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TREASURER OF THE COUNTY OF ____________________________________, AR
SECURITY AGREEMENT FOR FUNDS HELD IN DEPOSIT
This Agreement entered into as of the _______ day of ___________________, __________, by
and between ______________________________________________,Treasurer of the County
of ________________________________, (“Depositor”) and
_______________________________________, ____________________________, ________.
(Bank Name) (City, State) (Zip Code)
(“Institution”).
WITNESSETH
WHEREAS, the Depositor is the duly elected Treasurer of _______________________________
(“County”), and, as such, custodian for various county and agency funds under the laws of the
State of Arkansas; and
WHEREAS, pursuant to Arkansas Code Annotated §19-8-101 et. seq., the Institution has been
designated as a depository of public funds; and
WHEREAS, the Institution has agreed to secure the funds of the Depositor so deposited with it
by conveying to the Depositor a security interest in eligible securities owned by the Institution,
as allowed by 12 U.S.C. §90 and as provided in Arkansas Code Annotated §19-8-203 and §23-47-
203, as amended;
NOW, THEREFORE, in consideration of the Depositor depositing certain of its funds with the
Institution, and for other good and valuable consideration, it is agreed between the Depositor
and the Institution as follows:
1. For the purpose of securing the funds deposited by the Depositor with the Institution,
the Institution hereby agrees to assign, transfer, pledge and convey to the Depositor a
perfected security interest in eligible securities owned by the Institution, as allowed by
12 U.S.C. §90 and as provided in Arkansas Code Annotated §19-8-203 and §23-47-203,
as amended. The securities pledged as collateral hereunder ("Collateral") shall at all
times have a market value, as determined by the Depositor equal to at least 105% (the
"Maintenance Percentage") of the amount of funds of the Depositor so deposited with
the Institution. Each pledge of securities as Collateral hereunder shall be made as
follows:
a. In the case of any uncertificated securities issued by the United States and
registered in the name of the Institution by the Federal Reserve Bank of St. Louis
or any branch thereof, by delivery by the Institution to the Depositor of a
written confirmation setting forth the securities pledged and also by the
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Institution identifying on its books and records as being pledged to the
Depositor specific securities or a quantity of specific securities that constitute or
are part of a fungible bulk of securities owned by the Institution;
b. In the case of any uncertificated securities issued by the United States and held
for the account of the Institution by another financial intermediary (a bank or a
securities broker-dealer), by delivery by the financial intermediary to the
Institution and the Depositor of a written confirmation setting forth the
securities pledged, together with identification by the Institution on its books
and records of the pledge of such securities to the Depositor and identification
by the financial intermediary on its books and records of the pledge of such
securities to the Depositor;
c. In the case of any securities issued in the form of certificates and held in the
Institution's possession, by delivery or transfer of such certificates (in bearer
form or with instruments of transfer duly endorsed in blank) to the address or
account of the Depositor; and
d. In the case of any securities issued in the form of certificates and held in the
possession of a financial intermediary (a bank or a securities broker-dealer) for
the account of the Institution, by delivery or transfer of such certificates (in
bearer form or with instruments of transfer duly endorsed in blank) to the
address or account of the Depositor or by delivery by the financial intermediary
to the Depositor and the Institution of a written confirmation setting forth the
securities pledged together with identification by the Institution on its books and
records of the pledge to the Depositor of the specific certificated securities held
in the financial intermediary's possession and identification by the financial
intermediary on its books and records of the pledge to the Depositor of the
specific certificated securities held in its possession for the account of the
Institution. Each written confirmation delivered to the Depositor pursuant to
this Agreement shall set forth, at a minimum, (i) a description of the securities
pledged as collateral hereunder, including the type, cusip number, maturity date,
interest rate and par amount of each security pledged, (ii) the amount of funds
of the Depositor on deposit as of the date of the confirmation, (iii) the market
value of the securities pledged as collateral as of a recent date, and (iv) a
statement that the confirmation has been delivered to the Depositor pursuant
to the terms of this Agreement.
e. In the case of letters of credit, surety bonds and private deposit insurance
policies, the issuer will be identified along with the coverage amount. The
instrument will permit Depositor to make a claim directly on the issuer of the
instrument in the event of default, financial failure or insolvency of the
Institution. These instruments will be delivered to Depositor and risk of loss
shall be with the Institution until the instrument is actually received by
Depositor. Institution will also require the issuer of the Instrument to forward a
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copy of notification of coverage or insured limit to Depositor. As relevant to
surety bonds, any surety bond pledged as collateral is irrevocable and absolute,
and issuer of the surety bond cannot provide surety bonds for any one bank or
financial institution in an amount that exceeds ten percent (10%) of the surety
bond insurer’s policyholders’ surplus and contingency reserve, net of
reinsurance.
f. Each written confirmation delivered to the Depositor pursuant to this
Agreement shall set forth, at a minimum, (i) a description of the securities
pledged as collateral hereunder, including the type, cusip number, maturity date,
interest rate and par amount of each security pledged, (ii) the amount of funds
of the Depositor on deposit with the Institution as of the date of the
confirmation, (iii) the market value of the securities pledged as collateral as of a
recent date, and (iv) a statement that the confirmation has been delivered to the
Depositor pursuant to the terms of this Agreement. A current statement
reflecting pledged Collateral will be provided to both Depositor and Pledgor by
Custodian, the holder of Depositor’s Collateral, on a monthly basis.
2. If at any time the ratio of the market value of the Collateral to the amount of funds on
deposit is less than the Maintenance Percentage, then the Institution shall assign,
pledge and convey a security interest and transfer to the Depositor securities of the
type eligible to be pledged pursuant to Arkansas Code Annotated §19-8-203 and §23-47-
203, as amended, and in such amount so that the ratio of the market value of such
pledged securities to the amount of funds on deposit shall be at least equal to the
Maintenance Percentage. Any additional pledge of Collateral hereunder shall be
approved by an officer of the Institution duly authorized by resolutions of the Board of
Directors to approve substitutions of collateral, releases of collateral, and additional
pledges of collateral under this Agreement ("Duly Authorized Institution Officer").
3. The Institution shall have the right, from time to time, after approval thereof by a Duly
Authorized Institution Officer, to withdraw any of the pledged securities and substitute
therefore other pledged securities of the same type and of like amount of the securities
withdrawn upon compliance with the requirements of paragraph 1 hereof and delivery
to the Depositor of written notice of such substitution, specifically identifying the
securities withdrawn and the securities substituted therefore.
4. Any pledge hereunder shall be a continuing pledge and shall secure not only such
deposits that are held by the Institution at the time of the transfer of the Collateral to
the Depositor hereunder, but also any and all subsequent deposits of funds with the
Institution by the Depositor, notwithstanding the account or accounts in which such
funds may be held or identified by the Institution.
5. The pledge of Collateral by the Institution to secure the deposits of the Depositor shall
be in addition to, and shall in no way eliminate or diminish, any insurance coverage to
which the Depositor may be entitled under the rules and regulations of the Federal
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Deposit Insurance Corporation or any private insurance carried by the Institution for the
purpose of protecting the claims and rights of its depositors.
6. It is agreed that when the Institution shall have paid out and accounted for all the funds
of the Depositor so deposited with the Institution, then and in that event any and all
securities pledged as Collateral under this Agreement shall be released from the
security interest created hereunder, and the Institution and the Depositor shall take
whatever actions may be necessary to cause a transfer of such securities to the
Institution free and clear of any liens created hereunder.
7. The Institution hereby represents to the Depositor that (i) it is a national bank, state
bank, out-of-state bank with Certificate of Authority under Arkansas Code Annotated
§23-48-1001 or savings and loan association, duly organized and validly existing under
the laws of the United States or the State of Arkansas, (ii) it has, or will have at the time
of delivery of any securities as Collateral under this Agreement, the right, power and
authority to grant a security interest therein with priority over any other rights or
interests therein, (iii) the execution and delivery of this Agreement and the pledge of
securities as Collateral hereunder has been approved by its Board of Directors, and (iv)
the execution and delivery of this Agreement and the pledge of securities as Collateral
hereunder will not violate or be in conflict with the Articles of Association or By-laws of
the Institution, any agreement or instrument to which the Institution may be a party,
any rule, regulation or order of any banking regulator applicable to the Institution, or
any internal policy of the Institution adopted by its Board of Directors.
8. All of the terms and provisions of this Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and assigns.
9. This Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which taken together shall constitute one and the same
instrument.
10. In any action or proceeding which a party may be required to prosecute to enforce its
respective rights hereunder, the unsuccessful party therein agrees to pay all reasonable
costs incurred by the prevailing party therein, including reasonable attorney's fees, to be
fixed by the court, and said costs and attorney's fees shall be made a part of the
judgment of said action.
11. This Agreement shall be governed by and construed in accordance with the laws of the
State of Arkansas and it supersedes any and all prior agreements, arrangements or
understandings with respect to the subject matter hereof.
12. No provision of this Agreement may be waived except by a writing signed by the party
to be bound thereby and any waiver of any nature shall not be construed to act as a
waiver of subsequent acts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first written above.
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INSTITUTION:
____________________________________
Bank Name
____________________________________
City, State, Zip
Address for Notices:
____________________________________
____________________________________
ATTEST:
_________________________________ ____________________________________
Signature
____________________________________
Title
DEPOSITOR:
____________________________________
Treasurer Name
TREASURER OF _______________________
County
Address for Notices:
____________________________________
____________________________________
ATTEST:
__________________________________ ____________________________________
Signature