Leg., ch. 76, Sec. 10.01, eff. Sept. 1, 1995. Sec. 106.002. Deposits to Fund The following money shall be deposited in the fund: (1) court costs collected under Article 102.014, Code of Criminal Procedure; and (2) optional motor vehicle registration fees remitted to the municipality by the county under Section 502.173, Transportation Code. Added by Acts 1995, 74th Leg., ch. 76, Sec. 10.01, eff. Sept. 1, 1995. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 30.214, eff. Sept. 1, 1997. 11 Sec. 106.003. Use of Fund (a) Money in the fund shall be used for the purpose of providing school crossing guard services as provided by Chapter 343. (b) After payment of the expenses of the school crossing guard services, any remaining money in the fund may be used for programs designed to enhance child safety, health, or nutrition, including child abuse intervention and prevention and drug and alcohol abuse prevention. Added by Acts 1995, 74th Leg., ch. 76, Sec. 10.01, eff. Sept. 1, 1995. Sec. 106.004. Audit (a) Money collected under this chapter is subject to audit by the comptroller. (b) Money expended under this chapter is subject to audit in the same manner as other funds expended by a county or municipality. Added by Acts 1995, 74th Leg., ch. 76, Sec. 10.01, eff. Sept. 1,1995. 12 1 1 l 1 RESPONSE TO REQUEST FOR APPLICATION FOR DEPOSITORY AND BANKING SERVICES CITY OF ROUND ROCK, TEXAS PROVIDED BY BANK OF AMERICA January 29, 2002 EXHIBIT i BankofAmerica. ' Title: Senior Vice President Depository Services Application, Page 23 ATTACHMENT A CITY OF ROUND ROCK DEPOSITORY SERVICES APPLICATION FORM 1. The undersigned bank, credit union or savings association (hereinafter called Applicant), for the privilege of acting as Depository of the City of Round Rock, Texas, and in consideration of the required services specifications, supporting schedules, and attached activity shall prepare and attach to this Application a pro -forma analysis statement in accordance with its proposed pricing. 2. Applicant names the following Public Funds or Treasury Officer as the Relationship Officer for the City of Round Rock: Name: Alyce Anne Baggett Phone number: 397.2664 Email address: alvice.baggettnbankofamerica.com 3. Attach separate pages with information regarding any and all fees and services affecting this Application as requested in the Required Services section. Also include any information regarding fees and services which you feel may benefit the City not specifically mentioned in the required services section. Please refer to Addendum 3 for a detailed fee schedule. 4. Attach a copy of the latest financial statement which Applicant filed with the regulatory agency which has authority over the Applicant, a current credit ratings report, along with a corporate annual financial report for Applicant's holding company. Call Report and audited Annual Financial Statement can be found in Addendum 7. 5. Provide a copy of Applicant's Disaster Recovery Plans. Bank of America recognizes the importance of data processing services to the business functions of the Bank and our customers, and has developed extensive contingency plans for disaster recovery. The Bank of America Contingency Plan includes the resources and procedures necessary to restore services in the event of a major processing disruption. The Board of Directors reviews and approves management's assessment of the Contingency Plan each year. All Bank of America processing systems reside at the "Compute Utility" in Richardson, Texas. The Compute Utility, one of the nation's most advanced and sophisticated computer facilities, is a product of a Bank of America and Perot Systems partnership. In J the event of a major processing disruption, the Bank's computer site in Charlotte, North Carolina will be used for off -site contingency backup. Multiple tests are conducted each year to "restore" the Bank of America operating system and test selected application systems. Additionally, contingency plans exist for all financial application systems. In the event of a disaster, the goal for recovery of the most critical application systems is 48 hours. Following are the contingency plans for some of our systems that will be utilized by the City: FUNDS TRANSFER Bank of America has a separate line to the Federal Reserve that is called Fed Line II. This is a separate terminal input capability that connects the Federal Reserve to the Bank of America wire room. Phone initiation would also be accepted by the Federal Reserve. A second alternative would be for Bank of America to forward the information to another Bank of America site (e.g., Charlotte) which would in turn forward the information to the Federal Reserve. BALANCE REPORTING If system access via personal computer is down Bank of America can provide balances by telephone. Also, if the system is down for an extended period of time, there is a backup system in Richmond, Virginia. On rare occasions, access to the system had been delayed several hours in the morning. The system has not been down for an entire day. AUTOMATED CLEARING HOUSE If necessary, Bank of America has the capability to re -route all ACH transmissions through its Atlanta offices. This change would not cause any delay in posting of transactions, and would not require any additional effort on the City's part. 6. Provide copies of all agreement forms and statements that are expected to be executed if the Contract is awarded to Depository, including, but not limited to: Collateral Services Agreement Controlled Disbursement Agreement Wire Transfer Agreement Balance Reporting Agreement Automatic Clearing House Agreement Safekeeping Agreement Banking Services Agreement Positive Pay Agreement Treasury Services Agreement Terms & Conditions Statement Please see Addendum 4. APPLICANT: Bank of America BY: C. wwc. Depository Services Application, Page 24 (Auto ized Signature) Alyce Anne Baggett (Typed or Printed Name) TITLE:Senior Vice President ADDRESS:P. O. Box 908, TX9- 329 -11 -01 CITY, ST.: Austin, TX 78781 -0908 TELEPHONE: 397.2664 DATE:January 29, 2002 Depository Services Application, Page 25 • The City of Round Rock, Texas is a home -rule chartered municipality located just north of Austin. The City has what is called a Manager- Council form of government. Today, there are over 62,000 individuals calling Round Rock home, along with Dell Computers and the Round Rock Express minor league baseball team. The City has experienced tremendous growth over the past decade. This has led to a need for more efficient Depository services. The City of Round Rock has a certified cash manager on staff to work with its Depository in the ever - changing world of treasury management. The City currently has seven (7) interest - bearing checking accounts, a controlled disbursement account, along with two (2) non - interesting bearing accounts. The accounts consist of two (2) main Operating accounts, a Payroll account, a Health Claims account, three (3) Debt Service accounts, and two (2) grant accounts. Two of the City's accounts currently use Positive Pay services. The City has six to ten (6 -10) departments which ship deposits to vault services. The Utility department also encodes their checks for deposit. The controlled disbursement account averages 36 items cleared per day at an average of $248,000. The City's treasury area currently uses electronic balance reporting, online Fed - wires, and direct transmission of ACH and Positive Pay files. Please see the attached proforma activity for more details on the City's current activity. The City is looking to its future Depository to help migrate to more efficient methods of receipts and disbursements. For example, the City is looking to completely automate its payroll disbursement process. Currently, the City's payroll system uses both checks and direct deposit disbursements. The City would like to eliminate payroll checks completely within the next year or two. The City is also looking in the future to offer Internet payment capabilities, using "RCK" collections services, and ▪ converting check payments to ACH items. Our new Depository will need to be capable of assisting in the implemention of these services for the City. The City looks forward to working with its Depository over the next few years in developing these services. Bank of America offers interest bearing and non - interest bearing checking accounts. Interest Rate The base rate for interest bearing accounts will be the weekly 91 day Treasury Bill Auction Discount rate as stated in the Wall Street Journal, Southwest Edition on the first business day following the auction. The auction is held each Monday and the rate will be adjusted on Tuesday. When Monday is a holiday, the auction will be held on Tuesday and the rate will be adjusted on Wednesday. The rate will be adjusted as follows: Variable Rate Option: 70% of Base Rate Interest Computation Depository Services Application, Page 26 SCHEDULE A Summary & Statistics i Interest is compounded monthly and is accrued daily based on the collected balance and a 365 day year. Interest is credited to the account on the last business day of the month. If the collected balance falls below $0.00, interest will be deducted on the amount overdrawn at the Prime Rate plus three (3) percent. Interest is computed on each individual interest bearing account; balances in multiple accounts are not aggregated for interest computation. Account Restrictions There are no restrictions on the frequency or types of withdrawals from interest bearing or non - interest bearing accounts. Depository Services Application, Page 27 J AM J DEPOSITORY SERVICES BANK OF AMERICA ACCOUNT ANALYSIS PRICE SCHEDULE Banking Center Over the Counter Deposits All Other Deposits /Credits Electronic Credit Unencoded Deposited Items - Bundled Preencoded Deposited Items - Bundled Deposited Items On Us Local Clearing In District Fed Cities All Other High Dollar Group Sort Encoding Charge Presorted Foreign Items Rejected Items Up to 1% Rejected Items Greater than 1% Domestic Collection Item Non - documentary Domestic Collection Item Documentary Return Item Processing Return Items.. Return Items Reclear Return Items Telephone Advice (per call) Return Item Alternate Charge Return Item Duplicate Advice Return Item Special Handling (per item) Return Item Buy -Back Service (per month) Return Item Buy -Back Electronic Return Item Notification Monthly Maintenance Per Return Item Return Item Data (per keystroke) Disbursement Services Checks Paid Electronic Debit Stop Payment Orders Manual Call Automated: Entry Inquiry .30 .30 .20 09 -" Yep .055 �pQra��Jti .07 �,Sr,A2. .09 • .33 I .045 4.00 .10 .50 10.00 15.00 2.00 1.50 5.00 .60 .60 1.00 20.00 10.00 25.00 1.00 .02 .10 .08 25.00 9.00 1.00 DEPOSITORY SERVICES (CONTINUED) Controlled Disbursement Monthly Maintenance (per account) 50.00 Checks Paid 12 Funding Credit .50 Daily Fraud Review 500.00 Maintenance and Other Services Monthly Account Maintenance for Checking 10.00 Interim Bank Statements (One Statement per month, no charge) 5.00 Duplicate Statement 5.00 FDIC Insurance (Per$1,000 end of month ledger balance) .0143** Zero Balance Master Account 50.00 Zero Balance Subsidiary Account 25.00 Ledger Overdraft (per item) 0.00* Miscellaneous Account Services Account Research Fee 20.00 Balance Inquiry Fee 2,00 Overdraft Protection Fee 5.00 Account Printout 5.00 Cashier's Checks 5.00 Money Order 4.00 Non - Client Check Cashing Fee 0.00 Per Check Copy 3.00 CPA Confirmations Per Request 10.00 Statement Copy Request 5.00 Total Funds Roundup Master Account Maintenance 50.00 Sub Account Maintenance 25.00 Location Number Research 5.00 Return Item - Multiple Bank Return 10.00 Depository Plus Master Account Maintenance 50.00 Sub Account Maintenance 5.00 Checks Paid /Other Debits .15 Deposits /Other Credits .60 Earnings Credit Rate - A Bank of America rate, established monthly, and equal to the monthly average of the weekly 91 -day Treasury Bill Auction Rate for the previous month. Reserve Requirement - 10/ -- • The Overdraft Handling Charge is for processing of the transaction. There is also a Funds Usage charge of Prime Rate on the uncollected funds for the day, which is calculated at the relationship level. This is a direct pass through charge from the Federal Reserve and the FDIC and is subject to change as directed by these entities upon 30 day written notice of such change. INFORMATION REPORTING BANK OF AMERICA DIRECT Previous Day Maintenance: (per customer, per month) $ 25.00 Current Day Maintenance: (per customer, per month) 25.00 Per Account Maintenance: (per account, per month) 5.00 Transaction Detail Charge: (Optional) Previous Day Item: (stored 5 days) .05 Current Day Item: (stored 5 days) .05 Previous Day Item: (stored 25 days) .06 Stop Payment - 12 month 9.00 Stop Payment - 18 month 12.00 Stop Payment - 24 month 15.00 Stop Payment - 36 month 18.00 Paid Item Inquiry 1.00 Paid Item Viewed 2.00 Electronic Demand Deposit Statement (per account, per month) 10.00 Electronic Account Analysis Statement (per account, per month) 5.00 ACCOUNT RECONCILIATION Serial Sort - Without Reconciliation Per Cycle $ 35.00 Per Item . 04 Serial Sort - With Reconciliation Per Cycle Per Item 0.00 .01 Partial Reconciliation Per Cycle 0.00 Per Item .04 Output File Transmission 20.00 Tape 35.00 Diskette 25.00 Full Reconciliation Per Cycle Per Item Output File Transmission Tape Diskette Per Manual Issue Input 0.00 .05 20.00 35.00 25.00 1.00 Deposit Reconciliation Per Cycle 0.00 Per Item . 08 Output File Transmission 20.00 Tape 35.00 Diskette 25.00 Miscellaneous Services L / Maximum Dollar Control iptcs , r 0 . 75.00 Stale Date Control (per month) 75.00 ARP Additional Reports (per report) 10.00 Duplicate Reports (per report) 10.00 Float Disbursement (per account) 50.00 ACCOUNT RECONCILIATION (CONTINUED) WITH ELECTRONIC POSITIVE PAY Without Reconciliation Per Cycle 50.00 Per Item .02 Per Manual Issue Input 1.00 Partial Reconciliation Per Cycle 0.00 Per Item .04 Per Manual Issue Input 1.00 Full Reconciliation Per Cycle 0.00 Per Item .05 Per Manual Issue Input 1.00 CD ROM Maintenance (Per account per month) 5.00 Per Item .02 CD ROM Disk 10.00 CD ROM Duplicate 15.00 Per Item History .06 Deposit Notification 125.00 _ Manual Phone Call, Telecopy, TWX (per box, per month) 20.00 Additional Lockbox (same call) Data Transmission 100.00 Monthly Maintenance (first box) 40.00 Additional Transmissions (per lockbox, per month) Per Item 10 . Per Keystroke 75.00 PC Report 100.00 Programming (per hour) Mail -Out Options .., 17 First Class, U.S. Postal Service (per item) .60 Express Mail, U.S. Postal Service (per item) 20.00 — Remittance Package Delivery Prep Cost + 2 Overnight Courier Image Services 27 Per Item Processed 7 Reassociation, Paper .100.115 Image Transmission Maintenance 15.00 Image Output Per CD .005 Per Image Scanned 00 Online Access -Per Item *Non- Standard assembly and handling fees are quoted based on complexity. WHOLESALE LOCKBOX PROCESSING Basic Services $ 85.00 Monthly Maintenance (per lockbox) 1.00 Lockbox Deposit Preparation (per deposit) .35 Per Item Processing 05 Check Photocopy (1st check) 15 Check Photocopy (each additional check) 10 Non Depositable Items 7 Foreign Items 25.75 Additional Copy of Reports 5.00 Walk In Deposit 'Processing Options Simple (per item) Complex (per item) .05 .15 ACH APPLICATIONS Corporate to Consumer Per One Day Credit $ .10 Per Two Day Credit .08 Per One Day Debit .10 Per Two Day Debit .08 Per Paper Item (DTCIPAC) 1.00 Per Input - Tape /Cartridge /Diskette 100.00 Per Input - Transmission 20.00 Per Input -PC 5.00 Input- Vendor 20.00 ACH Maintenance (per month) 15.00 Initial ACH Setup 0.00 Corporate to Corporate Per One Day Credit .18 Per Two Day Credit .15 Per One Day Debit .18 Per Two Day Debit .15 Per Originating Addenda .01 Per Paper Item (DTC /PAC) 1.00 Per Input -Tape 150.00 Per Input- Transmission 7.00 Per Input -PC 7.00 Per Input- Vendor 7.00 ACH Maintenance (per month) 20.00 Initial ACH Setup 0.00 Additional Pricing Components Per Delete /Reversal 7.50 Per Reclear 2.50 Per Return Item 3.50 Return Notification - Telephone (per call) 7.00 Return Notification -Fax (per fax) 3.00 Return Items File 50.00 Initial Setup for Transmission 0.00 Special MicroCash Charges Initial Setup 0.00 MicroCash Support (per month) 15.00 NOTE: ALL MICROCASH CHARGES ARE IN ADDITION TO ACH CHARGES. j ACH APPLICATIONS (CONTINUED) Electronic Payment Authorization Maintenance (per month) 10.00 Trading Partner Add /Change 10.00 Return /Receipt File (per item) .10 Receipt File Maintenance 50.00 Global Advice Implementation Charge 0.00 Receipt Maintenance (per month) 25.00 Per Payment Recived .75 Per Payment Processing 0 - 75 Payments (per 1,000 characters) 0.00 75+ Payments (per 1,000 characters) .05 POS Check Conversion Implementation Fee 0.00 Maintenance (per month) 25.00 Conversion Fee (per item) Less than 100,000 items .10 100,000 to 1,000,000 items .095 Over !,000,000 items .09 Declines, Rejects, Voids (per item) Less than 100,000 items .10 Over 100,000 items . Return Item Representment (per item) Less than 100,000 items .09 100,000 to 1,000,000 items .085 Over 1,000,000 items .08 ACH Recall 50.00 Consumer NOC (per item) Less than 100,000 items 1.00 Greater than 100,000 items .95 Vendor Supported Cash Concentration Monthly Maintenance Per Location 5.00 Monthly Maintenance Per Inactive Location 5.00 Per Input Voice .90 Touch Tone .80 Terminal .75 MIS .10 Per Inquiry/Correction Voice 2.50 Terminal 1.50 Cash Con Report 1 Cash Caon Report Field .07 Information Storage Per Item 30 Business Days .10 45 Business Days .12 60 Business Days .15 Automated Cash Concentration Implementation Fee 50.00 Monthly Maintenance .00 Per Transaction Override 2.00 Per Field 1 - 25,000 fields .15 25,001 - 50,000 fields .14 Over 50,001 12 Daily Fax 1.00 Inactive Location 5.00 Location Setup 5.00 Monthly Input Fee Terminal 20.00 Voice 40.00 Fax 20.00 Single Daily Call 20.00 ACH APPLICATIONS (CONTINUED) Cash Pay Employee Enrollment .00 ATM Withdrawal Domestic 1.50 ATM Withdrawal International 2.75 POS Withdrawal 1.50 VRU Inquiry Domestic 1.50 VRU Inquiry International 2.50 CSR Inquiry Domestic 3.00 CSR Inquiry International 5.00 ATM Balance Inquiry 1.00 Emergency Cash Transfer Domestic 15.00 Emergency Cash Transfer International 30.00 Replacement Card Domestic 10.00 Replacement Card International 25.00 Exception Items 5.75 Express Tax Reprocessed Tax Payment Due to NSF 10.00 Fed EFTPS Tax Phone Deposit with Receipt 5.00 J 1 State Tax Phone Deposit with Receipt 3.50 20.50 Manual Assisted Phone Deposit 3.50 PC Tax Deposit 50.00 Manual Assisted PC Tax Deposit 75.00 Fed EFTPS Manual Assisted Fedwire 2.50 Mailed Tax Deposit Receipt 2.00 Faxed Tax Deposit Receipt 50.00 PC Software 100.00 Tax Update Diskettes 5.00 PC Subscriber Fee 25.00 Tax Deposit Quarterly Report .00 Tax Deposit Quarterly Report Transaction 10.00 Express Tax Letter Preparation J 1 1 FUNDS TRANSFER SERVICES Telephone Initiated Wire Transfer Repetitive $ 13.00 Non - repetitive 13.00 Draw Response Wire Out - Non - repetitive 10.00 Wire Out - Drawdown Response 10.00 Outgoing Drawdown Request 10.00 Automatic 8.00 Internal Telephone Wire Transfer Repetitive 6.00 Non - repetitive 6.00 Automatic 4.00 Bank Assisted Wire Transfer Internal 35.00 Domestic 35.00 Drawdown Request 35.00 Electronic Wire Transfer Wire Out - Repair Fee 3.00 Outgoing Transfer 8.00 Outgoing Transfer - Internal 4.00 Outgoing Transfer Drawdown Request 5.00 Bank Maintained Template Set -Up 2.00 Bank Maintained Template Storage 1.00 Bank Maintained Template Modify .50 Customer Maintained Template Storage .50 1.. i.}ra- lran■ , ,o c Incoming Transfers Incoming Wire Transfer 5.00 Incoming Internal Wire Credit 5.00 Notification Telephone 7.50 Mail 2.00 Fax 3.00 International Transfers Manual Out - USD 40.00 Electronic Out - USD 25.00 Automated Standing Order 25.00 Third Party (incoming) 15,00 Incoming - USD 12.00 Manual Foreign Draft Issued 15.00 Foreign Draft Cancellation 35.00 Tracer 15.00 Amended /Confirmation 35.00 NOTE: ADD $4.00 IF FED NOTIFICATION IS REQUIRED FOR OUTGOING WIRES. COMMERCIAL DEPOSIT PROCESSING Incoming Cash Deposits Banking Center Deposit - Immdediate Verification $ .20/$100 (Applies only to banking center deposits of $4,000 or more and includes the total amount of coin and currency deposited in the month.) Banking Center Deposit -- Post Verification .10/$100 Banking Center Deposit -- Night Drop .10/$100 Night Drop Non Standard Bag 5.00* Fed Currency Deposit .07/$100 Vault Deposit .09/$100 Envelope Processing, per envelope 1.50* Envelop Consolidation .50* Coin Verification: Fed Standard Bag No Charge Mixed Denomination (per bag) 5.00* Canvas Bag 5.00* Outgoing Change Orders Currency Supplied Per $100 Non - Standard .12 Currency Supplied Per $100 Standard .10 Coin Per Rot .08 Coin Per Roll Standard Box .08 Per Change Order 2.00 Deposit Corrections Per Correction 5.00 Per Correction Duplicate 1.00 Telephone Notification 5.00 Tamper Evident Plastic Bags ** Post Verification Armored Bags, 14x9, per 100 Vendor Charge Post Verification Armored Bags, 15x16, per 100 Vendor Charge Post Verification Armored Bags, 15x24, per 100 Vendor Charge Post Verification Non - Armored Bags, 11x14, per 100 Vendor Charge Post Verification Non - Armored Bags, 14x20, per 100 Vendor Charge *Plus Cash Processing Charge * *Plus Applicable Sales Tax Per State j J 1 1 AUTOMATED OVERNIGHT INVESTMENT Monthly Maintenance Repurchase Agreement $100.00 EuroDollar Deposits 100.00 Mutual Funds 100.00 Per Multi- Account 50.00 Split Investment Sweep 125.00 SAFEKEEPING SERVICES Deposits/Withdrawals 16.50 Disbursement Fees: - MBS /ABS Paydowns & Other Unique Securities Income 16.50 Processing - Income Collection/Disbursement for Credit to Account 1.00 - Redemptions/Maturities /Call Bonds for Credit to Account 1.00 - Check/Wired Funds 5.00 Asset Maintenance - Monthly Fees: - Safekeeping of Assets/Receipts 0.60 - Par Value /Assets Held — Up to $1 million par 0.005 Next $4 million par s 1i° 0.003 Account Maintenance - Monthly Fees 5.00 Account Billing Fee 50.00 Verification Statement 5.00 Registration of Securities 20.00 CLEARING SERVICES DTC (Book Entry) Eligible 50.00 FRB (Book Entry) Eligible MBS /ABS - Other Unique Securities Physical Securities Free Movements OTHER CHARGES BANK OF AMERICA SAFEKEEPING PRICE LIST Monthly Third party safekeeping fee (charged annually- December) See attached Definition of Charges for explanation of each fee. 50.00 50.00 50.00 50.00 Actual Charge 50.00 J 1 1 1 1 SAFEKEEPING SERVICES Deposits and Withdrawals Disbursement Fees: account. Payment of principal on maturing or called securities held in a safekeeping issuance of credit to Bank of America Demand Deposit (DDA) or savings account. month. Securities deposited or withdrawn to /from safekeeping, including securities that are traded through Bank of America, NCMI or other broker /dealers. • Mortgage Backed/Asset Backed (MBS /ABS) Paydowns and Other Unique Securities Income Processing (per receipt) Monthly principal and interest payments collected and disbursed on mortgage- backed, asset - backed and other unique securities, (i.e., REMICs, VRAPs, VRDNs, government exports, etc.) • Income Collection/Disbursement for credit to Account (per receipt) Payment of interest or principal on securities held in a safekeeping account by issuance of credit to Bank of America Demand Deposit Account (DDA) or savings • Redemptions/Maturities/Call Bonds (per receipt) • Check/Wired Funds Asset Maintenance - Monthly Fees DEFINITION OF CHARGES Payment of interest or principal on securities held in a safekeeping account by issuance of a cashiers check or wiring of funds to an account maintained with another financial institution. (Cashiers Check, Wire Transfers, etc.) account by • Safekeeping of Assets /Receipts Safekeeping maintenance fee based on average number of receipts held during the • Par Value of Assets Held - Fee /$1,000 Par Value Safekeeping maintenance fee based on average par value held during the month. Account Maintenance - Month Fees Safekeeping account maintenance fee for each safekeeping account maintained. SAFEKEEPING SERVICES (cont.) Account Billing Fee Charge for billing of fee to customers who require a bill rather than a direct charge to their Bank of America DDA or savings account. Verification Statement Statement of assets held in safekeeping at Bank of America. Registration of Securities Physical securities delivered to a Transfer Agent for registration into a customer's name or into Bank of America's nominee name. CLEARING SERVICES DTC (Book Entry) Eligible (per settlement) Clearing or a securities trade that settle book -entry through Depository Trust Company, FRB (Book Entry) Eligible (per settlement) Clearing of securities trade that settles book -entry through the Federal Reserve Bank's securities transfer system, U.S. Treasuries and Government Agencies. MBS/ABS and Other Unique Securities (per settlement) Clearing of a securities trade involving mortgage- backed, asset - backed, private placements, limited partnerships, REMICs, VRAPs. VRDNs, government exports or other non - standard securities, settling through a Bank of America custodian bank or depository. Physical Securities (per settlement) Clearing of securities trade that settles through a Bank of America's custodian bank or depository. Free Movements (per security) Securities received/delivered for a safekeeping customer free of payment, with no funds exchanged. OTHER CHARGES Securities clearing charges and the Federal Reserve wire fee (currently $2.25) for securities transfers via the Fed are netted against proceeds of securities trades. Any special charges (out -of- pocket expenses such as postage, courier charges, other charges, etc.) are debited to the customer's demand deposit account (DDA) or saving account as incurred. Charges for safekeeping services are debited to the customer's demand deposit account (DDA) as of month -end. BankofAmerica ' A Proposed Depository Analysis Statement for City of Round Rock - 221 E. Main Street Round Rock, TX 78664 BALANCE SUMMARY - AVG POSITIVE LEDGER BALANCE AVG LEDGER BALANCE - LESS AVG FLOAT - AVG COLLECTED BALANCE _ AVG NEGATIVE COLL BALANCE - AVG POSITIVE COLL BALANCE LESS RESERVES _ AVAIL BAL FOR EARNINGS CREDIT AVAILABLE BALANCE REQUIRED " NET AVAILABLE BALANCE REQ RESERVES ON NET AVAIL BAL DEFICIT COLLECTED BALANCE $593,598.00 $593,598.00 $230,202.00 $363,396.00 $0.00 $363,396.00 $36,339.60 $327,056.40 $1,007,163.56 ($680,107.16) $75,567.46 $755,674.62 Member FDIC Month of: August, 2001 EARNINGS CREDIT SUMMARY AVAIL BAL FOR EARNINGS CREDIT EARNINGS ON AVAILABLE BALANCE LESS TOTAL SERVICE CHARGES DEFICIT PERIOD TO DATE DEFICIT CURRENT PERIOD SERVICE CHARGE $327,056.40 $972.21 $2,993.90 $2,021.69 $2,021.69 $2,021.69 CURRENT MONTH'S EARNINGS CREDIT RATE = 3.50% CURRENT MONTH'S MULTIPLE = $ 336.41 SERVICE NUMBER OF UNITS UNIT PRICE SERVICE CHARGE BALANCE REQUIRED BALANCE RELATED SERVICES FDIC INSURANCE (per 51,000 eom ledger bal.) 592,598 50.014 $8.47 $2,850.75 DEPOSITORY SERVICES ACCOUNT MAINTENANCE 10 $10.000 $100.00 $33,640.55 QBD -QUICK BUSINESS DEPOSIT A 5 $0.300 51.50 5504.61 DEPOSIT CORRECTION -NON CASH 2 $5.000 510.00 $3,364.06 DEBITS 1,046 $0.100 $104.60 535,188.02 CREDITS A 358 $0.300 $107.40 $36,129.95 RETURN ITEM 37 $2.000 574.00 $24,894.01 RETURN ITEM RECLEAR 86 $1.500 5129.00 543,396.31 PRE- ENCODED DEP ITEMS 16,888 50.050 5644.40 $284,060.83 DEPOSITED ITEMS 2,098 $0.090 $188.82 563,520.09 REJECTS UP TO 1% 112 $0.100 $11.20 $3,767.74 STOP PAY 12 MONTH 3 $9.000 $27.00 $9,082.95 ELECTRONIC DEBIT 90 $0.080 $7.20 52,422.12 ELECTRONIC CREDIT A 130 $0.200 526.00 58,746.54 COMMERCIAL DEPS - CASH VAULT QBD / NIGHT DROP CASH PER $100 1 $0.100 $0.10 533.64 VAULT DEPOSIT (PER $100) 1 $0.090 $0.09 $30.28 MIXED /PARTIAL FED BAG 5 $5.000 525.00 58,410.14 DEPOSIT CORRECTION -CASH 3 $5.000 $15.00 55,046.08 COIN PER ROLL -BKG CENTER 31 50.080 $2.48 $834.29 CHANGE ORDER BC PER ORDER 4 $2.000 $8.00 $2,691.24 GENERAL ACH SERVICES RETURN ITEM NOC 4 $3.500 514.00 $4,709.68 MICROCASH SUPPORT 1 $15.000 $15.00 55,046.08 RETURN NOTIFICATION -FAX 7 $3.000 521.00 $7,064.52 CONSUMER ONE DAY CREDIT 51 $0.100 $5.10 $1,715.67 CONSUMER TWO DAY CR 1,316 50.080 5105.28 $35,416.77 CONSUMER MAINTENANCE 2 $15.000 $30.00 510,092.17 CONSUMER ONE DAY DR 43 $0.100 $4.30 $1,446.54 CONSUMER TWO DAY DR 868 $0.080 $69.44 $23,360.00 CONSUMER INPUT PC 10 55.000 $50.00 $16,820.28 ACH ADDENDA RECORD 43 50.010 $0.43 $144.65 CONTROLLED DISBURSEMENT CONTROLLED DISB MAINTENANCE 1 $50.000 $50.00 516,820.28 CONT. DISB. CHECKS PD. 836 $0.120 5100.32 $33,748.2C FUNDING CREDITS 21 $0.500 $10.50 53,532.26 WIRE TRANSFER 1 Bankof America � A Proposed Depository Analysis Statement for City of Round Rock 221 E. Main Street Round Rock, TX 78664 Month of: August, 2001 Member FDIC • BankofAmerica A Proposed Depository Analysis Statement for City of Round Rock 221 E. Main Street Round Rock, TX 78664 CURRENT MONTH'S EARNINGS CREDIT RATE _ 3.50% SERVICE ELEC WIRE OUT - DOMESTIC ELEC WIRE OUT -BOOK DB INCOMING DOMESTIC WIRE TEMPLATE STORAGE ACCOUNT RECONCILIATION CD ROM MAINTENANCE CD ROM ITEM (DAILY) 1 CD ROM DISK IMAGE REQUESTED - DIRECT POS PAY IMAGE REQUEST MANUAL ISSUE INPUT PER ITEM PARTIAL MAINT (PER CYCLE) PARTIAL RECON OUTPUT ITEM TRANS PARTIAL RECON OUTPUT FILE- DISKETTE EPP ITEM RETURN OTHER THAN FRAUD INFORMATION SERVICES PREV DAY MAINT PER MONTH CURR DAY MAINT PER MONTH ACCT MAINT PER MTH PREV DAY PER ITEM STORED (5 DAYS) CURR DAY PER ITEM STORED (5 DAYS) ELECTRONIC DATA INTERCHANGE(EDI) GLOBAL ADVICE REC. MAINT GLOBAL ADVICE REC. PER PAYMENT SAFEKEEPING ACCOUNT MAINTENANCE SAFEKEEPING OF ASSETS - RECEIPTS FEE - $1,000 PAR VALUE 10,000,001 AND OVE DISBURSEMENT FEE (CREDIT -ACCT) DEPOSIT - WITHDRAWAL FEE SECURITIES CLEARANCE NUMBER OF UNITS 12 13 8 5 4 1,890 1 0 0 0 4 2,342 3 1 8 415 140 43 1 34 55,883 2 2 2 CURRENT MONTH'S MULTIPLE _ $ 33641 UNIT PRICE $8.000 $4.000 $5.000 $0.500 $5.000 30.020 310.000 32.000 32.000 $1.000 30.000 30.040 $25.000 $10.000 $25.000 $25.000 $5.000 $0.050 $0.050 $25.000 $0.750 $5.000 30.600 $0.001 $1.000 $16.500 $50.000 SERVICE CHARGE $96.00 $52.00 $40.00 $2.50 $20.00 $37.80 $10.00 $0.00 $0.00 $0.00 $0.00 $93.68 $75.00 $10.00 $25.00 $25.00 840.00' $20.75 $7.00 325.00 $32.25 $5.00 320.40 $55.88 $2.00 833.00 $100.00 BALANCE REQUIRED $32,294.93 317,493.09 813,456.22 $841.01 36,728.11 $12,716.13 33,364.06 $0.00 30.00 $0.00 30.00 $31,514.47 325,230.41 33,364.06 $8,410.14 38,410.14 $13,456.22 36,980.41 $2,354.84 $8,410.14 $10,849.08 $1,682.03 86, 852.67 $18,799.35 $672.81 $11,101.38 $33,640.55 TOTAL SERVICE CHARGES $2,993.90 $1,007,163.56 Comments: Month of: August, 2001 Member FDIC EXCEPTIONS TO SPECIFICATIONS Bank of America does not provide signature restriction service for commercial accounts. Federal Financlal Institutions Examination Council Consolidated Reports of Condition and income for A Blink With Domestic and Foreign Offices -FFIEC 031 'Repdttat thetto§e of bus(ness Septginber 30, This report 0 required by law: 12 U.S.C, §324 (Slate member banks). 12 U.S.C. §1817 (State nonmember banks): and 12 U.S.C. 0181 (National banks). NOTE: The Reports of Condition and Mame must be signed by an authorized officer and the Repo/tot Condition must be attested to by not less than Iwo dlreclore (trustees) fer State nonmember bankse d three directors for State member and National beaks. .: I, Robert S. Null, Sr. Vice President - Nome and Title d011ker000lIkedloSWn , in, of the homed bank do hereby declare that the Reports of Con019on.and Income (Including the 000000)09 Schedule-s) fonthis report dale have been prepared Incontormance with the Inslrbolb0s Issued by We appropriate Federal regulatory ant(wrR/and and to_gta best of my knowledge and Slg7aeseNOlfiwrAel07000 to Sign Report 10/70)01 Dama 0)0.0101 Suandealon otReports Each bank must prepare it Report of Congdon and Income either: (a) In electronic form and then file the computer data file directly with the'banhing agencies' collection agent, Electronic Data Systems Corporation (EDS), by modem 00 on Computer diskette; of (b) M herd -coPy (paper) form and arrange for an01herpert0 to convert the paper report to electronic (Ohm- That party FDIC Certificate Humber: 03510 (RCR) 0000) 2001 20010930 (RCRI 9999) This report form Is to be flied by banks wob domestic office only. Banks with foralg11 offices (as defined In the Instructions) must file FFIEC - 031. TheRepons of Condifiwi and Income are to be prepared i aocordance with Federat regulatory authority ingnicde s. We, the undersigned directors (trustees), allest'to the correctness of the Report of Condi)on (Including the Supporting schedules) for This moon date and declare that has been examined by us and (0 the best of our knowledg end belief bas been prepared in conformance with the instructions Issued by the appropdat Federal le9ulemry authority and is aueend coned. , (d other than EDS) must transmit the bank's compute! data Ale to EDS; - • For electronic filing assistance, cOnlad EDS Cad Report Sendces,21,50 N. Prospect Ave.. Milwaukee. WI 53202, telephone (600) 2551571. To fulfill the signature and attestation requirement for the Report of Condition endlncome fortis report dale, etlai this signature page (or a photocopy or a 000npuler.gener8 version of this Page) to the hard-copy record of the mmplr report coal tie bank places in Its files, Bank of America; N.A. Legal rule of Bank (TEXT 9010) Charlotte Bawd d Gammas se.e Stems: Reserves OMB.I0e00 ad Fe0 O01n wel Opo M..Re Corms., r95r ORB C 15054. 0, el 000 mpvmer use OgreOgren, - M ke000. r. wer Ei p,m Ma.a sr, Zooa OaS00 M.wrose , ma aOemn 0 Primary Internet Web Address of Bank City (TEXT stag) (dome Page). O any (TEXT4087) NC 28255 (Exempla: wwwexemplebank.corn) Stale Abbrev. (TEXT 9200) Zip Code TEXT 0220) lid of Governess of the Federal Reserve System, Federal Deposit Insurance Corporation. ONl0e of cite Comptroller of Me Crete Bank ofAmerica, N.A. Legal Title of Bank Charlotte City NC State FDIC Certificate Number - 03510 28255 Zip Code Consolidated Report of Income for the period January 1, 2001 — September 30, 2001 All Report of Income schedules are to be reported on a calendar year -to -date basis In thousands of dollars. Schedule RI— Income Statement Dollar Amounts in Thousands RI .. Bil Mil Thou 1. Interest Income: a. Interest and fee Income on loans: (1) In domestic offices: (a) Loans secured by real estate (b) Loans to finance agricultural production and other loans to farmers (c) Commercial and industrial loans (d) Loans to individuals for household, family, and other personal expendialures: (1) Credit cards (2) Other (Includes single payment, installment, all student loans, and revolving credit plans other than credit cards) (e) Loans to foreign governments and official institutions (f) All other loans In domestic offices (2) In foreign offices, Edge and Agreement subsidiaries, and IBFs (3) Total Interest and fee Income on loans (sum of items 1.a.(1)(a) through 1.4.(2)) b. Income from lease financing receivables c. Interest Income on balances due from depository institutions: (1) 0. Interest and dividend income on securities: (1) U.S. Treasury securities and U.S. Government agency obligations (excluding mortgage-backed securities) (2) Mortgage - backed securities (3) All other securities (Includes securities Issued by states and political subdivisions In the U.S.) e. Interest Income from trading assets f. Interest Income on federal funds sold and securities purchased under agreements to resell g. Other Interest Income h. Total interest income (sum of items 1.a.(3) through 1 9) 2. Interest expense: a. Interest on deposits: (1) Interest on deposits in domestic offices: (a) Transaction accounts (NOW accounts, ATS accounts, and telephone and preauthorized transfer accounts) (b) Nontransacibn accounts: (1) Savings deposits (includes MMOAs) (2) Time deposits of 9100,000 or more (3) Time deposits of less than $100 000 (2) Interest on deposits in foreign offices, Edge and agreement subsidiaries, and IBFs b. Expense of federal funds purchased and securities sold under agreements to repurchase c. Interest on trading liabilities and other borrowed money (1) Includes interest income on time certificates of deposits not held for trading. FFIEC RI -1 3 4011 9 450 000 1.a.1.a 86,000 1.a.1.b 6 138 000 1.a.1.c 0 1.a.1.d.• 2.017,000 1.4.1.0.: 19,000 1.a.1.e 1,582.000 1.a.1.f 686,000 1.4.2 19,978,000 1.a.3 473 000 1.b 214000 1.0 213,000 1.d.1 1 743 000 1.d.2 424 000 1.0.3 1 614 000 1.e 474,000 1.f 48,000 1.g 25 181 000 1.h 47000 2.a.1.a 2,225,000 2.a.1.b.' 1,423,000 1 784 000 2.8.1.5.: 172 2,282,000 2.8.2 4180 1,070,000 2.b 4185 2,173,000 2.c 2. Interest expense (continued): d. Interest on subordinated notes and debentures e. Total Interest expense (sum of items 2.a through 2.d) 3. Net interest Income (item 1.h minus 2.e) _ 4. Provision for loan and lease losses _ - 5. Noninterest income: a. Income from fiduciary activities (1) b. Service charges on deposit accounts in domestic offices c. Trading revenue (2) d. investment banking, advisory, brokerage, and underwriting fees and commissions e. Venture capital revenue f. Net servicing fees g. Net securltlzation Income h. Insurance commissions and fees - i. Net gains (losses) on sales of loans and leases j. Net gains (losses) on sales of other real - estate owned k. Net gains (losses) on sales of other assets (excluding securities) I. Other noninterest Income' m. Total nonlnterest income (sum of items 5.a through 5.1) 6. a. Realized gains (losses) on held -to- maturity securities _ b. Realized gains (losses) on available -for -sale securities 7. Noninterest expense: • a. Salaries and employee benefits b. Expenses of premises and fixed assets (net of rental income) - (excluding salaries and employee benefits and mortgage interest) c. Amortization expense of Intangible assets (Including goodwill) d. Other noninterest expense • e. Total nonlnterest expense (sum of Items 7.0 through 7.d) _ - 8, Income (loss) before Income taxes and extraordinary items, and other adjustments (item 3 plus or minus items 4, 5.m, 6.a, 6.b, and 7.e) 9. Applicable income taxes (on item 8) ▪ 10. Income (loss) before extraordinary Items and other adjusments (item 8 minus item 9) 11. Extraordinary Items and other adjustments, net of Income taxes' 12. Net income (loss) (sum of items 10 and 11) ' Describe on Schedule RI -E - Explanations. • (1) For banks required to complete Schedule RC -T, items 12 through 19, Income from fiduciary activities reported In Schedule RI, item 5.a, must equal the amount reported in Schedule RC -T, item 19. - (2) For banks required to complete Schedule RI, Memorandum item 8, trading revenue reported in Schedule RI, Item 5.c must equal the sum of Memorandum items 8.a through 8.d. Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RI- Continued 8491 8492 8493 8494 5416 5415 8496 8497 4217 4531 4092 459, 000 11 463 000 679 000 148,000 1,685.000 72,000 47,000 16 53,000 697 000 1 562,000 5 061 000 13 718 000 2 277 000 8 448 000 115 000 13 177 000 6 827 000 2 560 000 4 267 000 Year -lo -date Dollar Amounts in Thousands RIAD Bil Mil Thou 10 11 340 4,267,000 12 FFIEC t RI -2 4 1 2.d 2.e 4 5.a 5.b 5.c 5.d 5.e 5.f 5.g 5.h 5.i 5.1 5.k 5.1 5.m 6.a 6.b 7.a 7.b 7.c 7.d 7.e 9 Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RI— Continued Memoranda 1. Interest expense Incurred to carry tax - exempt securities, loans, and leases acquired after August 7, 1986, that Is not deductible for federal income tax purposes 2. Income from the sale and servicing of mutual funds and annuities In domestic offices (included h1 Schedule 31 item 8) 3. Income on tax- exempt loans and leases to states and political subdivisions in the U.S. (included In Schedule RI. items 1.a and 1.h) 4. Income on tax- exempt securities Issued by states and political subdivisions In the U.S. (included in Schedule RI, item 1.4.(3)) 5. Number of full -time equivalent employees at end of current period (round to nearest whole number) 6. Not applicable 7. If the reporting bank has restated its balance sheet as a result of applying push down accounting rots calendar year, report the date of the bank's acquisition (1) 8. Trading revenue (from cash instruments and derivative instruments) - (sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c) (To be completed by banks that reported average trading assets (Schedule RC -K. Item 7) of 92 million or more for any quarter of the preceding calendar year.): a. Interest rate exposures b. Foreign exchange exposures c. Equity security and Index exposures d. Commodity and other exposures 9. Impact on Income of derivatives held for purposes other than trading: a. Net increase (decrease) to Interest income - b. Net (increase) decrease to Interest expense c. Other (noninterest) allocations - 10. Credit losses on derivatives (see Instructions) 11. Does the reporting bank have a Subchapter S election in effect for - federal income tax purposes for the current tax year ? ▪ (1) For example, a bank acquired on June 1, 2001, would report 20010601 Dollar Amounts in Thousands CCYY f MM f DD 9106 NIA RIAD Bit 1 Mil 1 Thou 8757 8758 8759 8760 421,000 451,000 45,000 163,000 RIAD 8761 8762 8763 A251 Bil I Mil I Thou 509,000 82,000 2,000 FFIEC RI -3 1 5 1 M.1 M2 M.3 M.4 M.5 M.7 M.B.a M.8.b M.B.c M.8.d M.9.a M.9.b M.9.c M.10 �� YES f NO laaj NO IM.11 Bank of America, N.A. Legal Tdle of Bank FDIC Certificate Number - 03510 Schedule RI -A— Changes in Equity Capital Indicate decreases and losses in parentheses. 1. Total equity capital most recently reported for the December 31, 2000, Reports of Condidon and Income (i.e., after adjustments from amended Reports of Income) _ 2. Restatements due to corrections of material accounting errors and changes In accounting principles 3. Balance end of previous calendar year as restated (sum of items 1 and 2) 4. Net Income (loss) (must equal Schedule RI, item 12) 5. Sale, conversion, acquisition, or retirement of capital stock, net (excluding treasury stock transactions) 6. Treasury stock transactions, net 7. Changes incident to business combinations, net 8. LESS: Cash dividends declared on preferred stock 9. LESS: Cash dividends declared on common stock 10. Other comprehensive Income (1) 11. Other transactions with parent holding company • (not Included in items 5, 6, 8, or 9 above) 12. Total equity capital end of current period (sum of hems 3 through 11) (must equal Schedule RC, item 28) • Describe on Schedule RI -E - Explanations. (1) Includes changes in net unrealized holding gains (losses) on available -far -sale securities, changes in accumulated net gains (losses) on cash flow hedges, foreign currency translation adjustments, and changes in minimum pension liability adjustments. Schedule RI -B— Charge -offs and Recoveries on Loans and Leases and Changes in Allowance for Loan and Lease Losses Part I. Charge -offs and Recoveries on Loans and Leases 1. Loans seared by real estate: a. Construction, land development, and other land loans In domestic offices b. Secured by farmland in domestic offices C. Seared by 1-4 family residential properties in domeslc ofices: (1) Revolving, open -end bans secured by 1-4 family residential properties and extended under lines of credit (2) Closed -end bans seared by 1-4 family residential properties d. Secured by multifamily (5 or more) residential properties in domestic o0lces e. Seared by nonfarm nonresidential properties in domestic offices L In foreign offices 2. Loans to depository Institutions and acceptances of other banks: a. To U.S. banks and other U.S. depository institutions b. To foreign banks 3. Loans to finance agricultural production and other loans to farmers 4. Commercial and industrial loans: a. To U.S. addressees (domicile) b. To non -U.S. addressees (domicile) 5. Loans to individuals for household, family, and other personal expenditures: a. Credit cards b. Other (includes single payment, Installment, all student loans and revolving credit plans other than credit cards) (1) Include write -downs arising from transfers of loans to the held -for -sale account. Dollar Amounts in Thousands RI - • Bil Mil Thou O 2 49,330,000 3 4 267 000 4 a 4,000,000 9 2 490 000 10 52 506 000 12 ( Column A) ( Column B ) Part I excludes charge -offs and recoveries through charge-offs (1) Recoveries the allocated transfer risk reserve. Calendar year-to-date Dollar Amounts in Thousands RIADI Bil Mil Thou IRIA• Bit Mil Thou O 11 2.000 1.a 5,000 1.c.1 O 1.d 1,000 1.e O 1.f O 2.a O 2.b O 3 4645 1,307,000 4617 130.000 4.a 4646 165,000 4616 30,000 4.b 651- 23 000 051. 522,000 8515 4.000 163.000 FFIEC C RI-4 5.a 5.b Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RI-B--Continued Part I. Continued 6. Loans to foreign governments and official institutions 7. All other loans 8. Lease financing receivables: a. To U.S. addressees (domicile) b. To non -U.S. addressees (domicile) 9. Total (sum of hems 1 through 8) Memoranda 1. Loans to finance commercial real estate, construction, and land development activities (not secured by real estate) Included In Schedule RI-B, part I, hems 4 and 7, above 2. Loans secured by real estate to non -U.S. addresses (domicile) (Included In Schedule RI -B, part I, item 1, above): (1) Include write -downs arising from transfers of loans to the held -for -sale account. Part II. Changes In Allowance for Loan and Lease Losses Dollar Amounts in Thousands Dollar Amounts in Thousands 1. Balance moot recently reported for the December 31, 2000 , Reports of Condition and Income (i.e., after adjustments from amended Reports of Income) 2. Recoveries (must equal part I, hem 9, column B above) 3. LESS: Charge -offs (sum of part I, hem 9, column A above and Schedule RI -E, item 6.a) 4. Provision for loan and lease losses (must equal Schedule RI, item 4) 5. Adjustments' (see Instructions for this schedule) 8. Balance end of current period (sum of Items 1 through 5) (must equal Schedule RC, item 4.c) RIAD Bit I Mil I Thou RIAD SR I Mill Thou 4643 0 4627 0 644 50 000 4828 18 000 658 658 Include as a negative number write-downs arising from transfers of loans to the held -for -sale account Describe all adjustments on Schedule RI- E— Explanations, Item 6. ( Column A) ( Column ) Cha . e-offs 1 Recoveries Calendar ear - o-date 30,000 4 88 Dollar Amounts in Thousands 0 4869 2,000 8.a 635 2,932,000 4605 400,000 9 ( Column A) I ( Column ) Chameoffs(1) Recoveries Calendar = -r -to -date RIAD Bil Mil Thou . BII Mil Thou 6,460,000 400,000 2,932,000 2,277,000 21 000 I80 Bil Mil Thou 2 3 4 5 123 6 184,000 6 FFIEC C RI -5 7 0 8.6 M.1 M.2 Bank of America, N.A. Legal Trtle of Bank FDIC Certificate Number - 03510 Schedule RI -D— Income from International Operations For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs where international operations account for more than 10 percent of total revenues, total assets, or net income. Dollar Amounts in Thousands RIAD( Bil 1. Interest income and expense attributable to international operations: a. Gross interest Income 5523 2308 1.a b. Gross Interest expense B 2 631 000 1.b 2. Net Interest income attributable to international operations (item 1.a minus 1.b) 3. Nonlnterest income and expense attributable to international operations: a. Noninterest Income attributable to intema0onal operat b. Provision for loan and lease losses attributable to International operations c. Other noninterest expense attributable to international operations d. Net noninterest income (expense) attributable to international operations (item 3.0 minus 3.6 and 3.c) 4. Estmated pretax income attributable to international operations before capital allocation adjustment (sum of items 2 and 3.d) 690 000 4 5. Adjustment to pretax income for Internal allocations to international operations to reflect the effects of equity capital on overall bank funding costs 4045 31 000 5 6. Estimated pretax income attributable to international operations after capital allocation adjustment (sum of items 4 and 5) 4846 (659,000) 6 7. Income taxes attributable to income from international operations as estimated in item 6 4797 241.000 7 8. Estimated net income attributable to international operations (item 6 minus 7) 4341 J900,000) 8 FFIEC Rt-6 I 8I Bank of America, N.A. Legal TiIle of Bank FDIC Certificate Number -03510 Schedule RI- E— Explanations Schedule RI -E is to be completed each quarter on a calendar year -to -date basis. Detail all adjustments In Schedules RI -A and RI -B, al extraordinary items and other adjustments In Schedule RI, and all significant items of other noninterest income and other noninterest expense in Schedule RI. (See instructions for details.) •408 D 'a = f ..., 3."?.}x..x'`•.i= ".:�iaZ`; C014 0016 4042 C010 4461 4462 4483 0497 4136 C018 8403 4141 4148 Year-to -Date Rr BII (Al Thou 1. Other noninterest Income (from Schedule RI, item 5.1) Itemize and describe the three largest amounts that exceed 1% of the sum of chedule RI, items 1.h and 5.m: _ TEXT a. C013 Income and fees from the printing and sale of checks b. Earnings onfincrease in value of cash surrender value of life insurance c. Income end fees from automated teller machines (ATMs) d. Rent and other income from other real estate owned e. Safe deposit box rent f. 9. h. 2. Other noninterest expense (from Schedule RI, item 7.4): and describe the three largest amounts that exceed 1% of the sum of edule RI, items 1.5 and 5.m: TEXT C017 Data processing expenses Advertising and marketing expenses c. Directors fees d. Printing. stationary, and supplies e. Postage f. Legal fees and expenses g. FDIC deposit Insurance assessments h. 4464 Intercompany Management Fee's I. 4467 Business Exit Cost j. 4468 3. Extraordinary items and other adjustments and applicable income tax effect (from Schedule RI, Item 11) (itemize and descibe all extraordinary items and other adjustments): TEXT a (1 Eff.et of ado tin FAS 133 "Accountin• for Derivative Instruments and Fled In Activities" Applicable Income tax effect__ b. (1 c. (1 Applcable income tax effect_ (2) Applicable income tax effect Dollar Amounts in Thousands FFIEC RI -7 9 1.0 1.b 1.c 1.d 1.e 1.1 1.9 1.h 2.0 2.5 2.c 2.d 2.e 2.f 2.g 2.h 2.1 2.) 3.a.1 3.a.2 3.6.1 3.b.2 3.c,1 3.c.2 Sank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RI -E— Continued 4. Restatements due to corrections of material accounting errors and changes in accounting principles (from Schedule RI-A, item 2) (itemize and describe all restatements): TEXT a. BS b. 8527 5. Other transactions with parent holding company (from Schedule RI -A, item 11) (itemize and describe all such transactions): TEXT a 4498 b. 4499 6. Adjustments to allowance for loan and lease losses (from Schedule RI -B, part II, Item 5) (itemize and describe all adjustments): TEXT 4789 Dollar Amounts in Thousands FFIEC RIO 4.a 4.b 5.a 5.b a. 5529 Writs -downs arising from transfers of bans in the held -for -sale aount 5523 0 6.a b. 4522 Subordinate Company Activities 4522 (21,000) 6.b 7. Other explanations (the space below is provided for the bank to briefly describe, at its option, any other significant Items affecting the Report of Income): Rl X= NO COMMENT -Y = COMMENT 1,11a4 X Other explanations (please type or print clearly): TEXT ( 70 characters per line ) ank of merles N.A. Legal Title of Bank Charlotte City 26255 NC Zip Code State FDIC Certificate Number - 03510 Consolidated Report of Condition for Insured Commercial and State - Chartered Savings Banks for September 30, 2001 All schedules are to be reported in thousands of dollars. Unless otherwise indicated, report the amount outstanding as of the last business day of the quarter. Schedule RC— Balance Sheet 0081 0r 1 B52• 3545 2145 1,102,000 71,002,000 16 079 000 26 426 000 2150 2130 2155 312,328.000 54,141,000 6 133,000 431 000 570,000 1 476 000 754 1773 25,156,000 2 251 000 Dollar Amounts In Thousands RCF r Bil Mil Thou FFIEC C RC -1 ASSETS 1. Cash and balances due from depository Institutions (from Schedule RC -A): a. NonInterest- bearing balances and currency and coin (1) b. Interest-bearing balances (2) _ 2. Securities: a. Held- to- matudly securities (from Schedule RC -B, column A) 2.b b. Available- for -sale securities (from Schedule RC-B. column D) 3 ,ass 3. Federal funds sold and securities purchased under agreements to resell 4. Loans and lease financing receivables (from Schedule RC-C): 4 a 86 31 B a. Loans and leases held for sale 2; 512000 ,� 4,b 8 b. Loans and leases, net of unearned Income 523 6 5 000 _=".r" - �- s,:,. =.... a,,,,_ d 4.c c. LESS: Allowance for loan and lease losses 4.c d. Loans and leases, net of unearned income and allowance (Item 4.b minus 4.c) 5 5. Trading assets (from Schedule RC-0) _ 6 6. Premises and fixed assets (including capitalized leases) 7 7. Other real estate owned (from Schedule RC-M) 8 8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 9 9. Customers' liability to this bank on acceptances outstanding 21 1 8 " Y 10. Intangible assets 3163 8.310,000 10.8 a. Goodwill 0426 9 .3 1 0,000 10. b. Other intangible assets (from Schedule RC -M) 2160 41,364,000 11 11, Other assets (from Schedule RC-F) 2160 547.348,000 12 12. Total assets (sum of items 1 through 11) (1) Includes cash items in process of collection and unposted debits. (2) Includes time certificates of deposit not held for trading. 1.a 1.b 2.a LIABILITIES 13. Deposits: a. In domestic offices (sum of totals of columns A and C from Schedule RC -E, part I) (1) Nonimerest- bearing (1) _ (2) Interest- bearing b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, part 11) (1) Noninterest- bearing (2) Interest - bearing 14. Federal funds purchased and securities sold under agreements to repurchase 15, Trading liabilities (from Schedule RC-D) 16. Other borrowed money (includes mortgage Indebtedness and obligations under capitalized leases) (from Schedule RC-M): • 17. Not applicable 16. Bank's liability on acceptances executed and outstanding 19. Subordinated notes and debentures(2) 20. Other liabilities (from Schedule RC-G) • 21. Total liabilities (sum of items 13 through 20) 22. Minority interest In consolidated subsidiaries - EQUITY CAPITAL 23. Perpetual preferred stock and related surplus ▪ 24, Common stock 25. Surplus (exclude all surplus related to preferred stock) - 26. a. Retained earnings b. Accumulated other comprehensive Income (3) 27. Other equity capital components (4) 28. Total equity capital (sum of items 23 through 27) - 29. Total liabilities, minority Interest, and equity capital (sum of items 21, 22, and 28) Memorandum To be reported only with the March Report of Condition. 1. Indicate in the box at the right the number of the statement below that best describes the most comprehensive level of auditing work performed for the bank by independent external ▪ auditors as of any date during 2000 - 1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified ▪ public accounting firm which submits a report on the bank 2 = Independent audit of the bank's parent holding company - conducted in accordance with generally accepted auditing standards by a certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately) 3 = Attestation on bank management's assertion on the effectiveness of the bank's Internal control over financial ▪ reporting by a certified public accounting firm la INN Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RC— Continued 316 611 000 6631 100 085 000 6936 216,526,000`�� irtcF 2200 58 410 000 r631 1 836 000 6636 56,574,000 C >,n�xwv 2800 38,905,000 3548 37 462 000 16046000 2.834 000 32.666 000 15 230 000 1,776,000 52,506,000 3300 575,020,000 Dollar Amounts in Thousands " Bil I Mil Thou 4 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public accounting firm (may be required by state chartering authority) 5 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority) 6 = Review of the bank's financial statements by external auditors 7 = Compilation of the bank's financial statements by extemal auditors 8 = Other audit procedures (excluding tax preparation work) 9 = No external audit work (1) Includes total demand deposits and noninterest- bearing time and savings deposits. — (2) Includes limiteddife preferred stock and related surplus. (3) Includes net unrealized holding gains (losses) on available - for -sale securities, accumulated net gains (losses) on cash flow hedges, cumulative foreign currency translation adjustments, and minimum pension liability adjustments. (4) Includes treasury stock and unearned Employee Stock Ownership Plan shares. 1,478,000 9,630.000 41 315.000 521,857,000 657 000 FFIEC C RC -2 r12 13.a 13.8.1 13.a.2 13.b 13.b.1 13.b.2 14 15 16 18 19 20 21 22 23 24 25 26.8 26.b 27 28 29 RCFy Number I 1 6724 1 NIA M. 1 Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RC -A —Cash and Balances Due From Depository Institutions Exclude assets held for trading. (Column A) Consolidated Bank (Column B) Domestic Offices iCO Bil Mil Thou 16 968 000 3 542 000 1 529 000 47 000 2 680 000 0010 24.766,000 1. Cash items in process of collection, unposted debits, and currency and coin a. Cash items in process of collection and unposted debits _ b. Currency and coin 2. Balance due from depository institutions in the U.S. a. U.S. branches and agencies of foreign banks (including their IBFS) b. Other commercial banks in the U.S. and other depository institutions in the U.S. (Including !heir IBFS) _ 3. Balances due from banks in foreign countries and foreign central banks a. Foreign branches of other U.S. banks b. Other banks in foreign countries and foreign central banks 4, Balances due from Federal Reserve Banks 5. Total (sum of items 1 through 4) (total of column A must equal Schedule RC, sum of Items 1.a and 1 5) Schedule RC- B— Securities Exclude assets held for trading. (Column B) Fair Value 72 000 (Column C) Amortized Cost (Column A) Amortized Cost MINIIMINI3®•11•11•111l 563 000 !MI IMIIIMMIr_1I3M 1 rte '.,+ r t-' :.x ^= -1 '9, '"3 r k trrs� ®�® I 113000 Crn 174000 l 185 000 .... 1 922 000 (Column D) Fair Value Bit Mil Thou 563 000 113 000 1 919 000 Dollar Amounts in Thousands RCF 1. U.S. Treasury securities 2. U.S. Government agency obligations (exclude mortgage- backed securities): a. Issued by U.S. Government agencies (1) b. Issued by U.S. Government-sponsored agencies (2) _ 3. Securities issued by states and political subdivisions in the U.S. Dollar Amounts in Thousands RCF (1) Includes Small Business Administration 'Guaranteed Loan Pool Certificates,' U S. Maritime Administration obligations, and Export - Import Bank participation certificalea. (2) Includes obligations (other than mortgage - backed securities) issued by the Fann Credit System, the Federal Horne Loan Bank System, The Federal Horne Loan Mortgage Corporation, the Federal National Mortgage Association, the Financing Corporation, Resolution Funding Corporation, the Student Loan Marketing Association, and the Tennessee Valley Authority. FFIEC C RC -3 13 1 1 1.a 1.6 2 2.a 2.b 3 3.a 3.b 4 5 2.a 2.b Bank of America, N.A. Legal Trite of Bank FDIC Certificate Number - 03510 Schedule RC- B— Continued Dollar Amounts in Thousands Held- to-maturity Available-for-sale (Column A) (Column B) (Column C) (Column D) Amortized Cost Fair Value Amortized Cost Fair Value B0 Mil Thou - CF. BI I Mil Thou - CF• Bil Mil Thou - CF• Bil Mil Thou 4. Mortgage - backed securities (MBS): a. Pass - through securities: (1) Guaranteed by GNMA (2) Issued by FNMA and FHLMC (3) Other pass- through securities b. Other mortgage-backed securities (include CMOs, REMICs and stripped MBS): (1) Issued or guaranteed by FNMA, FHLMC, or GNMA (2) Collateralized by MBS issued or guaranteed by FNMA. FHLMC, or GNMA (3) All other mortgage - backed securities 5. Asset- backed securities (ABS): • a. Credit card receivables b. Home equity lines c. Automobile loans d. Other consumer loans • e. Commercial and industrial loans 1. Other _ 6. Other debt securities: a. Other domestic debt securities b. Foreign debt securities 7. Investments in mutual funds and other equity securities with 7 readily determinable fair values (1) , ±'f `°� u ^'-? k., � gg--, -, , kfi =s( 8. Total (sum of Items 1 through 7) (total of Column A must equal Schedule RC Item 2.a) (total of column D must equal Schedule RC. Item 2.b) 1754 1.102,000 1 771 1.124,000 1 772 70,002,000 1773 71,002,000 8 (1) Report Federal Reserve stock, Federal Home Loan Bank stock, and banker's bank stock in Schedule RC-F, item 4. FFIEC C RC-4 ' 14 7929,000 4.a.1 38,011,000 4.a.2 0 4.a.3 14 998 000 4.b.1 Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RC- B— Continued Memoranda Dollar Amounts In Thousands R F. eil Mil Thou FFIEC C RC-5 1. Pledged securities (1) -.-- 2. Maturity and repricing data for debt securities (1, 2) (excluding those in nonaccrual status): a. Secudtles Issued by the U.S. Treasury, U.S. Government agencies, and states and political subdivisions In the U.S.; other non- mortgage debt securities; and mortgage pass -through securities other than those backed by closed -end first lien 1-4 family residential mortgages with a remaining maturity or next repricing date of (3,4) (1) Three months or less (2) Over three months through 12 months (3) Over one year through three years (4) Over three years through five years (5) Over five years through 15 years (6) Over 15 years b. Mortgage pass - through securities backed by closed -end first lien 1-4 family residential mortgages with a remaining maturity or next repricing date of; (3,5) (1) Three months or less A55 0 M.2.b.1 (2) Over three months through 12 months A558 93.000 M.2.b.2 (3) Over one year through three years A55 190,000 M2.b.3 (4) Over three years through five years 055 931,000 M.2.b.4 (5) Over five years through 15 years 3 009 000 M.2115 (6) Over 15 years 41 717000 M.2.b.6 c. Other mortgage - barked securities (include CMOs, REMICs, and stripped MBS; exclude mortgage pass -through securities) with an expected average Ice o1: (6) (1) Three years or less &f73( 2.196.000 M.2.c.1 (2) Over three years 15 289 000 M.2.c.2 d. Debt securities with a REMAINING MATURITY of one .r�. year or less (included in Memorandum items 2.a through 2.0 above) 4 112 000 M.2.d 3. Amortized cast of held-to-maturity securities sold or transferred to available-for -sale or trading securities during the calendar year- to-date (report the amortized cost at date 0 of sale or transfer) M3 nsfer) +�aa�'�:az ge 4. Structured notes (included in the held -to- maturity and available- for -sale accounts in Schedule RC-B, Items 2, 3, 5, and 6): a. Amortized cost 8782 0 M.4.a b. Fair value 0783 0 M.4.b (1) Includes held- to-maturity securities at amortized cost and available- for -sate securities at fair value. (2) Exclude investments in mutual funds and other equity securities with readily determinable fair values. (3) Report fixed rate debt securities by remaining maturity and floating rate debt securities by next repricing date. (4) Sum of Memorandum items 2.e.(1) through 2.a.(6) plus any nonaccrual debt securities in the categories of debt securities reported in Memorandum item 2.a that are included in Schedule RC-N, Ram 9, column C, must equal Schedule RC -B, sum of items 1, 2, 3, 5, and 6, columns A and Cr, plus mortgage pass -through securities other than those backed by closed -end first hen 1-4 family residential mortgages included in Schedule RC-a, Rem 4.a, columns A and D. (5) Sum of Memorandum items 2.6.(1) through 2.b.(6) plus any nonaccrual mortgage pass -through securities backed by dosed -end first lien 1-4 lardy residential mortgages included in Schedule RC -N, item 9, column C. must equal Schedule RC-B, Rem 4.a, sum of column A and 0, less the amount of mortgage pass -through securities other than those backed by closed -end first ten 14 family residential mortgages Included N Schedule RC-B. Rem 4.a, columns A and D. (8) Sum of Memorandum items 2.c.(1) and 2.c.(2) plus any nonaccrual "Other mortgage-backed securities" included in Schedule RC -N, item 9. column C. must equal Schedule RC-B, item 4.b, sum of columns A and D. M.2.a.1 M.2.a.2 M.2.a.3 M.2.a.4 M.2.a.5 M.2.a.6 J J 1 Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RC- C- -Loans and Lease Financing Receivables Part I. Loans and Leases Do not deduct the allowance for loan and lease losses from amounts reported in this schedule. Report (1) loans and leases held for sale and (2) other loans and leases, net of unearned income. Report loans and leases net of any applicable allocated transfer risk reserve. Exclude assess held for trading and commercial paper. 2183 4 037 000 7 271 000 15 425,000 4 076 000 12 377 000 1 245 000 22 293 000 29 505 000 4 037 000 1 204 000 4 782 000 18 766 000 Dollar Amounts In Thousands RCF (Column A) (Column B) Consolidated Domestic Bank Offices Bil I MII I Thou •Co Bil Mil Thou 410 158 472 000 FFIEC RC -6 1 1. Loans secured by real estate a. Construction, land development, and other land loans _ b. Secured by farmland (including farm residential and other improvements) c. Secured by 1-4 family residential properties. (1) Revolving, open -end loans secured by 1-4 family residential properties and extended under lines of credit (2) Closed -end loans secured by 1-4 family residential properties: (a) Secured by first liens ,, , 80 137 000 1,c.2.a (b) Secured by junior liens _ _ , ® 4 481 000 1.c.2.b d. Secured by multifamily (5 or more) residential proper0es 4 407 000 1.d e. Secured by nonfarm nonresidential properties *: 30 648 000_ 1.e 2. Loans to depository institutions and acceptances of other banks: a. To commercial banks In the U.S. ' � - l 13 227 000 2.8 (1) To U.S branches and agencies of foreign banks _ 853 2,000 .- r 2.a.1 (2) To other commercial banks in the U.S. 533 13 225 000 �% 4 �' :r . 2.a.2 Is. To other depository institutions in the U.S. 448 000 446 000 2.b c. To banks in foreign countries __ •'fix 1 235 000 2.c (1) To foreign branches of other U.S. banks _ 8536 4,000 s i 2.c.1 (2) To other banks in foreign countries 953 3 035 000 ' ',„,; 2.c.2 3. Loans to finance agricultural production and other loans to farmers __ . 1 716 000 1 000 3 4. Commercial and Industrial loans: a. To U.S. addressees (domicile) _ 1763 89,392,000 1763 87,819,000 4.a b. To non -U.S. addressees (domicile) 1764 16 290 000 1764 1 226 000 4 b 5. Not applicable. 6. Loans to individuals for household, family, and other personal expenditures (Le., consumer loans) (Includes purchased paper): a. Credit cards. 12 000 12 000 6.a b. Other revolving credit plans _ - 1 470 000 ) 1 464 000 6.b c. Other consumer loans (includes single payment, Installment and and all student loans 6.c 7. Loans to foreign government and official institutions (Including __........... m..-..,. �.�.e,e,.a.,,=..,..v�.�.....�_� foreign central banks) 8. Obligations (other than securities and leases) of states and political subdivisions In the U.S. 9. Other loans a. Loans for purchasing or carrying securities (secured and unsecured) Imo" 1+ 9 .a b. All other bans (exclude consumer loans) t � ��` t.�-„ .3. 9•b 10. Lease financing receivables (net of unearned income) _ �:�;= 3r =: -_.. 10 a. Of U.S. addressees (domicile) 2182 s 3 s 10.8 b. Of non -U.S. addressees (domicile) _ 10.b 11. LESS: Any unearned Income on loans reflected In Items 1 -9 above 12. Total loans and leases, net of unearned income (sum of items 1 through 10 minus Item 11) (total of column A must equal Schedule RC, item 4.a and 4.b) 2122 344,940,000 2122 321,164,000 12 1.a 1.b 1,6.1 1. Loans and Leases restructured and in compliance with modified terms (Included in Schedule RC -C, part 1, and not reported as past due or nonaccrual In Schedule RC -N, Memorandum item 1) (exclude loans secured by 1-4 family residential properties and loans to Individuals for household, family, and other personal expenditures) 2. Maturity and repricing data for loans and leases (excluding those b nonaccrual status): a. Closed -end bans seared by first liens on 1-4 family residential properties in domestic offices (reported in Schedule RC-C, part I, item 1.c.(2)(a), column (3) with a remaining maturity or next repridng dale of: (1, 2) (1) Three months or less (2) Over three months through 12 months (3) Over one year through three years (4) Over three years through five years (5) Over five years through 15 years (6) Over 15 years b. AM loans and leases (reported In Schedule RC-C. part 1, items 1 through 10, column A) EXCLUDING closed -end loans secured by first Mens on 1-4 family residential properties in domestic offices (reported In Schedule RC -C, pan I item 1.c.(2)(a), column B) with a remaining maturity or next repricing date of: (1,3) (1) Three months or less (2) Over three months through 12 months (3) Over one year through three years (4) Over three years through five years (5) Over five years through 15 years (6) Over 15 years c. Loans and leases (reported in Schedule RC-C, part I. items 1 through 10, column A) with a REMAINING MATURITY of one year or less (excluding (hose In nonaccrual status) 3. Loans to finance commercial real estate, construction, and land development activities (no secured by real estate) included In Schedule RC-C, part I, Items 4 and 9, column A (4) 4. Adjustable rate closed -end loans secured by first liens on 1-4 family residential properties in domestic offices (included In Schedule RC-C, part I item 1.c.(2)(a) column B) - 5. Loans secured by real estate to non -U.S. addresses (domicile) (included In Schedule RC -C, part 1, Item 1, column A) (1) Report fixed rate loans and leases by remaining maturity and floating rate loans by next repricing date. (2) Sum of Memorandum items 2.a.(1) through 2.a.(6) plus total nonaccrual dosed -end loans secured by first liens on 1-4 family residential properties in domestic offices Included in Schedule RC-N, item 1.c.(2), column C must - equal total dosed -end loans secured by first liens on 1-4 family residential properties from Schedule RC-C, part I, item 1.c.(2)(a), column B (3) Sum of Memorandum items 2.841) through 2.b.(6) plus total nonaccrual bans and leases from Schedule RC-N, sum of items 1 through 8, column C, minus nonaccrual closed -end loans secured by first liens on 1-4 family residential properties In domestic offices included in Schedule RC-N, item 1.c.)2), column C, must equal total loans and teases from Schedule RC-C, Part I, sumo items - 1 through 10. column A, minus total closed -end bans seamed by first liens on 1-4 family residential properties in domestic offices from Schedule RC-C, part I, item 1.c.(2)(a), column B, - (4) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A. Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RC-C--Continued Part 1. Continued Memoranda Dollar Amounts in Thousands - CF. Bil Mil Thou 4,200,000 4,313,000 5,305,000 10,987,000 RCO A57r 141.317 000 9571 24,256,000 957 18,958,000 7 19,126,000 A574 39,811,000 18 619 000 FFIEC RC-7 77 1 M.1 M.2.a.1 M.2.a.2 M.2.a.3 M.2.a.4 M.2.a.5 M.2.a.6 M.2.b.1 M.2.b.2 M.2.b.3 M.2.b.4 M.2.b.5 M.2.b.6 M.2.c M3 ROO 5370 24 056 000 M.4 RCF B83 2,968,000 M.5 Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RC -D— Trading Assets and Liabilities Schedule RC -D Is to be completed by banks that reported average trading assets (Schedule RC -K, item 7) of $2 million or more for any quarter of the preceding year. ASSETS 1. U.S. Treasury securities in domestic offices 2. U.S Government agency obligations in domestic offices (exclude mortgage - backed securities) 3, Securities Issued by states and political subdivisions In the U.S. In domestic offices 4. Mortgage - backed securities (MBS) in domestic offices: a. Pass - through securities Issued or guaranteed by FNMA, FHLMC or GNMA b. Other mortgage - backed securities Issued or guaranteed by FNMA. FHLMC, or GNMA (include CMOs, REMICs, and stripped MBS) c, All other mortgage- backed securities 5. Other debt securities in domestic offices 6. - 8. Not applicable 9. Other tradng assets In domestic offices 10. Trading assets In foreign offices 11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and equity contracts: a. In domestic offices b. In foreign offices 12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5) LIABILITIES 13. Liability for shod positions _ 14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and equity contracts 15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15) Dollar Amounts in Thousands 3CO Bil Mil Thou FFIEC C RC -8 18 J 1 1 Bank of America, N.A. Legal Title of Bank FDIC Certificate Number - 03510 Schedule RC -E— Deposit Liabilities Part I. Deposits in Domestic Offices Dollar Amounts in Thousands Deposits of: 1, Individuals, partnerships and corporations (include all certified and official checks) 2. U.S. Government 3. States and political subdivisions in the U.S. 4. Commercial banks and other depository Institutions In the U.S. 5. Banks in foreign countries 6. Foreign governments, and official Institutions (including foreign central banks) 7. Total (sum of Items 1 through 6) (sum of columns A and C must equal Schedule RC, item 13.a) 5 2202 2203 855 221 221 Transaction Accounts (Column A) Total transaction accounts (Including total demand deposits) CO Bit I MII Thou 2215 58,771,000 Nontrensaotion Accounts (Column B) (Column C) Memo: Total Total demand nontransacticn deposits accounts (included in (including column Al MMDAS) Co Bil Mil Thou •Coil Bil Mil Thou Dollar Amounts In Thousands 245,988.000 1 7,978,000 2 3 161 000 3 140,000 4 537 000 5 38 000 6 710 53,934,000 2385 257,840,000 7 o Bit Mil Thou FFIEC C RC -9 Memoranda 1. Selected components of total deposits (i.e. , sum of item 7, columns A and C): a. Total Individual Retirement Accounts (IRAs) and Keogh Pian accounts __�_____ _ 6935 10 M.1.a b. Total brokered deposits 2365 0 M.1.b c. Fully insured brokered deposits (Included in Memorandum item 1.6 above)• f3cu (1) Issued in denominations of less than 5100,000 (2) Issued either in denominations of $100,000 or in denominations greater than 5100,000 and participated out by the broker in shares 055100000 or less d. Maturity data for brokered deposits: (1) Brokered deposits issued in denominations of less than 5100,000 with a remaining maturity of one year or less (included In Memorandum item 1.c.(1) above) (2) Brokered deposits issued In denominations of $100,000 or more with a remaining maturity of one year or less (Included in Memorandum Item 1.b above) e. Preferred deposits (uninsured deposits of states and political subdivisions In the U,S. reported in Item 3 above which are secured or collatedized as required under state law) (to be completed for the December report only) 2. Components of total nontransaction accounts (sum of Memorandum Items 2.a through 2.c must equal item 7, column C, above): a Savings deposits: (1) Money market deposit accounts (MMDAs) 6810 123096,000 M.2.a.1 (2) Other savings deposits (excludes MMDAs) 0352 53,639,000 M.2.a.2 b. Total time deposits of less than 5100,000 6848 49,079,000 M.2.b c. Total time deposits of $100,000 or more 2604 32026,000 M.2.t ■ m M,1.c.2 M.1.d.1 M,1.0.2 M.1.e RESOLUTION NO. R - 02- 03- 14 -13A2 WHEREAS, Chapter 1, Section 1.1100, Code of Ordinances, City of Round Rock, Texas, provides that the City Council shall select a City Depository for the custody of City funds; and WHEREAS, the City has requested applications from banking firms authorized to submit such applications; and WHEREAS, Bank of America, N.A. has submitted the most favorable application; and WHEREAS, the City Council desires to accept the application of Bank of America, N.A. and to enter into a Depository and Banking Services Contract; and WHEREAS, Section 105.015 of the Texas Local Government Code empowers the City Council to authorize a designated officer to execute on the municipality's behalf one or more depository services contracts, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS: 1. That the City Manager and /or the Director of Finance shall be, either jointly or individually, the designated officer to serve as the primary liasion between the City and Bank of America, N.A., and the designated officer may exercise the powers and duties as authorized by applicable law. : :01711,1A\WORLDOX\O\WDOXVtESOLUrNi103 19A3.WPUl4g II. That the application of Bank of America, N.A. is hereby accepted and said institution is hereby selected as the official depository of the City of Round Rock, Texas, for the period beginning May 1, 2002, through April 30, 2004, and the designated officer is hereby authorized and directed to execute on behalf of the City a Depository and Banking Services Contract, and other necessary and related documents, with Bank of America, N.A. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended. RESOLVED this 14th day of March, 2002. TEST: CHRISTINE R. MARTINEZ, City Secret 2 ROBE •T A. STLUKA, S •., Mayor City of Round Rock, Texas uperanonai xuu "y Ideal Bank Service Provided JPMorgan Bank1 BkofAmer WellsFargo ACH Services 4 3 1 2 4 Electronic Balance Reporting 3 4 2 2 4 Controlled Disbursements 2 3 4 1 4 Positive Pay 2 3 4 1 4 Wrte Transfers - Electronic 3 4 4 2 4 Vault Services 4 2 4 3 4 Vault Deadlines 3 4 3 3 4 Branch Services 4 3 3 2 4 Safekeeping Services 2 4 4 3 4 ECR on Interest bearing accounts Yes =2 No = 0 2 2 0 0 4 TOTALS 29 32 29 19 40 City of Round Rock. Texas Depository Services Review Weighted Totals 40% 1st Place = 4 pts 2nd Place = 3 pts 3rd Place = 2 pts 4th Place = 1 Os Unable to determine or service unavailable = 0 Pts 11.6 AVAILABILITY MATRIX RATINGS: Please be aware that because this is based on services available, that more than one Bank can receive the same score. 12.6 11.6 7.6 16 COS1 MA KIX Ideal Bank Service Provided JPMorgan Bankt BkofAmer WellsFargo Price 71.70 3 106.70 2 47.80 4 115.60 1 4 Cancelled Cks on CD -Rom (ARP) Rating ARP Services - Partial Non Pos Pay Price 270.55 55.55 117.44 241.36 4 Rating 1 4 3 2 Electronic Balance Reporting Price 323.55 244.40 117,75 454.66 4 Rating 2 3 4 1 Controlled Disbursements Price 149.78 175,70 161.12 183.60 4 Rating 4 2 3 1 Positive Pay Services Price 163.24 78.55 81.24 4 Rating 2 4 3 1 ACH Services Price 336.18 360.70 358.82 276.95 4 Rating 3 1 2 4 ACH Addenda Retrieval Price 28.73 76.00 70.58 7 4 Rating 4 2 3 1 Wire Transfers Price 121.25 165.00 180.00 187.00 4 Rating g 4 3 2 1 Vault Services Price 216.55 253.50 206.70 130.25 4 Rating 2 1 3 4 Branch Services Price 17.80 6.27 12.10 4.98 4 Rating 1 3 2 4 Online Stops/Inquiries Price 75.00 37.50 27.00 21.00 4 Rating 1 2 3 4 Collateral Fees Price 0.00 0.00 0.00 0.00 4 Rating 4 4 4 4 Safekeeping Fees Price 522.00 198.00 266.28 216.50 4 Rating 1 1 4 Deposit Services (endpWnns/mainl Price 1,676.70 2,008.56 1,550.49 2.694,59 4 Rating 3 4 1 Initial Setup Fees Price _ 0.00 0.00 0.00 350.00 4 Rating Rat 4 4 4 3 Overall Costs Price _ 3,973.03 3,766.43 3,197.32 4,805.10 4 r Rating 2 3 TOTALS 41 44 50 36 64 Weighted Totals Best Price = 4 Second Place = 3 Third Place = 2 Fourth Place = 1 Unavailable = 0 COST MATRIX RATINGS: Please be aware that more than one Bank can receive the same raring for the same category. (Le. 2 or 3 banks could receive "4" if they have the same stop pymt fee. The next best price(s) would then receive '3", the next best price(s) '2', etc). Responses Scoring (Weighted) 40% 16.4 17.6 TOTAL WEIGHTED SCORE 46 50.4 20 20 20 20 10 20 51.6 14.4 32 25.6 61.6 Scoring of Responses for RFA Weighted at 20% JPMorgan Chase Criteria Response was easy to understand and in a logical order. Response answered all issues addressed under required services Response provided thorough pricing for all required services as requested Response included all items required in Attachment A. Respondent answered all telephone clarifications in a quick and thorough manner. $ankOne Total Score: Score Weighted at 20% Criteria Response was easy to understand and in a logical order. Response answered all issues addressed under required services Response provided thorough pricing for all required services as requested Response included all items required in Attachment A. Respondent answered all telephone clarifications in a quick and thorough manner. Total Score: Score Weighted at 20% # of Possible # of Points Points Scored 20 20 30 30 25 25 20 20 5 5 100 100 20 20 # of Possible # of Points Points Scored 20 20 30 30 25 25 20 20 5 5 100 100 20 20 Scoring of Responses for RFA Weighted at 20% 13ank of America Criteria Response was easy to understand and in a logical order. Response answered all issues addressed under required services Response provided thorough pricing for all required services as requested Response included all items required in Attachment A. Respondent answered all telephone clarifications in a quick and thorough manner. Wells Fargo Bank Total Score: Score Weighted at 20"/ Criteria Response was easy to understand and in a logical order. Response answered all issues addressed under required services Response provided thorough pricing for all required services as requested Response included all items required in Attachment A. Respondent answered all telephone clarifications in a quick and thorough manner. Total Score: Score Weighted at 20% # of Possible # of Points Points Scored 20 20 30 30 25 25 20 20 5 5 100 100 20 20 # of Possible # of Points Points Scored 20 10 30 10 25 15 20 10 5 5 100 50 20 10 SCHFDIII E P City of Round Rock, Texas Account Analysis Proforma Activity FDIC Assessment 592,598 Commerical Acct. Maintenance 10 BOA doesn't have sign restr. Signature Restriction Maintenance 8 Signature Restriction Activities 528 Debits Posted 1.046 Credits Posted 156 Return Items 37 Re- Clears 86 Item Encoding 2,098 On -Us Items 577 BOA -1 chg for all encoded Local Items 695 Local FED /RCPC Items 6,012 Texas Cities Items 5,312 Other Texas Items 3,775 Transit Items 2,615 Pre - Encoded Item Rejects 112 Electronic Credit Posted 130 Electronic Debit Posted 90 Deposit Correction (Proof) 2 Funds Xfer- Outgoing Repetitive 8 Funds Xfer - Outgoing Non - Repetitive 0 Funds Xfer - Outgoing Semi - Repetitive 4 Funds Xfer - Internal Repetitive 1 2 Funds Xfer - Internal Semi - Repetitive 1 Funds Xfer- Incoming 8 BOA- custom. Storage Funds Xfer Maintenance _ _ 8 ACH Cr /Dr Recd. 149 ACH Transmission 10 ACH Reporting Fax per page 7 ACH Report-NOCs via Autofax 4 ACH CR Orign Two + Days 1,316 ACH CR Orign One Day 51 ACH DR Orign Two + Days 868 ACH DR Orign One Day 43 Includes BOA Microcash supp ACH Support Maintenance 2 includes BOA Global Adv ACH Rec'd - Addenda 43 EDI Translation 28 Service Description Monthly Average Page 1 of 3 JAMorgan Bank1 BkofAmer WellsFargo 0.00 8.71 8.47 17.78 40.00 150.00 100.00 120.00 16.00 400.00 0.00 52.80 0.00 0.00 104.60 104.60 104.60 104.60 46.80 46.80 46.80 78.00 111.00 55.50 74.00 217.00 129.00 86.00 129.00 172.00 83.92 73.43 188.82 0.00 0,00 14.43 46.16 20.85 20.85 844.40 62.55 270.54 300.60 541.08 292.16 292.16 584.32 226.50 207.63 196.13 183.05 702.90 50.40 16.80 11.20 11,20 13.00 39.00 26.00 19.50 9.00 9.00 7.20 13.50 14.00 0.00 10.00 4.00 32.00 44.00 64.00 64.00 1 4.00 8.00 8.00 8.00 16.00 22.00 32.00 32.00 0.00 36.00 24.00 6.00 1.25 3.00 2.00 0.50 28.00 52.00 40.00 40.00 40.00 0.00 10.00 36.50 - 22.35 - -- - 14.90 14.90 44.70 -- 70.00 100.00 50.00 75.00 14.00 0.00 21.00 10.00 5.00 18.00 14.00 1.00 92.12 131.60 105.28 65.80 5.10 5.10 5.10 5.10 60.76 86.80 69.44 43.40 4.30 4.30 4.30 4.30 70.00 0.00 45.00 50.00 0.43 0.00 0.43 5.60 56.00 12.90 SCHFDIII E P City of Round Rock, Texas Account Analysis Proforma Activity FDIC Assessment 592,598 Commerical Acct. Maintenance 10 BOA doesn't have sign restr. Signature Restriction Maintenance 8 Signature Restriction Activities 528 Debits Posted 1.046 Credits Posted 156 Return Items 37 Re- Clears 86 Item Encoding 2,098 On -Us Items 577 BOA -1 chg for all encoded Local Items 695 Local FED /RCPC Items 6,012 Texas Cities Items 5,312 Other Texas Items 3,775 Transit Items 2,615 Pre - Encoded Item Rejects 112 Electronic Credit Posted 130 Electronic Debit Posted 90 Deposit Correction (Proof) 2 Funds Xfer- Outgoing Repetitive 8 Funds Xfer - Outgoing Non - Repetitive 0 Funds Xfer - Outgoing Semi - Repetitive 4 Funds Xfer - Internal Repetitive 1 2 Funds Xfer - Internal Semi - Repetitive 1 Funds Xfer- Incoming 8 BOA- custom. Storage Funds Xfer Maintenance _ _ 8 ACH Cr /Dr Recd. 149 ACH Transmission 10 ACH Reporting Fax per page 7 ACH Report-NOCs via Autofax 4 ACH CR Orign Two + Days 1,316 ACH CR Orign One Day 51 ACH DR Orign Two + Days 868 ACH DR Orign One Day 43 Includes BOA Microcash supp ACH Support Maintenance 2 includes BOA Global Adv ACH Rec'd - Addenda 43 EDI Translation 28 Service Description Monthly Average Page 1 of 3 $CIiEDUI F B City of Round Rock, Texas Account Analysis Proforma Activity Branch Deposit Branch Strap Rec Branch Change Order Processed Branch Coin Rolls Rec On -Us Cashed Checks (Payroll) Security Redemption Safekeeping Acct Maintenance Sfkp. Maint per Issue Portfolio Evaluations/Thousands DTC Transaction FRB Transaction Vault- Partial coin bags Vault -Check only deposits Vault -Coin Full Bags Vault adjustments Vault Mixed deposits Bank Acct. Reporting Maint. Bank Acct. Reporting # of Accts. BOA includes 1 Prev/1 Curr Current Day Accounts Current Day Items Previous Day Items EDI Report CL EDI per Line Controlled Disbursement Acct Maint Controlled Disb. Relationship Maint Controlled Disbursement Fee Image Safekeeping -CD Rom Image Safekeeping -per item Paid List Reconciliation Mo. Maint. Paid List Recon - Monthly Disks Paid List Reconciliation Postage Cont Disb. Debit Posted Cont Disb. Credit Posted Positive Pay Maintenance Non - Positive Pay items paid Positive Pay items paid Positive Pay No Issue Stop Payment - Online Service Description Monthly Average 5 1 4 31 136 2 1 34 55,883 0 2 5 35 0 1 3 168 8 2 140 415 1 127 1 1 1 1 1,890 2 3 5 836 1 2 811 1,531 1 3 JPMorgan Bank1 BkofAmer WellsFargo Page 2 of 3 7.25 3.75 1.50 2.50 0.20 0.35 0.12 0.00 8.80 0.00 8.00 0.00 1.55 2.17 2.48 2.48 0.00 0.00 0.00 30.00 30.00 35.00 14.00 300.00 0.00 5.00 10.00 102.00 68.00 20.40 42.50 0.00 0.00 55.88 30.00 50.00 50.00 50.00 60.00 50.00 100.00 100.00 18.75 20.00 25.00 13.75 17,50 10.50 10.50 17.50 1.95 2.00 5.00 18,75 15.00 15.00 15.00 159.60 206.00 151.20 84.00 35.00 0.00 0.00 20.00 160.00 160.00 40.00 120.00 30.00 40.00 50.00 30.00 28.00 11.20 7.00 41.30 70.55 33.20 20.75 243.36 10.00 20.00 25.00 20.00 12.70 0.00 32.25 45.00 50.00 50.00 30.00 0.00 0.00 7.00 0.00 10.50 15.00 50.00 10.00 40,00 56.70 56.70 37.80 75.60 200.00 0.00 10.00 130.26 30.00 15.00 75.00 30.00 Actual 0.00 0.00 66.88 125.40 100.32 83.60 0.90 0.30 0.30 100.00 0.00 10.00 40.55 40.55 32.44 81.10 61.24 76.55 61.24 15.31 2.00 2.00 10.00 15.00 37.50 - 27.00 21.00 100.00 JPMorgan Bank1 BkofAmer WellsFargo 15.00 0.00 0.00 45.00 0.00 0.00 0.00 0.00 - 0.00 - - -- 0.00 - - - -- 243.30 - - -- - 00 — 3,973.03 3,766.43 3,197.32 4,605.10 $1,000,000 pledged all month SCHEDULF B City of Round Rock, Texas Account Analysis Proforma Activity Service Description Monthly Average Online Check Research-1st Acct Online Check Research -Addtl Accts Collateral Fees Other Fees not able to match GRAND TOTALS 1 3 1 1 YTD 2001 Average Ledger Balances 592,598 Average Net Collected Balances 362,396 Page 3 of 3 No Earnings Credits on Interest - bearing Accts at BkofAmer or WellsFargo DATE: March 8, 2002 SUBJECT: City Council Meeting — March 14, 2002 ITEM: 13.A.2. Consider a resolution selecting Bank of America, N.A. as the official depository of the City of Round Rock, and authorizing the City Manager and/or the Director of Finance to execute a Depository and Banking Services Contract with Bank of America, N.A. Resource: David Kautz, Finance Director History: Public Comment: N/A Sponsor: N/A The City has received four applications from local banks for a new City depository. A summary of the banking services is attached which provides an itemization of the key services offered by the banks and the costs for those services. Several of the services were particularly complex and additional time was required to clarify and evaluate, causing the planned contract implementation date to be moved to May 1, 2002. Staff recommends that the Council enter into an agreement with Bank of America. The Bank of America application and services proposal best meet the City's needs at the lowest net cost. Funding: Cost: Approximately $41,000 /year, based on banking activity Source of Funds: General, Utility System operating funds Outside Resources: N/A Impact/Benefit: Modern banking services and capabilities provide the City with an efficient funds management, deposit and payables system.