1994-117E.:\WPD0CS\0RD\DEP0SIT.PLE
ORDINANCE NO. 9'q-117
AN ORDINANCE AMENDING ORDINANCE NO. 93-176 RELATING TO THE DESIG-
NATING OF DEPOSITORIES FOR CITY FUNDS TO PROVIDE FOR THE EXECUTION
OF DEPOSITORY PLEDGE AGREEMENTS BETWEEN THE CITY AND SUCH DEPOSITO-
RIES; AND PROVIDING FOR AN EFFECTIVE DATE.
WHEREAS, the City's independent auditing firm has recommended
that depositories for City funds execute pledge agreements with the
City that clearly delineate collateral responsibilities, levels and
safekeeping duties of depositories; and
WHEREAS, the failure of the depositories and the City to exe-
cute depository pledge agreements could result in the loss of col-
lateral if a depository were to go into bankruptcy based on the
court decision in North Arkansas Medical Center v. Barrett, 962
F.2d 780 (Eighth Circuit, 1992); NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION I. That Ordinance No. 93-176 relating to the
designating of depositories for City funds is amended to provide
that the City and its depositories (where the possibility exists
that at any point in time funds of the City in excess of $100,000
may be on deposit) shall execute Depository Pledge Agreements in a
form substantially the same as the pledge agreement between the
City, First State Bank and Nations Bank, attached hereto and made
a part hereof for all purposes. The terms of such pledge agreement
may be modified only if the City Manager and City Attorney agree
with the revised text.
SECTION II. That the council hereby authorizes the City
Manager to execute such agreements on behalf of the City of Denton.
SECTION III. That this ordinance shall be effective immedi-
ately from and after its passage and approval by the City Council
of the City of Denton.
PASSED AND APPROVED this the day of , 1994.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
BY:
Loo
APPROVED AS TO LEGAL FORM:
DEBRA A. DRAYOVITCH, CITY ATTORNEY
BY: zef L6/,?- cG
PAGE 2
DEPOSITORY PLEDGE AGREEMENT
Whereas, City of Denton (hereinafter called "Depositor") has selected FIRST
STATE BANK OF TEXAS, a bank chartered by the State of Texas, (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)
Employee Claims Account
Operating Account
Utility Sinking Fund
Payroll Account
Rehabilitation Commission
Transportation Grant
CDBG Commercial Development
Block Grant
Control Concentration
City of Denton
Cloride Branch
Security Account
Industrial Development
Authority
Denton Retirement &
Nursing Center Finance
Authority
Account
Type of Account Number
Public Funds Checking
Public Funds Checking
Public Funds Checking
Public Funds Checking
Public Funds Checking
Public Funds Checking
00-1009-0
00-1016-5
00-1017-3
00-1077-7
00-1363-1
00-3104-7
Public Funds Checking 01-3184-7
Public Funds NOW Checking 00-1395-3
Public Funds NOW Checking 00-1408-4
Public Funds Money Market 50-0018-7
Public Funds Money Market 51-0571-3
Public Funds Checking 00-1249-2
Public Funds Checking 01-0939-7
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 Securities 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:
Page 1
1. Depositor deposits shall be secured and Bank hereby grants a security
interest to Depositor in all Approved Securities held in safekeeping at Nations Bank,
Texas, (the "Safekeeping Institution"). Except as provided in paragraph 6 of 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 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 be subject to the approval of
Depositor. 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 to accept interest bearing time deposits
of Depositor in excess of $20,000,000 (twenty million dollars), but may choose to
accept such deposits at its discretion.
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 turn
over to its successor all funds, property and things of value coming into its hands as
depository.
6. Upon default of any of the Bank's 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.
Page 2
7. The Safekeeping Institution named herein hereby agrees to hold all
Approved Securities deposited with it pursuant to the terms of this Agreement 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 Securi-
ties.
8. This agreement may be terminated by either the Bank, Depositor or the
Safekeeping Institution by giving thirty (30) days prior written notice to 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.
WITNESS the execution hereof this day of~ 1994.
ATTEST: DEPOSITOR:
BY.
aJ/~)1L1.//~ G!/~ ~7~~qq
ATTEST:
T., -I..r,
BANK:
BY:~
NAME:
ATTEST:
BY:~ e
NAME: OIL cc, r a t D4
FIRST STATE BANK OF TEXAS
A Bank Chartered by the
State of Texas
BY:
NAME: William E. Bonds
TITLE: Executive Vice President/CFO
SAFEKEEPING INSTITUTION:
Nations Bank, Texas
A Bank Charted by the State
of Texas
BY: r
NAME: ur; :'IS E. L ii(YVVN
TITLE:
Page 3
ADDENDUM A
The following designated individuals are authorized representatives empowered to
direct FIRST STATE BANK OF TEXAS, a bank chartered by the State of Texas (the
"Bank") and NATIONS BANK, TEXAS, (the "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.
J.
Name and Title
Lloyd V. Harrell
City Manager
Rick Svehla
Deputy City Manager
Kathy DuBose, Acting
Executive Director of Finance
Harlan L. Jefferson, Director
Treasury Operations
Page 4
Authnri7ed Officer's Sianature
ADDENDUM B
FIRST STATE BANK OF TEXAS, a bank chartered by the State of Texas (the "Bank")
has designated the following officers as specifically authorized to instruct City of
Denton (the "Depositor") and NATIONS BANK, TEXAS (the 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.
Authorized Officer's zSi nature
Name and Title
William E. Bonds, Exec. VP/CFO/Cashier
Deborah Darley, VP & Controller
Greg Lytle, Accounting Supervisor
Page 5
CERTIFICATE OF SECRETARY OF
THE BOARD OF DIRECTORS OF
FIRST STATE BANK OF TEXAS
A BANK CHARTERED BY THE STATE OF TEXAS
The undersigned, being the duly appointed Secretary of the Board of Directors
(the "Board") of FIRST STATE BANK OF TEXAS, a bank chartered by the State of
Texas (the "Bank"), hereby certifies that:
(1) On , 1994, the Board approved the pledge of collateral,
as require y the depository contract with the City of Denton (the "City"), to
secure the Bank's obligations with respect to deposits maintained at the Bank
by the City.
(2) The minutes of the Board meeting held on y~(3 , 1994, will be
maintained as part of the permanent records of the Bank.
Date:
BY: 4-U~Lf 6ALA~
NAME: I)- io-2e Cl/'omhiL
TITLE: Secretary
Page 6