Loading...
R-96-03-14-10H - 3/14/1996t ARTICLE FOUR GENERAL PROVISIONS Section 4.1 INCORPORATED DOCUMENTS. Except to the edam inconsistent herewith, the Securities Safekeeping Agreement. and all future documents distributed by the Bank and related to the subject natter hereofahall apply to the Custodial Agreement as evidenced by the Conform as between Customer and the Bank as though set forth expressly therein Section 4 2 SUCCESSORS AND ASSIGNS. The Custodial Agreement as evidenced by the Confine shall more to the benefit of and shall be binding upon the Bank, Cuaonter and Depositor and their respective successors and assigns Section 4.3 CONSULTATION WITH ATTORNEYS. The Bank shall be entitled to employ and consult with counsel of its choosing at the expense of Customer and shall be entitled to act on advice of such counsel. Section 4.4 ADDRESS FOR NOTICE. All notices to be provided hereunder shall be mailed or provided to the parties hereto at their addresses set forth in the Confine. Section 4.5 AMENDMENT OF THIS AGREEMENT. The Custodial Agreement may be amended at any time by written agreement signed by all parties thereto Section 4.6 COUNTERPARTS AND EXECUTION. The Confirm may be executed in any number of counterparts, all of which taken together shall constitute one instrument and any of the parties hereto may execute the Confirm by signing any of such counterparts. By executing the Confirm the panics acknowledge receipt of these Terms and Conditions. ARTICLE FIVE TERMINATION /e- 9 - iy — /OH Section 5.1 RESIGNATION OF CUSTODIAN. The Bank may resign at any time upon five (S) business days written notice to customer. Upon receipt of such written notice, the Customer shall promptly locate and appoint a successor custodian and the Bank shall transfer all collateral held by it to such successor custodian. If Customer does not locate and appoint a successor custodian within thirty (30) business days of delivery of notice of resignation from the Bank, the Bard: may transfer its custodial duties to a successor chosen by it and shall have no further obligations or responsibilities hereunder The obligations of Customer and Depositor to the Bank pursuant to this Agreement shall be deemed to survive any termination of the Custodial Agreement and any removal or resignation of the Bank Section 5.2 DEFAULT BY MEMBER. lithe Bank receives from Depositor written notice ('Default Notice') of Customer's failure to pay when due, perform under the teens of any agreement between Customer and Depositor secured by the collateral, or perform under the temps of the Custodial Agreement ( "Default "), which failure shall he specified in detail, then and notwithstanding any defense, claim, or objection that Customer may have to the contrary, the Bank shall act as the exclusive agent of the Depositor for the purpose of delivering. with prior written notice to Customer, such part or all of the collateral to the Depositor or its nominee as directed in writing by the Depositor. Depositor shall be entitled to retain only that portion of the collateral having a value equal to the amount of principal and interest that Customer failed to pay at maturity, and Depositor shall promptly execute any releases, assignments, quitclaims, or other documents necessary or desirable to effect a release of Depositor's interest in the remaining portion of dm collateral. Section 5.3 SATISFACTION. Upon satisfaction of the Security Agreement between Customer and Depositor, Depositor shall promptly notify the Bank in writing of such satisfaction. Such notice shall be given by Depositor in the form of Exhibit B, which exhibit is attached hereto and iacotporated herein by reference. Immediately alter receipt of notice by Depositor, the Bank shall deliver the collateral, together with any necessary assignments(s). to Customer, and the Bank shall have no further obligations under the Custodial Agreement Section 5.4 TERMINATION OF THE CUSTODIAL AGREEMENT. The Custodial Agreement shall terminate upon the earlier of the following (i) thirty days from die date that Customer notihes the bank of the termination of the Agreement and delivers die consent of Depositor to such termination and transfer of the collateral, or (ii) when the Bank no longer holds the collateral identified in a Confirm and pledged to Depositor pursuant to these Terms and Conditions "CUS MOMEIt" BAN 'ONE, TEXAS, N.A TITLE I'??/ /D/C. DATE 3- 12J-9cp page 3 TITLE DATE 1 +' l q / ^q,`D TITLE )!`// DATE 'j `2S - EXHIBIT "A" FEDERAL HOME LOAN BANK OF DALLAS Federal Home Loan Bank - Dallas Custody Receipt 5605 N. Macarthur Blvd. Inang, Tx 75038 Returnable sole custody receipt for and on behalf of Bank One Austin Receipt No. Tax - ID Public Entity Name 11012313 752270994 Attn: Judy Guyton 1717 Main Street, LL1 Dated Acquired Dallas. TX 75201 0726/94 0722/94 Customer No. 6500065 Prin. Maturity 10/16/1997 Interest Dates: 01/16, 04/16, 07/16, 10/16 Location(s). be5 CUSTODIAN BANK : DEPOSITORY BANK : Pledgee /Depositor : Bank One, Texas. N A. Name of Depository Authorized Signature Date: Par /Shares Security Description Cusip Number 5,000.0000 FHLB 3133884M9 5,000 0000 5,000.0000 PLEDGED to Rate Receipt issued for Example of "Confirm" EXHIBIT "B" Safekeeping Custody Account No. Receipt Number (s) PUBLIC ENTITY NAME AUTHORIZATION FOR PLEDGED SECURITIES Federal Home Loan Bank of Dallas Bank One, Texas, NA 1717 Main Street LL1 Dallas, TX 75201 THE CUSTODIAN BANK NAMED ABOVE NON - NEGOTIABLE Security Description Cusp Number Issued 10/16/1992 • PLEDGE RELEASE You are hereby authorized to allow deposit or release of the securities described below upon request from the above named Depository Bank Par Amount of Securities Date: 344' 94, FEDERAL HOME LOAN BANK OF DALLAS CUSTODIAL SERVICES TERMS AND CONDITIONS These Custodial Services Tema and Conditions ("Tams and Conditions ") govern all future custodial services between Bank Onc, Texas, N.A. '("Customer ") and Depositor, as defined herein, and the Federal Home Loan Bank of Dallas ( "Bank ") with offices at 5605 N. MacArthur, Irving. Texas 75038, nailing address. Attention. Member Safekeeping Department, 9.0 Box 619026, Dallas/Fort Worth, Texas 75261 -9026. Section 1 1 DEFINITIONS ARTICLE ONE CUSTODIAL ENGAGEMENT "Confirm" means a document substantially in the form of Exhibit A which sets forth the temts ofthe Custodial Agreement and establishes the specific collateral to be delivered to Bank by Customer for the benefit of Depositor. 'Custodial Agreement " means an agreement between Bank, Customer and Depositor to have Customer deliver to Bank for the benefit of Depositor certain collateral as outlined in the Confirm. Such agreement is evidenced by a Confirm which incorporates the Tents and Conditions contained herein. 'Depositor" means any institution, corporation, municipality, federal or State Agency or instrumentality authorized to enter into Custodial Agreement and who rusts into a Custodral Agreement with Customer and Bank_ "Customer" means Bank One, Texas, N.A who has entered into a "Safekeeping Agreement" with the Bank and who pledges collateral to Depositor in a Custodial Agreement Section 1.2 PERFECTION OF SECURITY INTEREST BY DEPOSITOR The security interest that arises out ofa pledge of collateral is perfected from the time that the Bank identifies the pledge of the collateral on its books and records and issues a trust receipt Bank shall have the duty to identify the pledge of collateral on is books and records and issue a trust receipt for the collateral as set forth in Section 3.4 hereof. Depositor shall have the duty to obtain the trust receipt in order to verify that Customer has pledged collateral as directed by Depositor. Section 1.3 PROVISIONAL PLEDGE. To the extent that Customer requests in writing, that the Bank provisionally segregate specified collateral held in a safekeeping account with the Bank to be pledged to Depositor, these Terns and Conditions shall govern such provisional pledge. Section 1.4 'AUTHORIZATION OF CUSTODIAL SERVICES. Customer and Depositor authorize the Bank to act as custodian of collateral transferred to it pursuant to the Confirm in accordance with the rights and duties contained in Iltese Terms and Conditions and to safekeep such collateral subject to the 'emu and conditions of the Securities Safekeeping Agreement executed by Customer and the Bank. The Bank shall be compensated for its services in connection with the Custodial Agreement by the Customer in accordanx with the published fee schedule in effect on the date the Confirm is "issued All charges by the Bank for the handling and safekeeping of collateral pursuant to the Custodial Agreement shall be paid by Customer. : ARTICLE TWO RIGHTS AND DUTIES OF CUSTOMER Section 2.1 OWNERSHIP OF THE COLLATERAL. Customer shall be the owner of ail eollateal, and all inmate derived therefrom, when transferred to the Bank under the Custodial Agreement as evidenced from the Confine from time to time and the Bank is acting as custodian of Customer on behalf of Depositor in accordance with a Custodial Agreement Section 2.2 CUSTOMER'S RESERVATION OF RIGIDTS IN THE COLLATERAL Upon transfer of collateral by Customer to the Bank on behalf of Depositor. Customer shall reserve Inc t following right in the collateral. unless otherwise agreed to in writing between Customer and Depositor: "A" The right Io receive prepayments of principal front mortgage- backed securities and all income from the collateral, "B" The right to control the management. administration_ and supervision of the collateral in accordance with these Tents and Conditions and Ilse Securities Safekeeping Agreement. Section 2 3 ADDITIONS OF COLLATERAL Customer may transfer to the Bank additional eligible collateral acceptable to Ddwsilnr. Upt.n transfer to the 13mtk of such additional collateral, the Bank will sand Customer and Depositor a receipt identifying the additional collateral. "° Section 2 4 SUBSTiTUTIONS OF COLLATERAL In the event Customer requests, in uniting, the Bank shall release to Customer any of the collateral upon receipt of other collateral in substitution thereof on written authorization received from the Depositor. When substitution is made, the Bank promptly shall cause a receipt describing bo h the collateral substituted and that released to be mailed to Customer, with a copy to Depositor. Upon such substitution, all rights and obligations of Customer and the Bank and Depositor under the Custodial Agreement, including the grant of a security interest in such collateral in favor of Depositor as set forth in the Confirm, shall automatically apply to all substituted collateral. Section 2.5 INDEMNITY OF THE BANK Customer shall reimburse, indemnify and hold harmless the Bank from and against claims of third parties, Depositor, or from any taxes or other governmental charges, and any expenses related thereto, which may be imposed or assessed in respect to the custodial services performed pursuant to the Custodial Agreement except to the extent same results from the gross negligence or willful misconduct of the Bank. Customer further agrees that the Bank shall be entitled to make claim for and to receive from the value of the collateral pledged hereunder all funds due to the Bank from Customer pursuant to the indemnity granted by the paragraph and all of the costs and expenses, including without limitation, attorneys fees arising out of or in any way connected with an action in the nature of an interpleader. Such claims by the Bank shall have priority status (subject to any claims of Depositor) among the claims asserted against the collateral. Customer shall further reimburse, indemnify and hold harmless the Bank from and against claims, costs, liabilities, expenses, losses and damages, except those caused by the willful misconduct or gross negligence of the Bank, resulting from the exercise by the Bank of any authority or power granted to it hereunder. ARTICLE THREE RIGHTS AND DUTIES OF THE BANK Section 3.1 PRINCIPAL PAYMENTS ON COLLATERAL The proceeds of any payments for any redemption of securities upon receipt by Bank of a release of collateral, or of any principal payments made on collateral except prepayments of principal on mortgage backed securities, shall be wired to Customer on each payment date. Section 3.2 COLLECTION OF INCOME ON COLLATERAL.. The Bank shall collect any interest, dividends, prepayments of principal on mortgage backed securities, or other income from the collateral in accordance with the Securities Safekeeping Agreement executed by Customer and the Bank Section 3.3 RESPONSIBILITY OF THE BANK The Bank, its officers, agents, and employees shall not be liable for errors of judgment either in holding collateral initially delivered to it or in acquiring and afterwards holding additional collateral as instructed by Customer, nor for any loss arising out of any investment nor for any depreciation in the value of any collateral held by the Bank pursuant to this Agreement, nor for any act, or omission to act, performed or omitted by the Bank, its officers, employees, or agents, in the execution of this custodianship in good faith. The Bank shall be responsible far the safekeeping of any collateral held by it pursuant to these Tents and Conditions, except that it shall not be liable or responsible for any act or omission to act of any broker or similar agent employed by the Bank to effect a transaction on Customer's behalf, or for the financial solvency of any such broker or agent, so long as the Bank exercises the same care in selecting such broker or agent as the Bank employs in handling similar transactions involving its oast property. In no event shall the Bank be liable to Customer or Depositor for any special, consequential, incidental or punitive damages. Section 3.4 DUTIES OF THE BANK The Bank shall have the following duties respecting collateral held by it: "A" The duty to take possession of and safekeep all collateral transferred or assigned to the Bank by Customer on behalf of Depositor, "B" The duty to exercise reasonable skill and care when dealing with the collateral. The standard of skill and care exercisable by the Bank shall be the same as that employed by the Bank in dealing with similar transactions involving property of a similar type to the collateral for the Bank's own account. "C" The duty (I) to identify on its books and records each pledge of collateral that is transferred or assigned to the Bank by Customer on behalf of Depositor upon receipt of such collateral, and (2) to promptly issue and deliver to Depositor a trust receipt for such collateral. Section 3.5 LIMITATION ON SCOPE OF THE BANK'S DUTIES. Depositor acknowledges that: "A" The Bank will not make, and has no duty to make, any inquiry into the value or marketability of the collateral and shall not be responsible for determining whether the value of the collateral is sufficient to fully collatcralize Customers obligation to Depositor: "B" The Bank shall not record any assignments, file any financing statements with respect to any security interest referred to herein. or take any other action to perfect any such security interest: "C" Neither the Bank nor an of its officers have made any representations, given any assurances, or expressed any opinions to Depositor as to the effectiveness of any of the procedures and rights herein provided in any situations, including but not limited to a case where Customer is placed in receivership or is liquidated; and "D" The Bank IS under no duty to supervise to invstnent of. or to advise or make any recommendation to, Depositor or Customer with respect to the sale or other disposition of any collateral at any lime. page 2 RESOLUTION NO. R- 96- 03- 14 -1 WHEREAS, the City's official depository, Bank One, Texas wishes to enter into a Custodial Services Agreement with the Federal Home Loan Bank of Dallas, and WHEREAS, as depositor, the City is requested to approve the terms of said Custodial Services Agreement, and WHEREAS, the City Council wished to approve said Custodial Services Agreement, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City the Federal Home Loan Bank of Dallas Custodial Services Terms and Conditions, a copy of same being attached hereto and incorporated herein for all purposes. RESOLVED this 14th day of March, 1996. ATTEST: ANNE LAND, City Secretary C , ' dPDOCS \RESDLUTI \R560314H.WPD /kg HARLES C City of Rou ER, Mayor Rock, Texas wishes to enter into a Custodial Services Agreement with the Federal Home Loan Bank of Dallas, and WHEREAS, as depositor, the City is requested to approve the terms of said Custodial Services Agreement, and WHEREAS, the City Council wished to approve said Custodial Services Agreement, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the Mayor is hereby authorized and directed to execute on behalf of the City the Federal Home Loan Bank of Dallas Custodial Services Terms and Conditions, a copy of same being attached hereto and incorporated herein for all purposes. RESOLVED this 14th day of March, 1996. ATTEST: LAND, City Secretary C \ NPDOCS \RESOLUTI \RS60319N.NP0 /kg RESOLUTION NO. R- 96- 03- 14 -10H WHEREAS, the City's official depository, Bank One, Texas HARLES C ER, Mayor City of Rou d Rock, Texas ARTICLE FOUR GENERAL PROVISIONS Section 4.1 INCORPORATED DOCUMENTS. Except to the extent inconsistent herewith, the Securities Safekeeping Agreement, and all future documents ditnlwted by the Bank and related to the subject nutter hereof shall apply to the Custodial Agreement as evidenced by the Confirm as between Customer and the Bank as though set forth expressly therein. Section 4.2 SUCCESSORS AND ASSIGNS. The Custodial Agreement as evidenced by the Confirm sltall inure to the benefit of and shall be binding upon the Bank, Customer and Depositor and their respective successors and assigns. Section 4.3 CONSULTATION WITH ATTORNEYS. The Bank shall be entitled to employ and consult with counselor its denoting at the expanse of Customer and shall be entitled to act on advice of such counsel. Section 4.4 ADDRESS FOR NOTICE All notices to be provided hereunder shall be mailed or provided to the parties hereto at their addresses set forth in the Confirm Section 4.5 AMENDMENT OF THIS AGREEMENT. The Custodial Agreement may be amended at any time by written agreement signed by all parties thereto. Section 4.6 COUNTERPARTS AND ECUTION. The Confirm may be executed in any number of counterparts, all of which taken together shall constitute one instrument and any of the parties hereto may execute the Confirm by signing any of such counterparts By executing the Confirm the parties acknowledge receipt of these Terms and Conditions ARTICLE FIVE TERMINATION Section 5.1 RESIGNATION OF CUSTODIAN. The Bank may resign at any time upon five (5) business days written notice to customer. Upon receipt of such written notice, the Customer shall promptly locate and appoint a successor custodian and the Bank shall transfer all collateral held by it to such successor custodian. If Customer does not locate and appoint a successor custodian within thirty (30) business days of delivery of notice of resignation from the Bank, the Bank may transfer its custodial duties to a successor chosen by it and shall have no further obligations or responsibilities hereunder. The obligations of Customer and Depositor to the Bank pursuant to this Agreement shall be deemed to survive any termination of the Custodial Agreement and any removal or resignation of the Bank Section 5.2 DEFAULT BY MEMBER. lithe Bank receives from Depositor written notice ("Default Notice") afCustomrls _ failure to pa) when due, perform under the teems of any agreement between Customer and Depositor secured by the collateral, or perform under the terms of the Custodial Agreement ("Default"), which failure shall be specified in detail. then and notwithstanding any defense, daun, or objection that Customer may Imes to the contrary, the Bank shall act as the exclusive agent of the Depositor for the purpose of delivering. with prior written notice to Customer, such part or all of the collateral to the Depositor or its nominee as directed in writing by the Depositor. Depositor shall be entitled to retain only that portion of the collateral having a value equal to the amount of principal and interest that Customer failed to pay at maturity, and Depositor shall promptly execute an) releases, assignments, quitclaims, or other documents necessary or desirable to effect a release of Depositor's interest in the reiaining portion of the collateral. Section 5.3 SATISFACTION. Upon satisfaction of the Security Agreement between Customer and Depositor, Depositor shall promptly nolifi• the Bank in writing of such satisfaction. Such notice shall be given by Depositor in the form of Exhibit B, svhidt exhibit is attached hereto and incorporated herein by reference. Immediately after receipt of notice by Depositor, the Bank shall deliver the collateral, together with any necessary assigtments(s). to Customer. and the Bank shall have no further obligations under the Custodial Aveentent. Section 5.4 TERMINATION OF THE CUSTODIAL AGREEMENT. The Custodial Agreement shall terminate upon One earlier of the following (i) thirty da)s from the date that Cunonter notifies the bank oldie termination of the Agreement and delivers the cement of Depositor to such termination and transfer of the collateral; or (ii) vv hen die Dank no longer holds the collateral identified in a Cadinn and pledged to Depositor pursuant to these Tema and Conditions. "CUSTOMER" BANK ONE. TEXAS. N A BY TITLE DATE FEDERAL 110 \If. LOAN DANK OF DALLAS TITLE DA'L'E Tffl.li ✓nAy7/ . DATE 3- - 96, EXHIBIT "A" FEDERAL HOME LOAN BANK OF DALLAS Prin. Receipt issued for Federal Home Loan Bank - Dallas Custody Receipt 5605 N. Macarthur Blvd. Irving, Tx 75038 Returnable sole custody receipt for and on behalf of : Bank One Austin Receipt No. Tax - ID Public Entity Name 11012313 752270994 Attn: Judy Guyton 1717 Main Street, LL1 Dated Acquired Dallas, TX 75201 07/26/94 07/22/94 Customer No. 6500069 Par /Shares Security Description Cusip Number 5,000.0000 FHLB 31 4 38a4M9 5,000.0000 Maturity Rate Issued 10/16/1997 10/16/1992 Interest Dates: 01/16, 04/16, 07/16, 10/16 Location(s): be5 5,000.0000 PLEDGED to PUBLIC ENTITY NAME Example of "Confirm' NON - NEGOTIABLE � - EXHIBIT "B" _.. .__ Y�.�;:� � „ PLEDGE CUSTODIAN BANK : DEPOSITORY BANK : Pledgee/Depositor : Safekeeping Custody Account No. Receipt Number (s) Bank One, Texas, N A Name of Depository Authorized Signature Dale. AUTHORIZATION FOR PLEDGED SECURITIES Federal Home Loan Bank of Dallas Bank One, Texas, NA 1717 Main Street LL1 • • Dallas, TX 75201 THE CUSTODIAN BANK NAMED ABOVE You are hereby authorized to allow deposit or release of the secunlies described below upon request from the above named Depository Bank. Security Description Cusip Number uthorized Sig - ur RELEASE Par Amount of Securities epositor Date 344 9(0 These Custodial Services Terms and Conditions (Tema and Conditions ") govern all future custodial services between Bank One, Texas, N.A. '( "Customer) and Depositor, as defined herein, and the Federal Home Loan Bank of Dallas ("Bank ") with offices at 5605 N. MacArthur. Irving, Texas 75030, mailing address Attention- Member Safekeeping Department. P.O. Box 619026, Dallas/Fort Worth, Texas 75261 -9026. Section 1.1. DEFINITIONS FEDERAL HOME LOAN BANK OF DALLAS CUSTODIAL SERVICES TERMS AND CONDITIONS ARTICLE ONE CUSTODIAL ENGAGEMENT "Confirm" means a document substantially in the form of Exhibit A which sets forth the terns of the Custodial Agreement and establishes the specific collateral to be delivered to Bank by Customer for the benefit of Depositor. "Custodial Agreement " means an agreement between Bank. Customer and Depositor to have Customer deliver to Bank for the benefit of Depositor attain collateral as outlined in the Confirm Such agreement is evidenced bye Confirm which incorporates the Terms and Conditions contained herein. "Depositor" means any institution, corporation, municipality, federal or State Agency or insuunentality authorized to enter into Custodial Agreement and who enters into a Custodial Agreement with Customer and Bank. "Customer" means Bank One, Texas, N.A. who has entered into a "Safekeeping Agreement" with the Bank and who pledges collateral to Depositor in a Custodial Agreement. Section 1.2 PERFECTION OF SECURITY INTEREST BY DEPOSITOR. The security interest that arises out of a pledge of collateral is perfected from the time that to Bank identifies the pledge of the collateral on its books and records and issues a trust receipt. Bank shall have the duty to identify the pledge of collateral on its books and records and issue a trust receipt for the collateral as set forth in Section 3.4 hereof. Depositor shall have the duty to obtain the trust receipt in order to verify that Customer has pledged collateral as directed by Depositor. Section 1.3 PROVISIONAL PLEDGE. To the extent that Customer requests in writing. that the Bank prosisionally segregate specified collateral held in a safekeeping account with the Bank to be pledged to Depositor, these Tents and Conditions shall govern such provisional pledge. Section 1.4 "AUTHORIZATION OF CUSTODIAL SERVICES. Customer and Depositor authorize the Bank to act as custodian of collateral transferred to it pursuant to the Confirm in accordance with the rights and duties contained in these Terms and Conditions and to safekeep such collateral subject to the terms and conditions of the Securities Safekeeping Agreement executed by Customer and the Bank The Bank shall be compensated for its services in correction with the Custodial Agreement by the Customer in accordance with the published fee schedule in effect on to date the Confirm is Issued. All charges by the Bank for the handling and safekeeping of collateral pursuant to the Custodial Agreement shall be paid by Customer.. ARTICLE TWO RIGHTS AND DUTIES OF CUSTOMER Secion 2.1 OWNERSHIP 01 ilE COLLATERAL Customer shall be the owner of all collateral, and all income derived arerefronr, when transferred to the Bank under the Custodial Agreement as evidenced front to Confirm front time to time and the Bank is acting as custodian of Customer on behalf of Depositor lit accordance with a Custodial Apcentent Section 2.2 CUSTOMER'S RESERVATION OF RIGHTS IN TIIE COLLATERAL Upon transfer of collateral by 2ustomr to the Bank on behalf of Depositor. Customer shall reserve the following rights in the collateral. unless otherwise agreed to in writing between Customer and Depositor "A" The right to receive prepayments of principal from mongage- aacked securities and all urcootc from the collateral; "B" The right to control the management. administration and supervision of the collateral sat accordance with these Tents and Cnndinons and the Securities Safekeeping Agreement. Section 2.3 ADDI PIONS OF COLLATERAL Cudornr na transfer to the Ilank additional eligible collateral acceptable to Depositor. Upon tnusfr to the Ban(, of such additional collateral. the Bank will send Customer and Depositor a receipt identif imp the additional collateral Section 2.4 SUBSTITUTIONS OF COLLATERAL. In the event Customer requests, in writing, the Bank shall release to Customer any of the collateral upon receipt of other collateral in substitution thereof on written authorization received from the Depositor. When substitution is nude, the Bank promptly shall cause a receipt describing bo h the collateral substituted and that released to be mailed to Customer, with a copy to Depositor. Upon such substitution, all rights and obligations of Cussomcr and the Bank and Depositor under the Custodial Agreement, including the grant of a security interest in such collateral in favor of Depositor as set forth in the Confirm, shall automatically apply to all substituted collateral. Section 2.5 INDEMNITY OF THE BANK. Customer shall reimburse, indemnify and hold harmless the Bank Lon and against claims of patties, Depositor, or from any taxes or other governmental charges, and any expenses related thereto, which may be imposed or assessed in respect to the custodal services performed pursuant to the Custodial Agreement except to the extent same results from the gross negligence or willful misconduct of the Bank. Customer funhcr agrees that the Bank shall be entitled to make claim for and to receive from the value of the collateral pledged hereunder all funds due to the Bank from Customer pursuant to the indemnity granted by the paragraph and all of the costs and expcnus, including without limitation, attorney's fees arising out of or in any way connected with an action in the nature of an interplcader. Such claims by the Bank shall have priority status (subject to any claims of Depositor) among the claims asserted against the collateral. Customer shall further reimburse, indemnify and hold harmless the Bank from and against claims. costs, liabilities, expenses, losses and damages, except those caused by the willful misconduct or gross negligence of the Bank, resulting from the exercise by the Bank of any authority or power granted to it hereunder. ARTICLE THREE RIGHTS AND DUTIES OF THE BANK Section 3.1 PRINCIPAL PAYMENTS ON COLLATERAL. The proceeds of any payments for any redemption of securities upon receipt by Bank of a release of collateral, or of any principal payments made on collateral except prepayments of principal on mortgage backed securities, shall be wired to Customer on each payment date. Section 3.2 COLLECTION OF INCOME ON COLLATERAL. The Bank shall collect any interest, dividends, prepayments of principal on mortgage backed securities, or other income from the collateral in accordance with the Securities Safekeeping Agreement executed by Customer and the Bank Section 3.3 RESPONSIBILITY OF THE BANK. The Bank, its officers, agents, and employees shall not be liable for errors of judgment either in holding collateral initially delivered to it or in acquiring and afterwards holding additional collateral as instructed by Customer, nor for any loss arising out of any investment nor for any depreciation in the value of any collateral held by the Bank pursuant to this Agreement, nor for any act, or omission to act, performed or omined by the Bank, its of3icers, employers, or agents, in the execution of this custodianship in good faith. The Bank shall be responsible for the safekeeping of any collateral held by it pursuant to these Terms and Conditions. except that it shall not be liable or responsible for any act or omission to act of any broker or similar agent employed by the Bank to effect a transaction on Customers behalf. or for the financial solvency of any such broker or agent, so long as the Bank exercises the same care in selecting such broker or agent as the Bank employs in handling similar transactions involving its 015,1 property. In no event shall the Bank be liable to Customer or Depositor for any special, consequential. incidental or punitive damages. Section 3.4 DUTIES OF THE BANK The Bank shall have the following duties respecting collateral held by it: 'A' The duty to lake possession of and safekeep all collateral transferred or assigned to the Bank by Customer on behalf of Depositor, 'B" The duty to exercise reasonable skill and care when dealing with the collateral. The standard of skill and care exercisable by the Bank shall be the same as that employed by the Bank in dealing with similar transactions invoking property of a similar type to the collateral for the Bank's own account. 'C The duty (1) to identify on its books and records each pledge of collateral that is transferred or assigned to the Bank by Customer on behalf of Depositor upon receipt of such collateral, and (2) to promptly Issue and oeiiver to Depositor a trust rcccnp: for such: collateral. Section 3.5 LIMITATION ON SCOPE OF THE BANK'S DUTIES Depositor acknowledges that: 'A' Thc Bard: will not make, and has no duty to make, any inquiry into die value or marketability of Use collateral and shall not be responsible for detemtining whether the value of the collateral is sufficient to fully coilatcrohze Customer's obligation to Depositor: "B" The Bank shall not record any assignments, file any financing staternents with respect to any urvrity interest referred to lurch or take any other action to perfect any such security interest. "C' Neither the Bank nor any of its officers lust made any representations, given any assurances, or expressed any opinions to Depositor as to the effectiveness of any of the procedures and rights herein provided 01 any situations, including but not limited to a case where Customer is placed in receivership or is liquidated, and "D" The Bank is under no duty to supervise (Inc investment of. or to advise or make any recommendation to, Depositor or Customer with respect to the sale or other disposition of any collateral at any time. page 2 DATE: March 12, 1996 SUBJECT: City Council Meeting, March 14, 1996 ITEM: 10. H. Consider a resolution authorizing the Mayor to enter into an agreement with Federal Home Loan Bank of Dallas for deposit collateral safekeeping services. STAFF RESOURCE PERSON: David Kautz In accordance with the Collateral Security agreement between the City and its depository (Bank One), all funds on deposit with the depository are required to be secured by collateral (investment securities) as provided for in state law. To perfect the security interest of the City in the collateral pledged by the depository, the Federal Home Loan Bank of Dallas holds the collateral in a custody account for the benefit of the City. The three parties involved in the collateral safekeeping described above (the City, Bank One and the Federal Home Loan Bank) have agreed to update the safekeeping agreement. Changes reference the new FDIC requirements for security interest perfection. The agreement is attached and staff recommends approval. The cost for this required safekeeping service continues at approximately $1,500 per year.