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R-97-08-14-13D - 9/12/1997c:\Temoeeasxrs.weo/cm STATE OF TEXAS COUNTY OF WILLIAMSON ) DEPOSITORY AND BANKING SERVICES CONTRACT I. BANKING AND DEPOSITORY SERVICES /e- q1 -08 l -133 This Depository and Banking Services Contract, hereinafter referred to as "Contract ", is made and entered into between the City of Round, Rock, a home -rule municipality, situated in i Williamson County, Texas, hereinafter referred to as "City ", and Texas Commerce Bank, N.A., hereinafter referred to as "TCB ". WHEREAS, the City 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; WHEREAS, TCB is willing to provide such banking services and to act as a depository for City funds while providing full collateral satisfactory to the City; NOW, THEREFORE, in consideration of the mutual agreements and covenants contained herein, the City and TCB agree as follows: TCB agrees to receive and safely keep any and all public funds offered for deposit by City and to reimburse and pay same to City, by paying its designated officer, or whoever may be lawfully entitled to receive same upon request. TCB agrees to perform banking and depository services of the types and for the charges as specified in Exhibit "A ", "B ", "C ", "D ", "E ", "F ", "G ", and "H ", which are respectively: (A) TCB's Terms and Conditions of Deposit Accounts; (B) TCB's Depository Pledge Agreement; ® TCB's Treasury Management Services Agreement with Amendment for Public Entities; (D) Resolution No. R- 96- 04- 11 -13B establishing the City of Round Rock's Comprehensive Investment Policy; (E) TCB's Master Agreement Regarding Custodial and Related Services; (F) TCB's Merchant Service Agreement; (G) CITY'S Request for Applications; and (H) TCB's Response to the CITY'S Request for Applications, 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 TCB, or other agreement between the City and TCB, the terms of this Contract shall be final, controlling and binding. TCB agrees to accept stop payment orders issued by the City via Quick Search software. Such stop payment orders shall expire after one (1) year, however, the City may choose to renew such stop payment orders, at its discretion. II. DESIGNATED OFFICER 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 the City and TCB, and as the designated officer, may exercise the powers and duties as authorized by applicable law. III. TERM, RENEWAL AND TERMINATION 1 This Contract shall commence on the 1st day of October, 1997, and shall remain in full force and effect for a period of three (3) 2. years. However,,this Contract may be extended by mutual agreement of the City and TCB, to remain in full force and effect for a period not to exceed the period allowed by the City's Comprehensive Investment Policy. Such period shall be agreed to by the parties to this Contract. Either the City or TCB may terminate the Contract at any time after one year, for any reason, by ninety (90) days written notice delivered by either party to the other advising the other party of its intent to terminate the Contract. This Contract shall also be subject to termination upon the failure of TCB to cure a default. If TCB defaults in the performance of any of the terms and conditions of this Contract, written notice of such default shall be given, and TCB shall have ten (10) days from the date of initial notice within which to cure such default. If TCB fails to cure the default within such period of time, then the City shall have the right without further notice to terminate this Contract. TCB shall be fully responsible to pay the City all actual damages caused by TCB's default. Nothing herein shall deprive the City of any other legal remedies it may have to enforce the terms of this Contract, including bringing suit for damages or enforcing the specific performance of this Contract. However, notwithstanding any provision to the contrary herein, TCB shall not be liable for special, indirect, or consequential damages under this Contract. IV. NOTICES All notices shall be in writing and delivered to the parties at the addresses listed below. Personal hand delivery to an officer authorized to receive notices or the mailing of the notice 3. i by registered or certified mail, return receipt requested, postage prepaid, shall be sufficient service. The addresses of the parties for notice purposes shall be as follows, unless notified otherwise in writing: If to the City: City of Round Rock Attention: Director of Finance 221 East Main Street Round Rock, Texas 78664 If to TCB: Texas Commerce Bank, N.A. Attention: Karen Davidson P.O. Box 550 Austin, Texas 78789 V. SECURITY FOR DEPOSITS All funds of the City which are on deposit with TCB will be insured by the Federal Deposit Insurance Corporation, to the extent permitted by law, and fully and continually secured, including accrued interest, in compliance with the Public Funds Collateral Act as it presently exists or is hereafter amended, and in compliance with any other applicable federal, state, or local law or regulation,: as amended, by pledging certain investment securities ( "Pledged Securities ") as collateral to the City. TCB hereby grants to the City a security interest in, and hereby pledges to the City the securities listed on Exhibit "I ", which is attached hereto and incorporated herein, and any additional securities which may be pledged at a future date pursuant to this Contract to secure any and all funds deposited by the City with TCB. Such Pledged Securities shall be approved as to type and value 4. by the governing body of the City of Round Rock, Texas. The value of the Pledged Securities will be determined by the City in its reasonable discretion. TCB agrees to maintain the Pledged Securities at Bank One Texas, N.A. at Dallas, Texas or its successors pursuant to the terms of the Depository Pledge Agreement executed by the City and TCB, such Agreement is attached hereto and incorporated herein by this reference as Exhibit "B ". The City and TCB agree that Bank One Texas, N.A.', at Dallas, Texas or its successors shall be the "Custodian Bank" for the purpose of holding and safekeeping said Pledged Securities. Said Custodian Bank shall not be owned or controlled by , TCB, its holding company or affiliates or subsidiaries. Pledged Securities will be added, released, or substituted in accordance with the terms and conditions of the this Contract, the Depository Pledge Agreement, and the Master Agreement Regarding Custodial and Related Services executed between the City, TCB, and Bank One Texas, N.A., at Dallas, Texas, Custodian Bank. In addition to the initial list of Pledged Securities contained herein as Exhibit "I ", TCB shall furnish to the City a statement describing the Pledged Securities held in safekeeping by the Custodian Bank on at least a monthly basis commencing on October 1, 1997. The statement, at a minimum, shall set forth the par value, market value, interest rate, and maturity date of each of the Pledged Securities. TCB shall monitor the value of the Pledged Securities weekly and must immediately notify the City in the event the amount of City funds on deposit with TCB exceeds the market value of the collateral securing such deposits. Upon notice 1 from City of a deficiency, TCB shall immediately pledge additional 5. acceptable collateral to make up any deficiency between the City funds on deposit with TCB and the market value of the Pledged Securities. TCB agrees to maintain a separate, accurate and complete record relating to the Pledged Securities and transactions related to same, which shall be available to the City for examination at any and all reasonable times. i TCB shall provide to the City a statement of its financial condition ( "Call Reports ") on a quarterly basis. TCB shall also provide to the City the Chase Manhattan Corporation's annual financial statements audited by an independent public accountant as to its "fair representation" as published in the "Chase Manhattan Corporation Annual Report." VI. INVESTMENT POLICY It is the intention of the parties hereto that the City 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 adopted by the City Council of the City of Round Rock, Texas by Resolution No. R- 96- 04- 11 -13B, and consistent with other applicable laws. VII. NEW SERVICES The City may negotiate new services with TCB as deemed necessary by the City. The interest rate to be earned, as well as the other terms and conditions regarding the service will be mutually agreed upon by the City and TCB. Any such new service 6. agreement will be executed in writing as an addendum to this Contract. VIII. 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. IX. INDEMNIFICATION TCB agrees that it and all of its agents, servants, employees and independent contractors and subcontractors will use due care" and diligence in all of its or their activities and operations authorized under this Contract. TCB agrees to defend, indemnify and hold CITY, its officers, agents, and employees, harmless against any and all claims, lawsuits, judgments, costs and expenses including costs of court and attorney's fees for personal injury (including death), property damage or other harm for which recovery of damages is sought that may arise out of or be occasioned by TCB's intentional or negligent breach of any of the terms or provisions of this Contract, or by any other negligent act or 7. omission of TCB, its officers, agents, associates, or employees, in the performance of this Contract. City will promptly forward to TCB every demand, notice, summons or other process received by City in any claim or legal proceeding contemplated herein. Nothing in this section shall be deemed an attempt to change or modify in any manner whatsoever the method or conditions of preserving, asserting or enforcing any legal liability against the City as required by the City Charter, ordinances, or any law of the State of Texas. The provisions of this paragraph are solely for the benefit of the parties hereto and are not intended to create or grant any rights, contractual or otherwise, to any other person or entity. X. 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. XI. ACCEPTANCE AND APPROVALS Any acceptance or approval by the City, or its agents or employees shall not constitute nor be deemed to be a release of the responsibility and liability of TCB, its employees, agents, subcontractors, 'or suppliers for the accuracy, competency, and 8. completeness for any reports, information, or other documents or services prepared or performed pursuant to the terms and conditions of this Contract, nor shall such acceptance or approval be deemed to be an assumption of such responsibility or liability by the City, or its agents and employees for any defect, error or omission in any reports, information, or other documents or services prepared or 'performed by TCB, its employees, agents, subcontractors, or suppliers pursuant to this Contract. XII. CONFIDENTIALITY All data relating to City's business provided to TCB by City, except for data that is publicly available through no fault of TCB, will be treated confidentially and safeguarded by TCB, using the same care and discretion that it uses with data that TCB designates as confidential, and TCB shall safeguard all funds and investments of the City while such funds or investments are in the possession of or under the control of TCB. XIII. 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. 9. XIV. RESERVATION Pursuant to Chapter 105 of the Texas Local Government Code, the City reserves the right to contract with other depositories for the deposit or investment of a portion of available public funds of the City. XV. 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. XVI. ATTORNEY'S FEES If any action at law or in equity, including any action for declaratory relief, is brought to enforce or interpret the provisions of this Contract, the prevailing party shall be entitled to recover reasonable attorney's fees from the other party, which fees may be set by the court in the trial of such action or may be enforced in a separate action brought for that purpose, and which fees shall be in addition to any other relief which may be awarded. XVII. 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 10. resolutions. TCB 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. XVIII. VENUE Pursuant to Chapter 105 of the Texas Local Government Code, venue and jurisdiction of any suit or right or cause of action f 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. XIX. 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. 11. By: EXECUTED this 12 day of September THE CITY OF ROUND ROCK, TEXAS TEXAS COMMERCE BANK, N.A. ATTEST: By: E LAND, sistant City Manager/ City Secretary By: Pri Tit ATTEST: By: 12. , 199 ted Name : KAI∎EN L. UAVIDSON e: VIDEPntstuttu Printed N =me: IFFRRIAVE7 Title: Accicfan+VCc® pros �entJ Public Funds Administrator G. TERMINATION. A � We may at any time without notice terminate any EFT service we provide to you. If you fail to um your Card for any consecutive twelve month period, we may terminate the Card without nonce to you. - Part VII. Definitions • ACH means "automated clearinghouse," the method used for many electronic deposits to and automatic debits from • ` accounts. ' ' - t •� 4 y Availability Schedule is a detailed schedule which allows you to calculate when funds deposited by check will be avail- ' able to you for withdrawal (unless a hold is otherwise placed on the Item) by determining the locanon of the institution on which the deposited item is drawn. Our Availability Schedule is published from time to time and subject to revision without prior notice except as required by law. The Availability Schedule is available for examination in our offices. Some commercial accounts may have a different availability schedule. Contact your account officer for Information , about the applicable schedule. - _ Collected balance or collected funds means the amount of money in your account at the close of the business day after adding deposits and after subtracting any checks, withdrawals, transfers, and charges made that day, less (i) deposited items which have not cleared based on our Availability Schedule, and (ii) deposited items upon which a hold has been placed. Commercial account means any account that is not a consumer account, including a sole proprietorship business account. ' ' " Con account means an account in the name of one or more individuals, where the account is used primarily for ' personal, family or household purposes. . • Entity means any corporation, partnership, trust, estate, or other business or nonprofit organization. Item means any instrument presented for payment against an account.'The term includes checks, drafts, and electronic debit' items. Jumbo accounts means time deposits in the original amount of $100,000 or more. , Ledger balance means the amount of money in your account at the close of the business day after adding deposits and , after subtracting any checks, withdrawals, transfers, and charges made that day. NACHA means the National Automated Clearing House Association, the organization that oversees ACH transactions nationwide. • Person means a natural person or an entity. Product Disclosure means any of our documents listing current service charges, including without limitation the Services and Fees Disclosure and the "Commercial Account Service Charge Schedule" applicable to most commercial accounts. - - Receipt means the receipt that you have received or will receive upon opening a time deposit account. Some jumbo accounts may be evidenced by a Certificate of Deposit. For such accounts, the Certificate of Deposit is the Receipt for • purposes of this agreement. ' Regular time account means a time deposit in the original amount of less than $100,000, and all renewals of that account, notwithstanding the fact that any renewal amount may exceed $100,000 due to interest accrued on the origi- nal principal amount. " ' Services and Fees Disclosure means the brochure entitled "Services and Fees" containing information about deposit ,,; products s and pricing for consumer accounts and for certain commercial accounts. _ y Y , • We, us and our refer to Texas Commerce Bank. ' You and your refer to each person or entity that is an owner of the account. If the account styling includes the name of an agent for the owner (whether or not the owner's name is also disclosed), "you" includes the agent, and the agent is liable to us for charges and overdrafts as if it were a joint owner of the account with the principal. — 15 — depository financial institution (`RDH ") as mstructed in the payment order, even if that number identifies a per- - son different from the named beneficiary, intermediary bank, receive; beneficiary's bank or RDH. You assume hill responsibility for any inconsistency between the name and the identifying number of any credit parry. 3. Execution of Payment Orders. We may determine the order in which we handle payment orders that we receive from customers. Security Procedures. Unless you and we have agreed in writing to an alternate security procedure, the authenticity of oral or written (including writings transmitted by facsimile) wire transfer payment orders will be verified by telephonic call -back confirmation with an individual reflected on our records as having author- 4 ity to initiate wire transfers. You agree that this security procedure is a commercially reasonable pro- . " ' ' cedure for those wire transfer payment orders. - 'B. AUTOMATED CLEARINGHOUSE (ACH) TRANSFERS. 1. Commercial Accounts. We may receive electronic transfers of funds into or out of your account under the operating rules applicable to such transfers promulgated by NACHA. Under those operating rules, we are not required to give you next day notice of receipt of an electronic funds transfer credit item and we will not do so, unless you and we otherwise agree in wrinng. However, we will continue to notify you of the receipt of any electronic funds transfer credit items in the periodic statements we regularly provide to you. Consumer Accounts. [Omitted] 3. Namefdentitying Number Inconsistencies. In executing a payment order (including incoming payments), • ' we and ocher banks involved in the transfer may rely on the identifying number (e.g., transit routing number and/or account number) of any beneficiary, intermediacy bank, receive; beneficiary's bank, or receiving depos- itory financial msntunon ('RDH ") as instructed m the payment order, even if that number identifies a person different from the named beneficiary, intermediary bank, receive; beneficiary's bank or RDFI. You assume full t ' ' responsibility for any inconsistency between the name and the identifying number of any credit party. 4. Execution of Payment Orders. We may determine the order in which we handle payment orders that we receive from customers. ACH credit or debit entries may be transmitted by any means we deem appropriate. 5. UCC Article 4A Applicable. To the extent that Federal Reserve Regulation E, 12 CFR Part 205, does not apply to any of your accounts, and if Regulation E applies, then to the extent that it does not conflict, all automatic funds transfer credit transactions are governed by Texas Business & Commerce Code Chapter 4A. C - E. APPLICABLE ONLY TO CONSUMER ACCOUNTS. F. LIABILITY FOR COMMERCIAL AccouNis. r• - - ` The following provisions apply to EFT services you use if your account is a commercial account: •t You must promptly report in writing any error in connection with any EFT transaction or any discrepancy between your records and any nonce we send you relating to an EFT transaction. Unless some other provision of this agreement or another agreement provides for a shorter time, any rime over 60 days is not a reasonable time to notify us of errors or discrepancies. _ You agree to indemnify and hold us, our officers, directors, agents and employees (collectively, the "Bank Parties ")'harmless from and against any and all loss, liability and expense (including reasonable attorney's fees) aris- ing from the services performed by any of the Bank Patties in connection with EFT services, except for those losses caused direcdy by our failure to exercise ordinary care or to act in good faith. To the maximum extent permitted by law, you agree that the Bank Parties will not be liable for events or circumstances beyond their reasonable control, and the liability of the Bank Parties will be limited to correcting errors caused by the Bank Parties. You and we agree that clerical errors and mistakes in Judgment do not constitute a failure to exercise ordinary care or to act in good faith. THE BANK PARTIES WILL NEVER BE LIABLE OR RESPONSIBLE FOR CONSEQUENTIAL, EXEMPLARY, PUNITIVE, SPECIAL OR INCIDENTAL DAMAGES OR LOSSES, INCLUDING LOST PROFITS (WHETHER OR NOT ANY OF THE BANK PARTIES WERE ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES). — 14 — 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 nonce by the day after we receive your deposit. If you will need the funds from a deposit right away, you should ask as when the funds will be available. In addition, funds you deposit by Bieck may be delayed for a longer period under the following circumstances: • , We believe a check you deposit will not be paid. • You deposit checks totaling more than $5,000 on any one day. • You redeposit a check that has been returned unpaid. • You have overdrawn your account repeatedly in the last six months. • There is an emergency, such as failure of communications or computer equipment or severe weather, which has delayed the check collection process. 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 ninth business day after the day of your deposit. • 6. Sp ec i a l Ru les f or New Accounts. If you area new customer, we may delay your funds availability 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 and wire transfers will be available on the first business day after the day of your deposit. The first $5,000 of a day's total deposits of U.S. government, Federal Reserve Bank, Federal Home Loan Bank, cashier's, certified, teller's and traveler's checks and U.S. Postal Service money orders and checks drawn by the State of Texas or a county or municipality in Texas will be available on the first busi- ness day after the day of your deposit if the deposit meets certain conditions. The checks must be payable to you and a Special Deposit Slip must be used for cashier's, certified and teller's'checks, and checks drawn by ( the State of Texas or a county or municipality in Texas. The excess over $5,000 will be available no later than the ninth business day after the day of your deposit. Funds from all other check deposits will be available nolater than the ninth business day after the day .. " of your deposit. ' • 7. When Deposits Are Considered to Be Received. Deposits are credited to your account on the same day if deposited in person or in an automated teller machine at one of our branch locations before our transac- ' tion cut -off time. Deposits placed in a night deposit box are credited on the business day Upon which we • empty the night deposit box. We may not empty the night deposit box until the morning of the business day - after you leave a deposit, even if that deposit is made at 9:00 a.m. on a business day. Other deposits are cred- ieed on the business day of receipt, if received prior to our ,transaction cut time. • " 8. When Interest Begins to Accrue. A deposit into an interest - beating checking account, savings account, or money market account will begm to ram interest following the normal collection time of the items being deposited. Part VI. Electronic Funds Transfer Services. - - A. Wmn TRANSFERS. 1._ Method of Sending Wire Transfers; Applicable Rules. Unless the Bank or one of our affiliates is the ben- eficiary's bank, we will transmit all domestic wire transfer payment orders through the Fedwire service of the Federal Reserve Bank, and those payments orders will be governed by subpart B of Federal Reserve Regulation • • J, 12 CFR 210.25, et seq., and the Operating Bulletins and Circulars of the Federal Reserve Bank of Dallas. "• You also must comply with any procedures or requirements we establish for these services from time to time. We will transmit all payment orders designating a beneficiary's bank that is not located within the United States via telex or through the SWIFT communications system. Payment orders sent through SWIFT will be govemed by the rules of SWIFT. We reserve the right to refuse any request to send a wire transfer in our sole discretion. 2. Namelldentitying Number Inconsistencies. In executing a payment order (including incoming payments), we and other banks involved in the transfer may rely on the identifying number (e.g., transit routing number and/or account number) of any beneficiary, intermediary bank, receiver, beneficiary's bank, or receiving 13 — FIGURE B. ILLUSTRATION OF "PAYABLE THROUGH" DRAFT PAY IOIaE ORDER cc ■ - YOUR NAME ADDRESS m •Bc Non nm AMON !No routing number. The "PayableThrough" Bank. Bank ro Bank uting number. Credit Union which pays the check. • b. "Payable Through" Drafts. Some checks are marked "payable through" and have a four or nine -digit number nearby. For these checks, use the four -digit number (or the first four digits of the nine -digit num- ber), not the rounng number on the bottom of the check, to determine if these checks are local or non- local. For example, if a check is drawn on an account at a credit union (ABC Credit Union) located in our check processing region, we will treat that check as a local check even if it is payable through a non- local bank (XYZ Bank in Figure B). If you have questions about any specific item, ask the customer ser- " vice representative at your branch. - C. Time of Availability. Our policy is to make funds from these checks available as follows: • Local Checks. The first $100 from.the aggregate daily deposit(s) of local checks will be available on the first business day after the day of your deposit(s). The remaining funds will be available no later than the second business day after the day of your deposit. For example, if you deposit a local check of $700 on a Monday, at least $100 of the deposit is available on Tuesday. The remaining $600 is available no later than Wednesday. For specific information about a check, our Availability Schedule is available for review in the lobby of our branches. Nonlocal checks. The first $100 from the aggregate daily deposit(s) of nonlocal checks will be , available on the first business day after the day of your deposit(s). The remaining funds will be available no later than the fourth business day after the day of your deposit. For example, if you deposit a $700 nonlocal check on a Monday, at least $100 of the deposit is available on Tuesday. The remaining $600 is available no later than Friday. For specific information about a check, our,,,, + k ' Availability Schedule is available for review in the lobby of our branches. If your aggregate daily deposit(s) include both local and nonlocal checks, at least the fast $100 - from the checks will be available on the first business day after the day of your deposit(s). . ' 5. - Longer Delays May Apply. In some cases, we will not make all of the funds that you deposit by check avail ' able to you on the day stated above. Depending on the type of check that you deposit, funds may not be avail- " able until the fifth business day after the day of your deposit. However, the first $100 of your deposits will be available on the first business day. • . . If we are not going to make all of the funds from your deposit available on the day stated above, we will . ' notify you at the nme you make your deposit. We will also tell you when the funds will be available. If your 12 — 0000`00n The first tour digits of the routing number determine whether the check is local or nonlocal. Houston Zone Houston ' Beaumont Dallas Zone . Dallas/Fort Worth Metroplex San Angelo San Antonio Zone San Antonio Austin New Braunfels , , Rio Grande Valley El Paso Zone El Paso , Midland Odessa , FIGURE A. PLACEMENT OF ROUTING NUMBERS. Business Cheek Local Check Routing Numbers 1130, 1131, 3130, 3131 Local Check Routing Numbers 1110, 1111, 1113, 1119 3110,3111,3113,3119 Local Check Routing Numbers 1140, 1141, 1149 3140, 3141, 3149 Local Check Routing Numbers 1120, 1121, 1122, 1123, 1163 3120, 3121, 3122, 3123, 3163 , Personal Check Part IV. Special Account Types A. MULTIPLE PARTY Accourrrs Ask your banker for the consumer agreement if you need to see terms relating to multiple party accounts. Part V. Funds Availability Disclosure Texas Commerce strives to secure rapid availability for your deposits. Amounts deposited will be available for with- drawal in accordance with our Availabihty,Pohcy. Some commercial accounts may have contracted for a different avail- „ ability schedule. - 1. Determining the Availability of a Deposit. The length of time when funds become available is counted in business days from the day of your deposit. Every day is a business day except Saturdays, Sundays, and fed- , eral holidays. If you make a deposit before the transaction cutoff time on a business day when a location is open, we will consider that day to be the day of your deposit. However, if you make a deposit after the trans- action cutoff time or on a day we are not open, we will consider that the deposit was made on the next busi- ness day when we are open. Each Texas Commerce branch location may establish its own cutoff times, which may be 2:00 p.m. or later. Check with your local branch for its cutoff time. The length of the delay also varies depending on the type of deposit and is explained below. 2. Same -Day Availability. Funds from electronic direct deposits to your account will be available on the day we receive the deposit. 3. Next -Day Availability. Funds from the following deposits are available on the first business day after the day of your deposit: • Cash and traveler's checks; • U.S. Treasury checks that are payable to you; ' • Federal Reserve Bank checks, Federal Home Loan Bank checks, and U.S. Postal Service money orders if these items are payable to you; • Wire transfers; _ • Checks drawn on us. - If you use our Special Deposit Shp; which is available in our lobby, funds from the following deposits are also available on the first business day after the day of your deposit: _ • Checks issued by the State of Texas or a county or municipality in Texas that are payable to you; • Cashier's, certified, and teller's checks that are payable to you. Availability of these items may be delayed one additional business day if the check(s) are not deposited in person to an employee of Texas Commerce Bank or not deposited in the account of the person or entity to . whom the check is made payable. 4. Other Check Deposits. The delay for other check deposits depends on whether the check is a local or a non- local check. a. Identifying a Local Check. To see whether the check is a local or a nonlocal check, look at the rout- ' ing number on the check. The routing numbers are the numbers indicated on Figure A. Now find your Texas Commerce location and routing number below. If the first four digits of the routing number (1234 " in the examples below) are the same as one of the four digit prefixes listed opposite your Texas Commerce location, then the check is a local check. Otherwise the check is a nonlocal check. , 10 - 4. ' Waiver. No waiver of any provision of this agreement by us will be effective unless it is in writing and is signed by one of our authorized officers. If we waive a rule on one occasion, that waiver will not operate as ' a waiver on any future occasion. No course of dealing will modify our obligations under this agreement. i.. 5. Applicable Law; Place of Performance. This agreement is governed by Texas law. All accounts and the handling of all items for collection are subject 'to applicable state and federal laws, applicable rules and reg- ' - - ulations of the Federal Reserve Board, the Federal Deposit Insurance Corporation and the Comptroller of the • Currency, local clearinghouse rules, and general commercial bank practices in the area we serve. This agree- ment is to be performed in the place where our main office is located. • Part Ill. Additional Terms of Commercial Accounts I A. FEES AND SERVICES 1 1. Other Agreements. If you have contracted with us for pricing or services that vary from the standard pric- ing and services offered under our account documentation, then that contract supersedes this agreement to the extent of any conflict. However, this agreement governs all accounts to the extent not in conflict with any other agreements.' • 6 2. Forged or Altered Checks and Drafts. If your negligence substantially contributes to the forgery or mate- rial alteration of any check or draft, you may be liable for the forged or altered check or draft. Therefore, if we offer you cost - effective additional services reasonably designed to help prevent check fraud and you fail to utilize those services, that failure will constitute negligence and you will assume the risk that checks or drafts presented against your account may be forged or altered, to the extent that the services we offered may have prevented any loss.' B. { AUrHORIT Y DOCUMENTATION , - - + 1. All Accounts. You agree that each person named as a signer on the current,signature card (including any addenda) relating to the account is authonzed to make withdrawals from the account and to act in connection with the account. You represent that the signature specimens or facsimiles on the signature card (mcludmg any addenda) are genuine. We are authorized to act upon the instructions of the listed signers until we receive writ- .. ten notice of the authorization of others (or the termination of authority of aiiy listed signer) to sign for the • account owner, together with specimen signatures or facsimiles of any new signers. If you terminate the author- ity of any signer, we are not bound by that termination until we have received the termination instruction, it is I complete in all material respects m order to allow us to act on the termination instruction, and we have had a reasonable opportunity to act on the termination instruction prior to any action by us with respect to the account or any Item. You agree that one and one half business days to act upon a termination instruction is a reasonable amount of tame. ■, a , 1 2. Representations of Entity Account Owners. If the account owner is a corporation, partnership, limited liability company or other business or nonprofit entity, you represent that the owner is duly organized, validly { existing and in good standing under the laws of the state of its organization, has full power to own its prop- erties and to carry on its business as now conducted and has not commenced dissolution proceedings. You further represent that if the entity conducts business in the State of Texas under an assumed name, it has filed an Assumed Name Certificate in the Office of the Secretary of State of Texas or the Office of the County Clerk `C ? ' of the county of its pnncipal place of business m Texas and in the county where it maintains its registered office, or both, as required by law. 3. Representations of Sole Proprietorship Account Owners. If the account owner is a sole proprietorship, the person identified as the owner of the business represents that the owner of the account is an unincorpo- rated business owned wholly and exclusively by him or her. You agree to inform us in writing promptly of any changes in the organizational structure of the business. You further represent that if you use a name for the business other than the name of the individual, a current Assumed Name Certificate is on file in the Office of the County Clerk in each county in which you conduct business. , • ( -? y •, Q 8. Oral Instructions. You agree that we may, at our option, honor the oral, Instructions (by telephone or oth- • envise) of each signer on your account to receive and execute wire transfers and other transfers to and from r • the account, without a signature or other writing of that person, and without inquiry in any case as to the cir- cumstances of the request or disposition of the funds credited to or withdrawn from the account. 9. Termination. We may at,any time without prior nonce terminate your account. We will mail notice of fermi- nation to you at your address in our records. Any items presented to us after termination may be returned • unpaid. At the time of termination or within a reasonable time thereafter, we may mail a check for the balance of the terminated account (less any applicable charges) to you at your address in our records at your risk. 10. Abandoned Accounts. If your account has no activity other than charges assessed or interest credited by us for a period of at least six months, we are not required to provide you an account statement until your account has additional activity. If your account has no activity other than charges assessed or interest cred- ited by us for a period of at least 12 months, you may be unable to access your account other than by an in- person withdrawal. Texas law requires us to remit to the State of Texas as abandoned property the funds on deposit in any account in which there have been no deposits or withdrawals by the depositor or his agent for a period of five (5) years and the location of the depositor is unknown to us. You may prevent this tumover by making a deposit or withdrawal or by notifying us in writing of your awareness of the account, prior to the turnover • After turnover, the State of Texas holds the funds in trust for the benefit of rightful claimants and any claims should be made directly to the state. 11. Credit and'Sharing of Information. To allow us fully to understand and analyze your potential financial needs, you authorize us, to the extent permitted under applicable law, to obtain at any time such information from any sources, including credit investigations, as we deem appropriate to qualify you as our customer. You authorize us to share Information regarding you and your accounts and products with our affiliates, includ- ing information that may be used to offer you insurance and investment products. " 12. Consent to Recording. You agree that we may record telephone conversations between you and us relating q ' to your accounts. However, we are not obligated to record any conversation, or to retain any recordings we make for any - period of time. 13.. Indemnity. If any party makes a claim against us because of our handling of any item in accordance with this agreement or your Instructions, you agree to indemnify and hold us harmless against any loss, cost, and expense, including attorneys' fees, because of that claim. If you ask us to follow instructions which we believe expose us to liability under applicable law, we may refuse to follow your instructions or may require a bond or other indemnity satisfactory to us before following your instructions. - 14. Interest. You and we intend to conform strictly to applicable usury laws. Therefore, the total interest con- tracted fo, charged or received under this agreement will never exceed the highest rate allowed by applicable law. If we contract-for, charge or receive any excess interest, it will be deemed a mistake. We will automatically reform this agreement or the charge to conform to applicable law, and if we have received excess interest, we will either refund the excess to you or credit the excess on the unpaid balance owed under this agreement. , D. MISCELLANEOUS CONTRACTUAL PROVISIONS , • - , Amendment of Agreement. We may amend this agreement in a ccordance with procedures authorized or required by late at any time. We may also amend this agreement on 30 days notice o, if the amendment does not adversely affect you, with subsequent nonce. No change in the interest rate, maturity date or term of a time deposit account will be effective until the next maturity date. No notice will be required if the change is required by law or for the security of your account. If this account is a Joint account, delivery of any nonce of amendment to any codepositor is effective as to all codepositors: - - 2. Headings. The headings in this agreement are for convenience purposes only. n 3. Severability. If any provision of this agreement Is illegal or unenforceable, the provision will be reformed to the extent necessary to make it enforceable, and the other parts of this agreement will remain in effect. C. ` ADDITIONAL ACCOUNT TERMS , "1. Service Charges and Other Charges. You agree to pay any applicable service charges and other charges 1 ti we Impose for maintaining and servicing your account, as set forth in the applicable Product Disclosure. You acknowledge that you have received a Product Disclosure. You agree always to maintain sufficient collected . balances to pay any applicable charges. Charges may be automatically deducted from your account, whether or not the deduction will result in an overdraft to your account. We will provide a listing of our current charges upon request. 2. Identification Required. As protection for all customers, we may require you to produce satisfactory iden- r erfrcation before we give you any additional information about your account. Required identification may include a copy of your most recent statement. 3. Facsimile Signatures and Signatures with a Symbol. We may In our discretion agree to open an account with facsimile signatures or signatures with a symbol A "facsimile signature" is any signature made other I than by the signer's manual writing, and includes any signature made by any device (including a manual 1, stamp) or machine (Including a computer - generated copy or photocopy of a manual signature). A "signature - , ' with a symbol" is any signature made by an "X" or any other set of marks, or any signature containing a symbol, in each case other than the name of the person signing. If we open an account with authorized fac- r simile signatures, you authorize us to pay any nem bearing a facsimile that resembles the signature on file. If we open an account allowing a signature with a symbol, you authorize us to pay any item bearing the same or any similar symbol in the signature line. You agree that there is no commercially reasonable way for us to determine whether facsimile signatures or signatures with a symbol are authentic or authorized. If you request an account to bear facsimile signatures or a symbol as a signature, you assume all risk of forged or unautho- rized items bearing a facsimile signature or a signature with a symbol. • - 4. Account as Collateral. You may not pledge the account as collateral to secure any indebtedness without our prior express written consent. You acknowledge that your account is a general account and not a special pur- _�' le ' ' pose account. Your account is subject fo all of our rights of offset, whether legal or equitable, and you grant l• " us a security interest in all money deposited with us or placed in our custody to secure any amounts you may 1 i" owe us now or' in the future no matter how such indebtedness arises, whether matured or unmatured, direct or indirect, secured or unsecured, absolute or contmgene, joint or several, due or td become due, and whether your obligation is as maker, endorser, guarantor or otherwise. If your account is a joint account, you agree that we have the right to offset against the entire balance ,of your account for the debt of any of the codepositors to us. At any time we have a right to offset against funds in your account, we may choose to place a hold against the account (to the extent of our right of offset) rather than immediately deducting the funds. - If your account is part of a group of accounts the balances of which are aggregated for account analy- - sis purposes, we may treat all of the accounts as being jointly owned by all of the account owners and may roffset any account to repay overdrafts in another aggregated account or debts of the owner of any other aggregated account. - r - .. " • 5. ' Research and Legal Process. To the extent not prohibited by applicable law, you will be charged for 'research, reproduction and production of documents for our compliance with subpoenas, administrative orders, court orders, levies, garnishments, attachments or other legal process and any other expenses incurred by us in connection with our compliance, including but not limited to attorneys' fees., If any action, including administrative proceedings, garnishment, tux levies, restraining orders or other action is brought against you or your account, you agree to protect us from any liability or expense that may result from the action unless that liability or expense is the result of our breach of this agreement with you. Transfers. NO TEXAS COMMERCE BANK ACCOUNT IS ASSIGNABLE OR TRANSFERABLE WITH- OUT OUR PRIOR WRITTEN CONSENT. Any assignment or transfer of the account that we do not 'acknowledge in wring and consent to will not be binding on us. 1. I 7.. Power of Attorney. We are not required to honor an appointment of another person to are on your behalf 4 'i pursuant to a power of attorney, but we may do so in our sole discretion. tl4 Whether or not we pay an overdraft item, we may deduct the applicable overdraft charge from your account without notice. The overdraft charge is set by us from time to time and is designed to cover our costs for handling such an item and to discourage you from drawing items in excess of collected funds in your account. If we use any attorney or collection agency to collect any overdraft, or if the overdraft is collected through probate or any other judicial proceeding, you agree to pay all of ou(costs and expenses of collec- tion, including attorneys' fees. B. Accoucrr STATEMENTS AND DISPUTES • S Account Statement. We will send you a statement of account monthly on checking accounts and at least quarterly on savings, money market and tune deposit accounts. The statement will serve as our full account- ing for the period represented by the statement. You must review the statement and any paid items (or copies of Items) promptly and notify us immediately, at our telephone number or address provided On the statement, of any errors in the statement. If you do not receive a statement when it is due, you should notify us promptly. If you have asked that we hold your statement, you are considered to have received the statement when we make it available for you to pick up at the branch that holds your account. We are not required to return your checks with your statement. , • , 2. Unauthorized Signatures, Alterations or Endorsements. You must report all errors, alterations, unau- thorized signatures, unauthorized endorsements, and irregulanties, to us within 30 days after we make your account statement available to you. If you fail to do so, you may not claim any liability on our part in con- , 1 , nection with our handling of the items you dispute. Before we will consider making a refund or credit to you because of a claimed discrepancy, unauthorized signature, alteration or unauthorized endorsement, you must give us an affidavit containing any reasonable information we may require. You agree to cooperate with us and the authorities in any investigation and prosecution of a person believed to have participated in any unau- thorized signature, alteration or endorsement. ^ If your negligence substantiallycontributes to the forgery or material alteration of any item, you may be liable for the forged or altered check. If you lose any checks, whether completed or blank, or checks are stolen .from you, you must notify us immediately so that protective measures may be taken to avoid any additional • losses. • • 3. - Account Disputes. We may refuse to pay out any money from your account until any dispute over the funds has been resolved by a court, or by agreement of the parties which is documented to our satisfaction. We may • •• file an action in ihterpleader with respect to any money where we have been notified of disputed claims to that money. If any person asserts that a dispute exists, we are not required to determine whether that dispute , has merit in order to refuse to pay funds or interplead the funds. You agree to reimburse us for any expenses, including attorneys' fees, that we incur because of any dispute. We have the right to pay any money from your account that is required by law even if it results in an overdraft or reduces your account to the point where we return one or more items for insufficient funds. 4. Provisional Recredlt. In connection with any dispute regarding your account, we may choose to recredit your account pending completion of our investigation of the dispute. If we determine that your account was correct, we may reverse the provisional recredit to your account, even if that reversal results in an overdraft. 5. Arbitration. Unless prohibited by applicable law, either you or we may request (before or after judicial pro- ,, ceedings have begun) that any controversy or claim relating to your accounts or any of the services described in this agreement be settled by mandatory and binding arbitration using the Commercial Arbitration Rules of the American Arbitration Association ( "AAA "). In that case, all statutes of limitation that would otherwise apply will continue to apply, and the arbitration will be conducted in the city where our principal office is located. The arbitrator(s) may (i) order discovery to be conducted m accordance' with the Federal Rules of " ' Civil Procedure, and (ii) make summary rulings such as summary judgments and orders of dismissal after a party submits a motion to dismiss. Any arbitration award will be final and binding. This agreement to arbi- trate does not prevent us from exercising self -help remedies such as setoff, or from foreclosing any lien or security interest we may have, or from obtaining emergency court relief where it would otherwise be avail- able. Controversies or claims involving automatic funds transfer (ACH) services will be settled by arbitration in accordance with NACHA arbitration procedures. Part II. General Terms A. HANDLNc OF DEPOSITS AND CASHED ITEMS 1. Collection of Items. We may refuse any deposit, limit the amount that may be deposited, return all or any part of any deposit to a signer on the account, or close the account. Any item you deposit is received for col- lection only, even if we cash an item (in whole or in part by a deposit less cash) or give you credit for it. All items are credited or cashed subject to final payment in cash or solvent credits. We act only as your•agent for collection of items deposited in your account or cashed and we assume no liability except for our own negligence. You agree to use your best effort to assist us in locating or obtaining replacements of Items lost while in our possession. We or subsequent collecting banks or agents may present or send Items for payment directly to the financial institution on which drawn or on which payable, or to another financial institution or agent, and may accept either cash, draft or check in payment for the item and will not be liable for any item that is not received, or lost in transit, or which is not paid or returned for any ' reason. Each collecting agent is your agent. No collecting agent will be liable for any loss resulting from the insolvency, mistake, negligence, default or failure of another agent. You agree that we have acted with due care in selecting any collecting agent that is (1) a bank or savings Institution insured by the Federal Deposit Corporation or other governmental entity, (is) a Federal Reserve Bank, or (in) any clearinghouse association. 2. Returned Items. If any items are returned by the payer bank for any reason, or if any instrument we or a subsequent collecting agent receive in payment for collection items is not paid, or if any item drawn on us is not paid (subject to legal time restrictions), we may charge the item back to your account. If the payor bank • on any item returns the item to us or makes a claim against us based on an asserted unauthorized signature or endorsement, we may accept that return or pay that claim and charge your account for all or any part of the amount of the Item, even if the claim is made after the payor bank's return deadline. If you deposit or cash an item drawn on us and the item or any endorsement is asserted to be forged or unauthonzed, we may charge back all or any part of the amount of the item, even if the charge back is made after our midnight deadline. ' If we receive notice that an item that you deposited or cashed has not been paid, we may either immediately charge back your account or place a hold on your account and charge your account for the item when the • item is returned to us. If a returned item is one that we cashed for you, we may charge back or hold funds in any of your accounts with us including joint accounts. Any item lost In mail or transit or chargeable back to you for any other cause may be charged back whether or not the original nem itself can be returned. You understand that a charge back or hold may result in an overdraft if there are insufficient balances to cover the chargeback or hold. We will not be responsible for the subsequent dishonor of any item due to the chargeback or hold of any item. 3. Endorsement Standards. Federal regulations require that the payee endorsement on any check deposited . with us be located within 1.5 inches of the right side of the back of such check. You must place your endorse- ment within that area. You agree to indemnify and hold us harmless from any loss, cost or expense we incur as a result of your endorsement, or the endorsement of any prior endorser, being located anywhere on the check outside the described area. If you are a commercial customer who endorses checks on our behalf, you . ' agree to comply with the endorsement standards of Texas Commerce Bank and of Appendix D of Regulation CC of the Federal Reserve System (available through your account officer), and to indemnify and hold as harmless from any loss, cost or expense we incur as a result of your failure to comply. " 4. Overdrafts. If you write a check, initiate a transfer or make any other withdrawal for more than the collected funds in your account, we may either pay or return It or otherwise refuse to honor the withdrawal: The amount by which any withdrawal or charge exceeds (or would exceed if paid or assessed) the collected bal- ance of your account is called an "overdraft." We may refuse at any time to pay an overdraft even though we may have previously paid overdrafts on your account. If we pay an item or assess a charge that causes an overdraft, you agree to pay interest on the amount of the overdraft at the maximum rate of interest allowed by law, from the time we pay the item until you pay us the amount of the overdraft or we deduct that amount in good funds from your account. If you need overdraft protection you may apply to us for a Cash Reserve fine of credit for certain types of accounts with check writing privileges or you may apply to us for a loan. • • 5. Notice Requirement. Federal regulations require us to reserve the right to require seven (7) days notice before any withdrawal or transfer from savings or money market accounts. If any law or regulation requires us to impose additional restrictions, then you agree that we may impose the restrictions. We are not required to give you notice of a change required by federal regulations. C. TIME Deeosrr Accouters. • - r . When you purchase a time deposit account, you will receive a Receipt documenting your deposit. Capitalized terms used in this Subpart C and not otherwise defined in this agreement refer to the information contained in your Receipt. 1. Minimum Deposit. The minimum balance required to open or renew accounts is $1000 for regular time z . - accounts and $100,000 for jumbo accounts. 2. Automatic Renewal. Each account is automatically renewable for successive periods equal to the original Term. The Maturity Date for each successive Term is the date that follows the date of renewal by a period 'equal to the Term. For" each successive Term the Deposit Amount will equal the Deposit Amount from the previous Term, plus any interest credited to the principal amount, minus any withdrawals. The Interest Rate for each successive Term will be the rate we quote for time deposits of like maturity and amount purchased on the first day of the applicable Term. We may change the time deposit rate from time to time, without any notice to you or any other person. You may redeem the deposit on any Maturity Date or within 7 days after any Maturity Date without incurring an early withdrawal penalty. However, no interest will be paid from the Maturity Date to the day of redemption. EARLY WITHDRAWAL PENALTY. You have contracted to keep the Deposit Amount on deposit for the entire Term. We are not required to permit you to withdraw your deposit early, but we may do so. If we do permit you to withdraw your deposit early, we will assess an early withdrawal penalty in the following amounts: , • • If the deposit has a Term of at (east 7 days but less than or equal to 365 days, the penalty is $25 plus 1% of the amount withdrawn, regardless of the length of time the funds withdrawn have remained on deposit. • If the deposit has a Term of greater than 365 days, the penalty is $25 plus 3% of the amount withdrawn, regardless'of the length of time the funds withdrawn have remained on deposit. If there is insufficient accrued interest to pay a required penalty, forfeiture of some principal will be necessary. There will be no penalty for early withdrawal if the owner dies or is determined to be legally incapacitated by a court of competent jurisdiction. 4. Our Right Not to Renew. We reserve the right not to renew the account and will mail you nonce at your address contained in our records no less than seven (7) days prior to the applicable Maturity Date if we will not renew the account. If the account is not renewed for any reason, no interest will be paid after the applic- able maturity date. - 5. Payment of Time Deposits. We may pay a time deposit to any one of the Depositors whose name appears •, on the Receipt (even if the account is styled "A and B ") and payment to any Depositor will discharge us from all liability. Repayment of the Deposit Amount and interest may be conditioned upon identification satisfac- , tory to us. We may use any signature of Depositor on file with us to identify a Depositor. If the Receipt is a Certificate of Deposit, we may require the Certificate of Deposit to be presented before we pay the Deposit Amount, but we may pay the Deposit Amount without presentation of the Certificate of Deposit, and we will have no liability to you if we do so. 6. ' ,Time and Method of Paying Interest. Interest will be paid at the time and by the method designated on the Receipt. D -R APPLICABLE ONLY TO CONSUMER Accouivrs. ti 'G. • Presentment by Notice. We may debit your account on the earlier of the day an item drawn on your account is presented (whether electronically or by other means) and the day we receive notice that the item has been deposited for collection in another financial institution. In determining whether there are sufficient funds in your account to pay an item, we may determine the amount of available funds in your account at any time after the earlier of the time we receive presentment of the item (whether electronically or by other means) or the time we receive notice that an item drawn on your account has been deposited for collection in another financial institution. We are not obligated to determine more than once whether there are sufficient funds in your account to pay an item. - 11. Stop Payment Order. All stop payment orders must be in writing, dated and signed, and must describe the item with certainty, including the account number and check number. Each of these must be correct to each letter and digit. Any mistake in the description of the item may cause our computers to stop payment on an incorrect item or fail to stop payment on the Item you wish to stop. We must receive the stop payment order at a time and in a manner that affords us a reasonable opportunity to act on the stop payment order prior to any action, by us with respect to the item. You agree that one and one half business days to act upon such a request is a reasonable amount of time. A stop payment order is effective for only six months unless renewed in writing: We may choose to honor your oral request to stop payment on an item, but we will incur no lia- bility to you for payment of any item over an oral stop payment order. Stop payment orders on preauthorized electronic funds transfers are discussed in Part VI of this agreement. ' You agree to indemnify us against any loss, cost, or expense resulting from our dishonor of any item on which you have stopped payment. You agree to pay our stop payment charge, which we may deduct from your account. . • • • SAYINGS AND MONEY MARKET ACCOUNTS. . . 1. Savings Accounts. You may make no more than six transfers as explained in Section 4 below) from a sav- ings account during each monthly statement cycle period. No more than three of the six transfers may be made by a debit - card transfer to third parties. You must comply with the federal restrictions on transfers from savings accounts or we may automatically convert it into a checking account. In addition, if you exceed the transaction limits we will assess a charge as set forth in the Product Disclosure. ' 2. Money Market Accounts. You may make no more than six transfers (as explained in Section 4 below) from a money market account during each monthly statement cycle period. No more than three of the six transfers may be made by check, draft, debit -card, or similar order made by you and payable to third parties. We may return items drawn on your account which exceed the transaction limits. You must comply with the federal restrictions on transfers from money market accounts or we may automatically covert it into a checking account. In addition, if you exceed the transaction 'limits we will assess a charge as set forth in the Product • Disclosure. If you write any checks drawn on your money market account, the checks are subject to all of the rules relating to checks drawn on checking accounts, as described in Part 1.A. 3. Interest. Interest accrues daily on the collected balance of each account at the rare we quote from time to time for the applicable type of account. Each account carries a variable rate of interest which we set from time to time, changing without any notice. The rate may change as often as daily, unless the Product Disclosure provides a different frequency for rate changes. You may obtain the current rates by telephoning us. 4. Transfers. In calculating the number of authorized withdrawals or transfers permitted for savings and money market accounts, the following are not included: • • withdrawals paid directly to you, whether in person or by ATM; • - • transfers to pay loans and associated expenses to us; - • transfers of funds from your account to another one of your accounts with us by mad, messenger, automated teller machine, or m person; withdrawals by a telephone request, if the check is mailed to you and payable to you. However, if you telephone us and request a transfer from any of these accounts to any other account, including another of your accounts with us, that transfer is counted. The period in which a transfer is counted towards the applicable limitation is determined by the date the transfer posts to the account. • a. ' Federal regulations require as to reserve the right to require seven (7) days notice before any withdrawal or transfer from any interest - bearing accounts. If any law or regulation requires us to impose additional restriction's on these accounts, then you agree that we may impose the additional restrictions. We are not required to give you notice of a change required by federal regulations. ' Interest, accrues daily on the collected balance at the rate we quote from time to time for the applicable type of account, changing without any notice as often as daily. You may obtain the current rates by tele- phoning us. For some types of interest- bearing checking accounts, your account will consist of two subaccounts: a checking subaccount with unlimited transaction privileges and a savings subaccount. The savings subaccount will earn interest at the same rate as the checking subaccount. Your monthly statement will reflect the com- ' ^• bined balances and activity in the'two subaccounts. All minimum balance requirements and other require- ments relating to the account will be applied to the combined balances of both subaccounts. We will automatically and without charge transfer funds between the subaccounts to pay checks and comply with fed- eral regulations: You do not need to keep track of the amounts in the respective subaccounts. 3. Permitted Withdrawals. You may make withdrawals from any checking account only on preprinted check forms or other authorized withdrawal forms or by electronic transactions, such as automated clearing house (ACH) transactions, online banking, or ATM card, unless we have agreed with you otherwise in writing. We are not required to honor any check or other paper item presented unless the item is signed by a person listed as an authorized signer on the signature card. 4. Standards for Checks. If you do not buy your checks from or through us, you agree to comply with any requirements we impose regarding the checks, such as text, size, priming, numbering, and paper type require- ments. You agree not to use more than one check wnh the same check serial number on the same account. You agree not to use any check that contains material or printing (including a band) that would interfere with the readability of any endorsement on the back of your checks. If you use any check that does not comply with this agreement, you agree to protect us against and indemnify us for any loss, cost or expense we incur as a result of your noncompliance. 5. Payment of Conditional Items. Unless we agree otherwise with you in writing, we may charge your account and we will not be liable for payment of any item bearing any conditional statement or restriction, including but not hmited to "void after 60 days," "full and final settlement," or a statement to the effect that the nem must be accompanied by any documents, whether or not documents are attached or conform to the purported requirements. If we pay any such item we may charge the item to your account, and we will be a holder in ' due course as to that item: ' 6. Payment of Stale -dated or Postdated Checks or Nonnegotiable Items. We will not be liable for any damages caused by premature payment of a post -dated Item. We will not be required to pay any check pre- enred more than six months after its date or a non - negotiable item, but we may pay such an Item and charge your account for it. If we pay a post -dated item or an Item presented more than six months after its date, we will be a holder in due course of that Item. 7.. "Payable Through" Drafts. You agree not to execute any draft "payable through" us unless we have signed a written agreement with you governing handling of payable through drafts. If we do not have an agreement governing the handling of drafts, we may dishonor any "payable through" draft drawn by you without notice to you and charge your account our customary returned check charge. If any draft indicates your deposit account number (in MICR encoding or otherwise), we may treat that item as a check drawn on the indicated account. 8. Dishonor of Items for Protection of Your Account. In order to help protect the funds in your account from forgeries, we maintain systems to alert us to possible fraud. If a payee presents a check for cash and we deter- mine that a possibility of fraud exists, we may refuse to cash the check. If we refuse to cash a check for this reason, even though the person presenting the check is in fact the payee of a legitimate check, we will not be liable to you for wrongful dishonor. 9. Check Cashing Fee. If a payee who is not a customer of the Bank presents a check drawn on your account for cash at a teller window, we may charge the payee a check cashing fee. We will not charge a check cashing fee to one of our customers who cashes a check, nor will we charge the payee a fee if the check is presented by another bank through the normal check clearing process. Texas Commerce Bank Terms and Conditions of Deposit Accounts for Business Entities INTRODUCTION „ :( , • Welcome to Texas Commerce Bank. We are pleased that you decided to open an account with us. This agreement, together with the product and fee information and any other agreements you receive governing our services, contains the rules, regulations, terms and conditions for the accounts and services you use. This agreement is the contract between you and Texas Commerce Bank ( "Bank "). By signing signature cards or by using these accounts or services, you agree to these rules, regulations, terms and con- ditions. To the extent that there is any conflict between any statement made by one of our employees and this agreement, this agreement applies. If you enter into any other written agreement relating to services we provide and the other agreement conflicts in any way with this agreement, the other agreement will control. If you have any questions, please contact your Texas Commerce Bank account officer. - Part I describes features of deposit accounts and other services we offer. ' Part II describes general contractual terms applicable to all accounts. Part III describes special contractual terms relating to commercial accounts (Including business ennties, sole , • - proprietorships, nonprofit entities and governmental bodies). Pan IV describes rules applicable to special types of accounts, such as joint accounts and fiduciary accounts. _ Part V describes our funds availability policies. Pan VI describes our electronic funds transfer services. Part VII defines terms used In this agreement. This version of the agreement is intended for commercial accounts and has been modified to omit sections that relate only to consumer accounts. If you need information on consumer accounts, ask your banker for a copy of the consumer account agreement. - , Part 1. Description of Products and Services We offer a wide range of deposit products and related services. This pact of the agreement sets out contractual terms applicable to different types of accounts. However, we offer several different accounts within each type with distinct features, which are explained in the applicable Product Disclosure. A. CHEQnNC Accounts. 1. Consumer and Commercial Checking Accounts. No interest is paid on these accounts. These accounts are payable upon demand. You are permitted unlimited withdrawals subject to availability of collected funds in the account. For some types of checking accounts, your account will consist of two subaccounts: a checking subac- count with unlimited transaction privileges and a non- interest - bearing savings subaccount. Your monthly statement will reflect the combined balances and activity in the two subaccounts. All minimum balance requirements and other requirements relating to the account will be applied to the combined balances of both subaccounts. We will automatically and without charge transfer funds between the subaccounts to pay checks and comply with federal regulations. You do not need to keep track of the amounts in the respective subaccounts. 2. Interest - Bearing Checking Accounts. To open or maintain this type of account, the law requires that you be (i) an individual, (ii) a nonprofit entity operated primarily for religious, philanthropic, charitable, educa- tional, fratemal or other similar purposes or (iis) a governmental unit, and that the entire beneficial interest of the account must be held by one or more persons of the types just listed. To open or maintain an interest- bearing checking account we may request that you establish to our satisfaction that you meet the legal requirements for maintaining the account. • , F4654)3475 (8197) > r" Texas Commerce Bank Terms and Conditions of Deposit Accounts for Business Entities " ' Please retain for your records DEPOSITORY PLEDGE AGREEMENT WHEREAS, City of Round Rock (hereinafter called "Depositor ") has selected TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association (hereinafter called the 'Bank "), as a depository for certain of its funds in demand deposits and/or interest - bearing time deposits entitled ',as follows: Account Name(s) Operating Account Controlled Disbursements Payroll Account I &S GO Bonds Acct. I &3 — R ev e nue Ban Re..crvicAccount Type of Account Account Number Checking 09922769863 Checking 06300037739 Checking 09922769871 Checking 099GG /b9BB9 Checking 0 99227C�J097 Checking 09922769905 Health•Insurance Claims Checking 09922769913 and such additional accounts as Depositor may from time to time designate, and the Bank desires to be the depository of such funds; and WHEREAS, any and all cash balances in any funds deposited with the Bank must be continuously secured by a valid pledge to Depositor of certain securities (being herein called the "Approved Securities "). Approved Securities shall mean all securities which, under the laws of the State of Texas, can be used to secure the deposits of Depositor. The aggregate market value of the Approved Secunties shall at all times be, exclusive of accrued interest, equal to or in excess of the total funds of Depositor on deposit with the Bank, to the extent that said funds are not insured by the Federal Deposit Insurance Corporation. NOW, THEREFORE, for value received and in consideration of the mutual promises and covenants herein contained, Depositor and the Bank agree as follows: 1. Depositor deposits shall be secured and Bank hereby grants a security interest to Depositor in all Approved Securities held in safekeeping at BankOne Texas Da11as6h "Safekeeping Institution "). Except as provided in paragraph 6 such Approved Securities shall be subject only to the joint instructions of both (a) authorized individuals appointed by Depositor, and (b) specifically authorized officers of the Bank.- The Depositor shall provide to the Bank written notice and specimen signatures of authorized representatives of Depositor on Addendum A of this document for the purposes hereof, and thereafter written notice of the removal from or addition to the existing list of names of such authorized representatives. The Bank shall provide to the Board of Directors of Depositor or its authorized representatives written notice and specimen signatures of authorized officers of the Bank on Addendum B of this document for the purposes hereof, and thereafter written notice of addition to or removal from the existing list of names of such officers. 2. The Bank may make additions to or substitutions of Approved Securities from time to time and may withdraw excess Approved Securities, with the amount and character of the new and /or remaining securities to he subject to the approval of Depositor. Depositor shall approve the withdrawal of excess Approved Securities so long as, after such withdrawal, the aggregate market value of the Approved ecu Securities held in safekeeping shall equal or exceed the greater of (a) S , and (b)the: aggregate amount of funds of Depositor on Deposit with the Bank, to the extent such funds are not insured by the Federal Deposit Insurance Corporation. If the Approved Securities so proposed for substitution are of the kind, character, amount, and value required by law, such substitution shall be permitted. If approved, the substituted Approved Securities shall thereafter be subject to all the terms and conditions of this Pledge Agreement as fully as if originally incorporated herein. 3. Contemporaneously with the execution of this Agreement and at the time of the substitution or release of any of the Approved Securities, the Bank shall execute and deliver to Depositor a Memorandum describing the Approved Securities deposited to or withdrawn from the securities held pursuant to this Agreement_ 4. The Bank shall not be obligated Depositor in excess of Dollars ( at its discretion. to accept interest bearing time deposits of ), but may choose to accept such deposits 5. The Bank shall faithfully do and perform all of the duties and obligations required by the laws of the State of Texas for depositories of Depositor, and shall upon presentation pay all checks drawn on it by the duly authorized representatives of Depositor against collected funds of Depositor on demand deposit, and shall at the expiration of the term for which it has been chosen as depository of Depositor tum over to its successor all funds, property and things of value coming into its hands as depository. 6. Upon default of any of the Banks obligations hereunder or upon insolvency of the Bank or upon the appointment of a receiver of the Bank and at any time thereafter, Depositor may sell at public or private sale the Approved Securities or any part thereof and apply the proceeds of such sale to the satisfaction of any indebtedness caused by virtue of said default. This right is in addition to other 'remedies which Depositor may have under this Agreement and without prejudice to its rights to maintain any suit in any court for redress of injuries sustained by the Depositor under this Agreement. 7. The Safekeeping Institution named herein hereby agrees to hold all Approved Securities deposited with it pursuant to the terms of this Agreemeht and to deliver them in accordance with the terms hereof. Additionally, Safekeeping Institution agrees to serve as collateral agent for Depositor to the extent necessary to allow Depositor to perfect its security interest granted herein in the Approved Securities. 8. This Agreement may be terminated by either the Bank, Depositor or the Safekeeping Institution by giving thirty (30) days prior written notice of the other parties. 9. All applicable provisions and requirements of the laws of the State of Texas governing depositories for Depositor shall be a part of this Agreement. 2 ATTEST: ATTEST: ATTEST: WITNESS the execution hereof this DEPOSITOR: City of Round Rock David Kautz Director, of Finance By: Joanne Land, City Secretary ---(:; Its: ✓1' BANK: Name: Title: TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: c KAREN E. DAVIDSON VICE PRESIDENT N • me: Title: SAFEKEEPING INSTITUTION: By: Name: 44.44-7 .d.-- _ Title: 3 day of , 19 The following designated individuals are authorized representatives empowered to direct TEXAS COMMERCE BANK NATIONAL ASSOCIATION ( "Bank ") and BankOne, Texas - Dallas ( "Safekeeping Institution ") selected under Item 1 of the Depository Pledge Agreement in regard to collateral pledges, releases and substitutions in the joint safekeeping account. Such pledges, releases and substitutions shall follow procedures set forth in the Depository Pledge Agreement. Autho " d R is ve's Signature Accepted: TEXAS COMMERCE BANK NATIONAL ASSOCIATON By: ADDENDUM A 4 Name and Title David Kautz, Director of Finance Jerry Galloway, Asst. Finance Director • Typed Name John E. McKemie Jill Burtchaell Norma A. Davalos Rhonda Lara Sherry Curry Tanya Heeke ADDENDUM B BANK'S AUTHORIZED INDIVIDUALS Specimen Signature 9 - 4 , 44.,, (i1 • /�GInVZ(.LIGG/ Returnable sole custody receipt for and on behalf of: Customer No. 201311326 ,,ste.ztloer, ;rai • Par/Shares Security Description Face: FHLMC GOLD POOL #M19084 Par: — 1 019 ran Texas Commerce Bank Austin and City of Round Rock Attn: Rhonda Lara P.O. Box 2558 Houston, TX 77252-8087 Maturity Rate Custody Receipt 03/01/1998 6.00000 Interest Schedule: Monthly on Day 1 Location(s): 70 2,600,000.00 PLEDGEDto City of Round Rock BANK. ONE, Texas N.A. P.O. Box 655415 Dallas, Tx 75265-5415 (Payment delay of 15 days.) Receipt issued for SECURITIES RECEIVED INTO CUSTODY. SEE REVERSE SIDE FOR ADDITIONAL TERMS. Receipt No. Tax-ID 256013972 740800980 Dated Acquired 09/22/97 09/22/97 , Cusip'NuMber 31289KCV2: Issued 02/01/1993 on 09/22/1997 1 1 1 1 1 1 1 1 1 1 TEXAS COMMERCE BANK NATIONAL ASSOCIATION SECRETARY'S CERTIFICATE 1, Mark D. Morris, Assistant Secretary of Texas Commerce Bank National Association (the "Bank ") hereby certify that on January 15, 1997, at a meeting duly called and convened and at which a quorum was present, the Board of Directors of the Bank adopted the resolutions set forth below, and such resolutions are presently in full force and effect and have not been modified, revoked or rescinded: RESOLVED, that for the purposes of the following resolutions, the following words shall have these meanings ascribed to them: "Bank" shall mean Texas Commerce Bank National Association. "Senior Officer" shall mean the Chairman of the Board, the President, any Vice Chairman, any Executive Vice President, any Managing Director, any Senior Vice President, any Vice President, the General Counsel, the Chief Financial Officer, the Chief Administrative Officer, the Secretary, the Controller and the Cashier of the Bank, and any Chairman, any President, any Vice Chairman, any Executive Vice President, any Managing Director, any Senior Vice President and any Vice President of any region of the Bank. RESOLVED, that the Senior Officers be, and each of them hereby is, authorized to enter into, execute, approve, ratify, adopt, confirm and deliver any depository or pledge agreements, bids, commitments, bonds or other instruments as such Senior Officers may deem necessary or appropriate in connection with the deposit, disbursement, securing and/or handling of any public funds, including, without limitation, funds of the Federal government or any Federal governmental agency or authority, funds of any state, county, city, town, municipality, school district, school system, university or university system, water district, flood control district, court or other state county or city government, governmental agency or body organized or existing under or pursuant to any law, statute, regulation or authority. RESOLVED, that the power and authority conferred to any person pursuant to these resolutions shall include, but not be limited to, the power to execute any other documents and to do and perform such other acts and things as may be necessary or appropriate to consummate the transactions so authorized or to carry out the purposes and intent of such resolutions. EXECUTED effective as of April 17, 1997, at Austin, Texas. Texas Commerce Bank Na . Association B • ark D. Moms Assistant Secretary • TEXAS COMMERCE TREASURY MANAGEMENT Texas Commerce II Bank TREASURY SOLUTIONS THAT LEAD To SUCCESS TREASURY MANAGEMENT SERVICE AGREEMENT TABLE OF CONTENTS I. INTRODUCTION 1 II. GENERALLY APPLICABLE TERMS AND CONDITIONS 1 III. SERVICES 5 A. Funds Transfer /ACH 5 B. Lockbox 9 C. Controlled Disbursement 9 D. Positive Pay 10 E. Maximum Dollar Amount 11 F. Stale Date 11 G. Domestic Drafts 11 H. Electronic Stop Payments 12 I. Electronic Adjustment and Research Requests 13 I. Check Safekeeping 13 K. Cash Vault and Commercial Deposit 14 L. Information 15 M. Check Cashing 16 IV. TEXAS COMMERCE BANK LOCATIONS 17 II/1/96 I. INTRODUCTION TREASURY MANAGEMENT SERVICE AGREEMENT Texas Commerce Treasury Management offers a wide variety of treasury management services under the terms of this document. When you sign implementation forms or instructions (as modified from time to time, the "Service Forms ") or use any of the described services after you receive this document, you agree to these terms and conditions, recognizing that we are relying on them in providing the services to you. If the provisions of any Service Form for a particular service are inconsistent with the terms set out in this document for that service, the Service Form will control. Throughout this document, the terms "you," "your" and "yours" refer to the party other than us executing a Service Form or using the services described. The terms "we," "our ", "ours" and "Bank" refer to Texas Commerce Bank National Association. This document, the Service Forms and any administrative rules or user manuals that we provide to you in connection with a particular service (the "Administrative Rules ") are all together referred to as "this Agreement." Section II applies to all of the services. Section III contains provisions applicable to specific services. The various parts of Section III apply to you only if you actually use the service described in that part or you sign a Service Form for that service. If a provision in Section II relates to the same subject matter as a provision in Section III with regard to particular services and there is a conflict between the two provisions, Section III will control to resolve the conflict. II. GENERALLY APPLICABLE TERMS AND CONDITIONS A. Authorized Persons. We may accept oral or written instructions (including written instructions sent via facsimile or other electronic transmission) from any persons designated as "Authorized Persons" in the applicable Service Form, and may also accept instructions from any person authorized to sign on the affected account ( "Authorized Signers "). You agree to hold us harmless from any and all costs, suits, expenses, liabilities, damages and attorney's fees arising from or related to our acting in good faith in accordance with instructions or information that was purportedly faxed or sent electronically by you or your Authorized Persons. We may require further written confirmation of instructions given orally or via facsimile. Unless the applicable Service Form specifically limits the authority of particular persons, each Authorized Person or Authorized Signer may act alone. If at any time any two or more Authorized Persons, Authorized Signers, or other persons purporting to be authorized to act on your behalf give us conflicting instructions, without liability to you or anyone else, we may (I) honor one or more of the instructions, (2) refuse to honor any of the instructions until we receive jointly agreed instructions from all persons who had issued conflicting instructions, or (3) turn over to a court for disposition any funds subject to conflicting instructions. B. Service Charges and Tares. You agree to pay our fees and charges for the services you use, as reflected on a written fee schedule provided to you by us. We may change our fees and charges by giving you 30 days advance written notice of the changes; if you object to the changes you may terminate the services prior to the effective date of the changes. You also agree to pay all taxes or assessments that result from the services provided under this Agreement (except for taxes on our income) and to pay any access or transmission charges, transfer commissions or Page 1 other direct charges we incur in providing a product or service to you. We may choose to collect these amounts by debiting any of your accounts with us, taking the fees into account in account analysis, and /or billing you. C. Representations. You represent and warrant to us that (1) if you are not a natural person, you are duly organized and validly existing and in good standing under the laws of your state of organization, and you have the full power and authority to carry on your business as now conducted and are duly qualified to do business and in good standing in each jurisdiction where qualification is necessary for your business, and you have not commenced any dissolution proceedings; (2) if you conduct business under an assumed business or professional name, you have properly filed assumed name certificates as required by applicable law; and (3) you have obtained all necessary consents to enter into this Agreement and to make it legally binding on you. D. Compliance with Applicable Laws and Regulations. You must comply with all applicable laws and regulations all times that you use our services. E. Extensions of Credit. Certain provisions of this Agreement may require you to have specified amounts of collected or available funds in your accounts at the Bank or an affiliate bank at certain times. Neither we nor the affiliate bank is ever obligated to extend credit to you unless we have specifically agreed to do so in a separate writing and any conditions to that obligation have been satisfied. However, we have the option to extend credit to you from time to time by permitting overdrafts in your accounts, delaying collection of amounts due, or otherwise. If we extend credit to you, the outstanding principal amount is immediately due and payable and will bear interest from the date the credit is extended until it is repaid at a per annum interest rate determined by us, but not exceeding the lesser of 18% per annum or the maximum nonusurious rate of interest permitted under applicable Texas or federal law (whichever permits the higher rate). If we do not elect to extend credit to you, you must provide immediately available funds sufficient to satisfy your obligations under this Agreement. F. Confidentiality. If you use our software products to transmit instructions to us or for other purposes, you recognize that we have a proprietary interest in that software, and you agree to keep confidential all software, systems, customer records, supporting manuals, procedures, and instructions published or made available to you by us ( "Confidential Information "). You agree to disclose the Confidential Information to your employees and agents only on a need -to -know basis, and you agree not to disclose the Confidential Information to anyone else without our prior written consent, except as required by law or as permitted by this Agreement. When your right to use the software products terminates, you must retum all Confidential Information to us, together with any reproductions or extracts of the Confidential Information. G. Security. Some of the services we offer to you require you and any third parties whom you have designated as Authorized Persons to implement appropriate security measures, as set forth in the Administrative Rules for those services. We may rely on the security procedures identified in the Service Forms to determine whether any instructions are authorized, and you will be bound by those instructions issued in your name (or in the name of your Authorized Persons) and accepted by us in compliance with your chosen security procedures, whether or not you actually authorized them. You acknowledge that we have offered you and your Authorized Persons a number of different commercially reasonable security procedures, and that the security procedures indicated in the Service Forms are based on your belief that those procedures are commercially reasonable. If your chosen security procedures include a PIN, user ID number, password or other code (collectively, a "code "), you agree that you and your Authorized Persons will keep the code confidential. H. Data Transmission Systems. If you use one or more of our proprietary computerized data transmission systems and supporting software, you are bound by the terms and conditions relating to Information Services in addition to the terms that relate to the specific services you access by that transmission facility. I. Consent to Recording. We may mechanically record telephone conversations between you, your employees and agents and us, our employees and agents relating to your accounts and treasury management services. You Page 2 understand, however, that we are not obligated to record any conversation, or to retain any recordings made period of time. Page 3 r any J. Notices. If this Agreement requires that notices be written, the notices will be effective when received. Notices must be sent to one of the following: (a) the addresses listed in the Service Form for the service affected, (b) the address to which account statements are mailed, or (c) any other address designated in writing by either you or us to the other. IC Discrepancies /Errors. You must promptly report in writing any error in connection with any treasury management service and any discrepancy between your records of your orders and requests (including wire and ACH payment orders) and the notice you receive from us regarding our execution of your orders and requests. You agree that 60 days is a reasonable time for you to notify us of discrepancies, including unauthorized and erroneous payment orders, unless any other applicable Administrative Rules, agreements or laws provide for a shorter notification time. You agree to provide us with all information we reasonably request in connection with any discrepancy. This paragraph does not modify the Deposit Rules notification requirements regarding checks paid without a properly authorized signature or errors or discrepancies other than those specifically related to a treasury management service. L. Assignment/Affiliates. This Agreement binds and benefits you, us, and your and our respective success( rs and assigns, except that you may not assign or delegate any of your rights or obligations under this Agreement without our prior written consent. Certain of the treasury management services may be performed by one of our affiliates. You specifically authorize us to share with our affiliates information and documents relating to your deposit accounts, treasury management services, credit facilities and financial condition. This Agreement is not intended to benefit anyone other than you, us, and our affiliates. M. Uncontrollable Events. No party will be deemed to have breached this Agreement if it fails to perform because of a cause beyond the reasonable direct control of that party, and without fault or negligence of that party. Examples of causes beyond the reasonable direct control of a party include, without limitation: any failure or interruption any electronic communication system between you and us, equipment or software failure or malfunction, eletrical, computer, or mechanical failure or malfunction, action or inaction of governmental, civil or military authority, fire, strike, lockout or other labor disputes, flood, hurricane, war, riot, theft, earthquake, natural disaster, default of common carriers or third party vendors, and suspension in payments by another financial institution. We are not responsible for any act or failure to act by any correspondent bank, Federal Reserve Bank, SWIFT,.NACHA, SWACHA, any regional or Local automated clearinghouse, or any other third party. N. Other Rules of the Bank. Our Terms and Conditions of Deposit Accounts, schedules of services and fees, and Funds Availability Policy (collectively, the "Deposit Rules ") apply to each of your accounts and should be considered a part of this Agreement as fully as if the Deposit Rules were set out in this document. To the extent this Agteement conflicts with the Deposit Rules, this Agreement will control. In addition, we may publish Administrative Rules from time to time regarding particular products or services, and these are also a part of this Agreement; to the extent they conflict with this Agreement, the Administrative Rules will control. However, to the extent the Administrative Rules conflict with the Service Forms, the Service Forms will control. O. Indemnification /Limitation of Liability. You agree to indemnify and hold us, our affiliates, and our and their respective officers, directors, agents and employees (collectively, the "Bank Parties ") harmless from and against any and all Loss, liability and expense (including reasonable attorney's fees) arising from the services performed by any of the Bank Parties in connection with this Agreement, except for those losses caused directly by our failure to exercise ordinary care or to act in good faith. To the maximum extent permitted by law, you agree that the Bank Parties will not be liable for events or circumstances beyond their reasonable control, and the liability of the Bank Parties will be limited to correcting errors caused by the Bank Parties. You and we agree that clerical errors and mistakes in judgment do not constitute a failure to exercise ordinary care or to act in good faith. THE BANK PARTIES WILL NEVER BE LIABLE OR RESPONSIBLE FOR CONSEQUENTIAL, EXEMPLARY, PUNITIVE, SPECIAL OR INCIDENTAL DAMAGES OR LOSSES, INCLUDING LOST PROFITS (WHETHER OR NOT ANY OF THE BANK PARTIES WERE ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES). We make no representations or warranties to you, and disclaim any implied warranties, as to the fitness, merchantability or suitability of any of the services or software products for you, or as to the suitability or compatibility of our software, equipment or communication interfaces with those that you use. P. Amendment. We may amend or supplement this Agreement by giving you 30 days written notice of the amendment or supplement, and we may amend or supplement the Administrative Rules by giving you 10 days written notice of the amendment or supplement. If the change is required by law, regulations or applicable clearinghouse rules, or if we determine in our sole discretion that the change is necessary for the security of your accounts or the security or integrity of the systems used by us in performing treasury management services, we may amend or supplement this Agreement by giving you notice promptly after the change. If the change is unacceptable to you in any case, you may terminate this Agreement by written notice to us prior to the effective date of the change (or within 10 days after receiving notice of any change for which prior notice is not required). You may change this Agreement only by a written agreement signed by us setting forth the changes. Q. Termination. Either you or we may terminate this Agreement or the portion relating to any particular product or service by giving 30 days written notice to the other party. All provisions relating to indemnification, limitations of liability, and Confidential Information will survive termination. We may also terminate all or part of this Agreement immediately and without prior notice if (1) you fail to maintain adequate available balances in your accounts or fail to pay any overdraft of any kind, no matter how the overdraft was created (unless the overdraft was created solely by our error); (2) you violate this Agreement or any loan, credit, letter of credit or other financing agreement under which you are a debtor or account party (whether with us or any other creditor); (3) you fail to provide financial information that we reasonably request (4) a material adverse change occurs in your financial or business condition; (5) you make a general assignment for the benefit of creditors or become a debtor in any bankruptcy or other insolvency or liquidation proceeding of any kind; or (6) we determine that it has become impracticable for us to perform under this Agreement because of changes in applicable laws, regulations, or clearinghouse rules. If all or part of this Agreement terminates, you must return any Administrative Rules for the services no longer being used. R. Governing Law/Venue. THIS AGREEMENT IS GOVERNED BY - AND SHOULD BE INTERPRETED UNDER - TEXAS LAW. THE COUNTY IN WHICH OUR PRINCIPAL OFFICE IS LOCATED IS THE PLACE OF PERFORMANCE OF THIS AGREEMENT AND IS PROPER VENUE FOR ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, WHETHER SUCH ACTION IS IN CONTRACT, TORT, OR OTHERWISE. WE MAY BRING ANY ACTION OR PROCEEDING AGAINST YOU IN ANY STATE OR FEDERAL COURT IN THAT COUNTY OR IN ANY OTHER JURISDICTION OR VENUE, AND YOU IRREVOCABLY SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF THOSE COURTS AND WAIVE ANY OBJECTION YOU MAY NOW OR HEREAFTER HAVE AS TO VENUE IN THAT COURT OR AS TO THAT COURT BEING AN INCONVENIENT FORUM. YOU MAY BE SERVED WITH PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT YOUR NOTICE ADDRESS UNDER THIS AGREEMENT, OR IN ANY OTHER MANNER PERMITTED BY LAW. THE PREVAILING PARTY IN ANY SUIT RELATED TO A CLAIM UNDER THIS AGREEMENT WILL BE ENTITLED TO LEGAL COSTS, INCLUDING REASONABLE ATTORNEY'S FEES. S. Arbitration. Unless prohibited by applicable law, either you or we may request (before or after judicial proceedings have commenced), that any controversy or claim relating to treasury management services be settled by mandatory and binding arbitration using the Commercial Arbitration Rules of the American Arbitration Association (the "AAA "). In that case, all statutes of limitation that would otherwise apply will continue to apply, and the arbitration will be conducted in the city where the Bank's principal office is located, by a single arbitrator (or by 3 arbitrators if the amount in controversy exceeds $1 million). The arbitrator(s) may (1) order discovery to be conducted in accordance with the Federal Rules of Civil Procedure, and (2) make summary rulings such as summary judgments and orders of dismissal after a party submits a motion to dismiss. Any arbitration award will be final and binding. This agreement to arbitration does not prevent us from exercising self -help remedies such as setoff, or from, any lien or security interest we may have, or from obtaining emergency court relief where it woul Page 4 otherwise be available. Controversies or claims involving ACH services will be settled by arbitration in accordance with the NACHA arbitration procedures. T. Miscellaneous. If any provision of this Agreement is illegal or unenforceable under applicable law, that provision should be deemed reformed so as to be enforceable to the extent permitted by applicable law, or if that is not possible, then this Agreement should be read as if that provision was never a part of it, and the balance of the Agreement will be enforceable. If we waive your failure to comply with this Agreement in certain circumstances, that waiver will not be deemed a waiver of any other breaches of the same or different provisions of the agreements between you and us. All waivers must be written. All headings in this Agreement and the Administrative Rules are for convenience only and should not be considered in interpreting the agreements. All pronouns should be construed to include the masculine, feminine and neuter forms. You agree to execute any additional documents and provide any information that we reasonably request. U. ENTIRE AGREEMENT. THIS AGREEMENT, INCLUDING THE ADMINISTRATIVE RULES AND THE SERVICE FORMS, CONSTITUTES THE ENTIRE AGREEMENT BETWEEN YOU AND US REGARDING THE DESCRIBED TREASURY MANAGEMENT SERVICES; IT SUPERSEDES ALL PROPOSALS AND PRIOR AGREEMENTS AND ALL ORAL DISCUSSIONS RELATING TO THE SUBJECTS COVERED BY THIS AGREEMENT; AND IT MAY NOT BE CONTRADICTED BY EVIDENCE OF PIUOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN YOU AND US. III. SERVICES. A. FUNDS TRANSFER/ACH SERVICES. We provide automated clearing house ( "ACH ") and wire transfer services to meet the funds transfer needs of our customers. The following terms, as well as the Service Forms and any other referenced agreements, apply to these services. In this section, we refer to requests to transfer funds to or from your accounts via wire transfer, ACH, or the other methods described in this section as "payment orders" 1. Incorporation of Certain Other Agreements and Documents. Funds transfer services are subject to the Operating Bulletins and Circulars of the Federal Reserve Bank of Dallas. You also must comply with the procedures and requirements outlined in the Administrative Rules for these services, as modified from time to time. a. Wire Transfer. Unless the Bank or one of our affiliates is the beneficiary's bank, we will transmit all domestic wire transfer payment orders through the Fedwire service of the Federal Reserve Bank, and those payments orders will be governed by subpart B of Regulation J (12 CFR 210.25, et seq.). We will transmit all payment orders designating a beneficiary's bank that is not located within the United States via telex or through the SWIFT communications system. Payment orders sent through SWIFT will be governed by the rules of SWIFT. b. ACH. We will transmit all domestic ACH credit and debit entries through the National Automated Clearinghouse Association ( "NACHA "), the SouthWestem Automated Clearinghouse Association ( "SWACHA "), correspondent banks, Federal Reserve banks and ACHs, and all ACH entries will be governed by the NACHA /SWACHA rules and any amendments to those rules (the " NACHA/SWACHA Rules "). You agree to comply with the NACHA/SWACHA Rules. We will provide you with a copy of the NACHA/SWACHA Rules and notice of all amendments within a reasonable time after they become known to us. c. International ACH. We will transmit all international ACH debit or credit entries to the United Kingdom through the Bankers' Automated Clearing Services Limited ( "SACS "), and those entries will be governed by the BACS procedures. If you indicate on your ACH Service Form that you will use United Kingdom ACH Page 5 services, we will provide you with a copy of the BACS procedures. If we offer you ACH transmissions to other countries, we will provide you with any additional procedures prior to implementation of that service. 2. Issuance of Payment Orders. You may issue payment orders for wire transfers from your accounts with us orally, electronically or in writing, as set forth in the Service Forms. ACH payment orders and orders for the issuance of checks must be issued electronically. You authorize us to comply with those payment orders. We will only receive and process payment orders on our funds transfer business days, and within our established hours. We have the right to accept or reject payment orders, and we may hold or reject payment orders for many reasons, including your failure to have an available balance in your Settlement Account (hereinafter' defined) that is sufficient for the requested transaction. We will not be liable for failure to detect errors in the beneficiary or amount of payment orders, or the existence of duplicate payment orders. a. ACH. By initiating each ACH debit or credit entry, you represent to us that you have obtained the authorization of your customer /employee /third party ( "Receiver ") as required in the NACHA/SWACHA Rules, and that you have complied with the NACHA /SWACHA Rules and the Administrative Rules with respect to the entry. Additionally, you make each of the representations and warranties of a Receiver and an Originator under the NACHA/SWACHA Rules, as applicable, and you give us each warranty that the NACHA /SWACHA Rules require us to make to any other party involved in a transaction. Further, if you initiate any ACH debit governed by the Electronic Funds Transfer Act of 1978, Federal Reserve Regulation E, or other laws or regulations governing the initiation of preauthorized electronic debits, you warrant that you have fully complied with all applicable requirements, and you agree that you are solely responsible for compliance. (i) Payment Orders on Diskette. If you elect to deliver your instructions for ACH debit or credi entries to us using a diskette, you do so with the understanding that we have no effective and commercially reasonable method to determine whether the information on the diskette was properly, authorized by you, or whether the diskette was altered or tampered with after the time the diskette left your premises, and you understand that transmitting instructions using a diskette is a less secure means of providing instructions to us than other commercially reasonable options for transmission o§ instructions that we make available to you. You agree that we may act on the instructions contained on the diskette when the diskette arrives at Bank, and that we have no obligation to verify that the information on the diskette is correct or was authorized by you. We will not be liable to you for acting in accordance with any instructions on the diskette, regardless of whether the instructions were in fact authorized by you, and you agree to indemnify us for and hold us harmless against any and all claims, demands, proceedings, losses, liabilities, expenses, including attorney's fees, and damages including consequential, special and punitive damages, directly or indirectly arising out of our processing of diskettes. b. Paper Debits. If the ACH Service Form authorizes debit transactions that are to be initiated by sending to another financial institution a paper preauthorized check or similar document ( "Paper Items "), you authorize us to take all action necessary to effect transfers of funds in other banks ( "Local Depositor Banks ") to an account at Bank or one of our affiliates. If the account to be debited is owned by you, yoti agree to provide a letter of instruction to each Local Depository Bank, authorizing the Local Depositor) Bank to accept and pay all Paper Items drawn by us against your account, and to take all other actions necessary to ensure that the Paper Items will be honored by the Local Depository Bank. If the account to be debited is not owned by you, you represent and warrant to us that the amounts to be transferred via Pape Items are due and owing to you, that the debits have been authorized by the party being debited, and that you have complied with the NACHA/SWACHA Rules with respect to each debit. c. Automatic Standing Transfers. If you select the automatic standing transfer service in the Wire Transfe Service Form, you authorize us to automatically transfer funds from the disbursement accounts to the Page 6 receiving accounts specified in the Service Form, all in accordance with the instructions in the Service Form. d. Authorization to Issue Checks. If you use our consolidated payables services, you authorize us to issue or arrange for the issuance of paper items drawn on your account(s) with us ( "checks ") upon our receipt of a transmission from you containing instructions to issue checks. By transmitting to us a request for issuance of a check in accordance with the security procedures, you agree that we may honor the check upon presentation to us. You must provide us with all information necessary for us to arrange for issuance and delivery of checks (including, without limitation, information you want printed on the check or enclosed with the check, and the mailing or delivery address to which the check is to be mailed) by transmitting that information to us by the method specified in the Consolidated Payables Service Form. You understand that all accounts on which checks are to be issued through the consolidated payables service must utilize our account reconciliation and positive pay services, and that Item Issue Information for positive pay services on the applicable accounts will be provided by us or our vendor who prints the checks. 3. Execution of Payment Orders. We may determine the order in which we handle payment orders that we receive from customers. ACH credit or debit entries may be transmitted by any means we deem appropriate. a. Name /Identifying Number Inconsistencies. In executing a payment order (including incoming payments), we and other banks involved in the transfer may rely on the identifying number (e.g., transit routing number and/or account number) of any beneficiary, intermediary bank, receiver, beneficiary's bank, or receiving depository financial institution ( "RDFI ") as instructed in the payment order, even if that number identifies a person different from the named beneficiary, intermediary bank, receiver, beneficiary's bank or RDFI. You assume full responsibility for any inconsistency between the name and the identifying number of any credit party. b. Paper Debits. If you select Paper Debits in the ACH Service Form, you authorize us to endorse each Paper Item substantially as follows (with any appropriate changes in the name of the bank) if required by the Local Depository Bank: CREDIT TO THE ACCOUNT OF THE WITHIN NAMED PAYEE ABSENCE OF ENDORSEMENT GUARANTEED ALL RIGHTS RESERVED WITHOUT PREJUDICE TEXAS COMMERCE BANK N.A. 4. ACH Discrepancies /Errors. In addition to the general notification requirements regarding discrepancies and errors, you must notify us within 5 business days after the designated settlement date if you discover that any ACH entry you initiated was in error. After you notify us of the error, we may initiate a reversal entry on your behalf in accordance with the NACHA/SWACHA Rules, but we cannot guarantee that the funds transferred by the erroneous entry will be returned to you. 5. Settlement. The Service Forms designate a demand deposit account (the "Settlement Account ") at Bank or an affiliate bank approved by us, which will be used for your ACH and wire transfer transactions. You authorize us to debit and credit your Settlement Account in connection with those transactions (including but not limited to rejected, returned or erroneous payment orders), and you authorize any affiliate bank holding a Se tlement Account to honor our instructions with respect to the Settlement Account. You agree to have sufficient available balances in your Settlement Account to cover the amount of each day's payment orders, and you agree not to submit payment orders that exceed the available balances in the Settlement Account. a. ACH Only. If you use our ACH services, we may at any time in our sole discretion require you to maintain available balances in your Settlement Account in a minimum amount determined by us. We may at any time offset or debit the Settlement Account for any amounts you owe to us, whether related o ACH Page 7 Page 8 services or otherwise. You must maintain the Settlement Account for at least 60 days after ACH services terminate. 6. Transfers to Foreign Countries. If a transfer is to be made to a bank in a foreign country, the paying bank may make payment in the currency of the country to which the transfer is made, at the paying bank's exchange rate for U.S. dollars, even if you request the transfer in U.S. dollars. If you issue a payment order in a currency other than the U.S. dollar, we may debit your account for the U.S. dollar equivalent of the amount of the foreign currency, at our then prevailing selling rate. If we do not have a selling rate, then we may use any exchange rate that we determine to be reasonable under the circumstances. You agree to comply with all local currency restrictions and all U.S. and other laws governing the transaction. 7. Problems with ACH Input. If we notify you that your ACH input is unreadable or unprocessable, you must provide us with a replacement input file at least two days before the scheduled settlement. If you are unable to provide a timely processable replacement file, we will advise you of other available recovery options. If we are generally unable to process your ACH input in a manner satisfactory to us because of a high error or rejection rate or for other reasons, we have the option either to terminate ACH service immediately or to work with you to correct the problems. We may deduct any returned or rejected entries from either the Settlement Account or any of your other accounts at the Bank. Our only duties in connection with entries that arc returned or rejected by any ACH association or any receiving depository financial institution are those set out in the NACHA/SWACHA Rules and applicable law. 8. ACH Entries Processed through Vendors. You may elect to transmit your ACH entries to us using the services of a vendor acceptable to us, in which case you authorize us to follow the instructions of the vendor indicated on the Service Form to the same extent and under the same conditions as would apply if the instructions came directly from you. You remain responsible for complying with all NACHA/SWACHA Rules and maintaining sufficient records of your entries to permit resolution of questions about errors and discrepancies. You also authorize us to notify the vendor, as your agent, of any problems with your ACH input, and to provide the vendor with information necessary to permit the vendor to perform the services indicated on the Service Form. You agree to provide the vendor with copies of the NACHA/SWACHA Rules and all relevant Administrative Rules. a. Vendor Errors /Failures. We are not liable to you for errors in execution made by the vendor, or for our inability to process your ACH entries because of vendor computer or software failures. b. Vendor Fees and Charges. You agree to pay or reimburse us, upon our demand, for any vendor fees or charges assessed against us by the vendor in connection with the services that you use. c. Substitution of Vendor. If you wish to change vendors, you must notify us at least 30 days prior to ithe effective date of the change, and we must approve of the new vendor. We may require the new vendor to sign certain agreements with us as a condition of our approval. 9. Miscellaneous. When you initiate an ACH credit entry, and when you receive a credit to your account via ACH, that credit is provisional until the RDFI has received final settlement through a Federal Reserve Bank or otherwise has received payment as provided for in Article 4A of the Texas Business and Commerce Code. If the RDFI does not receive payment for the entry, the RDFI is entitled to a refund from the receiver in the amount of the credit to the receiver's account, and you will not be considered to have paid the amount of the credit entry to the receiver. The NACHA /SWACHA Rules do not require the RDFI to provide the receiver with notice that the RDFI has received the entry unless the RDFI has agreed to do so. B. LOCKBOX SERVICES. If you execute a Lockbox Service Form, we will perform lockbox processing services for you in accordance with the options you have selected in the Lockbox Service Form. Lockbox processing includes opening envelopes and handling checks and other evidences of payment ( "Checks ") and accompanying documents delivered to your lockbox(es), endorsing Checks as we determine is necessary, submitting Checks for payment by paying banks and drawees, crediting your designated account with proceeds of Checks, returning or forwarding Checks that your Service Form indicates are not acceptable to you, and adjusting account balances if errors occur or Checks are returned unpaid. 1. Restrictive Endorsements. We will process and deposit all checks bearing restrictive notations or endorsements, including but not limited to "payment in full," "balance on account," or "final settlement," unless your Service Form indicates that you want us to forward such checks to you. In that case, we will use reasonable efforts to identify Checks with restrictive endorsements or notations (but we will not examine the reverse side of any Checks for restrictive notations). However, we won't be liable to you if we process and deposit those Checks. 2. Returned Checks. If any Check is returned to us unpaid for any reason, we will charge back that Check against your account, and we will charge your account our fee for returned checks (unless the Service Form instructs us to take these charges into account in account analysis or to do otherwise). We will forward the returned Checks, if available, along with the debit advice, to you. 3. Foreign Checks. We will handle Checks drawn in foreign currency or on foreign bank offices on an individual collection basis only. You bear all the risk of any fluctuation in exchange rates. We will charge your account our standard fees for foreign collections (or take these charges into account in account analysis if the Service Form specifies). 4. Checks Payable to Third Parties. If your Service Form indicates that you want us to process Checks payable singularly or jointly to a person or entity other than you ( "Third Party"), you represent and warrant to us that you have the authority and right to receive and control all Checks received in the lockbox, including Third Party Checks, and their proceeds. This representation and warranty extends to all acceptable payees under the Service Form. You authorize us to endorse each Check in the name of the Third Party as necessary for negotiation. You must promptly provide us with evidence of your authority to receive and control Third Party Checks, at any time that we request that evidence. C. CONTROLLED DISBURSEMENT SERVICES. Controlled disbursement allows you to write checks and drafts on your demand deposit account (the "Disbursement Account ") at an affiliate bank designated in the S ervice Form (the "Disbursement Bank "), and to fund payment of those checks and drafts by transfers from a demand deposit account at Bank as designated in the Service Form (the "Funding Account"). 1. Authority of Bank. We may open the Disbursement Account in your name, and may act as your agent in authorizing withdrawals from and deposits to the Disbursement Account, except as that authority is limited in the Service Form. We may also act as agent for Disbursement Bank in connection with controlled disbursement services. If you want to revoke our authority with respect to the Disbursement Account, you must give us written notice. Even though we open the Disbursement Account and act as your agent in connection with, it, the Disbursement Account is a deposit arrangement exclusively between you and Disbursement Bank. 2. Authority of Disbursement Bank. Disbursement Bank will act as your agent to perform or to assist us in performing actions appropriate to carry out the purposes of controlled disbursement services, including requesting that we transfer amounts from the Funding Account to the Disbursement Account by any means acceptable to us and Disbursement Bank. Disbursement Bank may rely on our instructions regarding a Disbursement Account and may pay items drawn against the Disbursement Account pursuant to our instrvctions. Page 9 3. Standard Transfers /Maintenance of Available Balances. Upon Disbursement Bank's request, we wil transfer funds in the Funding Account to the Disbursement Account on each business day. We never have the obligation to transfer more than the amount of available funds in the Funding Account. You must insure tha there are available funds in the Funding Account sufficient to cover each day's funding requirements in the Disbursement Account. If you fail to have adequate available funds in the Funding Account to cover the Disbursement Account requirements, we may return checks drawn on the Disbursement Account. 4. Adjustments. Both we and Disbursement Bank rely on information from third parties to report to you and to initiate transfers from the Funding Account to the Disbursement Account. Differences in the reported clearing totals and the actual totals are identified the morning of the next business day. If the reported clearing totals that we receive from third parties are inaccurate on the funding day, the Disbursement Account will not show a zero balance on the next day unless we initiate a funds transfer to the Disbursement Account from our own funds or the Disbursement Bank returns unpaid a sufficient number of checks to avoid an overdraft in the Disbursement Account. You authorize us to debit the Funding Account (or any of your other accounts at Bank or Disbursement Bank) in an amount sufficient to reimburse us for any advances we make to cover items paid or withdrawals made against insufficient available funds in the Disbursement Account. If the actual clearing totals are such that the Disbursement Account has a positive balance, you authorize us to debit the Disbursemen Account and credit the Funding Account in a like amount so as to result in a zero balance in the Disbursemen Account. 5. Use of Other Services for Controlled Disbursement Accounts. If you use any of the other described treasury, management services in connection with your Disbursement Account, you understand that we will act as the Disbursement Bank's agent in performing the services, and all of your communication will be with us. You authorize us to act on your behalf in instructing the Disbursement Bank, and you authorize Disbursement Bank to act on our instructions with respect to your Disbursement Account. In each case where you have agreed to hold us harmless or to indemnify us in connection with particular services, you also agree to hold Disbursement Bank harmless and to indemnify Disbursement Bank. You agree that if we would not be liable to you in a given situation, Disbursement Bank will not be liable to you either. D. POSITIVE PAY SERVICE. We offer a service that allows you to provide us with information regarding al checks and other debit items ( "Items ") issued by you against your accounts with us or an affiliate bank, including Item number and amount ( "Item Issue Information "), which we can then compare against Items that we receive foi payment against your accounts. 1. Item Issue Information Requirements. You must provide Item Issue Information to us via electronic transmission by the deadline specified in the Administrative Rules (the "Information Deadline ") each business day. We may also, at our sole option, elect to accept Item Issue Information in written form via facsimile from time to time. If we accept Item Issue Information after the Information Deadline, that does not obligate us to accept late Item Issue Information in the future. 2. Bank Review of Item Issue Information. We will review all Items presented to us for payment against a 1 Item Issue Information that is in our files as of the Information Deadline on the previous business day. You agree that if the Item number and amount on an Item conform to the Item Issue Information, then we may consider that Item validly issued and authorized, and we may pay the Item without contacting you. You agree that if we act in accordance with this Agreement in paying Items, we will be deemed to have exercised ordinary care. 3. Suspect Items. If we fmd that an Item is inconsistent with the Item Issue Information you provide to us (a "Suspect Item"), we will advise you by the notification time specified in the Administrative Rules (the "Notification Time ") via telephone and facsimile. You must instruct us by the decision deadline specified in the Administrative Rules (the "Decision Deadline ") via facsimile signed by an Authorized Person or an Authorized Signer as to whether to pay or stop payment on each Suspect Item (the "Instructions "). If you fail to provide Page 10 Instructions by the Decision Deadline, we will either pay or return the Suspect Items, as you designate in the Service Form. a. Late Instructions. If you miss the Decision Deadline but belatedly provide Instructions to stop payment on certain Suspect Items, we may elect to attempt to return the Items unpaid; however, the presenting bank may not be obligated to honor the return. If the presenting bank fails to honor the return, you must immediately reimburse us for the amount of the Item, and you agree to indemnify us and hold us harmless from any costs, suits, expenses, liabilities, damages and attorney's fees related to return of the Item. b. Excessive Suspect Items. If we determine that there appear to be an excessive number of Suspect Items on a particular business day, possibly indicating inaccurate or missing Item Issue Information, we will contact you so that we can jointly determine how you can provide us with instructions to pay or return the Suspect Items, and we will be entitled to rely on your instructions without further review of the Items. If for any reason you instruct us to suspend positive pay services and pay all Items presented at our teller lines, you agree that we will have exercised ordinary care in following your instructions and paying Items without review of Item Issue Information, and we will not be liable to you for paying any fraudulent item during the suspension of teller line positive pay services. E. MAXIMUM DOLLAR AMOUNT SERVICE. If you use our Maximum Dollar Amount Service you authorize us to automatically return all Items in excess of.a designated dollar limit or to notify you of such Items, as designated in the Service Form. F. STALE DATE SERVICE. If you use our Stale Date Service you authorize us to automatically return all Items that are processed for payment more than a specified number of days after the issue date ( "Stale Items "), or to notify you of Stale Items, as designated in the Service Form. You agree to advise your payees of the stale date restrictions on the negotiability of Items that you issue. You agree to hold us harmless and indemnify us against any damages caused by your instructions to us to deem Items stale on the basis of a shorter time period than that provided by the Texas Uniform Commercial Code or other applicable laws. G. DOMESTIC DRAFTS. If you sign a Draft Service Form, you may issue drafts payable through an account at Bank or Disbursement Bank. The bank through which the draft is payable is a collecting bank only, meaning that the bank will make presentment to you, but will not automatically pay the draft except as set forth in this Agreement. I. Draft Requirements. All drafts must contain on the face of the instrument (a) the words "DRAFT" in prominent type, (b) a legend that the draft is "payable through" either Bank or Disbursement Bank, and (c) a unique serial number. In addition, each draft must: CO contain a statement that the draft is payable on sight ( "Sight Drafts "); (ii) contain a statement that the draft is payable a certain number of days after presentment to you, specifying the number of days ("Time Drafts"); or (iii) be printed with magnetic ink character recognition ( "MICR ") characters conforming to specimens furnished by us and reflecting our transit routing number and an account number (the "Draft Account Number ") indicated in the Service Form ("Payable Through Drafts"). The Draft Account Number is not the number of your deposit account with Bank, but is a special number for the purpose of electronic retrieval of information regarding drafts. You agree to provide us with specimen Payable Through Drafts after printing for MICR testing and our approval before issuing any Payable Through Drafts to payees. Sight Drafts and Time Drafts must not be printed with any MICR characters. We may treat any draft that does not meet these requirements precisely either as a draft or as a check. 2. Presentment of Drafts. We will notify you of the total amount of all drafts on a daily basis, and will deliver the drafts to you by electronic transmission, commercial courier, or delivery to your agent at our offces, as designated in the Service Form. We will notify you of any Payable Through Drafts received by our published Page 11 notice time for Payable Through Drafts on the business day following the business day we receive them. The day of this notice is called the "Appropriate Banking Day." a. Physical Delivery. If we physically deliver drafts to you, you or your agent must acknowledge receipt of the drafts. b. Electronic Delivery. If you choose electronic delivery, we will electronically transmit to you a listing of the serial number and dollar amount of the drafts received. Entry of information into our chosen electronic system constitutes delivery of drafts to you, regardless or whether or not you retrieve the information. If electronic delivery is unavailable to us for any reason, we may deliver drafts to you by commercial courier. We will subsequently return to you the original of electronically presented drafts or provide you with microfilm or microfiche copies of the original drafts, as designated in the Service Form. 3. Dishonored Drafts. If you wish to dishonor any Sight Draft, you must do so by our published dishonor deadline for Sight Drafts on the business day following the day we present the drafts to you. If you wish to dishonor any Time Draft, you must do so by our published dishonor deadline for Time Drafts on the due date calculated by us. If you wish to dishonor any Payable Through Draft, you must do so by our published dishonor deadline on the Appropriate Banking Day. If you dishonor a draft, we will return it to the payee marked as we deem appropriate. If you fail to dishonor a draft by the dishonor deadline by the appropriate method described below, we may treat the draft as accepted for payment. a. Drafts Presented by Physical Delivery. If we physically deliver the draft to you, to dishonor it you must physically return the draft to us. b. Drafts Presented Electronically. If we present the draft to you electronically, to dishonor it you must notify us by telephone, electronically, or by facsimile. c. Late Dishonor. If you physically retum a draft or notify us of your dishonor of a draft after the dishonor deadline, we may elect to attempt to process the return for you, but you understand that the originating financial institution is not obligated to accept the return. You agree that we will not be liable to you, and you will indenmify us for any losses or costs, including reasonable attorney's fees, that we incur as a result of returning the draft. 4. Payment for Drafts. You must tender sufficient immediately available funds to pay all drafts that you have not dishonored by the applicable dishonor deadline. If you don't have sufficient available funds in the account through which a draft is payable, we may deem that draft dishonored and may return it, regardless of your instructions to us, without liability for wrongful dishonor, or we may charge any of your accounts for the amount of the draft. 5. Responsibilities of Bank. We assume no responsibility for the genuineness of any draft or endorsements on any draft. If the payee of a draft demands return of the draft and any accompanying documents before the applicable dishonor deadline, we may notify you of this request, but we are not obligated to do so; we assume no responsibility for your failure to respond to such a request. 11. ELECTRONIC STOP PAYMENTS. We offer you the ability to electronically place stop payment orders against Items drawn on your accounts at the Bank and certain affiliate banks. If we provide you with access to software that will permit you to place electronic stop payment orders, you agree as follows. 1. Instructions. All stop payment instructions must comply with the Administrative Rules and must describe the Item by MICR encoded serial number (i.e., check number) and the face amount of the Item, and we must receive the instructions in sufficient time to allow us to act on the instructions prior to payment of the Item in the Page 12 normal course of business. Generally, stop payment instructions will not be effective until at least 30 minutes following the time you electronically input the instructions. 2. Bank Liability for Payment of Items. If we pay an Item after you have validly provided us with stop payment instructions as a result of our failure to exercise ordinary care or to act in good faith, our liability to you will not exceed the face amount of the Item. You agree that we will not be deemed to have failed to exercise ordinary care if (1) you fail to comply with this Agreement or the Administrative Rules; (2) your description of the Item is inaccurate or incomplete; or (3) we do not receive the stop payment instructions in sufficient time to allow us to act on your instructions prior to payment of the Item in the ordinary course of business. 3. Duration of Stop Payment Instructions. Electronic stop payment instructions are effective for a period of 1 year from the date we receive the instructions. You may renew the instructions for an additional 1 -year period by issuing additional electronic stop payment instructions at the end of the initial 1 -year period. The 1 -year effective period applies only to instructions issued through our electronic stop payment service, and not to instructions issued via telephone, fax, or other systems. All other stop payment instructions are governed by the provisions concerning stop payments in the Deposit Rules. I. ELECTRONIC ADJUSTMENT AND RESEARCH REQUESTS. We offer you the ability to electronically request adjustments to and/or research on items drawn against or deposited to your accounts at the Bank and certain affiliate banks. If we provide you with access to software that will permit you to place these electronic requests, you agree that requests made using this service are requests only, and we are not obligated to take any particular action with respect to your request. If we are unable to satisfy your request or we determine that any requested adjustment is not warranted or appropriate, we will not have any liability to you for our failure to complete the requested research or adjustment. J. CHECK SAFEKEEPING SERVICE. If you use our check safekeeping service, we will provide microfilm, microfiche or CD ROM copies of the Items drawn on the accounts you specify in a Service Form. If you indicate on your Service Form that you want us to provide CD ROM copies of the Items drawn on your accounts at other financial institutions, we will provide CD ROM copies of the Items you deliver to us. We will deal with your original Items as you specify in the Service Form. 1. Obtaining Originals or Copies of Items. If you want a photocopy or the original of any Item we are holding in safekeeping, you must make a written request, providing us with all information concerning the Item that is shown on your Account Reconciliation Report or your bank statement (or if the Item is drawn on an account at another financial institution, you must provide all information that is necessary for us to retrieve the original Item). We will make a good faith effort to provide you with (1) a photocopy of the Item within 2 business days after we receive your request, or (2) the original Item within 5 business days after we receive your request. I We may delay providing you with a photocopy of the Item if we cannot locate it on the film or if you request a large number of Items. 2. Availability of Items. For purposes of Section 4.406 of the Texas Business and Commerce Code, any Item reflected on a statement of account will be deemed available to you on the ending date of the statement period. 3. Bank's Liability. We will not be liable to you or anyone else because an original Item is destroyed or unavailable if we have acted in accordance with this subsection of this Agreement and your—instructions in the Service Form. It is your responsibility to review the microfilm, microfiche, or CD ROM copies of the I ems drawn on your accounts and to promptly notify us of any items that are not clear on the microfilm, microfiche, or CD ROM image. We have no liability or responsibility for the accuracy or completeness of any information provided to us in connection with accounts at or Items drawn on other financial institutions, or for the condition of the original Items provided to us by you or other financial institutions. Page 13 K. CASH VAULT AND COMMERCIAL DEPOSIT SERVICES. If you use the services described below, the following provisions apply. 1. Courier Service. You may deliver and pick up shipments of cash or checks to or from us by usin services of a courier that has been preapproved by us, who will act as your agent. The courier must comply our Administrative Rules and must maintain adequate insurance to cover its liabilities under this Agreement. may refuse to permit any courier to enter our premises with or without cause, in which case we will reasonable efforts to promptly notify you. the with We use 2. Deposit Presentment and Processing. You must deliver deposits to your account to be processed through the vault in sealed bags that meet the standards described in the Administrative Rules for the deposit presentment method you are using, have been approved by us, and contain only cash and checks. The bags may also contain food stamps if you have provided proof satisfactory to us of your authority to redeem food stamps. We authorized to open the bags and count the cash, checks and food stamps found in the bag, and then to credit, our count of items to your account designated in the Service Form. a. Delivery to Vault. If we agree to accept your deposits at one of our vault locations, we will provide a receipt indicating the number of bags received, but this receipt is not an acknowledgment of the contents of any bag, nor is any telephonic or other acknowledgment of a deposit of which you notify us by telephon; an acknowledgment of our receipt of that deposit or of the contents of any bag. b. Delivery to Branch for Delayed Processing. If we agree to accept your deposits at one of our branch locations, we will not verify the amount of deposits at the time of receipt, but we will provide you with a receipt showing the amount indicated on your deposit slip. This receipt is not an acknowledgment of the contents of any bag. c. Delivery to Unattended Facility. If we agree to allow you to use one of our unattended facilities (including but not limited to a night depository or commercial ATM), we will provide you with an access device (such as a key or card that may require a PIN). You must return all access devices to us upon our request. We will process any deposits delivered to an unattended facility as specified in the Service Form and our Administrative Rules. If you receive a receipt from an unattended facility, the receipt is not an acknowledgment of the contents of any bag or of the receipt of any bags. While you or your agents are physically present at one of our unattended facilities, you are a licensee only and we owe you only the duty of care that we owe a licensee. d. Discrepancies. If there are differences between the amount credited by us and the amount shown on the deposit slips prepared by you or the receipt provided to you upon initial presentment, a supervisor or similar bank employee will verify the official bank count. Our determination and records as to our receipt of any bag and as to the contents of any bag is conclusive and binding on you, and we may correct any provisional credit made to your account so as to be consistent with the official bank count. We will notify the customer representative designated in the Service Form if the difference is more than the amount specified in the Administrative Rules. e. Relationship Upon Delivery of Bags. Until we verify the contents of the bags and enter a final cred t to your account on our books, our only relationship with respect to the deposit is that of bailee and bailor. We are not responsible for any property included in a bag other than cash, checks and food stamps. 3. Currency Deliveries. If you wish to order currency, you must place the order within the time frame set out in the Administrative Rules using the system designated in the Service Form and Administrative Rules, and you must comply with all of the procedures and Administrative Rules applicable to that system. We will notify you from time to time of the denominations and maximum amounts of currency that you may order. Page 14 a. Payment for Currency. We will debit the account designated in the Service Form for the amount of currency ordered by you according to our records. You agree to have sufficient available funds in the designated account to cover each day's currency orders. If the account does not contain sufficient ava table funds, we may either supply a partial order or refuse to supply any of the order. b. Discrepancies. You must verify each currency shipment under dual control procedures immediately upon receipt of the shipment. If you discover a discrepancy in a shipment received in a plastic bag prior to opening the bag, you must return the bag to us immediately without opening the bag. If you discover a discrepancy within a strap, you must report it to us within 5 days of the shipment date and promptly return the strap to us. We will have a reasonable time to investigate any reported discrepancy and we will promptly communicate our findings to you. - 4. Investigations. You agree to cooperate fully and to cause your employees, agents, officers, contractors and subcontractors to cooperate fully with us in any investigation of any loss or discrepancy. If you fail to comply with these duties of cooperation, that will constitute your release of us from any liabilities, claims or expenses incurred by anyone in connection with a discrepancy. 5. Currency Transaction Reports. We may be required by law to report any currency deposits or withdrawals in a single day exceeding $10,000 or lower limits established by the Internal Revenue Service. 6. Bank's Liability. You may not assert any claim you have against us in connection with the services described in this Section K. more than 90 days after the date the event occurred that gives rise to the claim. You assume all risks of using our unattended facilities, including risks of theft, robbery and personal injury; we are not responsible if a facility fails to operate properly m any way, including failing to open, close, lock, or unlock. It is your responsibility to verify that your bags have dropped down completely into the facility, and you agree that you will not leave your bags in any facility that does not appear to be operating properly. We will not be liable to you if any of our unattended facilities or tele -entry systems is closed or otherwise unavailable for use at any time. L. INFORMATION SERVICES. We offer electronic cash management and information services, available by direct transmission to you or by using a personal computer and certain software. If we provide you with access to our cash management and information reporting software (the "Software "), or if we provide you with another means of electronic access to information about your accounts, the following provisions apply. 1. Software. The Software will be distributed to you on a non - exclusive basis in object code form on a diskette or other medium. You must determine whether the Software is compatible with one or more of the personal computers and operating software described in the Administrative Rules, and must advise us of the personal computer and operating software you intend to use. When the Software is distributed to you, you will be granted a non - exclusive, non - transferable license to use the Software (the "Software License "), and by using the Software you agree to comply with all of the terms and conditions of the Software License. 2. Customer Accounts. You will designate the accounts to which you want to secure access in the Service Form. If you request access to accounts of other companies in which you or your parent have majority ownership ( "Affiliates "), you must provide evidence satisfactory to us of your authority to access the Affiliate accounts, and must represent and warrant that you are authorized to access those accounts and give instructions on behalf of the Affiliates. 3. Bank's Obligations. We will transmit all appropriate financial data within our control that is necessary for you to use the Software for the purposes for which it is designed, and will act on appropriate instructions received from you in connection with the Software. We make no representations or warranties regarding the accuracy of any information you receive while using the Software or otherwise accessing information about Page 15 accounts, and we will not be liable if you receive inaccurate information, unless we have been grossly negligent or engaged in willful misconduct in making available the information. 4. Use of the Software Products. You may use the Software and otherwise access the account information only (a) for so long as this section of this Agreement is in effect, (b) for your own business use, and (c) in accordance with the terms of this Agreement, the Software License, and the Administrative Rules. All trademarks, trade names, service marks, copyrights, programs, software, specifications, systems designs, applications, routines, sub - routines, techniques, enhancements, documentation, manuals, ideas and formulas used, developed or provided by us or otherwise in connection with this Agreement are proprietary property, will remain the sole property of the rightful owner (whether Bank or a third party), and you have no ownership interest in them. You agree not to disclose any proprietary or other confidential information to any third party. S. Termination. If the Software License terminates, your rights and our obligations with respect to the Software will terminate immediately without prior notice to you, but your obligations not to disclose Confidential Information will remain in effect. M. CHECK CASHING SERVICE. If you have signed a Check Cashing Service Form, we may cash certain checks or drafts drawn on your accounts at other banks for the payees of those checks or drafts. The Service Form will specify the requirements for checks or drafts that will be cashed. 1. Presentment of Checks /Drafts. All named payees on the check or draft must be present at the time the check or draft is presented to us, and must provide identification bearing the name of the payee in the form of a state driver's License or state identification card, or in another form acceptable to us. We may require additional identification if we determine that such a request is warranted, and we may refuse to cash any particular check or draft without giving you notice of our refusal. 2. Dishonored or Returned Checks. You agree to pay us the amount of any check or draft cashed by us that is dishonored or returned for any reason, together with all applicable fees in connection with the dishonor or return. As long as you use this service, you will maintain an account with us, and you authorize us to debit that or any other account for the amount of any dishonored or returned check and applicable fees. Page 16 Austin (4 Locations) 700 Lavaca (512) 479 -2695 Beaumont (4 Locations) 510 Park (409) 880 -1445 El Paso (10 Locations) Main at Mesa (915) 546 -6506 Houston Area (53 Locations) 712 Main Street (713) 216 -5714 Dallas/Fort Fort Metroplex (33 Locations) Dallas 2200 Ross (214) 965 -2173 Fort Worth 201 Main (817) 878 -7567 Permian Basin (3 Locations) 400 West Illinois Midland (915) 335-4421 Rio Grande Valley (6 Locations) 1034 East Levee Street Brownsville (210) 548 -6968 San Angelo (2 Locations) 301 West Beauregard (915) 653 -5911 San Antonio Area (5 Locations) 1020 N.E. Loop 410 San Antonio (210) 829 -6122 Page 17 1 L1 1 1 1 1 1 d 1 1 1 AMENDMENT TO TREASURY MANAGEMENT SERVICE AGREEMENT FOR PUBLIC ENITTIFS This Amendment to Treasury Management Service Agreement for Public Entities (this "Amendment") is dated as of , 199 and is between TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("Bak) and City of Round Rock ("Customer"). RECITALS: Bank has agreed to provide certain services to Customs in accordance with the terms of Bank's Treasury Management Service Agreement, as amended from time to time (the 'Treasury Management Agreement"), as amended by this Agreement. As a public entity, Customer is not permitted to make certain of the agreanests required by the Treasury Management Service Agreement. Accordingly, Bank has agreed to amend the Treasury Management Service - Agreement as set forth below. AGREEMENT: In consideration of the recitals and $10.00 and other good and valuable consideration, tlx receipt and sufficiency of which the parties acknowledge, Bank and Customs agree as follows: 1. The Treasury Management Service Agreement is amended by deleting Section IL O. and replacing it in its entirety with the following: Limitation of Liability. You agree that we and our affiliates, and our and their respective officers, directors, agents and anployees (collectively, the 'Bank Parties") will not be liable to you or any third party for any loss, liability or expense fmcluding reasonable attorney's fees) arising from the services performed by any of the Bank Parties in connection with this Agreement, except for those losses caused directly by our failure to exercise ordinary care or to act in good faith. To the maximum extent permitted by law, you agree that the Bank Parties will not be liable for events or circumstances beyond their reasonable control, and the liability of the Bank Parties will be limited to correcting errors caused by the Bank Parties. You and we agree that clerical errors and mistakes in judgment do not constitute a failure to exercise ordinary are or to act in good faith. THE BANK PARTIES WILL NEVER BE LIABLE OR RESPONSIBLE FOR CONSEQUENTIAL, EXEMPLARY, PUNITIVE, SPECIAL OR INCIDENTAL DAMAGES OR LOSSES, INCLUDING LOST PROFITS (WHETHER OR NOT ANY OF THE BANS PARTIES WERE ADVISED OF THE POSSIBILITY OF SUCH LOSSES OR DAMAGES). We maim* representations or warranties to you, and disclaim any implied warranties, as to the fitness, :merchantability or suitability of any of the services or software products for you, or as to the surtsbelity or compatibility of our software, equipment or carnmmmicatien interfaces with those that you toe. 2. The Treasury Management Service Agreement is amended by deleting the third sentence of Section HI.C.S., which reads "In each case where you have agreed to hold us harmless or to indemnify m in connection with particular services, you also agree to hold Disbursement Bank harmless and to indemnify Disburso,.cut Bank" 1 3. The Treasury Management Service Agreement is amended by deleting the last sentence of Section III.D.3.a. and replacing it in its entirety with the following: If the presenting bank fails to honor the return, you must immediately reimburse us for the amount of the Item, and you agree that we will not be liable to you for any costs, suits, expenses, liabilities, damages or attorney's fees related to return of the Item. 4. The Treasury Management Service Agreement is amended by deleting the last sentence of Section ELF. and replacing it in its entirety with the following. You agree that we will not be liable to you or any third party for any damages caused by your instructions to us to deem Items stale on the basis of a shorter time period than that provided by the Texas Uniform Commercial Code or other applicable laws. 5. The Treasury Management Service Agreement is amended by deleting the last sentence of Section III.G.3.c. and replacing it in its entirety with the following. You agree that we will not be liable to you or any third party for any losses or costs, including reasonable attorney's fees, incurred as a result of returning the draft. If any other person objects to the late return of the drafts, you will immediately pay the drafts, and we may charge your accounts to effect payment. 6. Except as expressly modified by this Ant®dment, the terns and provisions attic Treasury Management Service Agreement caatinue in full force and effect. CUSTOMER: City of Round Rock (Revised 4/6/95) B Name: David Kautz Title: Director of Finance BANK: TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: s• ,� Name: Title: KAREN E. DAVIDSON VICE PRESIDENT 2 ATTEST: e l V P ) ∎I ILL Tom• E LAND, City Secretary C.\ wpnOCS1aEsourrI\as60411S.M11n /kg RESOLUTION NO. R- 96- 04- 11 -13B WHEREAS, pursuant to Chapter 2256, Texas Government Code ( "the Act ") the City Council desires to adopt a written investment policy regarding the investment of City funds, and WHEREAS, the City Council has reviewed the attached written policy and has determined same to be in compliance with the Act, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the attached written investment policy for the investment of City funds is hereby approved and adopted. RESOLVED this 11th day of April, 1996. CHARLES CULR ° R, Mayor Cicv of Round Rock, Texas City of Round Rock, Texas Investment Policy March 6, 1996 City of Round Rock, Texas Investment Policy March 6, 1996 Section Page I. Introduction 3 H. 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 9 Wire Transfer Authorizations Collateralization Requirement X. Portfolio Valuation and Reporting 10 Reporting Internal Controls External Audit XI. Quality and Capability of Investment Management 11 Training Limitation of Liability Ethics XII. Review and Amendment 12 XIII. Conclusion 12 Appendix Investment Strategy 13 Page 2 I. Introduction 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 City of Round Rock, Texas Investment Policy March 6 , 1996 "1'm not as concerned about the return on my principal as 1 am about the return of my principal." 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. H. 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: 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 Page 3 this Policy, bond 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 and the Accounting Manager 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 earn ngsr 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. 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 Page 4 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: 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; Page 5 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 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. Page 6 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) States, Agencies, Counties, Cities and Other 35% 2) 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 270 days and the maximum allowable maturity shall be two years. 2) Capital Project Funds 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. Page 7 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'fmai 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 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 which sells investments to the City must execute a written instrument stating that the registered principal has received and thoroughly reviewed the Investment Policy of the City. The principal also must acknowledge that the firm Page 8 has implemented reasonable procedures and controls to preclude imprudent investment activities arising out of investment transactions conducted between the City and the firm. The Investment Officers may not buy any investment from a person who has not delivered to the City an instrument in substantially the form described above. The following institutions or firms 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). 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. Safekeeping procedures shall be reviewed annually by the independent auditor. 1X. 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. Call backs, (i.e bank confirmation from a second employee), for all wires will be required by the City. Furthermore, a separate wire funds transfer agreement will be entered into between the City and the Depository bank. Page 9 B. 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 the market value plus accrued interest 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 Ofcer. Allowable collateral may consist of those securities or instruments permitted as suitable investments under the Public Funds Collateral Act (Texas Government Code, Ch. 2257)_ and this Invcstment Policy_ Financial institutions serving as City Depositories will be required to sign a Depository Agreement with the City_ • ' _ _ • The safekeeping "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 As required by law, the Investment Officers shall submit a written investment report 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. 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 and c. the ending book value and market value of the portfolio. 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 Page 10 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. XI. Quality and Capability of Investment Management A. Training It is the City's policy to provide training required by the Public Funds Investment Act 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, Pagc 11 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. X11. 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 Strateey 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 270 days and restricting the maximum allowable to two 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 alternative to fixed maturity Page 13 investments.. 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 minimised 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 Page 14 the Capital Project 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 MASTER AGREEMENT REGARDING CUSTODIAL AND RELATED SERVICES The undersigned customer, a Municipality, hereinafter referred to as "Customer" and Texas Commerce Bank N. A. Austin Office, hereinafter referred to as "Bank ", do hereby agree as follows: 1. Customer represents and warrants that it possesses all authority necessary to enter into this Agreement, including the authority to execute and deliver Enhancement Agreements as contemplated herein. If Customer is a corporation, joint venture, partnership, trust, or other organization, Customer agrees to deliver to Bank such documentation of the aforementioned authority as Bank may reasonably request. 2. Bank represents and warrants that is a national banking association, duly chartered and in good standing, and that it has all requisite authority to enter into this Agreement. 3. Customer hereby requests and Bank agrees to establish for the account of Customer, a custody account, hereinafter referred to as the "Account ". The Account is not transferable or assignable and Bank will pay the Account only to Customer or its assignee in accordance with the terms of the Agreement. Bank shall receive and hold in the account as Custodian such stocks, bonds, and other securities, collectively referred to hereinafter as "Custodial Property ", as Customer shall cause to be deposited therein or as shall be received by Bank as income thereon or by way of collection therefor. Customer hereby authorizes Bank by and through its officers, employees or agents to accept written, faxed or verbal instructions from certain officers, employees or agents of Customer (or its "Investment Adviser ") ( "Authorized Persons" or "Authorized Person ") regarding security trades for Customer and/or regarding Customer's Account No. 107177, Styled: City of Round Rock. Errors resulting from verbal instructions will not be the responsibility of Bank if Bank acted in good faith. Customer understands that verbal instructions are only to be given by Authorized Persons on Fed Funds trades and that Bank shall be given written or faxed authorization for any and all other trades by trade date plus one. On sales which involve registered securities, Customer shall furnish Bank by trade date plus one properly executed Stock or Bond Power and Corporate Resolution, and any and all necessary documentation to be used in the settling of these trades. In the event Customer does not have immediately available funds to finalize a purchase, Bank may, at its sole option and without liability to Customer, liquidate such purchase, and Customer shall remain liable for any deficit. Customer agrees and undertakes to release, indemnify, and hold Bank harmless against any and all loss, costs, suits and expenses, including attorney's fees, which Bank may incur in carrying out its duties under this Agreement provided Bank acts in conformity with this Agreement provided Bank acted in conformity with this Agreement. The Custodial Property shall be held by Bank subject to the terms of this Agreement. Bank shall, except as specifically provided otherwise herein, exercise the same degree of care with respect to the Account as it exercises with respect to its own property. Customer may, from time to time, (a) make deposits of securities to the Custodial Property held by the Bank, as custodian for Customer and (b) withdraw and /or substitute various securities for these hereafter held by Bank as Custodian. Bank may, at any time and at its sole discretion, refuse to accept any securities or other property into this custodial account. 1 4. Bank, acting as Customer's agent, is to receive whatever principal and income may be due on such bearer and /or book entry securities and the proceeds of sale of any thereof, and credit Customer's Account No. ** 09922769863 ** at Bank's office with all such amounts at such times as they are collected. Bank shall send Customer copies of income credits daily or as otherwise directed. Any income due on any of the Custodial Property shall be paid only if available funds are to be had. Otherwise, no payment shall be made. Any payment which is made and subsequently proves to have been effected by other than available funds may, at Bank's sole discretion, be charged back to Customer's Account No. ** 09922769863 ** at Bank's office. Notwithstanding the above, income from securities or other property held in the name of Customer, (or its predecessor or subsidiaries if Customer is a corporation), will be received directly by Customer at its place of business or where otherwise designated by the Customer. 5. From time to time Bank will, as Customer's agent, deliver securities as directed by Customer to various dealers or their agents to obtain payment therefor. Bank assumes no responsibility other thank to act with ordinary care, with respect to such transactions. Specifically, such securities will customarily be delivered to the dealer or the paying agent and payment will be effected or authorized later when the dealer has satisfied itself as to the count and /or accuracy of such securities and suitability of related documents. In the time between release of such securities to such dealers or the paying agents, and receipt of payment, Bank does not assume and Customer acknowledges assumption of all risk attendant to such delivery pending final and collected payment therefor.. Bank shall adopt such reasonable procedures as Customer may from time to time request, to ensure the prompt return of securities to Bank by the dealer in the event the dealer elects not to accept them. 6. Bank shall appropriately identify, in accordance with Customer's instructions, that portion of the Custodial Property which by statute, law or any duly promulgated rule of any governmental body or agency having jurisdiction over Customer, are required to be segregated for special uses or purposes. Customer shall inform Bank which of Custodial Property placed in Bank's custody and owned by Customer are required by statute, law or such rule to be segregated for special uses or purposes. 7. Bank is authorized to exchange securities in temporary form for securities in definitive form; to effect an exchange of the shares where the par value of stock is changed; and to surrender stocks and bonds or other securities at maturity or when advised of an earlier call for redemption, upon receiving payment in current funds therefor. Bank is authorized to act on direction of Customer to process tender offers, reorganizations, capital changes, dividend reinvestment, rights and warrants, provided, however, that Bank is authorized to act without further instructions from Customer in the event of nondiscretionary calls, exchanges, and reorganizations. It is specifically noted that the Bank must have authorization, instructions, securities (if applicable) and other documentation, if any relating to such matters at least two (2) business days prior to the deadline date for action thereon. Bank's sole obligation in this regard shall be to make a good faith effort thereon. 2 8. Bank will exercise reasonable care in the identification and processing of Bonds called for redemption. Bank assumes no responsibility for making any independent investigation as to whether Bonds are called for redemption, it being the responsibility of Customer to notify the Bank, in writing or by fax, of Bonds called for redemption. Bank is authorized to execute as agent in the name of Customer, all declarations, affidavits, and certificates of ownership now or hereafter required in collecting income and principal payments as required by regulatory authorities to establish that securities are on deposit, inserting thereon the name of Customer as owner of securities. 9. It is specifically acknowledged that all or part of the Custodial Property may be held in nominee form by a nominee of the Customer or by a nominee of the Bank. If a nominee of the Customer is used, to facilitate sales and deliveries of securities and receipts of payments and notices, all registered securities are to be registered in the name of the Customer's nominee, which is used only for securities owned by Customer unless specifically requested otherwise, in such name as directed by Customer. In any case, the Bank's responsibility to Customer will remain unimpaired and, except for securities held in book -entry form, all communications from issuers of the securities are to be sent to Customer. If a nominee of the Bank is to be used, an Enhancement Agreement must be executed. If the Enhancement Agreement - Nominee is executed, that portion of the preceding language in paragraph relating to Customer's nominee shall, to the extent set forth in said Enhancement Agreement, be null and void. Nothing herein contained shall be construed as obligating Bank to offer to Customer the establishment of any nominee, and this shall not constitute any offer by Bank to enter into such Enhancement Agreement - Nominee with Customer. It will be the responsibility of the Customer to provide Bank the appropriate documentation, as deemed appropriate by Bank and /or receiving party, to effect the sale of securities as instructed by the Customer. 10. With respect to all securities, however registered, Bank is to deliver or authorize book -entry transfer of such securities according to generally accepted settlement methods; Customer may from time to time request special processing by notifying Bank in writing. 11. Payment of cash from the account of Customer in connection with purchases of securities or refunds of cash collateral for loaned securities are to be made only upon receipt of such securities and upon receipt of appropriate instructions from an Authorized Person(s). Authorized Person(s) are set forth in Exhibit "A ", attached hereto and made a part hereof by reference. No payment of cash for securities purchases or any other purpose hereunder may be made without the receipt of securities unless the Bank has previously been authorized by instructions from an Authorized Person(s) to make such payment. Payments on securities will be charged to Customer's Account No. ** 09922769863 ** at Bank's office. In the event securities are purchased for Customer's account as provided herein and collected funds are no made immediately available to Bank to pay for such securities, Bank may forthwith sell such securities in any manner it deems reasonable, but Customer shall remain liable for any deficiency from any such sale or any loss to Bank. In the event securities are sold by Customer which Customer does not own nor have position therein, and securities are delivered to Broker, Bank, or Dealer, proceeds from subject sale may be used to replace securities in any manner Bank deems reasonable, but Customer shall remain liable for any deficiency from any such sale or loss to Bank. 3 12. With respect to all securities held in book -entry form at the Depository Trust Company (DTC), however registered, it is understood that the voting rights and powers shall be exercised by Customer and not by Bank. Bank's only duties with respect to voting shall be to make a good faith effort to provide to such person as Customer shall designate the corporate reports and any proxy or other voting documents received, with the proxies respecting securities registered in the name of the nominee executed by such nominee and in each case where annual reports and proxy materials are not received directly by Customer or its nominee, Bank shall make good faith effort to obtain such annual corporate reports, financial statements, proxies, and related material and forward same to the person designated by Customer. 13. During the course of Bank's regular business hours, any officer or employee of Customer, an independent accountant selected by Customer, and any representative of an appropriate regulatory body shall be entitled to examine on Bank's premise, to the extent permitted by law, Bank's records relating to securities held subject to this Agreement, but only upon furnishing Bank with written instructions to that effect from a person duly authorized to act on behalf of Customer. 14. Bank shall be obligated to indemnify Customer for any loss of any of the Custodial Property deposited with the Bank occasioned by the dishonesty of Bank's officers or employees, or burglary, robbery, holdup, theft, or mysterious disappearance. Bank's responsibility for the acts of its employees during the term of their employment will not be diminished by virtue of the various capacities in which its employees are or could be acting, notwithstanding that such employees may from time to time be acting as general partners of a nominee of Customer. 15. (a) In the event that there is a loss of Custodial Property for which Bank is obligated to indemnify the Customer, the loss or the value thereof and the value of any loss of right or privileges which are vested and readily ascertainable from an external source resulting from said loss of securities shall be promptly replaced. (Bank shall make available to Customer such securities and value amounts.) Bank will not be liable for any failure to take any action required to be taken under this Agreement in the event and to the extent that the taking of such action is prevented or delayed by war (whether or not declared or existing), revolution, insurrection, riot, civil commotion, act of God, accident, fire, explosion, stoppage of labor, strikes or other differences with employees, laws, regulations, orders or other acts of any governmental authority, or any other cause whatever beyond the Bank's reasonable control. (b) Insurance for losses on the Custodial Property is limited in amount and covers money and negotiable securities owned by Bank and securities held for safekeeping. In the event of a loss, the amount recovered in insurance proceeds will be applied first against any loss of Bank property and the excess, if any, will be available for pro rata distribution to Customer and other customers against their losses. Customer may wish to purchase additional insurance at its own expense. 16. Any of Bank's agents shall have the same responsibility for, and be subject to the same liability for loss of, securities which have been redeposited with such agent as Bank has pursuant to paragraphs (14) and (151. 17. It is understood and agreed that Bank shall be under no duty to take any action other than herein specified with respect to any securities or other property at any time deposited hereunder unless specifically agreed to by Bank in writing, or to appear in or defend any suit by third parties with respect thereto unless requested by Customer in writing and indemnified to Bank's satisfaction. 4 18. Bank shall on request of Customer or government or agency or official of a body having jurisdiction over Customer, certify in writing the securities held by Bank as custodian for Customer. Such certification shall include the name of the issuer of each security, the CUSIP number of each security, the number of shares or units or original face value in which Customer has vested ownership, and specific uses or purposes for which such shares, units, or fact amount of any part thereof has been segregated as required by statute, law, or duly promulgated rule, _ Customer consents to any disclosure required pursuant to this section. 19. Bank shall promptly, in any event within five work days after notification of receipt of investment income or credit therefor generated form securities owned by Customer, held by Bank as custodian, physically credit any and all such investment income or credit. Further, the transmittal, deposit, or credit of the investment income, or credit therefor, shall identify the security that produced the income and provide sufficient information to facilitate the originating accounting entry on the books of the Customer. Bank shall credit the Customer Account No. ** 09922769863 ** at Bank's office. 20. Bank shall not pledge, hypothecate, or encumber in any mariner any of the Custodial Property of Customer held by Bank pursuant to this Agreement, nor shall Bank be permitted to use such Custodial Property for the benefit of the Bank. 21. In the event any state of federal governmental body having jurisdiction over Customer determines that this Agreement does not comply with the rules and regulations applicable to Customer, that the customer or practices of the parties hereto do not comply with said rules and regulations, then this Agreement shall immediately terminate and Bank and Customer will cooperate with such governmental body in complying with said rules and regulations. 22. Bank shall be paid compensation for its services pursuant to this Agreement such fees as may be mutually agreed from time to time, not to exceed Bank's published fee schedule. 23. Customer agrees to be responsible for all expenses, taxes, or other charges or liabilities incurred by Bank in connection with this account, and Bank is hereby authorized to charge the Account therefor. In addition, Customer agrees to be responsible for the preparation and filing of all regulatory and governmental reports, tax returns, and any other information required by law, rule, or regulation. 24. Either Customer or Bank may terminate this Agreement at any time upon thirty (30) days written notice to the other. Upon the expiration of said thirty (30) days, this Agreement shall cease, provided, however, that the Agreement shall continue thereafter for such additional period of time, if any, as may be necessary to complete the transfer to Customer or his designated agents of the Custodial Property. 25. Customer agrees to provide Bank promptly with such certificates as to matters of fact within the Customer's knowledge as Bank may reasonably request, including, but not limited to, a certification of the veracity of computer listings of securities and other assets comprising the Custodial Property held by Bank hereunder for the account of Customer, such certificates to be provided within thirty (30) days from the date of any request by Bank. 5 26. Customer agrees and undertakes to notify Bank within forty -five (45) days from the date of the occurrence of any error, inconsistency, or similar problems hereunder, such notification to be given in writing setting forth such details as are within Customer's knowledge relating to any aspect of such error, inconsistency or similar problem, and Bank and Customer undertake mutually to act promptly and in good faith to resolve all such matters. Error, inconsistencies, or similar problems not brought to the Bank's attention in forty -five (45) days shall be the sole responsibility of Customer, and Bank shall have no duty with respect thereto. Any undertaking by Bank to resolve any such matter shall not prejudice Bank's right to require at any time strict compliance with this section. 27. This instrument shall be construed and interpreted according to the laws of the State of Texas. 28. This Agreement shall not be assigned by either party hereto without the written consent of the other. 29. Except as specified in paragraph 30, below, this Agreement may be amended only by a written instrument signed by both of the parties hereto. 30. Bank will, from time to time, deliver to Customer, a list of available Enhancements, such Enhancements, such Enhancements constituting services which Bank will make available to Customer subject to execution of an appropriate Enhancement Agreement. The latest of such list delivered to Customer shall constitute Exhibit "B" hereto. Bank may add or delete from this list at any time, provided executed Enhancement Agreements shall remain in effect notwithstanding deletion of the subject services from Exhibit B. 31. All correspondence to Customer shall be addressed as follows: City of Round Rock ATTN: Elaine Wilson 221 E. Main Street Round Rock TX 78664 32. All correspondence to Bank shall be addressed as follows: Texas Commerce Bank Austin Office ATTN: Kathy McRae P 0 Box 550 Austin TX 78789 6 This agreement entered into this 15 day of 5teltiOar , 19 qq at Austin, Texas. SIGNED: TITLE: DATE: David Kautz Sept. 12, 1997 Director of Finance ACCEPTED BY TEXAS COMMERCE BANK N. A. AUSTIN OFFICE; VP & Managing O fic>r ott TITL : Strideepingl:ecarity Clearance L°.pt. DATE: SEP 15 1997 7 EXHIBIT A AUTHORIZATION FORM FOR SECURITY CLEARANCE AND SAFEKEEPING TRANSACTIONS CUSTOMER: City of Round Rock SAFEKEEPING ACCOUNT NUMBER: 107177 DEMAND ACCOUNT NUMBER: 09922769863 PHONE NUMBER: 512- 218 -5444 FAX NUMBER: 512- 218 -5442 Customer hereby designates the following persons as authorized signers with respect to the Customer's security clearance and safekeeping transactions. All of these signers are authorized to deliver oral or written instructions to Texas Commerce Bank N. A. Austin Office (Bank) for these transactions and Bank is fully entitled to act upon such instructions provided it acts in good faith. The person executing this Authorization Form on behalf of Customer certifies that the signatures appearing hereon are true and correct signatures of the persons indicated. All written authorizations must be signed by 1 authorized signers. Any 2 authorized signers may designate, in writing, additions or deletions from this list. � °""`-`J Name/Title Elaine S. Wilson /Acct. II Signature a24; Name/Title Cindy Demers /Acctg. Manager Signature Name/Title Jerry Galloway /Asst. Finance Signature Director Name/Title Kautz /Finance Director Signature Name/Title Signature Name/Title Signature Name/Title Signature The undersigned, executing and delivering this Authorization Form for and on behalf of the Customer, represents and warrants that he or she possesses all necessary authority to execute and deliver this Authorization Form and that it constitutes the binding undertaking of the Customer. Executed this BY: f 0 xxx YES NO September David,Kautz,� Director of Finance Customer's Duly Authorized Officer or Representative ,19 97 NV VINE FAX INSTRUCTIONS AUTHORIZED IN LIEU OF MAILED INSTRUCTIONS: /f MfdenMUliCD1.RlTE I •.:u:..e eta •SApwe.OMl AcornatL=Nal BMW . • HA„. cow . 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Boo 374 Ranh Service Ohm GO day. e1 M dove NA.mir• $M1M 2(070 n 1.1000- 187.pe= CITY OF ROUND ROCK, TEXAS REQUEST FOR APPLICATIONS DEPOSITORY AND BANKING SERVICES I. 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 three (3) years 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 pgs) 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 2:00 P.M. on Tuesday July 1, 1997, 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 returned unopened. 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 Govemment Code (attached hereto as Schedule F) 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 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, consistent with the policy guidelines adopted by the City Council regarding the selection of the Depository. 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. Depository services Application, Page 1 A. Submitting Applications B. Right to Reject Applications C. Authorization II. SPECIFICATIONS A. Background 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: June 9, 1997 (Mon) July 1, 1997 (Tues) August 14, 1997 (Thurs) August 20, 1997 (Wed) October 1, 1997 (Wed) David Kautz Director of Finance City of Round Rock 221 E. Main Street Round Rock, TX 78664 (512) 218 -5400 Depository Services Application, Page 2 B. Application Schedule of Events Specifications available for Applicants Applications returned to Director of Finance and opened: Council Chambers 2:00 PM 7:00 P.M.; Regular City Council Meeting. City Council will consider the selection of one or more Depositories Pre - service meeting with City staff and Depository representatives (including ordering deposit and withdrawal documents) Effective date of Contract(s). C. Qualifications for Applicants Cindy Demers Accounting Manager City of Round Rock 221 E. Main Street Round Rock, TX 78664 (512) 218 -5400 In order to be considered and selected as the City's Depository, Applicants shall have the following minimum qualifications: 1. Applicants shall offer within the City, full banking services , as described in section F. below. 2. Deposits shall be insurable 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 E. 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. 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 for the handling of City funds and banking services available to the City. E. Term of Contract The Contract will be for a period of three (3) fiscal years of the City commencing October 1, 1997, and ending September 30, 2000, 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 for an additional two (2) year period of time, 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 approved changes. Depositor) services Application. Page 3 F. Required Services Banking Function. The Depository shall accept deposits, provide for the safekeeping of those deposits, pay checks upon demand and provide other customary services. The Depository shall designate an Account Officer as a single point of contact for the City. Monthly Statements. The Depository shall prepare monthly statements showing debits (checks in ascending numerical sequence based on the pre - printed check number), credits (deposits by date) and balance of each separate account. Statements shall be provided to the City no later than ten (10) calendar days following the end of month cut -off. Canceled checks, deposit receipts and miscellaneous transaction documentation (e.g. deposit correction advices) shall be included in the monthly statements. 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. Bank Card Services. The Depository shall provide for the processing of VISA and Mastercard receipts, including deposits, charge backs, statement reporting and credit refunds. Returned Check Service. All returned checks shall be presented twice for payment and stamped by the Depository as being presented twice prior to return. Wire Transfer /ACH Services. The Depository shall maintain wire transfer capabilities of the Federal Reserve System for transactions with other financial institutions. Wire transfer debit and credit notices shall be provided to the City within three (3) banking days of the transaction. The Applicant shall indicate whether it can provide the City with electronic means to transfer funds via the Automatic Clearing House (ACH) for a direct deposit program. The Depository shall accept direct deposits to the City accounts from any government agency, accept letters of credit payment from governmental entities, including federal grant programs, and give immediate credits on such deposits. MiscellaneousServices. The following services may be required during the term of the Contract: (1) three -part deposit slips, (2) travelers/cashiers checks, and (3) the ability to move funds within the Depository. Stop Payment Services. The Depository shall accept stop payments issued by phone (with written confirmations to follow) or issued via electronic communication. All drafts from the City shall be void 90 days after issuance. Special Services. The Applicant shall indicate whether or not it is able to provide the following services to the City:Balance Reporting, Controlled Disbursements, Image Statements, Lock Box, Money Market Mutual Funds, Positive Pay. Locking Bank Bags. The Depository shall provide the following deposit bags upon request by the City: Depository Services Application, Page 4 Twenty -Five (25) 12" x 15" locking bag Fifteen (15) 6" x 11" zipper bag Safe Deposit Box. The Depository shall state whether it can provide a large commercial safe deposit box. Overdraft Protection. Although none is anticipated, overdraft balances shall be calculated using the aggregate of all City bank balances versus individual account balances. Other Services. From time to time the Depository shall provide assistance in various additional banking and financial matters, such as assistance in the collection of letters of credit and advisory services regarding investments and financial forecasts. 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. Additional Accounts. The City reserves the right to open additional demand accounts as needed during the term of the Contract. Depository Compensation. 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. 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 el seq, (see Schedule E) all City monies held by the Depository above the FDIC insurable limits shall be collateralized with securities pledged the City at 102% of the current market value. The amount of collateral will be determined by the City. Investments which may be pledged to secure City funds are governed by Chapter 105, Local Government Code (Schedule F) and Chapter 2257, Government Code (Schedule E). In addition to the foregoing, all monies shall be collateralized in accordance with the Investment Policy of the City, a copy of which is attached hereto as Schedule D. 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. Release of Collateral. No collateral will be withdrawn, released or substituted without the prior written consent of the City Director of Finance or his deputies. The City will release collateral only if it 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. Third Party Safekeeping. 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. H. Earned Interest Evaluations 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. I. Exceptions to Specifications 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. Depository Services Application. Page 5 J. Attachments The following attachments are hereby made a part hereof by reference: 1. Attachment A (2 pages) - Depository Services Application Form K. Schedules The following schedules are hereby made a part hereof by reference: 1. Schedule A (1 page) - Monthly Banking Transactions Statistics 2. Schedule B (1 page) - Account Analysis Review 3. Schedule C (1 page) - Mastercard/Visa Monthly Statement 4. Schedule D (20 pages) - City of Round Rock Investment Policy - 5. Schedule E (13 pages) - V.T.C.A. Government Code Chapter 2257 6. Schedule F (7 pages) - Texas Local Govt. Code Chapter 105 Depository services Application. Page 6 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 attached specifications and supporting schedules shall pay or charge the City as follows: Activi ATTACHMENT A CITY OF ROUND ROCK DEPOSITORY SERVICES APPLICATION FORM Account Maintenance Balance Reporting Fees Deposit Processing Fee Check Processing Fee Controlled Disbursements Statement Fee (printed) Image Statement Fee Bank Card Processing Fee Return Check Charge Re- cleared Items Incoming Wires Outgoing Wires ACH Services 3 -Part Cont. Checks 1 -Part Cont. Checks • Travelers/Cashiers Checks 3 -Part Deposit Slips Stop Payments Safekeeping Services Collateral/Pledge Fees Lock Box Services Locking Bank Bags Safe Deposit Box Overdraft Protection Monthly Unit Cost Total Cost 2. Applicant shall pay the City interest on demand account balances at the rate of Specify method of compounding. Additional comments: 3. Applicant may make short-term loans to the City for a maximum amount of $ at the prime interest rate (effective on the loan date) plus /minus ( + / -) basis points (Source: Wall Street Journal). All loans to the City shall be in the form of properly executed promissory notes for any legal purpose, as stated under present Texas laws. Depository services Application, Page 7 Additional comments: 4. Specify the maximum balance of demand deposits Applicant is willing to service and collateralize 5 Attach a separate page with any information regarding any and all fees and services affecting this Application or available to the City, not specifically addressed above. 6. Attach a copy of the latest financial statement which Applicant filed with the regulatory agency which has authority over the Applicant and a current credit ratings repoiR. 7. Based on Schedule B, please prepare a combined analysis statement assuming an average collected balance of $185,000. 8. Can Applicant provide the City with an electronic means to transfer funds? (Yes/No) If "Yes ", please describe: 9. Provide copies of all agreement forms that are expected to be executed if the Contract is awarded to your firm, for example: Collateral Services Agreement Controlled Disbursement Agreement Wire Transfer Agreement Balance Reporting Agreement Automatic Clearing House Agreement Safekeeping Agreement Banking Services Agreement Capital Markets Agreement APPLICANT: BY: TITLE: (signature) ADDRESS: CITY, ST.: TELEPHONE: DATE: Depository Services Application, Page 8 (typed or printed name) I. Number of Bank Accounts:6 - 9 2. Average number of transactions clearing: CHECKS DEPOSITS & DEBITS & CREDITS a. Operating Fund 872 160 b. Debt Service Fund 5 3 c. Reserve Fund 1 0 d. Payroll 1173 2 3. Mastercard/VISA Transactions: 4. Wire Transfers (Estimates only) a. Incoming: 5 b. Outgoing: 6 5. Number of Overdrafts: none to date, none anticipated 6. Number of Short Term Loans: none to date, none anticipated 7. Stop payments: 2 8. Returned Checks: 75 Depository Services Application, Page 9 SCHEDULE A MONTHLY BANKING TRANSACTIONS STATISTICS 5 50 Service Description YTD Ave. Credits Posted 160 Debits Posted 48 Checks Paid 824 Teller Deposit Processing 15 Change Order - Coin 33 Change Order - Currency 14 Encoding 13,985 Return Item 32 Return Item - Redeposit Reclear 70 On Us Items 2,248 Local City Clearinghouse 664 Local RCPC 5,943 Dallas Country 78 11th District - City 360 1 lth District - RCPC 1,498 FRB Cities 215 FRB RCPC & Country 1,229 Statewide Clearing House 1,691 Stop Pymts 1 Domestic Incoming Wires 4 Domestic Repetitive - Terminal (OUT) 6 Internal Transfers - Terminal 1 Wire Transfer Advices Mailed 11 Prev Day Drs /Crs - Terminal 220 Safekeeping Receipts 24 Security Settlements 5 Monthly Total 29,379 Analysis for Payroll Acct Service Description YTD Ave. Credits Posted 3 Debits Posted 372 ACH Credit Origination 801 ACH Data Transmissions 4 ACH Return Notice 2 Monthly Total 1,182 Analysis for Health Acct Service Description YTD Ave. Credits Posted 5 Debits Posted 284 Domestic Incoming Wires 0 Wire Transfer Advices Mailed 0 Monthly Total 290 City of Round Rock, Tex: s Account Analysis Review Analysis for Operating Acct p:\position\monthly \review wk4 SCHEDULE B CITY OF ROUND ROCK THERESA SIMS 221 E HAIN STREET ROUND ROCK, TX 5TORER 0000 78664 SCHEDULE C Mastercard /Visa Monthly Statement CLIENT NUMBER 000000504005 FUNDING REFERENCE CHECKING ACCOUNT TRANSFERS DATE 05/01/97 043455000001 DEPOSIT 043455000002 DEPOSIT TOTALFOR 05/01/97 15,789.00 05/04/97 041732000001 DISCOUNTSERVICE CHARGE 288.06- 041732000002 DISCOUNT /SERVICE CHARGE 427_2S- 041732000003 INTERCHANGE/ASSESSMENT 5.66 - 041732000004 FEE - 3.80- 724.77- TOTAL FOR 05/04/97 5,047.00 10,742.00 TOTAL TRANSFERS On /02/97 - 05104/97 32,842.23 DEPOSIT RECAP SALES CREDITS NET SALES DISCOUNT DISCOUNT AVERAGE CARD TYPE TICKETS AMOUNT TICKETS AMOUNT TICKETS AMOUNT PAID RATE TICKET MASTERCARD 93 13,652.00 1 49_00 92 13,603.00 0.00 147.86 VISA 132 20,249.00 5 285_00 127 19,964.00 0.00 157.20 TOTALS 225 33,901.00 6 334.00 219 33,567.00 0.00 153.27 WHEREAS, pursuant to Chapter 2256, Texas Government Code ( "the Act ") the City Council desires to adopt a written investment policy regarding the investment of City funds, and WHEREAS, the City Council has reviewed the attached written policy and has determined same to be in compliance with the Act, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS, That the attached written investment policy for the investment of City funds is hereby approved and adopted. RESOLVED this llth day of April, 1996. ATTEST: J E LAND, City Secretary C V,MOCS \xESOLUTi \4360 WPO /kg RESOLUTION NO. R- 96- 04- 11 -13B SCHEDULE D 1 i (�/ 4 A yvj CHARLES CUL•_ P , Mayor City of Round Rock, Texas mvpoi City of Round Rock, Texas Investment Policy March 6, 1996 SCHEDULE D City of Round Rock, Texas Investment Policy March 6, 1996 Section Page I. 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 9 Wire Transfer Authorizations Collateralization Requirement X. Portfolio Valuation and Reporting 10 Reporting Internal Controls External Audit XI. Quality and Capability of Investment Management 11 Training Limitation of Liability Ethics XII. Review and Amendment 12 XIII. Conclusion 12 Appendix Investment Strategy 13 Page 2 City of Round Rock, Texas Investment Policy March 6 , 1996 "I'm not as concerned about the return on my principal as I am about the return of my principal. " Will Rogers I. Introduction 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: I) 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 Page 3 this Policy, bond 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 and the Accounting Manager 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. 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 Page 4 securities with active secondary markets; and maintaining appropriate portfolio diversification. N. 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: 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; Page 5 4) Obligations of statcs,agcncies, counties, cities and other political subdivisions of any state rated as to investment quality by a nationally recognized investment rating firrn 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 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_ Page 6 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) States, Agencies, Counties, Cities and Other 35% 2) 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 270 days and the maximum allowable maturity shall be two years. — 2) Capital Project Funds 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. Page 7 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. Vil 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 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 fimi which sells investments to the City must execute a written instrument stating that the registered principal has received and thoroughly reviewed the Investment Policy of the City. The principal also must acknowledge that the firm Page 8 has implemented reasonable procedures and controls to preclude imprudent investment activities arising out of investment transactions conducted between the City and the firm. The Investment Officers may not buy any investment from a person who has not delivered to the City an instrument in substantially the form described above. The following institutions or firms 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). 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. 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. Call backs, (i.e. bank confirmation from a second employee), for all wires will be required by the City. Furthermore, a separate wire funds transfer agreement will be entered into between the City and the Depository bank. Pagc 9 B. 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 the market value plus accrued interest 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 safekeeping "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: X. Portfolio Valuation And Reporting A. Reporting 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. As required by law, the Investment Officers shall submit a written investment report 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. 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 and c. the ending book value and market value of the portfolio. 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 Page 10 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. XI. Quality and Capability of Investment Management A. Training It is the City's policy to provide training required by the Public Funds Investment Act 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 investient program, Pagc 11 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 d ynamic 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 270 days and restricting the maximum allowable to two 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 alternative to fixed maturity Page 13 investments.. 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 Page 14 the Capital Project 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. Pagc 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 • DATE: April 9, 1996 SUBJECT: City Council Meeting, April 11, 1996 ITEM: 13. B. Consider a resolution adopting the City of Round Rock Investment Policy and Investment Strategy. STAFF RESOURCE PERSON: David Kautz The 74th Texas Legislature recently passed House Bill 2459 enacting significant procedural and substantive changes in the manner in which public funds may be invested. The new law is applicable to all local governments, most state agencies holding funds outside of the state treasury , all interlocal investment pools, including TexPool and non - profit corporations. Among the more significant changes of the bill are the following: - in addition to a written investment policy, the City must now have a written investment strategy and a designated investment officer or officers. - the Council must conduct an annual review of its investment policy and investment strategy. - each investment officer of the City must attend formal training sessions. - the investment officers must submit quarterly reports to the Council and City Manager describing investment transactions and beginning market value and changes in market value of portfolio investments during the reporting period and stating compliance with the investment strategy. - the investment officers are prohibited from purchasing investments from brokers unless certain conditions are met by the brokers. - new restrictions are imposed on certificates of deposit, repurchase agreements, reverse repurchase agreements and mutual funds in order to qualify as authorized investments. - in addition to new requirements on all interlocal investment pools, additional new requirements are imposed on public funds investment pools, including a daily mark -to market of portfolio investments, a target of $1 net asset value for shares and maintenance of a rating of at least AAA or AAA -m by at least one nationally recognized rating agency. - absolute prohibition on certain types of investments is provided for in the new law A summary of the City investment policy and investment strategy are attached along with the actual documents. Item Subject Reference Section General Comments The Investment Policy is designed to provide an investment standard to guide the investment officers in conducting the day to day investment affairs of the City. The investment standard is established in concert with state law, prudence and suitability of investments for the City of Round Rock. 1. Statutory Authority - This policy is designed in accordance with the requirements of the Texas Government Code,Chapter 2256, the Public Funds Investment Act I• 2. Scope of the Policy - This policy and strategy apply to all funds owned by or held in trust by the City of Round Rock. This Policy is to be reviewed annually by the City Council. II. A. 3. Investment Officers - This policy designates investment officers for the City and these officers have specific responsibilities regarding the investment of funds. - The designated investment officers are the _ a. Director of Finance b. Assistant Director of Finance c. Accounting Manager II. C. 4. Investment Objectives for the City Investment Portfolio a Safety of Principal b. Adequate Liquidity III. 5. Investment Strategy - Each fund type must have a written investment strategy which is to be reviewed annually by the Council V. City of Round Rock Summary of Proposed Investment Policy and Investment Strategy 4/9/96 m.z„m. Investment Policy Summary Page 1 ins,,,, Investment Policy Summary Page 2 - A separate, written Investment Strategy is required (this Strategy is attached to the Investment Policy) 6. Authorized Investments - This section establishes the investment instruments which are acceptable to the City in accordance with state law - This section also emphasizes safety of principal, diversification of investments by type and maturity VI., pages 5 - 9 7. Relationships with Financial Institutions and Firms - This section provides a standard of care in selecting and dealing with financial institutions VII. 8. Custodial Safekeeping, Transaction requirements - This section provides for the minimum standard of safekeeping for investment securities VIII., IX. 9. Portfolio Valuation and Reporting requirements - This section requires certain valuation and reporting to be done by the Investment Officers. . X. 10. Investment Strategy - Establishes investment strategies by fund type. Appendix ins,,,, Investment Policy Summary Page 2 ORE :le 10 funds •t editor ttee's gency Irides tional nk on 3ritieS tid fo "lot be trities. 2. sta sh GENERAL GOVERNMENT Ch. 2257 Prior Laws: Acts 1967. 60th Leg., p. 915. ch 401. Acts 1979, 66th Leg.. p 310, ch. 143. § 1. SCHEDULE E Historical and Statutory Notes Vernon's Ann.Civ St art. 6252 -5a, § 2 Acts 1993. 73rd Leg., ch. 268. § 1 V.T.C.A., Government Code § 2256.103. § 2256.055. Deposit of Securities Purchased by State At the direction of .the state treasurer or the agency. a security purchased under this chapter may be deposited in trust with a bank or federal reserve bank or branch designated by the treasurer, whether in or outside the state. The deposit shall be held in the entity's name as evidenced by a trust receipt of the bank with which the securities are deposited. Amended by Acts 1995, 74th Leg., ch. 402, § 1, eff. Sept. 1, 1995. Historical and Statutory Notes Prior Laws: Vernon's Ann.Civ.St. art. 6252 -5a. § 3. Acts 1967, 60th Leg., p 915, ch. 401. Acts 1993, 73rd Leg., ch. 268, § 1 Acts 1979. 66th Leg.. p. 310, ch 143, § 2. V.T.C.A., Government Code § 2256.104. §§ 2256.056 to 2256.059. Deleted by Acts 1995, 74th Leg., ch. 402, § 1, eff. Sept. 1, 1995 [Sections 2256.060 to 2256.100 reserved for expansion] SUBCHAPTER C. PAYMENT FOR AND DELIVERY AND DEPOSIT OF SECURITIES PURCHASED BY STATE [DELETED] §§ 2256.101 to 2256.104. Deleted by Acts 1995, 74th Leg., ch. 402, § 1, eff. Sept. I, 1995 CHAPTER 2257. COLLATERAL FOR PUBLIC FUNDS SUBCHAPTER A. GENERAL PROVISIONS Section 2257.001. Short Title. 2 257.002. Definitions. 2 257.003. Chapter Not Applicable to Deferred Compensation Plans. 2 257.004. Conflict With Other Law. 2257.005. Contract Governs Legal Action. [Sections 2257.006 to 2257.020 reserved for expansion] SUBCHAPTER B. DEPOSITORY; SECURITY FOR DEPOSIT OF PUBLIC FUNDS 2 257.021. Collateral Required. 22 57.022. Amount of Collateral. 22 57.023. Collateral Policy. 22 57.024. Contract for Securing Deposit of Public Funds. 22 57.025. Records of Depository. 22 57.026. Change in Amount or Activity of Deposits of Public Funds. 545 Section SUBCHAPTER A. GENERAL PROVISIONS § 2257.001. Short Title This chapter may be cited as the Public Funds Collateral Act. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: Acts 1989, 71st Leg., ch. 627. 1 Vemon's Ann.Civ.St. art. 2529d, § 1. 546 GOVERNMENT CODE Title 10 [Sections 2257.027 to 2257.040 reserved for expansion] SUBCHAPTER C. CUSTODIAN; PERMITTED INSTITUTION 2257.041. Deposit of Securities With Custodian. 22.57.042. Deposit of Securities With Permitted Institution. 2257.043. Depository as Custodian or Permitted Institution. 2257.044. Custodian as Bailee. 2257.045. Receipt of Security by Custodian. 2257.046. Books and Records of Custodian; Inspection. 2257.047. Books and Records of Permitted Institution. 2257.048. Attachment and Perfection of Security Interest. [Sections 2257.049 to 2257.060 reserved for expansion] SUBCHAPTER D. AUDITS AND EXAMINATIONS; PENALTIES 2257.061. Audits and Examinations. 2257.062. Penalties. 2257.063. Mitigating Circumstances. 2257.064. Reinstatement. [Sections 2257.065 to 2257.080 reserved for expansion] SUBCHAPTER E. EXEMPT INSTITUTIONS 2257.081. Definition. 2257.082. Funds of Exempt Institution. 2257.083. Investment; Selection of Depository. Cross References Water districts, general fiscal provisions and depository regulations, see V.T.C.A., Water Code 5 49.156. § 2257.002. Definitions In this chapter: (1) "Bank holding company" has the meaning assigned by Section 1.002(a), -Texas Banking Act. (2) "Board" means the State Depository Board. (3) "Control" has the meaning assigned by Section 1.002(a), Texas Bank- ing Act.' 22 ( d (: . f C } ms Co Te in< Ec in GENERAL GOVERNMENT § 2257.002 Ch. 2257 (4) "Deposit of public funds" means public funds of a public entity that: (A) the state treasurer 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. (5) "Eligible security" means: (A) a surety bond; (B) an investment security; or (C) an ownership or beneficial interest in an investment security, other than an option contract to purchase or sell an investment security. (6) "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 (C) a security in which a public entity may invest under Subchapter A, Chapter 2256. (7) "Permitted institution" means: (A) a Federal Reserve Bank; (B) a clearing corporation, as defined by Section 8.102(c), Business & Commerce Code; (C) a bank eligible to be a custodian under Section 2257.041; or (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. (8) "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. (9) "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. (10) "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. (1 "Trust receipt" means evidence of receipt, identification, and record - ing, including: (A) a physical controlled trust receipt; or 547 § 2257.002 GOVERNMENT CODE Title 10 (B) a written or electronically transmitted advice of transaction. ' Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, § 5.48(a), eff. Sept. 1, 1995; Acts 1995, 74th Leg., ch. 914. § 5. eff. Sept. 1, 1995. r Vernon's Am.Civ.St. art. 342- 1.002(a). Acts 1995, 74th Leg., ch. 76, to conform to Acts 1993, 73rd Leg., ch. 234, § 2, in subd. (6)(B), deleted subparagraph designations and deleted subpars. (ii) and (iii), which previously read: "(8) is rated as to investment quality by a nationally recognized rating agency; and "(iii) has a current rating of not less than A or its equivalent; or" Acts 1995, 74th Leg., ch. 914, in subds. (1) and (3), substituted "Section 1.002(a), Texas § 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 treat- ment 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, § 1, eff. Sept. I, 1993. Prior Laws: Acts 1989, 71st Leg., ch. 627. Vernon's Ann.Civ.St art. 2529d, § 11(c). § 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, § 1, eff. Sept. I, 1993. Prior Laws: Acts 1989, 7Ist Leg., ch. 627. Vernon's Ann.Civ.St. art. 2529d, § 11(a). Historical and Statutory Notes Historical and Statutory Notes Historical and Statutory Notes 548 Banking Act." for "Article 2, Chapter 1, The Texas Banking Code (Article 342 -102, Vernon's Texas Civil Statutes)." Prior Laws: Acts 1989, 71st Lcg., ch. 627. Acts 1993, 73rd Leg., ch. 234, § 2. Vernon's Ann.Civ.St. art. 2529d, § 2(1) to (4), (6) to (11). Acts 1995, 74th Leg., ch. 76, § 5.48(b). Acts 1995, 74th Leg., ch. 426, § 32(2). § 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, § 1, eff. Sept. 1, 1993. 4.+ PO" La, Acts 1` p Veror U: E T1E1 hi 225 § 225 'A de and in Added 1 Prior La Acts 1 Vemo § 225 (a) be in (1 (2 Unit (b) (c) Added Prior L Acts 1 Vernc . § 22° (a) ' the pt eligibl (b) (1 sect GENERAL GOVERNMENT Ch. 2257 Prior Laws: Acts 1989. 71st Leg.. ch. 627 Vernon's Ann.Gv St. art 2529d. § 7. [Sections 2257.006 to 2257.020 reserved for expansion) SUBCHAPTER B. DEPOSITORY; SECURITY FOR DEPOSIT OF PUBLIC FUNDS § 2257.021. Collateral Required 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, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: Acts 1989, 7Ist Leg., ch. 627. Vernon's Ann.Civ.St. an. 2529d, § 3. § 2257.023 § 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: (1) increased by the amount of any accrued interest; and (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, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes Prior taws: Acts 1989, 71st Leg.. ch. 627. Vernon's Ann.Civ.St. art. 2529d, § 4. Historical and Statutory Notes § 2257.023. Collateral Policy (a) In accordance with a written policy approved the public entity, a public entity shall determine if eligible to secure deposits of public funds. (b) The written policy may include: (1) the security of the institution that obtains security; 549 by the governing body of an investment security is or holds an investment § 2257.023 (2) the substitution or release of an investment security; and (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, § 1, eff. Sept. I, 1993. Prior laws: Acts 1989, 7Ist Leg., ch. 627. . Vemon's Ann.Civ.St. art. 2529d, § 5(a). § 2257.024. Contract for Securing Deposit of Public Funds (a) A public entity may contract with a bank domiciled 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 deposit of public funds is valued. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Prior Laws: Acts 1989, 71st Leg., ch. 627. Vemon's Ann.Civ.St. art. 2529d, § 5(b). Historical and Statutory Notes Historical and Statutory Notes § 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 board 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, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: Acts 1989, 7Ist Leg., ch. 627. Vemon's Ann.Civ.St art. 2529d, § 9(a). (c). 550 . GOVERNMENT CODE Tide 10 2 22 AS ubli t thi Adds Xce Ver §2 (a nti 105 tha dep ple sha C; pul ( GENERAL GOVERNMENT § 2257.041 Ch. 2257 § 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. § 1, eff. Sept. 1. 1993. Historical and Statutory Notes Prlor Law.. Acts 1989. 71st Leg.. ch. 627. Vernon's Ann.Civ.St. art. 2529d. § 5(c). [Sections 2257.027 to 2257.040 reserved for expansion] SUBCHAPTER C. CUSTODIAN; PERM111BD INSTITUTION § 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 n secure other a than a state agency shall deposit with a custodian a security pledged to deposit of public funds. (c) A pledged os l deposit secure a deposit of public funds. The s cus custodian and thcustodian tate agency shall agree in writing on the terms and conditions for securing a deposit of public funds. (d) A custodian must be approved by the public entity and be: (1) a state or national bank that: (A) is designated by the board as a state depository; (B) is domiciled in this state; and (C) has a capital stock and permanent surplus of $5 million or more; (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, § 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 1010, § 1, eff. June 17, 1995. 551 1 § 2257.041 The 1995 amendment, in subsec. (d), deleted "or" in subd. (2), added "or" in subd. (3), and added subd. (4). Prior Laws: - Acts 1989. 7Ist Leg., ch 627. § 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 docu- ment that is evidence that the custodian deposited the security in the permitted institution. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Prior Laws: Acts 1989, 71st Leg., ch. 627. Vemon's Ann.Civ.St. art 2529d, § 6(e). Historical and Statutory Notes Historical and Statutory Notes GOVERNMENT CODE_: Title 10 Vernon's Ann.Civ.St. art. 2529d, § 6(a) to (c), § 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 fluids by a state agency. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: Acts 1989, 71st Leg., ch. 627. Vemon's Ann.Civ.St. art. 2529d, § 6(a), (b). 552 g(tiERAL GO 2257 2257.044. ( A custoth ti tution h whether acting e e or agen w ith the depo of s (b) To the e: Business & Co Added by Acts I Prior Laws: Acts 1989, 7101 Vemon's Ann.0 • § 2257.045 t' On receipt (1) imme -, method, tht (2) prom trust rcceip Added by Acts Prior Laws: Acts 1989.71 Vernon's Ann § 2257.041 (a) A pub complete rec tion relating (b) The be time a pledg section. Th s• security evic (c) The p in the manr Added by Ac• nent cure rent shall Lion; shall locu- . the .. or an of or ,sit of lot be ;es to § 2257.046 GENERAL GOVERNMENT Ch. 2237 § 2257.044. Custodian as Bailee to an (a) A custodian under this chapter or a custodian of a security pledged institution of higher education, as defined by Section 61.003, Education e ode, 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 the depository. (b) To the extent any conflict,'Subsection (a) prevails over Chapter 8 or 9, Business & Commerce Code. Added by Acts 1993, 73rd!eg., ch. 268, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: Act. 1989, 71st Leg., ch. 627. Vernon's Ann.Civ.SL an. 2529d. § 8. § 2257.045. Receipt of Security by Custodian On receipt of an investment security, a custodian shall: (1) immediately identify on its books anb entity; and bo k entry or another method, the pledge of the security public (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, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes Priar Laws: Acts 1989. 71st Leg., ch. 627. Vernon's Ann.Civ.St. art 2529d, § 6(d). § 2257.046. Books and Records of Custodian; Inspection (a) A public entity's tour pled d investment securiity t and each complete record relating transa - g tion relating to a pledged investment security. (b) The board 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 board in the manner and on the dates prescribed by the board. Added by Acts 1993, 73rd Leg., ch. 268, § 1, elf. Sept. I, 1993. 553 § 2257.046 Prior taws: Acts 1989, 71st Leg , ch. 627. Historical and Statutory Notes § 2257.047. Books and Records of Permitted Institution (a) A permitted institution may apply book entry procedures when an invest- ment 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, § 1, eff. Sept. 1, 1993. Prior Laws: Acts 1989, 71st Leg., ch. 627. Vernon's Ann.C:.St. art. 2529d, § 6(e). Prior Laws: Acts 1989, list Leg., ch. 627. Vernon's Ann.Civ.St. art. 2529d, § 8. Historical and Statutory Notes § 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 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, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes GOVERNMENT COD * Title 10, Vernon's Ann.Civ.St. art 2529d, 55 6(d), 9(b). (5), (e). [Sections 2257.049 to 2257.060 reserved for expansion] SUBCHAPTER D. AUDITS AND EXAMINATIONS; PENALTIES § 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 main- tained under Section 2257.025 or 2257.046; and (2) report any significant or material noncompliance with this chapter to the board. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. 554 2457 � LOW°. Acts 1989.' Vernon's A § 1 22 57.0 (a) The one year i the deposi (1) di (2) fa after re. 1 (b) The depositor (1) h (2) h Added by Prior Law: Acts 196 Vernon'' § 225' (a) T1 mance by Sect isolatec (b) T reasons public (c) T secure manne deposi Added Prior L Acts Vern DE's tp, 'i1 «b). xt - the: .on. to :her 2es, the and s of .tory to GENERAL GOVERNMENT Ch. 2257 Prior Laws: Acts 1989, 71st Leg , ch. 627. Vernon's Ann.Civ.St. art. 2529d, § 9(d). Historical and Statutory Notes § 2257.062. Penalties (a) The board may revoke a depository's designation as a state depository for one year if, after notice and a hearing, the board makes a written finding that the depository, while acting as either a depository or a custodian: (1) did not maintain reasonable compliance with this chapter; and (2) failed to remedy a violation of this chapter within a reasonable time after receiving written notice of the violation. • (b) The board may permanently revoke a depository's designation as a state depository if the board 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, § I, eff. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: A89. st Lg.. ch 627. V cts erno s Ann e Sr. art. 2529d, § l0(a). (6). § 2257.063. Mitigating Circumstances (a) The board shall consider the total circumstances relating to the perfor- mance of a depository or custodian when the board makes a finding required by Section 2257.062, including the extent to which the noncompliance is minor, isolated, temporary, or nonrecurrent. (b) The board 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, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: Acts 1989, 71st Leg.. ch. 627. Vemon's Ann.Civ.St. art. 2529d, § 10(d). (e). 555 § 2257.063 § 2257.064 GOVERNMENT CODE. Tide lo, § .2257.064. Reinstatement The board may reinstate - a depository's designation as a state depository if: (1) the board determines that the depository has remedied all violations of this chapter; and (2) the depository assures the board to the board's satisfaction that the depository will maintain reasonable compliance with this chapter. Added by Acts 1993, 73rd Leg., ch. 268, 5 1, eff. Sept. 1, 1993. - Historical and Statutory Notes Prior Laws: Acts 1989, 71st Leg., ch. 627. Vemon's Ann.Civ.St. art. 2529d, § 10(c). [Sections 2257.065 to 2257.080 reserved for expansion] SUBCHAPTER E. EXEMPT INSTITUTIONS § 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 defined by Section 15.01, Education Code. Added by Acts 1993, 73rd Leg., ch. 268, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes Prior Laws: - Acts 1989, 71st Leg., ch. 627. ' - Vernon's Ann.Civ.SL art. 2529d, § 2(5). § 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 (2) the governing body of the institution, in exercising its fiduciary respon- sibility, 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, § 1, eff. Sept. 1, 1993. 556 y258 laws: Acti 1989. (Vernon's A 2257.( t.: This chi et (1) Pr of depot (2) rc : exempt Added by Prior Lows . Acts 1985 Vernon's . Section . 2258.001 2258.002. 2258.003 2258.021 2258.022 2258.023 2258.024 2258.025 2258.02E SU f. 2258.05 2258.05 2258.05 2258.05 2258.05 2258.05 2258.05 2258.05 7r ' 0 f P GENERAL GOVERNMENT Ch. 2258 Prlor Laws: Acts 1989. 71st Leg, ch 627 Vernon's Ann Civ.St. art. 2529d. 5 11(13). Historical and Statutory Notes § 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, § 1, eff. Sept. 1, 1993. Historical and Statutory Notes - Prior Laws: Acts 1989. 71st Leg., ch. 627. - Vemon's Ann.Civ.St. art. 2529d, § 11(13). • CHAPTER 2258. PREVAILING WAGE RATES SUBCHAPTER A. GENERAL PROVISIONS Section 2258.001. Definitions. 2258.002. Applicability of Chapter to Public Works. 2258.003. Liability. [Sections 2258.004 to 2258.020 reserved for expansion] SUBCHAPTER B. PAYMENT OF PREVAILING WAGE RATES 2258.021. Duty of Governmental Entity to Pay Prevailing Wage Rates. 2258.022. Determination of Prevailing Wage Rates. penal 2258.023. Prevailing Wage Rates to be Paid by Contractor and Subcontractor; Penalty. =Y 2258.024. Records. 2258.025. Payment Greater Than Prevailing Rate Not Prohibited. 2258.026. Reliance on Certificate of Subcontractor. (Sections 2258.027 to 2258.050 reserved for expansion] SUBCHAPTER C. ENFORCEMENT; CIVIL AND CRIMINAL PENALTIES 2258.051. Duty of Public Body to Hear Complaints and Withhold Payment. n -; • ^' 2258.052. Complaint; Initial Determination. a if z;? 2258.053. Arbitration Required for Unresolved Issue. 2258.054. Arbitration Award; Costs. m , > 3 2258.055. Arbitration Decision and Award Final. . .. 2258.056. Payment by Public Body to Worker; Action to Recover Payment. 2258.057. Withholding by Contractor. 2258.058. Criminal Offense. 557 placing the funds in time deposit accounts with one or more depository banks of the municipality Acts 1987. 70th Leg.. ch 149, 9 1. eff Sept. 1, 1997. § 104.01(3. Effect of Early Withdrawal • If any of the funds placed in Hine deposit accounts are required before maturity, they shall be made available by the depository bank. but the bank is not liable for interest earned on any amount uithdtawn before maturity. Acts 1057. 70th Leg., ch. 149.9 1, eff. Sept. 1. 1987. § 104.004. Interest The municipal official responsible for managing and conducting the fiscal affairs shall receive the interest earned on the investments and shall place the interest in the municipal general fund as compensation to the municipality for holding and handling the trust funds and special deposits for the benefit of the persons ultimately entitled to receive the funds and deposits. Acts 1987, 70th Leg., eh. 199, 4 1, eff. Sept. I, 1987. § 104.005. Cumulative Effect With Charter Provi- sions This chapter is cumulative of the municipal powers of investment derived from the municipal charter. Acts 1987, 70th Leg, ch. 199, 4 1, eff. Sept. 1, 1987. CHAPTER 105. DEPOSITORIES FOR MUNICIPAL FUNDS SUBCHAPTER A. GENERAL PROVISIONS Section 105001. Definitions. se 105002. Funds Affected. ra [Sections 105.003 to 105.010 reserved for expansion] SUBCHAPTER B. ESTABLISHMENT OF DEPOSITORY 105.011. Depository Authorized. 105.012. Notice. 105.013 Application. .nd 105.014. Review of Applications. itt• 105.015. Selection of Depository. 105.010. Designation of Depository. 105.017. Term of Depository Contract. 105.018. Additional Scr•ieto. [Sections 1(1:5.0111 to 101.030 ieiervt)d for expansion] SUBCHAPTER 1'. SECIMITY FOR FUNDS 111•:1.1) BY DEPOSITORY it: 1 05.031. Qualification as DeposnmS. 105032. 1'cr -find Bond. r s 105.0:33. Sin ety Bond. sing 1 05.034. Conditions to Acting as Depository. • bt 105.035 to 105.037. Deleted. nd. 01. unc atdl h'u't SCHEDULE F FINANCES 10.001 Section [Section. 103 (118 10 1(15.050 : esentd for expansion] SUBCHAPTER D. MAINTENANCE AND MODIFICATION OF SECURITY 1071(51. Maintenance of Secm ity. 107.052. Sohency of Personal Surety. 105.053. Sohency of Surety Company and Adequacy of Seemities. 105.054. Surrender of Intel est on Securities. 103.055 to 105.057. Renumbered. [Sections 105.058 to 1.05.070 reserved for expansion] SUBCHAPTER E. DEPOSITORS' ACCOUNTS 105.071. Character and Amount of Deposits. 105.072. Investments. 105073. Deposit of Funds. 105.074. Payment of Funds. 105.075. Checks Payable at Depository. 105.070. Debts Payable Other Than at Municipal Treasury. [Sections 105.077 to 105.090 reserved for expansion] SUBCHAPTER F. LIABILITY AND REPORT OF DESIGNATED OFFICER 105.091. Liability of Designated Officer. 105.092. Report by Designated Officer. SUBCHAPTER A. GENERAL PROVISIONS § 105.001. Definitions In this chapter: (1) "Bank" means a state bank or a national bank domiciled 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 depos- itor. (9) "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 sub- ject to a contract between the depositor and the depository under which the depositor may not with- draw 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 accor- dance with the tot ms of a depository services 005 - u•act. (7) "Depository services contract" means a con- tract executed by a municipality and a depositor; containing terms and conditions relating to the de- pnsitury services to be provided by the depository. 115 i 11 1 4 § 105.001 LOCAL GOVERNMENT CODE (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 sav- ings and loan association or a savings bank orga- nized under federal law. (11) "National bank" means a banking corpora- tion organized under the provisions of 12 U.S.C. Section 21. (12) "Savings association" means a state savings association or a federal savings association domi- ciled in this state. (13) "State bank" has the meaning assigned by Section 1.002(a), Texas Banking Act. (14) "State credit union" means a credit union organized under the Texas Credit Union Act (Arti- cle 2461 et seq., Vernon's Texas Civil Statutes). (15) "State savings association" means any sae : ings and loan association or savings bank organized under the laws of this state. Acts 1987, 70th Leg., ch 149, § 1, eff. Sept. 1, 1987. Amend- ed by Acts 1993, 73rd Leg, eh 234, § I, eff. Sept. 1, 1993; Acts 1995, 74th Leg, ch 914, § 9, eff. Sept. 1, 1995. § 105.002. Funds Affected This chapter applies to the funds, including school funds, of any municipality or any department or agen- cy of the municipality. Acts 1587, 70th Leg., ch 149, 0 1, elf. Sept. 1, 1987. Amend- ed by Ach, 1993. 73r1 Leg, ch. 234. 5 1. eff. Sept. 1, 1993. [Sections 105.00.3 to 105.010 reserved for expansion] SUBCHAPTER B. ESTABLISHMENT OF DEPOSITORY § 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 de- pository services fi on, one or more hanks, credit union., ur savings associations (b) The governing body may consider the applica- tion of a hank, credit union, or savings association that is not doing business within the municipality if: (I) 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 116 (2) the governing body, prior to pm•urg the nun„ required by Section 105.012, has adopted .1 wrutet policy expressly permitting the consideration of ,q, plications received by the municipality from a haul credit union, or savings association that is not doire business within the municipality, after taking nu. consideration what is in the best interest of 11, municipality in establishing a depository. (c) The designated officer shall request, recta ,• and review applications for the performance of depo -i 'tole services. The designated officer shall present the specifications of each application to the gocermrc body who will then select a depository. Acts 1987, 70th 1.g., eh. 149, 0 1, eff. Sept 1, 1987. Amcc.I ed by Acts 1989, 71st Leg., ch. 1, § 14(a), eff. Aug. 28. 19 , Acts 1993, 73rd Leg.. ch. 234, § 1, eff. Sept. I, 1993. § 105.012. Notice (a) The designated officer shall give notice 0. banks, credit unions, and savings associations r•eque' l- ing the submission of applications for the performan of depository services. (b) The notice must contain: (1) the name and address of the designated olti cer receiving the applications; (2) the date and time the applications are to 1' received by the designated officer; and (3) the date, time, and place the governing hod) of the municipality will consider the selection of one or more depositories. (c) Notice of the request shall be published at lea -t once no later than 21 days prior to the deadline f n receipt of applications for depository services con tracts (i) in a newspaper of general circulation in 1hi municipality and (ii) in a financial publication of gener- al ch culation published within this state; in °vide that the notice requited by clause (ii) shall not 1■ required if the governing body has not adopter) the written policy described in Section 105.011. Acts 1957. 70th Leg., ch. 149, § 1, eff. Sept. 1, 1987. Amara ed by Acts 1993, 73rd Leg , ch. 234, 4 1, eff. Sept. 1, 1091 § 1115.013. Application The designated officer may not consider an appla lion if it is received alter the date specified in dr notice for receiving applications by the designao•'l officer. Atto 19877, 70th l.eg., eh. 119, 9 I. MT. Sept I, 1997. Aeo'i ed by Act. 15192, 7301 Leg , rh 234. 9 1, eft. Sept. I, I7'' 10 "a9 : In r shall c 'prance :cost 0 ,` consist gorerr deposi Acts 19 'ed by . for r t 3 �en ,1., 105. (a) thoriz z; ipality ' -'tracts (b) r tion (c) (' :Added 1987. 1993, Acts ( Afor 241. 105 - -r sx (a) ts,1ec0rr • ' 9ai>,inl 4 none (b) r "select sec rr 105.9; '.,'savinl gover to be : applic ' Added 1987. 199[1, 105 AI any d exce § 1115.014. Review of Applications In reviewing the applications, the designated officer .hall consider the terms and conditions for the perfor- mance of depository services, including the type and cost of services to be provided to the municipality, consistent with any policy guidelines adopted by the gnvernmg body regarding the selection of one or mot e depositories. Acts 1937, 70th Leg., eh. 149, § 1, eff. Sept. 1, 1987. Amend- ed by Acts 1993, 73rd Leg., ch. 234, § 1, eff. Sept 1, 1993. A former § 105 014 was renumbci el as 9 103 015 by the 14'13 emendatory act. § 105.015. Selection of Depository (a) The goverrting body of a municipality may au- thorize the designated officer to execute on the munic- ipality's behalf one or more depository services con- tracts. (b) The governing body may reject any of the appli- cations and readvertise if all applications are rejected. (c) The conflict of interests provisions of Section 131.903 apply to the selection of the depositolios. .Added by Acts 1987, 70th Leg., ch 149, § 1, eff. Sept. 1, 1987. Renumbered from § 105.014 and amended by Acts 1093, 73rd Leg., ch. 234, § 1, eff Sept. 1, 1993. Amended by Acts 1993, 73rd Leg, ch. 268, § 25, eff. Sept. 1, 1993. A fosse § 105.015 was renumbered as § 105 016 by Acts 1993, ch 334. § 105.016. Designation of Depository (a) The governing body shall designate, by an order t ecorded 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. § 1. eff. Sept. 1, 10 7. Renumbered from § 105 015 and amended by Acts 1993, 73rd Leg, ch 234, § 1, eff. Sept 1, 1993. 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. FINANCES § 105.032 117 may only contain terms and conditions approved by the governing body of the municipality. Added by Acts 1993, 73rd Leg., ch 234. § 1, eff. Sept. 1, 1093. § 1)15.018. Additional Services In addition to depository servires, a municipality may contract with financial institutions, including hanks, 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 534, § 1, eft_ Sept 1, 1993. [Sections 105.019 to 105.030 reserved for expansion] SUBCHAPTER C. SECURITY FOR FUNDS HELD BY DEPOSITORY § 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 deposito- ry 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 meth- od 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 combi- nation 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 1937, 70th Leg, eh. 149, § 1, eff. Sept 1, 1987. Amend- ed by Acts 1993, 73rd Leg., ch. 234, § I, eff. Sept. 1, 1993; Acts 1995, 74th Leg, ch. 76, § 595(12), eff. Sept. 1, 1995. § 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: (1) the bonds are signed by at least five solvent sureties who: (A) aim unencumbered real property in the slate that has a value at least equal to the amount of the bonds and that is not exempt from execu- 1 fi 105.032 LOCAL GOVERNMENT CODE. tion under the constitution and other laws of this state; or (13) 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 Subsec- tion (a)(1)(A), the sureties shall also file with the governing body a statement containing: (1) a description of the unencumbered and nonex- empt 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 Subsec- tion (a)(I)(B), the sureties shall also file with the governing body or designated officer of the municipal- ity an itemized and verified financial statement show- ing 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. Acts 1987, 70th Leg, ch. 149, § 1. eff. Sept. 1, 1987. Amend- ed by Acts 1993, 73rd Leg., eh. 234, § 1, eff. Sept. 1, 1993. 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 sub- chapter 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.. eh. 149, § 1, e0'. Sept. 1, 1987. Amend- ed by Act 1993. 73131 Leg., ch 234, § 1, etc. Sept. 1. 1993. )t 105.031. Conditions to Acting as Depository (a) The depository shall: (1) keep the municipal funds covered by the de- pository services contract; (2) perform all duties and obligations imposed on the depository by law and under the depository services contract; 118 (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 lei el required by the provisions of Chapter 2257, Govern- ment Code; and (6) account for the municipal funds as required by law. (b) Any suit brought in connection with a deposito- ry services contract must be tried in the county in which the city hall of the municipality is located. Acts 1987, 70th Leg, ch. 149, § I, eff. Sept. 1, 1987. Amend- ed by Acts 1993, 73rd Leg., ch. 234, 1 1, eff. Sept. 1, 1993: Acts 1995, 74th Leg., ch. 76, § 5.95(12), eft Sept. 1. 199.1 00 105.035 to 105.037. Deleted by Acts 1993, 73rd Leg., ch. 234, § 1, efL Sept. 1, 1993 [Sections 105.038 to 105.050 reserved for expansion) SUBCHAPTER D. MAINTENANCE AND MODIFICATION OF SECURITY § 105.051. Maintenance of Security (a) A depository services contract shall contain terms and conditions relating to the possession, sub- stitution, 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; (3) releasing securities pledged by a depository in excess of the amount required by this chapter; (4) the time period in which such addition, substi- tution, or release of security by a depository may occur; and (5) other platters relating to the possession, sub- stitution, 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, sub- stitution, 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, § 1, e0: Sept. 1, 1987. Amend- ed by Acts 1993. 73rd Leg., ch. 234, § 1, eff. Sept. 1, 199:3 § 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 solven- cy 0 the a st state posit real own, (b requ the . men: t.; At } consir pality office Al,: that is 1)r` or im depos 3 - Added 1987. 1993, § 105. Exe 1' the m 5° 2257, deposi due, it secutil erning deposi this et Added . 1987. 1993, 7: Acts I! re, is dis rei ert chi �- Adder '1087. 1993, § 101 7 e y 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 ,Lilemenl accurately showing the smely's financial position anti, if the bond requires the surety to own ear property, identifying each tract of reel property owned by the sm ety and stating its value. fb) The governing body of the municipality shall require a depository to provide a new bond meeting the requirements of this 'chapter if a financial state- ment 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 emaining unencumbered and nonexempt real prop- erty is insufficient to meet the requirements of this chapter. Added by Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept. 1, 1987. Renumbered from § 105.055 and amended by Acts 1993, 73rd Leg, ch. 234, § 1, eff. Sept. 1, 1993. 5 105.053. Solvency of Surety Company and Ade- quacy of Securities At any time the governing body of the municipality considers it necessary for the protection of the munici- pality, 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 depository to secure municipal funds. .Added by Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept. 1, 1987. Renumbered from § 105.056 and amended by Acts 1993, 73rd Leg., ch. 234, § 1, eff. Sept. 1, 1993. 5 105.054. 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 > ecurities deposited by the depository with the gov- erning 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. § 1, eff. Sept. 1. 1937. Renumbered from § 105.057 and amended by Act; 1993. 73rd Leg., ch. 234, § 1, eff. Sept 1. 1993. Amended by Acts 1995, 74th Leg.. ch. 78. § 5.95(121. eff. Sept. 1, 1995. FINANCES § 105.074 119 *5 105.055 to 105.057. Renumbered as 88 1(15.052 to 1115.054 by Acts 1993, 73rd Leg., ch. 234, § 1, eft Sept 1, 1993 'Sections 105.058 to 105.070 reserved for expansion' SUBCHAPTER E. DEPOSITORY ACCOUNTS 105M71. 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 munici- pality 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 de- pository for interest on time deposits, including, with- out limitation, certificates of deposit, at any legal rate under federal or state law, rule, or regulation. Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept_ 1, 1987. Amend- ed by Acts 1993, 73rd Leg., ch. 234, § 1, eff. Sept. 1, 1993. § 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, § 1, eff. Sept. 1, 1987. Amend- ed by Acts 1993, 73rd Leg., ch. 234, § 1, eft Sept. 1, 1993; Acts 1995, 74th Leg, eh. 76, § 5.95(11), eff. Sept. 1, 1995. § 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 mu- nicipality shall as soon as practicable also deposit in the 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, § 1. eff. Sept. 1, 1987. Amend- ed by Acts 1993, 73rd Leg., eh. 234, § 1, eff. Sept 1, 1993. § 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 . § 105.074 LOCAL GOVERNMENT CODE (b) Except as provided in Subsection (g), a desig- nated 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 presenta- tion of the warrant shall draw a check on the deposito- ry 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 con- tract 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 indebted- ness of the municipality other than to pay the princi- pal 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 munici- pality 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 (t), the governing body of a municipality may adopt procedures: (1) governing the method by which the designat- ed officer is authorized to direct payments from the funds of the municipality on deposit with a deposito- ry; (2) governing the method of payment of obli- gations 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 accor- dance with Subsection (g), a copy of the adopted procedures shall be filed with the depository. The designated officer and the depository shall agree upon record- keeping safeguards and other measures neces- 120 say to ensure the safety and integrity of the payment process. The safegum ds 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 Sub. section (g). Acts 1987, 7015 Leg, ch. 149, § 1, eff. Sept. 1, 1987. Amend. ed by Acts 1993, 7:3rd Leg., ch. 234, § 1, eff. Sept. 1, 1993. § 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. § I, eff. Sept. 1, 1987. Amend- ed by Acts 1993, 73rd Leg., ch. 234, § 1, eff. Sept. 1, 1993 § 105.076. Debts Payable Other Than at Munici- pal 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 redemp- tion prior to maturity at the other location. Acts 1937, 7015 Leg., ch. 149, § 1, eff. Sept 1, 1987. Amend- ed by Acts 1993, 73rd Leg, ch. 234, § 1, eff. Sept. 1, 1993 [Sections 105.077 to 105.090 reserved for expansion) SUBCHAPTER F. LIABILITY AND REPORT OF DESIGNATED OFFICER § 105.091. Liability of Designated Officer' The designated officer is not responsible for any loss of municipal funds through the negligence, failure, or wrongful act of a depository. This section does not release the designated officer from responsibility for a loss resulting from the official misconduct of the des- ignated officer , including a misappropriation of the funds, or from responsibility for the funds until a depository is selected and the funds are deposited. Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept. 1, 1987. Amend- ed by Acts 1993, 73rd Leg, ch. 234, § 1, eft Sept. 1, 1993. § 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 smnmaly form: (1) the amount of receipts and expenditures of the municipal treasury; (2) the amount of money on hand in each fund; dE nE re Acts 'Ed b, `Sect 106.0 106.0 106.0 I06.( §, if )P. ti'ea that Add( 1995 § 1( Tl to . 91 SuL Add( ,. 1995 rR § 1( (a of p ed t (b cros func chit( . inte abu Addy 1995 y a a a d. 1- 1. al vl in of d; 6. (3) the amount of bonds becoming due for re- demption that require action; (4) the amount of interest to he 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. 148, 5 1, eff. SepL 1, 1987. Amend- ed by Acts 1993, 73rd Leg, ch. 234, § 1, eff. SepL 1, 1993. CHAPTER 106. MUNICIPAL CHILD SAFETY TRUST FUND Section 106.001. Creation of Child Safety Trust Fund in Certain Municipalities. 106.002. Deposits to Fund. 106.003. Use of Fund. 106.004. Audit. § 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, § 10.01, eff. Sept 1. 1995. § 106.002. Deposits to Fund The foIlo14ing 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 remit- ted to the municipality by the county under Section 9b, Chapter 88, General Laws, Acts of the 41st Legislature, 2nd Called Session, 1929 (Article 6675a -9b, Vernon's Texas Civil Statutes).' Added by Acts 1995, 74th Leg., eh. 76, § 10.01, eff. Sept. 1, 1995. Repealed; sec, nos, V.T.0 A. Transportation Code 4502173. § 106.003. Use of Fund (a) Money in the fund shall be used for the purpose of providing school crossing guard services as provid- ed by Chapter 343. (b) After payment of the expenses of the school crossing guard services, any remaining money in the fund may he 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, § 10.01, eft Sept. 1, 1995. FINANCES 121 § 106.004 § 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, § 1001, eff. Sept. 1, 1995. [Chapters 107 to 110 reserved for expansion] SUBTITLE B. COUNTY FINANCES Section CHAPTER 111. COUNTY BUDGET SUBCHAPTER A. BUDGET PREPARATION IN COUNTIES WITH POPULATION OF 225,000 OR LESS 111.001. Subchapter Applicable to Counties With Popula- tion of 225,000 or Less; Exception. 111.002. County Judge as Budget Officer. 111.003. Annual Budget Required. 111.004. Itemized Budget; Contents. 111.005. Information Furnished by County Officers. 111.006. Proposed Budget Filed With County Clerk; Pub- lic Inspection. 111.007. Public Hearing on Proposed Budget. 111.0075. Special Notice by Publication for Budget Hear- ing. 111.008. Adoption of Budget. 111.009. Approved Budget Filed With County Clerk. 111.010. Levy of Taxes and Expenditure of Funds Under Budget; Emergency Expenditure; Budget Transfer. 111.011. Changes in Budget for County Purposes. 111.012. Penalty. 111.013. Limitation on Budget of County Auditor. [Sections 111.014 to 111.030 reserved for expansion] SUBCHAPTER B. BUDGET PREPARATION IN COUNTIES WITH POPULATION OF MORE THAN 225,000 111.031. Subchapter Applicable to Counties With Popula- tion of More Than 225,000; Exception. 111.022. County Auditor as Budget Officer. 111.033. Annual Budget Required. 111.034. Itemized Budget; Contents. 111.035. Limitation on Expenditures Before Adoption of Budget 111.056. Information Furnished by Officers. 111.037. Proposed Budget Filed With County Clerk; Pub- lic Inspection. 111.038. Public Hearing on Proposed Budget. 111.0385. Special Notice by Publication for Budget Hear- ing. 111.010. Adoption of Budget. 111.040. Approved Budget Filed With Officers. 111.041. Expenditure of Funds Under Budget; Transfer of Budget Surplus. TEXAS COMMERCE TREASURY MANAGEMENT Texas Commerce Bank TEXAS COMMERCE BANK N.A. AUSTIN, TEXAS RESPONSE TO REQUEST FOR APPLICATION DEPOSITORY AND BANKING SERVICES FOR CITY OF ROUND ROCK, TEXAS JULY 1, 1997 TREASURY SOLUTIONS THAT LEAD To SUCCESS TEXAS COMMERCE BANK N.A. AUSTIN OFFICE RESPONSE TO REQUEST FOR APPLICATIONS FOR DEPOSITORY AND BANKING SERVICES FOR CITY OF ROUND ROCK, TEXAS TABLE OF CONTENTS PAGE COVER LETTER 2 DEPOSITORY SERVICES APPLICATION FORM 3 REQUIRED SERVICES CLARIFICATION AND EXCEPTIONS 6 COLLATERAL REQUIREMENTS 8 PRO -FORMA ACCOUNT ANALYSIS 9 CLIENT REFERENCES 10 EXHIBITS TABLE OF CONTENTS 11 1 Membor FDIC Jennifer E. Blavet Assistant Vice President Public Funds Division Mr. David Kautz Director of Finance City of Round Rock 221 E. Main St. Round Rock, TX 78664 Dear Mr. Kautz, Sincerely, L...) ,........„- J infer E. Blavet, AVP TEXAS COMMERCE BANK NATIONAL ASSOCIATION July 1, 1997 700 Lavaca P. O. Box 550 Austin,TX 78789 512 -479 -2861 We very much appreciate the opportunity to respond to your request for proposal for banking services agreement and hope it will lead to the establishment of a meaningful relationship between our organizations. The proposal will be valid until the award of the agreement. Texas Commerce Bank N.A. is the second - largest bank in Texas, with $20 billion in assets and 124 branches. We are a subsidiary of The Chase Manhattan Corporation, the largest bank holding company in the U.S. Texas Commerce's Mission is to achieve superior financial performance by serving as the preeminent financial institution for businesses and individuals in the major metropolitan areas of Texas by: *Providing STAR Treatment to customers and employees; *Developing a broad range of products; *Rewarding expense reductions; *Embracing a strong commitment to community, diversity and teamwork. We are delighted to present this proposal for your consideration and are available to answer any questions you may have. 2 ATTACHMENT A CITY OF ROUND ROCK DEPOSITORY SERVICES APPLICATION FORM The undersigned bank, credit union or savings association (hereinafter call Applicant), for the privilege of acting as Depository of the City of Round Rock, Texas, and in consideration of the attached specifications and supporting schedules shall pay or charge the City as follows: Ac Account Maintenance Balance Reporting Feet Deposit Processing Fee* Check Processing Fee* Controlled Disbursement* Statement Fee (printed) Image Statement Fee Bank Card Processing Fee Retum Check Charge Re- cleared Items Incoming Wires Outgoing Tel -Rep Wire ACH services* 3 -part Cont. Checks 1 -part Cont. Checks Travelers /Cashiers Checks 3 -part Deposit slips Stop Payments Safekeeping Services* Yes Collateral/pledge Fees Yes Lockbox Services* Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes No No No No Yes Monthly Unit Cost 3 No Charge 30.00/Maint .10 /credit posited .01;.02;.03;.04;.05;.06 50.00/Maint, .06 /item No Charge Not available See Exhibit VIII 1.00 /item .80 /item 4.00 /each 6.00 /each 25.00/Maint; .06 /item No Charge for Cashiers Checks 10.00 /each Manual No Charge No Charge Refer to Fee Schedule Refer to Fee Schedule Refer to Fee Schedule Refer to Fee Schedule No Charge ** Total Cost 1.00 .80 /item 4.00 /each 6.00 /each Refer to Fee Schedule As billed by Printer As billed by Printer No Charge As billed by Printer 10.00 /each Refer to Fee Schedule Refer to Fee Schedule Locking Bank Bags* Yes Only Disposable Bags Refer to Fee Schedule Safe Deposit Box* No - Annual Depends on Size Refer to Fee Schedule Overdraft Protection Yes Prime Rate Refer to Clarifications * Please refer to Exhibit I for a complete list of Fee Schedules that pertain to the above services. * *Please refer to Exhibit II for a description of our check safekeeping product "CD Search" which allows imaging of your checks onto CD Rom. The bank statement itself, however is not available on CD Rom. 2. Applicant shall pay the City interest on demand account balances at the rate of 70% of the Earnings Credit Rate. Specify method of compounding. Additional comments: Texas Commerce Bank's Earnings Credit Rate is based on the average of the 91 day Treasury Bill Auction discount Rate for the reporting month. Interest is calculated on daily collected balances, accrued daily and paid monthly. 3. Applicant may make short-teen loans to the City for a maximum amount of $ * at the prime interest rate (effective on the loan date) plus /minus ( + / -) * (Source: Wall Street Journal. All loans to the City shall be in the form of properly executed promissory notes for any legal purpose, as stated under present Texas laws. *Texas Commerce Bank can provide a short term loans to the City which will include general terms of a one year commitment with an interest rate of Texas Commerce Bank's prime rate. as it may change, minus 75 basis points. Prime on February 28. 1997 was 8.25% yielding an effective rate of 7.50 %. Other specific terms will be favorably negotiated. 4. Specify the maximum balance of demand deposits Applicant is willing to service and collateralize Texas Commerce Bank can accommodate the City's highest deposit balances both for servicing and collateralization. 5. Attach a separate page with any information regarding any and all fees and services affecting this Application or available to the City, not specifically addressed above. Refer to Exhibit I for all service fee schedules. Please refer to Exhibit II for information on Cash Management Services available to the City. 6. Attach a copy of the latest financial statement which Applicant filed with the regulatory agency which has authority over the Applicant and a current credit ratings report. For Chase Manhattan Corporation' 1996 Annual Report, and Texas Commerce Bank's March 31, 1997 Call Report, please refer to Exhibit III. For Chase Manhattan's current credit ratings, please refer to Exhibit IV. 7. Based on Schedule B, please prepare a combined analysis statement assuming an average collected balance of $185,000.00. Refer to page 9 for the pro -forma account analysis statement. 8. Can Applicant provide the City with an electronic means to transfer funds? (Yes/No). If "Yes ", please describe: Yes, Texas Commerce Bank's Electronic Funds Transfer service offers efficient, secure, and sophisticated electronic technology to support a broad range of funds transfer needs. Funds Transfer provides personal computer -based funds transfer initiation, receipt and review using standard communications software. Texas Commerce Bank can also offer ACH services for payment origination's or executing collections from consumer or corporate accounts. For a more in depth look at these products, please refer to Exhibit II - Cash Management Services. 9. Provide copies of all agreement forms that are expected to be executed if the Contract is awarded to your firm, for example: Collateral Services Agreement Wire Transfer Agreement Automatic Clearing House Agreement Banking Services Agreement 4 Controlled Disbursement Agreement Balance Reporting Agreement Safekeeping Agreement Capital Markets Agreement i Copies of all agreement forms are included as Exhibit V. The "Depository Pledge Agreement "; "Treasury Management Agreement" (this agreement covers wire transfer ACH, controlled disbursement, balance reporting, cash vault and commercial deposit processing, Lockbox, stop payments, and positive pay); "Safekeeping /Custodian Agreement "; Various Capital Markets Agreements, and Texas Commerce Bank's Important Disclosure Information. APPLICANT: TEXAS COMMERCE BANK N. A. BY: /d / �Q vxr,✓ WILL H. GARNER TITLE: EXECUTIVE VICE PRESIDENT ADDRESS: P. O. BOX 550 CITY, ST.: AUSTIN, TEXAS 78789 TELEPHONE: 512 -479 -2772 DATE: JULY 1, 1997 5 Banking Function. REQUIRED SERVICES CLARIFICATION AND EXCEPTIONS The designated Account Officer for the City will be Jennifer Blavet. She can be reached at 479 -2861 in our downtown branch. Monthly Statements Texas Commerce Bank can meet the City's requirement that bank statements be provided no later than ten(10) calendar days, unless the account is fully reconciled by the bank, then the statement will be available within seven (7) "business days ". Bank Card Services. Texas Commerce Bank does not offer credit card merchant processing. The following merchant card processing proposal is offered by National Data Payment Systems, Inc. (NDC). The combination of a TCB bank account and NDC processing increases funds availability to the City. The NDC contact is Bret Baumann. He can be reached at 327 -7090. NDC supports Mastercard, Visa, American Express and Discover credit cards. NDC offers electronic draft capture of credit card payments through a point of sale terminal. This requires a standard phone line as well as a standard AC wall socket for equipment operation. Electronic Draft Capture (EDC) through your terminal will provide direct depositing to your TCB bank account. The funds will appear on the bank ledger within 24 hours after merchant processing and settlement. Through NDC and EDC a customers credit card is either approved or declined for acceptance within 8 to 12 seconds after the card swipe transaction Please refer to Exhibit VIII for NDC's proposal.. Returned Check Service No clarifications or exceptions to this service. Wire Transfer /ACH Services No clarifications or exceptions to these services. Please refer to Exhibit II "Automated Clearing House" for a complete description of this service as well as "MicroLink Automated Payment and Collections" for a description of our PC based ACH software module. Miscellaneous Services Travelers Checks are not available to our Commercial clients. Cashiers checks, however will be available at no charge to the City. 6 Stop Payment Services Please refer to Exhibit V "Important Disclosure Information "for Texas Commerce Bank's Terms and Conditions of Deposit Accounts. Special Services Texas Commerce Bank can provide all special services the City has requested. Locking Bank Bags Texas Commerce Bank can provide fifteen (15) 6" X 11" zipper bags at no charge to the City. However, Locking bank bags are no longer available, and only disposable plastic bags may be used. These can be purchased through the bank or your own vendor. Safe Deposit Box Our largest safe deposit box at our Round Rock location is 10" X 10" X 22 ". The largest box available at our downtown location is 11" X 16" X 24 ". Overdraft Protection Texas Commerce Bank agrees to aggregate all the City's collected bank balances before considering an overdraft position. Texas Commerce reserves all rights and remedies it has under its Terms and Conditions of Deposit Account (Exhibit V) or otherwise with respect to overdrafts. Overdraft interest will be charged any time the aggregate collected balance in the City's accounts is negative at the end of a banking day at a rate equal to Texas Commerce Bank's overdraft interest charge of Prime, as it changes from time to time. Other Services No clarification or exceptions to other services. Additional Services Texas Commerce Bank is willing to provide additional bank services and products to the City that are not requested in this Request for Application but which the City later determines would be beneficial. These new services and products will be subject to the terms of Bank's Treasury Management Service Agreement and/or other standard agreements, as applicable, and pricing will be as specified in the Bank's published Commercial Account Service Charge Schedule or as otherwise agreed in writing between the Bank and the City. Please refer to Exhibit II for Cash Management services which may be of interest to the City. Additional Accounts No clarification or exceptions to this section. 7 Depository Compensation Texas Commerce Bank will provide an account analysis statement for each account as well as a group summary analysis statement. Earnings credit on non - interest bearing balances is equal to the average of the 91-day Treasury Bill weekly auction discount rates for the reporting month. In determining fees due or not, all balances of combined accounts, will be so that the balances of one can offset the services of another. Texas Commerce Bank's standard billing cycle for deficit fees is monthly with a direct debit to the City's account for fees due. The City however, can be invoiced for any fees due. A sample account analysis brochure is attached as Exhibit VI. COLLATERAL REQUIREMENTS Texas Commerce will comply with Section G of the request for application with the following additions: Texas Commerce will pledge to City acceptable securities equal to 102% of the ledger or collected funds on deposit (City's choice) with the bank from day to day that are not covered by Federal Deposit Insurance Corp. protection. Pledged securities will be held at a third party custodian, Bank One of Dallas. To afford the bank a reasonable time to adjust the amount of pledged collateral, the City must notify the bank at least 2 business days prior to any expected increase in deposits funds that would require an increase in the amount of pledged collateral. Pledged collateral will be priced to market once monthly, and the bank will make necessary adjustments after the bank becomes aware of any deficiency to bring the amount of pledged securities into conformance with the requirements of this contract. A monthly pledged collateral listing including market values, will be provided to the City by the Bank at no charge. Pledged security receipts from the Third Party custodian will be sent to the City. The Bank shall have the right, with the consent of the City's Director of Finance or his deputies, to purchase or sell, and substitute or replace, any and all of the pledge securities with other securities of a type permitted by the City's Investment Policy so long as the pledged securities continue to be of sufficient value to maintain the required pledged amount. The City agrees its consent will not be unreasonably withheld or delayed. _ The Bank will not assess a collateral charge to the City unless the City requests collateral to be pledged not securing deposit balances. The Bank will assess a 25 basis point charge on any collateral pledged above $3,000,000 which is not securing deposit balances. 8 PRO FORMA ACCOUNT ANALYSIS STATEMENT City of Round Rock , Texas May 1997 Combined Accounts Summary Processing Services Credits Posted Debits Posted Cont Disb Checks Paid Teller Deposit Process Change Order Coin Roll Change Order Currency Encoding Returned Item Returned Item - recleared Items Deposited: On Us Items Local Items Fed /RCPC Items Texas City Items Other Texas Items Transit Items Stop Payment Dom Incoming Wire Dom Outgoing Wire(rep) Internal Wire - Terminal Wire Mail Advice Balance Rpt/Previous Day Detail Safekeeping Receipts Security Settlement - Fed Book Entry ACH Credit Orig 2 day ACH Data Transmission ACH Return Notice Mail Other Charges: Activity Service Charges ' Avg Projected Monthly Volume /Units 168 704 824 15 33 14 13985 32 70 2248 0 6607 2151 1229 1691 1 4 6 1 11 220 24 5 801 4 2 See Exhibit II TOTAL MONTHLY SERVICE CHARGE 9 Monthly Unit Price .10 .08 .06 .75 .05 .20 .02 1.00 .80 .01 .02 .03 .04 .05 .06 10.00 4.00 6.00 1.00 2.00 .12 3.00 20.00 .06 5.00 2.50 Total Estimated Monthly Service Charge 16.80 56.32 49.44 11.25 1.65 2.80 279.70 32.00 56.00 22.48 198.21 86.04 61.45 101.46 10.00 16.00 36.00 1.00 22.00 26.40 72.00 100.00 48.06 20.00 5.00 $ 1 332.06 h: Positive Pay 1. CD- Search Current Client References NAME CONTACT PHONE SERVICES TITLE UTILIZED City of Austin Marion Raley 370 -3826 a,b,c,d,e,g,h,i P. O. Box 2106 Cash Manager Austin, Texas 78768 Lower Colorado River Authority Mike Vollmer 473 -3276 a,b,c,d,e,g,h P. O. Box 220 Director of Finance Austin, Texas 78767 Texas Comptroller's Office Carolyn Tumey 463 -5908 a,c,d,e P. O. Box 12608, Capitol Station Director of Cash Management Austin, Texas 78711 Texas Municipal Retirement System Pam Carter 476 - 7577 P. O. Box 149153 Controller Austin, Texas 78714 Key for Services Unliud: Micror ink Balance Reporting b: Controlled Disbursement e ACH - Origination d: Account Reconciliation e: Wire Transfer D Access L Automated Stop Payments Safekeeping/Security Clearance Services List of Top Local Government Accounts City of Austin Texas Comptroller's Office Austin Travis County MHMR Manor Independent School District Del Valle Independent School District Housing Authority of the City of Austin Ray Hendren Chapter 12 and Chapter 13 Trustee U. S. District Court Lower Colorado River Authority University of Texas Texas Municipal Retirement System Texas County and District Retirement System Texas Association of School Boards Texas Association of Counties Texas National Guard Armory Board Teacher Retirement System Texas Department of Insurance Liquidation Division 10 EXHIBITS TABLE OF CONTENTS I Fee Schedules II Cash Management Services III Chase Manhattan Corporation 1996 Annual Report and Texas Commerce Bank N.A. December 31, 1996 Call Report IV Chase Manhattan Corporation's Credit Ratings Various Agreements VI Account Analysis Brochure VII Vista Yield, Prospectus and Other Investment Alternatives VIII National Data Payment Systems Credit Card Proposal 11 TEXAS COMMERCE TREASURY MANAGEMENT Texas Commerce Bank TEXAS COMMERCE BANK N.A. AUSTIN, TEXAS EXHIBITS TO RESPONSE TO REQUEST FOR APPLICATION DEPOSITORY AND BANKING SERVICES FOR CITY OF ROUND ROCK, TEXAS JULY 1, 1997 TREASURY SOLUTIONS THAT LEAD To SUCCESS T O M M E R .C Automated Clearing House (ACH) Origination (Statewide) PRICE LIST EFFECTIVE JANUARY 1, 1997 SERVICE PRICE Monthly Maintenance $ 25.00 /client Tax ID /month Delivery/Input Tape/Cartridge $ 35.00 /tape/file * Vendor, i.e. ADP, Ceridian $ 25.00 /file' Data Transmission $ 5.00/transmission/file * Long Distance Phone Expense As incurred Transmission Set -up $ .00 /one -time set -up charge Credits/Debits - 2 day + settlement $ .06/item Credits/Debits - 1 day + settlement $ .10 /item Credits/Debits 2 Day Settlement Extended Processing $ .01 /item Addendum Originated $ .01 /addendum Preauthorized Check (PAC) $ 1.00 /item Retum Item $ 2.50/item Return Item w /phone call $ 5.00 /item Return Item via Transmission $ 1.00 /item + 5.00 /transmission/file _` Fax Notification $ 4.00 /page Recall $ 30.00 /item Correction/Reversal $ 15.00 /item Unroutable $ 1.00fdem Notification of Change $ 1.00fiitem Electronic Payment Authorization (EPA) Module $ 5.00 /account/month ACH /EDI Programming $ 100.00 /hour • File is defined by the different tax identification numbers contained in the NACHA input file. CONFIDENTIAL T E X A' S "C Automatic Dollar (Zero Balance) Transfer PRICE LIST EFFECTIVE JANUARY 1, 1997 SERVICE Automatic Dollar (ZBA) Transfer ADT Mail Advice PRICE $ 25.00 /sub account/month $ .50 /page CONFIDENTIAL T c E R' C E g :..p..;N K. Serial Sort SERVICE Paid List Reconciliation Positive Pay Non Positive Pay Range Reconciliation Full Reconciliation Positive Pay Non Positive Pay Deposit Reconciliation Float Report Output Tape Daily or Weekly Output Tape Microfiche Output Additional Reconciliation' Issue Tape Daily Issue Tape Daily Paid Data Transmission Transmission Set -Up Non Return of Tapes Transmission Phone Expense Diskette - Inbound and Outbound Postage/Courier Stop Pay Expiration Report " Interfile Rejects Positive Pay Maintenance Positive Pay Notification Transmission Set -Up Quick Search First Account Additional Accounts Stop Payment Account Reconciliation Services PRICE LIST EFFECTIVE JANUARY 1, 1997 PRICE $ .02/item $ 50.00 minimum $ .04 /item no minimum $ .05 /item $ 50.00 /minimum $ .06/item $ 50.00 minimum $ .05 /item no minimum $ .06/item $ 50.00 minimum $ .05/item $ 50.00 minimum $ 50.00/cycle $ 30.00 /tape $ 100.00 /month $ 6.00 /cycle $ 25.00 /cycle $ 30.00/tape $ 15.00/tape $ 100.00 /month + trans. charge $ 10.00 /transmission $ 200.00/one-time set -up charge $ 50.00 /tape As incurred $ 35.00 /diskette Actual costs - 20.00/account/month $ .50 /reject No charge $ 2.00 /item No charge No charge $ 35.00/account/month $ 10.00/account/month $ 7.00 /stop • For accounts reconciled more than once a month (e.g. weekly or semi - monthly). ** Available on all DDA accounts. CONFIDENTIAL M M -;E R A'' N SERVICE Credits Posted - Electronic (to disbursement account) Credits Posted -Paper (to disbursement account) Client Fee Account Maintenance Debits Posted 1 - 9,999 10,000 - 19,999 20,000 - 29,999 30,000+ Funding ChemLink Reporting Controlled Disbursement Funding Report Check Detail MicroLink Reporting TCB & Chase Manhattan Banks (First 5 Accounts) (Next 6 - 75 Accounts) (Next 76+ Accounts) Current Day Reporting "` Current Day Items Telephone Advice First Account (1 calVday) First Account (2 calls/day) Additional Accounts Fax Stop Payment Electronic Payable Through Drafts Returns Current Day Transmission Transmission Set -up Financial Management Account Additional Calculations Controlled Disbursement PRICE LIST EFFECTIVE JANUARY 1, 1997 PRICE $ .10 /item $ ' .28/item $ 50.00 /client/month $ 15.00 /disbursement acct. /mo. $ ..06/item $ .06/item $ .06/item $ .06/item $ 20.00 /disb. account/month + .50 /transfer " $ 35.00/account/month $ .25/item $ 10.00/account/month $ 10.00/account/month $ 10.00/account/month $ 10.00 /account/month $ .20/item $ 75.00 /month $ 125.00 /month $ 25.00/account/month $ 20.00 /stop $ 5.00 /return $ 10.00 /transmission $ 200.00 /one -time set -up charge $ 300.00/account/month $ 20.00 /each calculation/mo. Debits posted price should be determined by total client volume. Volume levels will be reviewed on a three month average basis. Transfer fee is charged by Funds Transfer through lead account. "` The charge for Current Day Reporting is in addition to the account charges. C O N F I D E N T I A L Commercial Deposit and Cash Vault Services PRICE LIST EFFECTIVE JANUARY 1, 1997 SERVICE MONEY SHIPMENT SERVICES Outgoing Vault Shipment Coin Rolls Straps Orders Processed Full Straps/Rolls Partial Straps/Rolls QuickPak- Prepackaged Change Order - Bulk Coin Order Outgoing Branch Shipment Coin Rolls Straps Orders Processed Straps/Rolls DEPOSIT PROCESSING SERVICES Vault Deposit Processing* Coin Deposit Processing Full Bags Partial Bags Type A - Fed Ready (Bulk Deposit) Per $1,000 Deposited Type B - Standard Deposit Per $1,000 Deposited Type C - Mixed Deposit Per $1,000 Deposited Type D - Envelope Deposit Per Envelope Per Note/Food Stamp Branch Delivered Vault Deposit Processing ** Per Deposit Per Note /Food Stamp Miscellaneous Services Special Handling BranchNault Deposit Adjustments and Corrections (for adjustments > $1.00) QuickSilver Plastic Security Deposit Bags*** 2 -Pouch Cash/Check Deposit (10" x 14 ") 2 -Pouch Cash/Check Deposit (14" x 21") Non QuickSdver 2 -Pouch Cash/Check Deposit (10" x 14 ") Single Pouch Check Only Deposit (9" x 12 ") Single Pouch Check Only Deposit (12" x 16 ") PRICE $ .05/roll $ .20 /strap $ 1.55 /order $ 2.20/order $ 1.00 /in addition to strap and roll charge $ 3.75/bag $ .05 /roll $ .20 /strap $ 2.20 /order $ 1.95/bag $ 3.75/bag $ .53 $ .65 $ .75 $ .28 /envelope $ .027/iitem $ 1.45 /deposit $ .02/item $ .50 /minute $ 3.00 /adjustment $ 25.00/box $ 37.00 /box $ 25.00 /box $ 17.00/box $ 22.00/box CONFIDENTIAL SERVICE • Check capacity per box is 3,000 checks. Check Safekeeping PRICE LIST EFFECTIVE JANUARY 1, 1997 PRICE Safekeeping With Microfilm $ .015/item $ . 50.00 minimum Without Microfilm $ .007 /item $ 50.00 minimum With Imaged Microfiche $ .025/item Image Safekeeping CD ROM $ 60.00 /CD ROM/ Per Item $ .025/item, CD- Search Duplicate CD $ 30.00 /CD ROM Cumulative CD $ 80.00 /CD ROM Extended Storage I ^iA.r -IL& gel-A-V $ 5.00 /box/month • Retrieval of Original Check $ 12.50 /item Photocopy of Check $ 2.00 /item Duplicate Microfilm $ 18.50 /roll CONFIDENTIAL X A , S , •A , N rK SERVICE Collection Services PRICE LIST EFFECTIVE JANUARY 1, 1997 PRICE Payable Through Drafts $ .20 /draft Incoming Collection Item $ 10.00 /draft Outgoing Collection Item $ 10.00/draft Outgoing Collection Item - Immediate Credit $ 10.00 /draft Time Draft $ 10.00/draft Outgoing Coupons $ 15.00 /envelope Outgoing Bonds $ 15.00/item Return Item $ 10.00 /item Faxing $ 1.00 /page CONFIDENTIAL T E X A 'S C O M `M E R C E ChemLink Information Reporting & Transaction Initiation PRICE LIST EFFECTIVE JANUARY 1, 1997 Previous Day Reports Balance Report TCB and Chemical Banks SERVICE PRICE First 1 - 5 accounts $ 35.00 /account Next 6 - 75 accounts $ 25.00/account Next 76+ accounts $ 15.00/account Multibank Account First 1 - 5 accounts $ 40.00 /account Next 6 - 75 accounts $ 30.00/account Next 76+ accounts $ 20.00/account Accesses over 25 per month $ 3.00 /access Phone Calls $ 100.00 /account Peg Balance $ 7.50/item Historical Reporting 10 Days History No charge 35 Days History $ 5.00 /account 63 Days History $ 90.00/account Debit/Credit Report TCB & Chemical Banks $ 10.00 /account/modulE Multibank Accounts $ 25.00/account/modulE Items $ .22/item Accesses over 25 per month $ 3.00 /access/module Paid Check Detail Report $ .22/item Collections Reports $ 50.00 /user Current Day Reports Debit/Credit Report $ 35.00 /accountlmoduk Items over 75 per month $ .25 /item Lockbox Deposit Summary $ 30.00/box Lockbox Detail Report $ 50.00 /user Per Line Charge $ .05/line Controlled Disbursement Funding Report $ 35.00 /account Check Detail $ .25 /item EDI Reporting Service $ 15.00 /user Addendum Records $ .35 /addendum Transactions $ .35/transaction Accesses over 25 per month $ 3.00 /access Data Exchange Reporting Previous Day Account Balances Per debit/credit items $ 50.00 /account $ .25/item CONFIDENTIAL SERVICE Account Maintenance Incoming Transfer AUTOPOST Domestic NON - AUTOPOST Domestic International Non - Database Credit Notifications Printed Advice Telephone Notification Fax Notification Direct Access FT EXPRESS International Investigation Automated Initiation (ChemLink FT, Funds Transfer Direct Access, FT EXPRESS, Automatic Standing Transfer, BatchWire) * Internal Outgoing Repetitive Non- Repetitive and Semi - Repetitive International Outgoing Account Balance Report Wire Activity Report Defender SecureNet Key Telephone Initiation Internal Outgoing Repetitive Non - Repetitive and Semi - Repetitive International Outgoing International Call -Back for 2nd PIN International Pass Through Transfer Intl Foreign Exchange Transfer over $10,000 Wire Activity Report Transmission Controlled Disbursement Funding Manual Transfer (Initiated without PIN authorization) Special Instructions Funds Transfer Pricing PRICE LIST EFFECTIVE JANUARY 1, 1997 • BatchWire supports domestic intemal and outgoing funds transfers. PRICE 3 /account/month 4.00/transfer 4.00/transfer 10.00/transfer 10.00/transfer 2.00/page 5.50/call 4.00/transfer No charge No charge No charge $ 3.00/transfer $ 6.00/transfer $ 8.00/transfer $ 3 5.O0Rransfer $ 50.00/month No charge $ 125.00 /device $ 7.00/transfer $ 10.00 /transfer $ 1 2.00/transfer • $ 4 3.00/transfer $ 5.00 /call $ 20.00/transfer No charge $ 10 . 0 0 /day /account $ .50 /transfer $ 65.00 /transfer $ 3.00/transfer �iwe.a a• CONFIDENTIAL T E X AS C O M 'M` Item Processing /Deposit Services Basic Commercial Accounts Location: Austin PRICE LIST EFFECTIVE JANUARY 1, 1997 SERVICE PRICE ITEM PROCESSING Pre-encoded Deposit On -Us $ .01 /item Tier I /Local City $ .02/item Tier II /Local RCPC $ .03/item Tier III/Texas Fed Cities $ .04/item Tier IV /Other Texas $ .05 /item Tier V /Other Transit $ .06/item DEPOSIT SERVICES _ Account Maintenance $No Ctia�ge/account Debits Posted Paper $ .08/item Electronic $ .08/item Credits Posted Paper $ .10 /item Electronic $ .10 /item Encoding $ .02/item Invoice Billing Fee $ 10.00 /account/mo. Additional Analysis Statement $ 10.00 /copy Stop Payment - Telephone $ 10.00 /stop Return Items - Received $ 1.00 /retum Return Items - Reclears $ .80/reclear Return Items - Special Handling $ 4.00 NSF Items $ 20.00 /item Special Statements $ 7.50 Client Research - Per Hour $ 20.00 Client Research - Per Copy $ 2.00 Telephone Balance - Individual $ 2.00 /inquiry Telephone Balance - Corporate $ 3.00 /inquiry Cashed Checks drawn on TCB No Charge CONFIDENTIAL 0 MicroLink Information Reporting & Transaction Initiation PRICE LIST EFFECTIVE JANUARY 1, 1997 SERVICE PRICE BANK ACCOUNT REPORTING Software Pricing * Bank Account Reporting Setup Fee $No Charge Check Manager $$No Charge Accounting Connection $$No Charge Maintenance * Bank Account Reporting $ 30.00/client/month Check Manager $ 15.00/client/month Accounting Connection $ 15.00/client/month Bank Account Reporting TCB & Chase Manhattan Banks (First 5 Accounts) $ 10.00/account/month (Next 6 - 75 Accounts) $ 10.00/account/month (Next 76+ Accounts) $ 10.00/account/month Current Day Reporting " $ 10.00/account/month Other Banks (First 5 Accounts) $ 35.00/account/month (Next 6 - 75 Accounts) $ 25.00/account/month (Next 76+ Accounts) $ 20.00 /account/month Current Day Reporting *' $ 10.00/account/month Transaction Reporting Previous Day Items $ .12/item Current Day Items • $ .20 /item AUTOMATED PAYMENTS & COLLECTIONS (APC)*'* Software Pricing * APC Setup Fee $No Charge w/o Bank Account Reporting $$No Charge Maintenance * Automated Payments & Collections $ 25.00/client/month w/o Bank Account Reporting $ 45.00/client/month APC Transactions First 1 - 500 Transactions $ .30 /transaction Next 501 - 1,000 Transactions $ .15 /transaction Next 1,000+ Transactions $ .10 /transaction CCD+ Addenda Record $ .12/record CONFIDENTIAL SERVICE Maintenance Standard Item Monthly Minimum Encoding Deposits Additional Photocopy Additional Deposit Advice Additional Copy Assembly* Research Photocopy ** Post Office Rental Fee ChemLink Reporting Lockbox Module Special Report Module MicroLink Reporting TCB & Chase Manhattan Banks (First 5 Accounts) (Next 6 - 75 Accounts) (Next 76+ Accounts) Current Day Reporting Current Day Items Terminal Reporting Standard Telephone Call Detail Telephone Call Wire Transfer Initiation Lockbox Buddy . Maintenance Set -up Fee Software License Fee Data Capture Check Information Remittance Information LB Search *"** Monthly Maintenance Set -Up CD Scan First Document Additional Documents Wholesale Remittance Banking PRICE LIST EFFECTIVE JANUARY 1, 1997 PRICE $ 105.00/box/month $ .35/item $ 50.00/box/month $ .03/item $ 1.25/deposit (over two /day) $ .12/item $ 30.00/box/month $ .20/item $ 10.00/copy No charge $ 30.00/box/month $ 50.00/client/month + .05/line + data capture $ 25.00/account/month $ 15.00 /account/month $ 10.00/account/month $ 10.00/account/month $ .20/item $ 100.00/box/month $ 200.00/box/month $ 200.00/box/month + .60 /item $ 150.00/box/month 50.00 /client/month + data capture 200.00 /installation 100.00 /installation .20 /item .007 /keystroke 65.00 /month 200.00 /set -up 12.00 /CD .12/item .15 /item CONFIDENTIAL Wholesale Remittance Banking Page 2 SERVICE Lockbox Credit Card Processing Lockbox standard Item Data Entry Surcharge (tiered according to document complexity) Data Transmission Special Report Set -Up Data Consolidation Data Transmission Data Consolidation FaxLink No Check Mail First Class Mail Courier /Express Prep /USPS /Pkg Prep Multi Address Mail Walk in Deposits Cash Deposits Account Balancing Foreign Items Unprocessable Items Special Reports Programming Special Instructions Special Instruction Changes Local Mail Collection (From Other Banks) PRICE $ .35/item $ .50 /item $ .80 /item $ 1.12/item $ 50.00/month $ 50.00 /month $ 200.00/set -up $ 35.00/month $ 50.00 /month $ 35.00/mo.7incoming trans. $ 50.00/mo. /outgoing trans. $ 75.00/box/month + data capture $ .20/item Cost + handling $ 33.00/month $ 38.00/box/month/address $ 1.50 /item $ 10.00 /deposit $ 100.00/month $ 10.00/item $ 3.00/item $ 50.00/box/month $ 100.00 /hour $ .10/item $ 25.00 /request $ 5.00 /day ' Price is in addition to the standard item price. Research requested 15 days or more after deposit date. Charge for Current Day Reporting is in addition to the account charge. Data transmission required (both data transmission maintenance and data capture check information are needed for minimum set -up requirements). Data capture remittance information is optional and will be assessed an additional fee. "' Remittance delivered to Lockbox for "immediate deposit ", after the 10:00 a.m. and before the 3:00 p.m. (Houston) and 2:00 p.m. (Dallas) cutoff. Refers to unprocessed items returned to a client, pursuant to their instructions i.e., items with restrictive endorsements, stale -dated items, post -dated items, etc. CONFIDENTIAL SERVICE Retail Lockbox Maintenance Standard Item 1 - 9,999 items 10,000 - 49,999 items 50,000 - 99,999 items 100,000 - + items Implementation Programming - 50 Hours Maximum Basic Output Services Standard Paper Reports: Batch Detail Listing Batch Summary Report Daily Document Listing- Account Number Sequence Magnetic Tape - One Daily Extraction Data Transmission - One Daily Extraction Optional Services Partial Payment Processing Non - Uniform Return Envelope Coupon with 4 -8 Scannable Fields Vendor Programming Cost (one time charge) Additional Sorting/Staging Requirements Stop File Processing Customized Output Report In -House Programming Costs (one -time charge) Each Additional Daily Tape Extraction Each Additional Daily Data Transmission Rejects in Excess of 2% Photocopy Retrieval of Items Research (1/95) Texas Commerce Bank National Association Austin Office Retail Lockbox Pricing Effective January 1995 PRICE $ 250.00/box /month $ .160 /item $ .140 /item $ .110 /item $ .100 /item No Charge No Charge 50.00 /month 100.00 /month .0550 /item .0100 /item 90.00 - $120.00/hour .02/item/sort 10.00 /day 50.00/hour 50.00 /month 100.00 /month .02/each 2.00 /each 20.00/hour Basic Service (includes one photocopy) Optional Services: Reporting services: TEXAS COMMERCE BANK National Association Austin Office Wholesale Lockbox Service Fee Schedule $ .29 /item Monthly Maintenance $ 65.00/box Additional photocopy $ .09 /item Item sort .02 /item Circle /underline /record amount paid .06 /item Additional deposit slip mailed 8.00 /month Additional deposit account 10.00 /month Standard data capture _ _ _ .17 /record Non - standard data capture .25 /record Programming /non - standard data capture 50.00/hour Terminal input deposit summary $ 10.00 /month Daily deposit amount phone call 50.00 /month Item listing phone call (avg. 10 items /day maximum) .15 /item Daily data transmission 50.00 /month Daily diskette 25 00 /month Diskette not returned 1.50 /each Daily faxed report 150.00 /month C O M M E R C E B A N K REVISED JULY 21, 1997 Safekeeping /Security Clearance Austin Office PRICE LIST FOR THE CITY OF ROUND ROCK EFFECTIVE JANUARY 1, 1997 SERVICE PRICE Safekeeping Issue Safekeeping Receipt $No charge /item Maturity Redemption $ 15.00 /item Corporate Action $ 35.00 /item Mortgage Backed Income Disbursemnt $ 10.00/item Claims $ 100.00 /item Issues On Deposit $ 3.00 /month Account Maintenance $ 10.00 /month Valuation $ .01 per $10M /month $ 50.00 minimum Security Clearance Purchase and Sale Settlements Through Depository Trust Company $ 35.00 /each Through Federal Reserve Bank $ 20.00/each Through Participant Trust Company $ 31.00 /each Physical Delivery $ 35.00/each Security Re- Registration $ 30.00 /each Commercial Paper Purchase $ 35.00 /each A"1 CONFIDENTIAL T E X AS C O M M E R ;" SERVICE Safekeeping Issue Safekeeping Receipt Maturity Redemption Corporate Action Mortgage Backed Income Disbursemnt Claims Issues On Deposit Account Maintenance Valuation Security Clearance Purchase and Sale Settlements Through Depository Trust Company Through Federal Reserve Bank Through Participant Trust Company Physical Delivery Security Re- Registration Commercial Paper Purchase Safekeeping /Security Clearance Austin Office PRICE LIST EFFECTIVE JANUARY 1, 1997 PRICE 10.00 /item 15.00/item 35.00/item 10.00 /item 100.00 /item 35.00 /each 20.00 /each 31.00 /each 35.00 /each 30.00 /each 35.00 /each C O N F I D E N T I A L 3.00 /month 10.00 /month .02 per $10M/month 50.00 minimum CHASE SECURITIES OF TEXAS, INC. 700 Lavaca Austin, Texas 78701 (512) 479 -2865 (800) 438 -7834 (Intl.) Fax: (512) 479 -2811 mardn.morales @chase.com EXHIBIT I Mr. David Kautz City of Round Rock 221 E. Main St. Round Rock, Texas 78664 Dear Mr. Kautz: gm` CHASE June 27, 1997 Chase Securities of Texas, Inc. is an affiliate of Texas Commerce Bank and member of NASD, SIPC. Products offered are not FDIC insured, not bank guaranteed and may lose value. Martin M. Morales Senior Vice President This letter is submitted as EXHIBIT I to answer the investment portion of your bid notice. The investment services available for the City of Round Rock through the investment division of Texas Commerce Bank, Chase Securities of Texas, Inc., include a broad an of investment product options tailored to fit the City's specific investment needs. Chase Securities of Texas, Inc. is a team of experienced investment professionals available to assist clients in planning and implementing their investment strategy for some or all of their portfolios. A working relationship with a Chase Investment Professional allows clients to benefit from a combination of exemplary personal service, experienced investment specialists, and a wide array of investment products. Our affiliation with The Chase Manhattan Corporation, the largest banking organization in the United States, only enhances our capabilities. Chase Investment Professionals work closely with specialized traders, both locally and globally, to help clients select investment securities from the multitude of investment products currently available. Through a Chase Securities of Texas relationship, clients receive a unique combination of global investment expertise and the superior level of personalized service reserved for clients of Texas Commerce Bank. Beyond personalized client service, our primary objective is to provide high quality investments and maximum yield within given investment risk parameters. OVERNIGHT INVESTMENT SERVICES Chase Securities of Texas (CST) offers a wide range of short-term, Public Fund Investment Act approved, money market instruments to it's clients. Chase's broad offerings provide '°` CHASE 1 1 1 clients with market insight not found in firms that deal in a more limited number of products. Following is an outline of Chase's broad product offerings. No - Load Money Market Mutual Funds. These are simple, convenient and perfectly suited for a sophisticated cash management environment. Excess collected balances can be utilized to purchase shares of the fund daily by Chase Securities, on instructions from the district. Conversely, shares of the fund may be sold daily to provide for daily liquidity needs. Chase Securities offers the Vista Government Money Market Mutual Fund for the daily investment of short term liquidity. This fund invests only in short-term U.S. Government and Treasury obligations. The fund is regulated by the Securities and Exchange Commission and must maintain a dollar- weighted average maturity of 90 days or less; currently the fund's average maturity is 39 days. The Government Fund seeks to maximize current yield as is consistent with stability of principal. Please read the attached Prospectus describing the Fund in more detail. Operationally, this Fund is extremely client friendly. Daily and month-end balance and yield figures are available 24 hours by an easy to operate, secure and free automated phone system. Funds can easily be invested and redeemed daily before 11:30 am. There are no fees to invest or redeem shares in the Fund. Operating fees are charged to the gross earnings of the Fund and are fully detailed in the Prospectus. All yields quoted will always be net of all fees assessed to the Fund. Current rates are detailed in the matrix on the following page for comparison puMoses, although past results do not guarantee future performance. U.S. Government Agency Securities. As provided in the Public Funds Investment Act, U.S. Government Agency Securities can also be offered on an overnight basis. These securities can be purchased with minimum face values of $50,000 and increments of $5,000. On purchases of small lot sizes ( <$1 million), a $50.00 service charge is included. The effect of this charge on the investment's yield will be calculated to ensure the viability of the investment decision. SHORT -TERM AND INTERMEDIATE -TERM INVESTMENT SERVICES Beyond overnight liquidity management, yield can be enhanced by structuring short-term portfolios of Govemment Agency Securities and U.S. Treasury Bills and Notes. In developing these portfolios, absolute attention is given to Government requirements, as well as, the District's unique requirements, as outlined in the Investment Policy. On average, Chase Securities of Texas sells approximately $350 million in fixed income securities to our clients daily. U.S. Government Agency Securities. Please see above. Chase Securities of Texas, Inc. is an affiliate of Texas Commerce Bank and member of NASD, SIPC. Products offered are not FDIC insured, not bank guaranteed and may lose value. CHASE U.S. Treasury Securities. Chase Securities of Texas offers primary dealer capabilities through our affiliation with Chase Securities, Inc. Chase clients benefit from competitive pricing, pertinent market information and the development of customized market strategies. As with Government Agency Securities, on small lot purchases or trades with terms of less than 180 days, a $50. service charge is included. YIELD COMPARISONS. Yields are affected by not only long -term economic policy developments, but also by daily market reactions to domestic and global economic, financial and political circumstances. Through our affiliation with Chase Securities, Inc. and Chase Manhattan Corporation, the nation's largest banking organization, we provide up -to -date insight into this information and its impact on current and future investment opportunities. Short Term Investments' Federal Agencies U.S. Treasury Bills and Notes Government Money Market Fund . Treasury Money Market Fund 5.27 5.18 - 7 Day 5.48 4.66 30 Day 5.50 4 97 60 Day 5.53 5 17 90Da 180 Day 360 Day 1 5 64 523 5 75 5.62 We are guided at all times by your goals. Chase Investment Professionals are client driven, not product driven. We strive for continuous communication with you so that when your goals change we can suggest the appropriate changes in your portfolio We do not guide our product recommendations by our inventory positions, but rather choose to provide our clients the most competitive prices from the entire market. This personalized focus on the needs of our clients distinguishes us from many competitors. I look forward to the prospect of working with the City of Round Rock for your future investment requirements. Please use me as an investment resource and call with any questions or comments you have. Sincerely, Martin M. Morales Senior Vice President Chase Securities of Texas, Inc. is an affiliate of Texas Commerce Bank and member of NASD, SIPC. HOLDING COMPANY BANK Debt Preferred Stock CP Senior Sub. LT BANK & BANK HOLDING COMPANY RATINGS MOODY'S J.P. MORGAN CITICORP (u) BANKAMERICA BANK OF NEW YORK FIRST CHICAGO WELLS FARGO BANKERS TRUST NATIONSBANK (u) - Under review for possible upgrade (I) - Implied or shelf registration rating. 2/28/97 P -1 P -1 P -1 P -1 P -1 P -1 P -1 P -1 Aa2 Al Al Al Al Al A2 A2 Aa3 A2 A2 A2 A2 A2 A3 A3 aa2 a1 al al al a2 a2 a2 Aet Aa3 Aa3 Aa3 Aa3 Aa3 Al Al Deposits Trend ST Indicator P - 1 stable kttcsJi P -1 P -1 P -1 P -1 P -1 P -1 P -1 positive positive stable stable positive negative positive : 4_,I'JL -09 -1997 16.10 NDC. r Texas Commerce Bank Attn: Jennifer Blavet 700 Lavaca Austin, Texas 78701 Dear Jennifer. TCE PF'CE 512 479 2E53 P.02/03 MATIOMALOATA PATNENT SYSTEMS, EMC. 130 C.AnLCS TE W mn Sours. SUNEA1se AUSTIN ti 75745 ,V :07)0No Per our conversation please find the following information on National Data Corporation's (NDC) electronic services program. 1 look forward to working with you to take advantage of the value our leading edge solutions provide. Based an the annual MasterCardArisa volume estimate of $93,000 and a average ticket of $120.00, NDC can offer a discount rate of 1.84° retail card swipe (No Transaction Fees) and 2.09% mail & telephone order (No Transaction Fees).The MasterCardMsa discount rate includes the following: • All authorization and capture fees for MasterCardMsa • 24 Hour customer and terminal help desk support • All paper supplies for credit card processing in addition to the discount rate, the following fees are charged for use of merchant services, when applicable: • Statement Fee 5.00 (Month) • Program/Installation 75.00 (One Time) • POS Help Desk Warranty Fee ' 5.00 (Month) • Charge Backs 5.00 (Per Occurrence) NOTE The merchant is not billed for chargebacks automatically. Instead NDC contacts the merchant for verification of the transaction. The merchant has 10 days to respond to the request and send a copy of the sales draft. Only if the merchant can not provide documentation or does not return the phone call within 10 days is the chargeback fee and the cost of sale assessed !,,,,C-09 -1997 16:10 TCE PF/CB Electronic Draft Capture through your terminal will provide direct depositing to your bank account The funds will appear on the bank ledger within 24 hours and available for access within 48 hours. NDC will provide a monthly bankcard statement that includes a summary of your daily activity, authorization expenses, average ticket, volume size and discount fees. To establish your account with NDC I will need the following information: • Completed Merchant Application/Agreement • A voided check verifying the checking account number you prefer to use for your merchant bankcard transactions. We appreciate the opportunity to present this proposal and look forward to establishing a long term relationship with your company. Thank you for your consideration. Please feel free to contact me at 512-327-7090 or B00-284-2638 should any questions arise, Sincerely, D. Bret Baumann Territory Manager • pale 512 479 2653 P.03/03 TOTAL P.03 NDC. Texas Commerce Bank Attn: Jennifer Blavet 700 Lavaca Austin, Texas 78701 Re: City of Round Rods Dear Jennifer. June 30, 1997 M•TIOM•L OATA '3OI CAAAld TWA NA17 SRAthi Coif A+>e ' ALAI. TR aARA ^ 512 RR Rom Per our conversation please find the following information on National Data Corporation's (NDC) electronic services program. I look forward to working with you and the City of Round Rock to take advantage of the value our leading edge solutions provide. Based on the annual MastoCarcUVisa volume estimate of $400,000 and a average ticket of $150.00, NDC can offer a discount rate of 1.70% (No Transaction Fees) retail card swipe and 1.99% mail and telephone order (No transaction fees). The MasterCardNisa discount rate includes the following: • All authorization and capture fees for MasterCardMsa • 24 Hour customer and terminal help desk support • All paper supplies for credit card processing In addition to the discount rate, the following fees are charged for use of merchant services, when applicable: • Statement Fee 5.00 month • Program/Installation 75.00 • POS Help Desk Warranty Fee 5.00 month • Charge Backs 5.00 (Per Occurrence) NOTE The merchant is not billed for thargebacks automatically. Instead NDC contacts the merchant for verification of the transaction. The merchant has 10 days to respond to the request and send a copy of the sales draft. Only if the merchant can not provide documentation or does not return the phone call within 10 days is the chargeback fee and the cost of sale assessed. •1. II C. Electronic Draft Capture through your temtinal will provide direct depositing to your bank account. The funds will appear on the bank ledger within 24 hours and available for access within 48 hours. NDC will provide a monthly bankcard statement that includes a summary of your daily activity, authorization expenses, average ticket, volume size and discount fees. To establish your account with NDC I will need the following information: • Completed Merchant Application/Agreement • A voided check verifying the checking account number you prefer to use for your merchant bankcard transactions. We appreciate the opportunity to present this proposal and look forward to establishing a long term relationship with your company. Thank you for your consideration. Please feel free to contact me at 512-327-7090 or 800- 284 -2638 should any questions arise, Sincerely, ---- . D. Bret Baumann Territory Manager • Page 2 R:\ WPDOCS \w2SoLVrr \ws70814D.w112/clb RESOLUTION NO. R- 97- 08- 14 -13D 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, Texas Commerce Bank, N.A. has submitted the most favorable application; and WHEREAS, the City Council desires to accept the application of Texas Commerce Bank, 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 appoint a municipal employee act as a designated officer pursuant to Chapter 105 of the Texas Local Government Code, Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK, TEXAS: I. That 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 the City and Texas Commerce Bank, N.A., and the designated officer may exercise the powers and duties as authorized by applicable law. ATTEST: E LAND, City Secretary II. That the application of Texas Commerce Bank, 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 October 1, 1997, through September 30, 2000, and the Mayor is hereby authorized and directed to execute on behalf of the City a Depository and Banking Services Contract with Texas Commerce Bank, N.A. RESOLVED this 14th day of August, 1997. 46 CHARLES CUL E ER, Mayor City of Round Rock, Texas Duel Deposit ACH Pnce 10312 179 34 247.95 200 65 600 292 55 6 Ra 5 4 2 3 8 1 PC Balance Reporting Pike 97 52 187 44 55 00 WA WA WA 6 Rahng 5 4 8 0 0 0 Controlled Disbursements Pnce 11970 10000 100 00 42000 W A N/A 6 Rating 5 6 6 4 0 0 On•Line Wire Trensters Pnce 7500 70 50 13000 8000 1500 82 00 6 Rating 4 5 1 3 6 2 Stop Payments Price 1000 1000 2000 2000 000 2000 6 Rating 5 5 4 4 6 4 Collateral Fees/Pledge Chas Pace 000 14000 17579 000 000 000 6 Rating 6 5 4 6 6 6 Safekeeping Fees Price 23200 17800 8060 13940 7250 000 6 Rating 1 2 4 3 5 6 Deposd Nu -Net Charges Pace 93421 1,26600 1,59116 1,251 47 80698 1,51584 6 Rating 5 3 1 4 6 2 TOTALS 84 36 34 28 27 35 21 48 City of Round Rock, Texas Depository Services Review AVAILABILITY MATRIX Best Price = 6 Second Best = 5 Third Best = 4 Fourth Best = 3 Fifth Best = 2 Sixth = 1 Unavailable = 0 Service Provided COST MATRIX Semce Prwlded TOTAL WEIGHTED AVERAGE tlea Welghl TCB eanki I Nonvest Hartland ITx Henna gel lst Texas Ba Available = 3 Unavailable = 0 Currently unavailable but will become available = 1 " Direct Deposit via Diskette but not PC to PC = 2 Must Have = 5 Needed = 4 Would Ike to have = 3 AVAILABILITY MATRIX RATINGS: Please be aware that because this le based on services available, that more than one Bank can receive the sane score. de a TCB 1 Banks 1 Ndrwest 1 Hartland ITx Hentagel let Texas Bon COST MATRIX RATINGS: Please be aware that more than one Bank can receive the sate raring for the same category. (La. 2 e. 3 banks could receive '6' 11they have the sae stoppyrnt fee. The neat bestprke(s) would then resolve '6', the next best prloo((s) '4', etc). SCORES: 66.84 Excellent 57.65 Acceptable 057 Unacceptable In order fo be deemed 'Acceptable' you would need fo have available those servroes weighted 5 & 4. SCORES: 4048 Excellent 28-39 Acceptable <28 Unacceptable In order fo be deemed 'Acceptable' you would need at least the following scamp. 1 Category 6 6 1 Category 6 5 2 Category Q 4 2 Category 3 1 Category 6 2 1 Category Q 1 TOTAL SCORES: 106.132 Excellent 85.105 Acceptable 120 118 104 69 54 31 132 085 Unacceptable 3 3 3 3 2 2 3 Direct Deposit ACH we. PC' 5 15 15 15 15 10 10 15 3 3 3 1 1 0 3 PC Balance Reporting 5 15 15 15 5 5 0 15 3 3 3 3 0 0 3 Controlled Disbursements 5 15 15 15 15 0 0 15 3 3 1 1 0 3 Wires via PC 4 12 12 4 4 4 0 12 3 3 3 1 0 0 3 Automated (PC) Stop Pymis 3 9 9 9 3 0 0 9 3 3 3 0 0 0 3 Positive Pay 3 9 9 9 0 0 0 9 3 3 3 0 0 0 3 Cancelled CKs on CD ROM 3 9 9 9 0 0 0 0 TOTALS 64 84 76 42 19 10 64 City of Round Rock, Texas Depository Services Review AVAILABILITY MATRIX Best Price = 6 Second Best = 5 Third Best = 4 Fourth Best = 3 Fifth Best = 2 Sixth = 1 Unavailable = 0 Service Provided COST MATRIX Semce Prwlded TOTAL WEIGHTED AVERAGE tlea Welghl TCB eanki I Nonvest Hartland ITx Henna gel lst Texas Ba Available = 3 Unavailable = 0 Currently unavailable but will become available = 1 " Direct Deposit via Diskette but not PC to PC = 2 Must Have = 5 Needed = 4 Would Ike to have = 3 AVAILABILITY MATRIX RATINGS: Please be aware that because this le based on services available, that more than one Bank can receive the sane score. de a TCB 1 Banks 1 Ndrwest 1 Hartland ITx Hentagel let Texas Bon COST MATRIX RATINGS: Please be aware that more than one Bank can receive the sate raring for the same category. (La. 2 e. 3 banks could receive '6' 11they have the sae stoppyrnt fee. The neat bestprke(s) would then resolve '6', the next best prloo((s) '4', etc). SCORES: 66.84 Excellent 57.65 Acceptable 057 Unacceptable In order fo be deemed 'Acceptable' you would need fo have available those servroes weighted 5 & 4. SCORES: 4048 Excellent 28-39 Acceptable <28 Unacceptable In order fo be deemed 'Acceptable' you would need at least the following scamp. 1 Category 6 6 1 Category 6 5 2 Category Q 4 2 Category 3 1 Category 6 2 1 Category Q 1 TOTAL SCORES: 106.132 Excellent 85.105 Acceptable 120 118 104 69 54 31 132 085 Unacceptable DATE: August 11, 1997 SUBJECT: City Council Meeting, August 14, 1997 ITEM: 13. D. Consider a resolution authorizing the Mayor to execute a Depository Services & Banking Contract for a City depository. STAFF RESOURCE PERSON: David Kautz STAFF RECOMMENDATION: r The City has received 6 applications for City Depository. A summary of the banking applications is attached which provides information about the services offered by the banks and the costs for those services. Staff recommends accepting the application of Texas Commerce Bank, NA and entering into a depository agreement with Texas Commerce Bank. Of the applications received, Texas Commerce Bank's availability of services meets the City's needs at the lowest net cost.