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HomeMy WebLinkAboutResolution - 3901 - Authorizes Investment Pool Participation Agreements - 05_28_1992Resolution No. 3901 May 28, 1992 Item #17 RESOLUTION WHEREAS, the City of Lubbock (this "Governmental Entity") is a "local government" within the meaning of The Interlocal Cooperation Act, Article 4413(32c), Vernon's Texas Civil Statutes, as amended (the "Interlocal Act"), and as such is authorized to contract with one or more other such local governments for the joint investment of public funds of such local governments in any investments in which each such local government is authorized to invest its funds; and WHEREAS, this Governmental Entity is authorized by the Public Funds Investment Act of 1987, Article 842a-2, Vernon's Texas Civil Statutes, as amended (the "Public Investment Act"), to invest its public funds in any of the obligations or securities described in section 2 or 3 of the Public Investment Act, as amended; and WHEREAS, the joint investment of local public funds is in the best interest of this Governmental Entity and its inhabitants; and WHEREAS, this Governmental Entity therefore desires to authorize the joint investment of its public funds with other local governments pursuant to the Interlocal Act and to enter into a contract with such local governments to provide for the terms on which public funds so invested may be combined, invested, secured, and accounted for; NOW THEREFORE: BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK: SECTION 1. Authorization of Contract. The terms of the Common Investment Contract attached hereto as Exhibit A, including the investment objectives and purposes described therein, are hereby approved. The [Mayor/County Judge/President of the Board of Trustees] of the Governmental Entity is hereby authorized and instructed to execute and deliver, and the [Secretary/County Clerk/Secretary of the Board of Trustees] of this Governmental Entity is hereby authorized to attest, a Common Investment Contract substantially in the form and to the effect so attached (the "Interlocal Contract"), and there upon the designations, delegations, approvals, and authorizations described thereby shall be authorized, approved, and granted by this Governmental Entity without further act by this Governing Body. SECTION 2. Authorization of Investments. Upon the execution of the Interlocal Contract by this Governmental Entity, each officer and employee of this Governmental Entity who is designated to be responsible for the investment of public funds of this Governmental Entity pursuant to Article 4413(34c). Vernon's Texas Civil Statutes, as amended (the "Investment Procedures Act"), is authorized to transfer public funds of this Governmental Entity to the Fund to be created by the Interlocal Contract in order to acquire an interest in any Series thereof, provided that, in the case of any. Series other than the initial Series created by the Interlocal Contract, (1) the funds of such Series may be invested solely in obligations described in the Public Investment Act or in any other obligations in which this Governmental Entity may lawfully invest its funds and (2) this Governing Body has approved the investment rules and policies governing such investments. All such transfers shall be made in accordance with investment policies and procedures heretofore adopted by this Governmental Entity pursuant to the Investment Procedures Act, as such policies and procedures may be amended from time to time, but to the same extent as if such policies and procedures expressly authorized such transfers as direct investments of public funds of this Governmental Entity. SECTION 3. Notices, Etc. All notices, demands, requests, drafts, consents, approvals, waivers, ballots, and other documents and action which may be given or taken by this Governmental Entity under the Interlocal Contract may be given or taken by any officer of this Governmental Entity who at the time is designated pursuant to the Investment Procedures Act as responsible for the Investment of public funds of this Governmental Entity. SECTION 4. Further Acts. Each officer of this Governmental Entity is hereby authorized to take any and all action necessary to effect the Interlocal Contract and joint investments authorized hereby and to perform any obligation of this Governmental Entity thereunder. SECTION 5. Repealer. All ordinances, orders, or resolutions, or parts thereof, which are in conflict or inconsistent with any provision hereof are hereby repealed and declared to be inapplicable to the extent such conflict, and the provisions hereof shall be and remain controlling to the matters ordained, orderVd—,—bT--rQ.$olved herar Passed by the City Counci ary APPROVED AS TO CONTENT: /Kjobert Massenga e, AssioStant City L14anager for Financial Services AS TO FORM: vanala u. vanalver, first ASSYS City Attorney DGV:dw agenda-D$2/Intact.Rea of as - 2 - Local Government Investment Fund for Texas Common Investment Contract Conformed Copy I.G-TIP-CIC-3/90 { Table of Contents Recitations Article I - Name and Definitions Section 1. Name of Agency Section 2. Definitions Article II - Purpose, Objectives and Standard of Care Section 1. Purposes and Objectives of Contract Section 2. Standard of Care Article III - Parties to Contract Section 1. Eligibility Section 2. Entry into Contract Section 3. Termination of Participation Section 4. Effect of Amendment of Interlocal Cooperation Act. Article IV - Beneficial Interests Section 1. Units of Beneficial Interest Section 2. Establishment of Series Section 3. Ownership of Units Section 4. Placement of Assets with the Fund Section 5. Assets and Liabilities of Series Section 6. No Preemptive Rights Section 7. Limitation of Personal Liability Article V - First Series Section 1. Establishment of First Series Section 2. Eligible Governmental Entities Section 3. Eligible Investments Section 4. Investment Policies and Restrictions Section S. Investment Officer Section 6. Distributions Section 7. Custodian i Article VI - The Directors Section 1. Management of the Fund Section 2. Number of Directors Section 3. Initial Board of Directors Section 4. Ex Officio Directors Section S. Term and Election Section 6. Effect of Death, Resignation, Etc. of a Director i Article VII - Powers of Directors Section 1. Powers Section 2. Action by the Directors Section 3. Officers Article VIII - Adviser Section 1. Advisory and Service Agreement Section 2. Duties Section 3. Provision of Services Article IX - Unitholders' Voting Powers and Meetings Section 1. Voting Powers Section 2. Meetings Section 3. Quorum and Vote Required Article X - Custodian Section 1. Appointment and Duties Section 2. Central Certificate System Article XI - Investment Officer Section 1. Appointment Section 2. Scope of Authority Section 3. Management Reports Article XII - Distributions and Redemptions Section 1. Distributions -- Section 2. Redemptions Section 3. Determination of Net Asset Value and Valuation of Portfolio Assets Section 4. Suspension of the Right of Redemption Article XIII - Limitation of Liability and Indemnification Section 1. Limitation of Liability Section 2. Indemnification Section 3. Ex Officio Directors ' Article XIV - Miscellaneous Section 1. Fund Not a Partnership Section 2. Ownership of Assets of the Fund Section 3. Director's Good Faith Action, Expert Advice, No Bond or Surety Section 4. Establishment of Record Dates Section S. Termination of Fund Section 6. Open Records Act; References, Headings; Principal Office Section 7. Applicable Law Section S. Amendments Section 9. Fiscal Year Section 10. Defect as to Provision or Participation ii •mtu• 3v Ma &1KQZkX1400 Whereas, Article 4413(32c) of the Texas Revised Civil Statutes, as amended, (hereinafter, the 'Interlocal Cooperation Act") provides that any local government may contract or agree with one or more local governments to perform governmental functions and services; Whereas, the Interlocal Cooperation Act defines "governmental functions and services" to include public funds investment; Whereas, the Interlocal Cooperation Act authorizes the creation of an administrative agency for the supervision of performance of contracts or agreements among "local governments"; Whereas, the Interlocal Cooperation Act defines "local government' as a county; a home rule city or a city, village, or town organized under the general laws of the State of Texas; a special district; a school district; a junior college district; any other legally constituted political subdivision of the State of Texas or any adjoining state; or a combination of political subdivisions; Whereas, the City of Forth Worth, the City of McKinney, and the North Central Texas Council of Governments, (hereinafter, the "Initial Participants") are each a "local government" as defined in the Interlocal Cooperation Act and desire to enter into this contract for the combined investment of public funds; and Whereas, this Common Investment Contract is intended to be a joint agreement entered into pursuant to the Interlocal Cooperation Act for the purpose of better performing the Initial Participants' responsibilities to invest their public funds, as set forth in Section 1 of Article II; Whereas, the governing body of each of the Initial Participants has duly adopted a resolution authorizing the respective Initial Participants to become parties to this Common Investment Contract in accordance with Section 4 of the Interlocal Cooperation Act; Whereas, the governing body of each of the Initial Participants has adopted the investment objectives and purposes set forth in Article II of this Common Investment Contract; and Whereas, the Initial Participants anticipate that other 'local governments' as defined in the Interlocal Cooperation Act may desire to invest public assets jointly with the Initial Participants or other local governments; Now therefore, the Initial Participants do hereby create an agency pursuant to Section 4(d) of the Interlocal Cooperation Act to hold legal title to and manage all monies, assets, securities, funds and property now or hereafter transferred to or held by it pursuant to this Common Investment Contract all for the benefit of such local governments as may from time to time become Participants; and The Initial Participants do further declare their agreement to be bound and abide by the terms of this Common Investment Contract. NAME AND DEFINITIONS Section 1. The agency hereby created shall be known as the "Local Government Investment Fund for Texas." DEFINITIONS Section 2. Wherever used herein, unless otherwise required by the context or specifically provided: (a) "Adviser" refers to the party with whom the Fund has contracted pursuant to Article VIII; and "Advisory and Servicing Agreement" refers to the contract between the Fund and the Adviser; (b) "Bylaws" refers to the Bylaws of the Fund, if any, as amended from time to time; (c) "Contract" or "Common Investment Contract" refers to this instrument executed by the Initial Participants and establishing the Fund; and shall encompass any amendments and supplements to this Contract which are duly approved pursuant to this Contract or the Bylaws of the Fund; and shall also encompass the written instruments by which Governmental Entities become parties to, or terminate their participation under, this Contract; (d) "Directors" refer to individual directors in their capacity as directors hereunder of the Fund, and their successor or successors for the time being in office as such directors; and "Board of Directors" refers to the governing body of the Fund; z)rovided, bowever that, except as otherwise specified, the term "Directors" shall not refer to IL off icio Directors; (e) "Fund" refers to the Local Government Investment Fund for Texas; (f) "Governmental Entity refers to a "local government" as defined in the Interlocal Cooperation Act, as amended from time to time; provided, that political subdivisions of a state other than Texas shall not be deemed a "Governmental Entity"; (g) "ILFA" refers to Article 4413(34c), Texas Revised Civil Statutes, as amended from time to time; (h) "Interlocal Cooperation Act" refers to Article 4413(32c) of the Texas Revised Civil Statutes, as amended from time to time; (i) •Investment Officer" refers to an officer or employee of the Fund who shall be designated in accordance with the provisions of Article XI; (j) "Net Asset Value" refers to the net asset value of the Fund determined in the manner provided in Article XII, Section 3; (k) "Open Meetings Law" refers to Article 6252-17, Texas Revised Civil Statutes, and "Open Records Act" refers to Article 6252-17a, Texas Revised Civil Statutes, both as amended from time to time; (1) "PFIA" refers to Article 842a-2, Texas Revised Civil Statutes, as amended from time to time; (m) "Participant" refers ito'e party which has entered into this Common Investment Contract through due and proper authorization, and which has not terminated such status; and "Participation" refers to the status of an entity as a Participant; (n) "Series" refers to any subdivision of the assets of the Fund established in accordance with the provisions of Section 2 of Article IV; and "Series Supplement" refers to the written document containing the terms of a certain Series; and (o) "Units" refers to the equal proportionate units of undivided beneficial interest in the assets of the Fund or of each Series from time to time, including fractions of Units as well as whole Units (which the Participants intend to maintain at a stable $1.00 Net Asset Value, in accordance with Article II, Section l(e) of this Contract); and "Unitholder" refers to a record owner of Units of the Fund or of a Series. References in the singular number in this Contract shall be considered to include the plural, if and when appropriate, and vice -versa. PURPOSE,OBJECTIVES AND STANDARD OF PURPOSEOBJECTIVES OF • Section 1. The purpose of this Common Investment Contract is to create an instrumentality and agency (the "Fund") pursuant to the Interlocal Cooperation Act, through which Governmental Entities may jointly invest their public funds. The objectives of the Fund include: (a) Improving the efficiency and effectiveness of Participants in the investment of their public funds; (b) Obtaining the highest possible rate of return on Fund assets, while providing necessary protection of principal consistent with the operating requirements of Unitholders. In seeking to attain this objective, the Fund will place its highest priority upon safety of principal, its second upon liquidity, and its third upon income, . (c) Minimizing administrative fees and transactional and other expenses of investing public funds; (d) Providing Governmental Entities with a continuous source of managed investments, within the limitations upon such investments prescribed by applicable law; and I (e) Managing the assets of the Fund with the intent of maintaining a stable $1.00 net asset value for each whole Unit. STANDARD OF CARE Section 2. Assets held by the Fund pursuant to this Common Investment Contract shall be invested with such judgment and care, under standards then prevailing, that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived; all in accordance with Section 4 of PFIA. 3 ELIGIBILITY Section 1. No entity which is not a Governmental Entity shall become a Participant. Subject to the preceding sentence, the Directors shall have sole discretion (i) to determine whether a Governmental Entity, under Texas law, is eligible to become a Participant and (ii) to designate categories of Governmental Entities eligible to become Participants in the Fund, or in any Series thereof. In making a determination as to whether an entity is an eligible Governmental Entity, the Directors of the Fund, after obtaining the advice of counsel, shall have final authority to determine the question. ENTRY INTO CONTRACT Section 2. (a) A Governmental Entity may enter into this Common Investment Contract, without further action by the existing Participants, by executing and delivering to the Fund an agreement to be bound by its terms pursuant to duly exercised authority. Such agreement need not be physically affixed to a copy of this Contract, but instead may be indicated by reference to this Contract. The Directors shall establish the form of such agreement and such additional procedures and requirements for entering into this Contract as they deem appropriate from time to time. (b) In executing an agreement under subsection (a) of this Section 2, a Governmental Entity shall be deemed to expressly (i) designate the Investment Officer(s) of the one or more Series into which the Governmental Entity places any of its public funds, as that Governmental Entity's Investment Officer responsible for such funds; (ii) designate the depository and custodian of the one or more Series into which the Governmental Entity places any of its public funds as that Governmental Entity's depository and custodian for such funds; (iii) delegate to the Fund the authority to hold legal title to the assets placed with the Fund; (iv) approve the investment objectives, policies, rules and procedures of the Fund or of any Series thereof, as the investment objectives, policies, rules and procedures of the Governmental Entity with respect to its assets transferred to the Fund or any Series thereof; and (v) provide authority to the Fund, its Directors, Adviser, officers, employees, and any of their agents to deposit, withdraw, invest, transfer and otherwise manage the funds which the Governmental Entity may place with the Fund; all in conformance with the terms of this Contract, and the investment objectives, policies, rules and procedures of the applicable Series and the requirements of the ILFA. • • • Section 3. Participants shall have the right to terminate their Participation in this Contract, and the Directors shall specify procedures for such termination. Such procedures shall require a Participant to redeem its Units in the Fund prior to such termination. The termination of Participation by any Participant shall not affect the validity of this Contract with respect to the remaining Participants. 4 Section 4. In the event that the Interlocal Cooperation Act is amended so as to expand the definition of "local government" therein, the Directors shall have power to determine whether, and under what circumstances, any new category of Governmental Entity may become a party to this Common Investment Contract. In the event that the Interlocal Cooperation Act is amended so as to exclude from the definition of "local government" therein any previously included entity, the Directors shall promptly determine whether any existing Participant has lost its status as a Governmental Entity (or will lose such status upon effectiveness of such amendment). If the Directors determine, after obtaining the advice of counsel, that an existing Participant is no longer a Governmental Entity (or will not be a Governmental Entity upon effectiveness of the amendment), the Directors shall so notify such Participant, redeem any Units held by that Participant in the Fund, and terminate such Participant as a party to this Contract. The Directors shall have final authority with respect to determinations under this Section 4. ARTICLE IV UNITS OF BENEFICIAL INTEREST Section 1. The undivided beneficial interests of Participants in the assets of the Fund or of any Series shall be represented by such Units of one or more separate and distinct Series as the Directors shall from time to time create and establish. The number of Units is unlimited and each Unit shall be without par value and shall be fully paid and nonassessable. The Directors shall have full power and authority, in their sole discretion and without obtaining any prior authorization or vote of the Unitholders of the Fund or of any Series of the Fund, to create and establish Units or any Series thereof with such preferences, voting powers, rights and privileges as the Directors may from time to time determine; to divide or combine the Units thereof into a greater or lesser number; to classify or reclassify any existing Units into one or more Series or classes of Units; and to take such other action with respect to the Units as the Directors may deem desirable; provided that the Directors may take no action pursuant to this Section 1 which would impair the beneficial interests of Unitholders in the then -existing assets of the Fund; and provided further• that such powers as the Directors may ordinarily exercise pursuant to this Section l shall not be inconsistent with the intent of maintaining a stable Net Asset Value of $1.00 per Unit. ESTABLISHMENT OF SERIES Section 2. (a) The first Series is hereby established pursuant to Article V of this Common Investment Contract. (b) The establishment of any future Series shall be effective upon the adoption of a resolution by a majority of the Directors. With respect to each such future Series, the Directors shall designate investment objectives and policies (which shall, so long as required by applicable law, comply with Section S of the PFIA and Section 6 of the ILFA, each as amended from time to time), authorized investments (and if repurchase agreements are authorized, the Custodian for pledged securities), categories of Governmental Entities eligible to own Units, authorized Investment Officers, and the relative rights and preferences of the holders of such Units; all of which shall be described in a written Series Supplement. (c) At any time that there are no Units outstanding of any particular Series previously established and designated, the Directors may by majority vote abolish that Series and the establishment and designation thereof. OWNERSHIP OF UNITS Section 3. Notwithstanding anything in this Contract to the contrary, ownership of Units in the Fund shall be limited to Participants. Ownership of Units shall be recorded in the books of the Fund. The Directors may make such rules as they consider appropriate, to the extent permitted by law, for the transfer of Units and similar, matters. The record books of the Fund shall be conclusive as to who are the holders of Units and as to the number of Units held from time to time by each Unitholder. MW ► • , I Section 4. The Directors shall accept transfers of funds to a Series of the Fund from such Governmental Entities as have become Participants on such terms as they may from time to time authorize. After the date of the initial transfer of funds to a Series, the number of Units of that Series to represent the initial transfer of funds may be considered as outstanding and the amount received by the Series on account of such transfer shall be treated as an asset of such Series of the Fund. Subsequent transfers of funds to the Series shall be credited to each Unitholder's account in the form of full Units at the Net Asset Value per Unit next determined after the funds are received; provided, however, that the Directors may, in their sole discretion, authorize the issuance of fractional Units. ASSETS AND LIABILITIES OF SERIES Section 5. (a) All consideration received by the Fund with respect to Units of a particular Series, together with all assets in which such consideration is invested or reinvested, all income, earnings, profits, and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation of such assets, and any funds or payments derived from any reinvestment of such proceeds in whatever form -the same may be, shall be referred to as "assets belonging to" that Series. In addition, any assets, income, earnings, profits, and proceeds thereof, funds, or payments which are not readily identifiable as belonging to any particular Series shall be allocated by the Directors between and among one or more of the Series in such manner as they, in their sole discretion, deem fair and equitable.. Each such allocation shall be referred to as assets belonging to that Series, and shall be conclusive and binding - upon all Fund Participants for all purposes. The assets belonging to a particular Series shall be so recorded upon the books of the Fund, and shall be held by the Fund for the benefit of the Unitholders of that Series. (b) The assets belonging to each particular Series shall be charged with all expenses, costs, charges and reserves attributable to that Series. Any expenses, costs, charges or reserves of the Fund which are not readily identifiable as belonging to any particular Series shall be allocated and charged by the Directors between or among any one or more of the Series in such manner as the Directors in their sole discretion deem fair and equitable, and such expenses, costs, charges and reserves shall be payable only from the assets belonging to the applicable Series. Each such allocation shall be conclusive and binding upon all Fund Participants for all purposes. Any creditor of any Series may look only to the assets of that Series to satisfy such creditor's debt. 6 (e) To the extent that the. expenses, costs, charges and reserves of the Fund or one or more Series thereof is allocated' pursuant to this Section S to the Units of a Participant, that Participant authorizes the payment of such out of, inter gJii earnings from the investment of that Participant's interest in Fund assets, which are current revenues of that Participant for the year and a fund within its immediate control when such items were incurred. NO PREEMPTIVE RTGHTS Section 6. Unitholders shall have no preemptive or other preferential right to acquire any additional Units of the Fund. Section 7. The Directors shall have no power to _bind any Unitholder or to call upon any Unitholder for the payment of any sum of money or assessment whatsoever other than such as the Unitholder may at any time agree to pay, by way of subscription for any Units or otherwise. Every contract or other undertaking by or on behalf of the Fund shall include a recitation limiting the obligation represented thereby to the Fund and its assets (but the omission of such a recitation shall not operate to bind any Participant). Section 1. The Initial Participants hereby agree that the first Series shall be established in conformance with the terms of this Common Investment Contract and the policies, objectives, restrictions and other terms of this Article V. ELIGIBLE GOVERNMENTAL ENTITIES Section 2. The following Governmental Entities situated in the state of Texas may become Participants in the first Series: (a) counties; (b) home rule cities; (c) cities and towns organized under the general laws of the state of Texas; (d) hospital districts; (e) districts created under Texas Constitution Article III, Section 52, or Article XVI, Section 59; (f) school districts; (g) junior college districts; and (h) any other Governmental Entity which is authorized by law to invest its funds in any and all securities in which assets of the Series may be invested. ►�! Section 3. The Series may invest in the following instruments: (a) obligations of the United States or its agencies and instrumentalities; (b) direct obligations of the State of Texas or its agencies; (c) other obligations, the principal of and interest on which are unconditionally guaranteed or insured by the State of Texas or the United States or its agencies and instrumentalities; (d) obligations of states, agencies, counties, cities, and other political subdivisions of any state having been rated as to investment quality by a nationally recognized investment rating firm and having received a rating of not less than A or its equivalent; 0d (e) certificates of deposit issued by state and national banks domiciled in Texas that are: (1) guaranteed or insured by the Federal Deposit Insurance Corporation, or its successor; or (2) secured by obligations that are described by (a)-(d) above, which are intended to include all direct federal agency or instrumentality issued mortgage backed securities that have a market value of not less than the principal amount of the certificates or in any other manner and amount provided by law for deposits of Participants; (f) certificates of deposit issued by savings and loan associations domiciled in Texas that are: (1) guaranteed or insured by the Federal Savings and Loan Insurance Corporation or its successor; or (2) secured by obligations that are described by (a)-(d) above, which are intended to include all direct federal agency or instrumentality issued mortgage backed securities that have a market value of not less than the principal amount of the certificates or in any other manner and amount provided by law for deposits of Participants; (g) prime domestic bankers' acceptances as defined in the PFIA; (h) commercial paper with a stated maturity of 270 days or less from the date of its issuance that either: (1) is rated not less than A-1, P-1 or the equivalent by at least two nationally recognized credit rating agencies; or (2) is rated at least A-1, P-1, or the equivalent by at least one nationally recognized credit rating agency and is fully secured by an irrevocable letter of credit issued by a bank organized and existing under the laws of the United States or any state thereof; and (i) repurchase agreements described in Section 2(a)(9) of the PFIA.. INVESTMENT POLICIES AND RESTRICTIONS Section 4. (a) The Series will purchase only instruments with a remaining maturity of one year or less, except that obligations underlying a repurchase agreement may have a final maturity of more than one year; (b) No more than 25% of the net assets of the Series may be invested in commercial paper of any one industry; except that there is no limitation on the percentage of net assets that may be invested in the banking industry (neither finance companies as a group or utility companies as a group are considered a single industry for purposes of this policy); 8 (c) Investment in instruments which are, not readily marketable (as determined in accordance with procedures used by the Adviser and approved by the Directors) will be limited to no more than10% of the Series' net assets at the time of purchase; (d) At the time of purchase no more than 10% of the Series' net assets will be invested in securities of any one issuer, except that there is no limitation on the percentage of net assets that may be invested in obligations of the United States Government and/or agencies thereof. For purposes of this subsection (d) of Section (4), "obligations of the United States Government and/or agencies thereof" shall include repurchase agreements collateralized by such obligations. 'Provided however, that this subsection (d) of Section 4 may be changed by the Board of Directors upon their discretion; and (e) The Series will be managed to maintain a dollar -weighted average portfolio maturity of 120 days or less. I RhIMMIAawel� Section 5. The Investment Officer for the first Series shall be Linda Patterson or any successor Investment Officer designated by the Directors. Section 6. Earnings on the assets of the first Series shall be accrued daily and shall be distributed on the first day of the month following the month in which such earnings are accrued. Such earnings may be distributed in the form of cash sent to a Participant, or credited to the Participant's account in the form of full or fractional Units. CUSTODIAN Section 7. The Custodian for the Series shall be. NCNB Texas National Bank, if such bank shall accept such designation on terms approved by the Directors or any duly authorized officers of the Fund, and otherwise shall be any bank or trust company which is domiciled in Texas, is authorized to exercise corporate trust powers, has a combined capital and surplus of at least $25,000,000, is subject to supervision or examination by federal or state authority, and has been designated as such by the Directors. The Custodian (and/or any of its agent(s) which are approved by the Board of Directors, and which (a) are subject to supervision by state or federal regulators; and (b) maintain at least $25,000,000 in capital and surplus) shall hold collateral securing repurchase agreements entered into by the Series. The Custodian shall be required to collateralize any cash of the Series held by it to the extent required by law. MANAGEMENT OF THE FUND Section 1. The business and affairs of the Fund shall be managed by the Directors, and they shall have all powers necessary and desirable to carry out that responsibility. Z R OF DI Section 2. The number of Directors shall initially be seven and shall thereafter be fixed from time to time by the Bylaws; provided. that the number of Directors (excluding Uc f ' . i Directors appointed pursuant to Section 4 of this Article VI) shall in no event be less than three or more than fifteen; and provided further that (except for U officio Directors appointed pursuant to Section 4 of this Article VI), no more than one Director may sit on the Board who is not an elected or appointed official of a Governmental Entity. ITIAL BOARD OF DIRECTOR Section 3. The initial Board of Directors shall serve for a two year term, and shall be comprised of the following individuals: Michael Eastland, Ralph Ellis, Jr., Winston Evans, James Forte, Donald E. Paschal, Jr., Linda Patterson, M. Wayne Usry. EX OFFICIO DIRECTORS Section 4. The Directors may, by their majority vote, appoint one or more C_x officio Director(s) to sit on the Board of Directors, with such powers and obligations as are set forth in the Bylaws of the Fund for such n offi Directors; r vi dcd that no Uc officio Director shall vote as a Director, nor have any power or effect with respect to such votes; nor shall the presence or absence of such ;x officio Director be considered for purposes of determining whether a quorum of Directors exists. The qualifications of persons to serve as U officio Directors shall not be subject to the requirements of this Article VI, but shall be in compliance with the Bylaws of the Fund. TERM AND ELECTION Section 5. Each Director of the Fund shall serve for a term of two years (except for those Directors whose terms are immediately subsequent to the terms of the initial Directors; the terms of such Directors shall be fixed by the Bylaws) and until his successor has been elected (or appointed) and has qualified to serve as Director. Elections of Directors shall be by affirmative vote of the holders of at least a plurality of the Units voting in such election. There shall be no cumulative voting in the election of Directors. The Directors may remove any Director from office in accordance with the provisions of the Bylaws. Also in accordance with the terms of "the Bylaws, the Directors may appoint any qualified person to fill the unexpired term of any Director who is removed or who otherwise fails to complete his term for any reason. EFFECT OF DEATH. RESIGNATION. ETC, OF A DIRECTOR Section 6. The death, declination, resignation, retirement, removal, incapacity, or inability of the Directors, or any one of them, shall not operate to annul the Fund or to revoke any existing agency created pursuant to the terms of this Common Investment Contract. ARTICLE VII POWERS OF DIRECTORS POWERS Section 1. The Directors shall have full power and authority to do any and all acts and to make and execute any and all contracts and instruments that arc necessary for or incidental to the management of the Fund or the investment of the assets thereof. 10 Subject to applicable law and this Common. In vestment Contract, the Directors shall have full authority and power to make, or cause to be made, any and all investments which they, in their discretion, shall deem proper to accomplish the objectives of the Fund. Subject to any limitation in this Common Investment Contract or applicable law, the Directors shall have power and authority: (a) To invest and reinvest cash and securities, and to hold cash or other property uninvested, without in any event being bound or limited by any present or future law . or custom in regard to investments by trustees; (b) To adopt Bylaws not inconsistent with this Common Investment Contract providing for the conduct of the business of the Fund and to amend and repeal them to the extent that they do not reserve that right to the Unitholders; (c) To appoint and ,remove one or more Investment Officers pursuant to Article XI; to appoint and remove such additional officers as they consider appropriate; and to appoint and terminate such agents as they consider appropriate; (d) To employ a bank or trust company, in accordance with applicable law, as custodian of any assets of the Fund, subject to any conditions set forth in this Common Investment Contract or in the Bylaws, if any; (e) To retain an Adviser with such powers, responsibilities and functions as are described in Article VIII hereof; (f) To set record dates in the manner hereinafter provided for; (g) To delegate, consistent with applicable law, such authority as they consider desirable to any officers of the Fund and to the Adviser, custodian or other agent; (h) To sell or exchange, or cause to be sold or exchanged, any or all of the assets of the Fund, subject to the provisions of Article XIV, section S(b) hereof; (i) To vote or give assent, or exercise any rights of ownership, with respect to securities or property and to execute and deliver powers of attorney to such person or persons as the Directors shall deem proper, granting to such person or persons such power and discretion with relation to securities or property as, subject to applicable law, the Directors shall deem proper; (j) To exercise powers and rights which in any manner arise out of ownership of securities; (k) To hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form; or either in its own name or in the name of a custodian or nominee or nominees, subject in either case to proper safeguards according to the usual practice of Texas trust companies or investment companies; (1) To establish separate and distinct Series with separately defined investment objectives and policies and distinct investment purposes in accordance with the provisions of Article IV; (m) To allocate assets and expenses of the Fund to a particular Series or to apportion the same between or among two or more Series, provided that any expenses incurred by a particular Series shall be payable solely out of the assets belonging to that Series as provided for in Article IV; 11 (n) To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or concern, any security of which is held in the Fund; and to consent to any contract, lease, mortgage, purchase, or sale of property by such corporation or concern; (o) To compromise, arbitrate, or otherwise adjust claims in favor of or against the Fund or any matter in controversy including, but not limited to, claims for taxes; (p) To make distributions of income and of capital gains to Unitholders in the manner hereinafter provided for; (q) To establish, from time to time, a minimum total investment for Unitholders, and to require the redemption of the Units of any Unitholders whose investment is less than such minimum upon giving notice to such Unitholder; (r) To amend, pursuant to Section 8 of Article XIV, this Common Investment Contract; and (s) To retain one or more auditors for the Fund or any Series thereof, and to require annual audits and reports, and such other audits and reports as they consider appropriate. Section 2. The Directors shall act by vote of a majority of the Directors present at a meeting duly called and held in accordance with the Open Meetings Law, at which a quorum is present. Notice of any such meeting shall be posted in accordance with the Open Meetings Law. Subject to applicable law, the Directors by majority vote may delegate to any one or more of their number theirauthority to approve particular matters or take particular actions on behalf of the Fund. OFFICERS Section 3. The Directors shall appoint one of "their number to be Chairman of the Board of Directors. The Chairman shall preside at all meetings of the Directors and shall be the Chief Executive Officer of the Fund. Other Officers may be appointed in accordance with, and shall have the duties prescribed by, the Bylaws. ARTICLE VIII ADVISER VISORY AND SERV Section 1. When authorized by a majority of the Directors, the Fund may, subject to the laws of the State of Texas, from time to time enter into an Advisory and Service Agreement whereby the other party to such agreement shall be designated as the Fund's Adviser, shall agree to serve as such, and shall undertake to provide to the Fund such advice, assistance, facilities, and services, upon such terms and conditions, as the Directors may in their discretion determine. 12 TIE Section 2. The Advisory and Service Agreement shall be set forth in writing and shall establish the duties and responsibilities of the Adviser. The Directors shall have power to retain the Adviser to provide such advice, assistance, facilities and services as the Directors shall, consistent with applicable law and this Contract, in their discretion determine, including, without limitation: provision of investment advice and management services; performance of transfer agent and pricing and bookkeeping services; solicitation of Participation in the Fund; and servicing of Unitholders and Participants. Section 3. The Adviser shall provide such advice, assistance, facilities and services as the Directors may determine, in accordance with Section 2 of this Article VIII; but the Adviser shall have the power, subject to applicable law and with the consent of the Directors, to retain third parties, whether or not affiliated with the Adviser, to perform all or some of the advice, assistance, facilities and services for which it has been retained by the Fund. VOTING POWERS Section 1. The Unitholders shall have power to vote (i) for the election of Directors as provided in Article VI, Section 5. (ii) for the removal of Directors as . provided in the Bylaws, and (iii) with respect to such additional matters relating to the Fund as may be required or authorized by law, by this Common Investment Contract, or the Bylaws of the Fund. Each whole Unit shall be entitled to one vote as to any matter on which it is entitled to vote, and each fractional Unit shall be entitled to a proportionate fractional vote. Units may be voted in person or by delivery of a written instrument. Until Units are issued, the Directors (i) may exercise all rights of Unitholdcrs and may take any action required or permitted by law, this Common Investment Contract or any Bylaws of the Fund to be taken by Unitholdcrs, and (ii) may waive the notice provision and 60-day period specified in Article XIV, Section 8 of this Common Investment Contract. MEETINGS Section 2. Meetings of Unitholders of the Fund or of one or more Series of the Fund may be called by the Directors in their discretion, and shall be called by the Directors upon the written request of Unitholders owning at least one -quarter of the outstanding Units entitled to vote at such a meeting. Unitholder meetings shall be held in accordance with the Open Meetings Law. QUORUM AND REQUIRED VOTE. Section 3. A majority of Units entitled to vote shall be a quorum for a Unitholder vote, or the transaction of any business at a Unitholders' meeting, except that where any provision of law or of this Common Investment Contract permits or requires that holders of any Series shall vote as a Series, then a majority of the aggregate number of Units of that Series entitled to vote shall be necessary to constitute a quorum for the transaction of business by that Series. Any lessernumber shall be sufficient for adjournments. Any adjourned session or sessions may be held within a reasonable time after the date set forth for the original meeting. Except when a larger vote is required by any provision of this Common Investment Contract or the Bylaws, if any, a majority of the Units voted shall decide any question and a plurality shall elect a Director, 13 provided that where any provision of this Common Investment Contract or the Bylaws, or of applicable law, permits or requires that the holders of any Series shall vote as a Series, then a majority of the Units of that Series voted on the matter shall decide that matter insofar as that Series is concerned. ARTICLE X CUSTODIAN APPOINTMENT AND DUTIES Section 1. The Fund shall at all times employ a bank or trust company as, custodian with authority as agent, but subject to such restrictions, limitations and other requirements, if any, as may be contained under the laws of the State of Texas, this Contract or the Bylaws of the Fund: 1) to hold the securities owned by the Fund in the name of the Fund, or otherwise as authorized by the Directors; and to deliver the same upon written order; 2) to receive and receipt for any moneys due to the Fund and deposit the same in its own banking department or elsewhere as the Directors may direct; and 3) to disburse such funds upon orders or vouchers; all upon such basis of compensation as may be authorized by the Directors. The custodian shall deliver and pay over all property of the Fund held by it as directed by the Directors. The Directors may also authorize the custodian to employ one or more sub custodians or agents from time to time to perform acts and services on behalf of the custodian. CENTRAL CERTIFICATE SYSTEM Section 2. _ Subject to the laws of the State of Texas, the Directors may direct the custodian to deposit all or any part of the securities owned by the Fund in a system for the central handling of securities pursuant to which system all securities of any particular class or series of any issuer deposited within the system are treated as tangible and may be transferred or pledged by bookkeeping entry without physical delivery of such securities, provided that all such deposits shall be subject to collateralization to the extent required by applicable law, and to withdrawal only upon the order of the Fund. ul � Section 1. The Directors shall designate for each Series of the Fund one or more Investment Officers who shall be responsible for the investment of assets transferred to that Series. By authorizing Participation in any Series of the Fund, each Governmental Entity shall thereby designate the Investment Officers for that Series as such Governmental Entity's Investment Officers responsible for the assets transferred to such Series, pursuant to the ILFA. No person who is an officer or employee of a regional planning commission, council of governments or similar regional planning agency created pursuant to Chapter 391, Local Government Code shall also serve as Investment Officer of the Fund or of any Series thereof. 14 Section 2. The Investment Officer of each Series shall be authorized to run the day-to-day operations of that Series in conformance with this Contract and such purposes, objectives and requirements as the Directors may set forth in that Series' Series Supplement. Within the limits of such Series Supplement, the Investment Officer of each Series shall be authorized, to the fullest extent allowable by law, to deposit, withdraw, invest, reinvest, transfer and otherwise manage the assets of that Series. Section 3. At least once each year, each Investment Officer shall prepare a written report concerning the investment transactions of the applicable Series for which such Investment Officer is responsible for the preceding year, and describing in detail the investment position of such Series as of the date of the report. If the Directors have appointed two or more Investment Officers for a Series, those officers shall prepare the report jointly. The report shall be signed by each Investment Officer and shall be delivered to the Board of Directors and the Chairman of the Fund. DISTRIBUTIONS Section 1. (a) The Directors shall have power, to the fullest extent permitted by the laws of Texas, at any time to declare and cause to be paid distributions on Units of a particular Series, from the assets belonging to that Series; which distributions, at the election of the Directors, may be paid monthly or otherwise pursuant to a standing resolution or resolutions adopted with such frequency as the Directors may determine, and may be payable in Units of that Series at the election of each Unitholdcr of that Series. The amount of such distributions and the payment of them shall be wholly in the discretion of the Directors. (b) Anything in this Contract to the contrary notwithstanding, the Directors may at any time declare and distribute pro rata among the Unitholders of a particular Series as of the record date of that Series fixed as provided in Section 4 of Article XIV hereof a distribution in the form of Units. MPTION Section 2. In case any holder of record of Units of a particular Series desires to redeem some or all of its Units and withdraw such of its assets as are represented by those Units, it may deposit at the office of the Adviser or other authorized agent of the Fund a written request or such other form of request as the Directors may from time to time authorize, requesting that the Series redeem the Units in accordance with this Section 2; and the Unitholdcr so requesting shall be entitled to require the Series to redeem such Units, and the Series shall redeem such Units, at the Net Asset Value thereof next calculated (as described in Section 3 hereof). The Series shall make payment for any such Units to be redeemed, as aforesaid, in cash from the assets of that Series. The Directors shall specify procedures pursuant to which a Unitholdcr may, under normal circumstances, redeem its Units and receive payment thereon by wire and in the form of immediately available funds within the same business day, but'(subject to the following sentence) in any event, payment for such Units shall be made by the Series to the 15 Unitholder of record no later than seven (7) days after the date upon which the request is effective. Notwithstanding anything to the contrary, the provisions of this Section 2 of Article XII, and any procedures for the redemption of Units and the payment thereon, shall be subject to Section 4 of this Article XII. DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSET Section 3. The net income of the Fund and Net Asset Value per Unit shall be determined as of the close of trading on each day the Federal Reserve Bank of Dallas is open for business (and at such other times as the Directors may determine). The net income of the Fund (from the time of the immediately preceding determination thereof) shall consist of (i) all interest income accrued on the portfolio assets of the Fund and (ii) less all expenses of the Fund. Such net income shall be determined on the accrual basis in accordance with good accounting practice. Interest income shall include amortization of purchase discount or premium. Securities in the Fund's portfolio may be valued at cost or on the basis of market quotations (under procedures established by the Directors), in the discretion of the Directors. ' All the net income of the Fund at the time of each determination thereof shall be allocated among and accrue to each Unitholder at the time of such determination in proportion to the number of Units then held by each Unitholdcr. If the net income of the Fund at the time of such determination is a negative amount, the Directors shall have power and authority (i) to allocate such negative amount among the Unitholders in proportion to the number of Units held at the time of such determination and to offset the allocable share of each Unitholder of such negative amount against any income accrued to such Unitholdcr, and/or (ii) to reduce the number of outstanding Units of the Fund by reducing the number of Units of each Unitholdcr by that number of Units which' represents the amount of its allocable share of such negative amount which is not offset against income accrued to such Unitholder. The Net,Asset Value per Unit at the time of each determination thereof shall be determined by taking the value of all assets of the Fund (valued on the same basis as in the determination of the net income of the Fund at the time of such determination) less accrued expenses and arrearages and dividing by the number of Units then outstanding. For purposes of this Section 3, the term "Fund" shall refer to each Series of the Fund if more than one Series is outstanding. The net income and Net Asset Value of each Series, and of Units of each Series, shall be calculated separately from that of all other Series. Section 4. The Directors may declare a suspension of the right of redemption or postpone the date of payment for the whole or any part of any period during which an emergency exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for the Fund fairly to determine the value of its net assets. Such suspension shall take effect at such time as the Directors shall specify but not later than the close of business on the business day next following the declaration of suspension, and thereafter there shall be no right of redemption or payment until the Directors shall declare the suspension at an end. Any suspension pursuant to this Section 4 shall continue only so long as the Directors conclude such suspension is in the best interest of the Unitholders. In the case of a suspension of the right of redemption, a Unitholdcr may either withdraw his request for redemption or receive payment based on the Net Asset Value per Unit existing after termination of the suspension. 16 ARTICLE LIMITATION OF LIABILITY XIII AND INDEMNIFICATION ..IMITATION OF LIABILITY Section 1. The Directors and officers of the Fund are governmental officials and shall enjoy the same immunities from liability and suit as are enjoyed by officers of the Participants. Provided they have acted in good faith under the belief that their actions are in the best interest of the Fund, the Directors and officers of the Fund shall not be responsible for or liable in any event for neglect or wrongdoing by them or any officer, agent, employee or investment adviser of the Fund, but nothing contained herein shall protect any Director against any liability to which he would otherwise be subject by reason of fraud, willful misfeasance or bad faith. RNOM101121WANLORI Section 2. (a) Subject to the exceptions and limitations contained in Section (b) below: (i) every person who is, or has been, a Director or officer of the Fund (hereinafter referred to as a "Covered Person"), whether or not such Covered Person has been alleged to have been negligent in the exercise of the duties of his office, shall be indemnified by the appropriate Series to the fullest extent permitted by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Director or' officer and against amounts paid or incurred by him in the settlement thereof; (ii) the words "claim," "action," "suit," or "proceeding" shall apply to all claims, actions, suits or proceedings (civil, criminal or other, including appeals), actual or threatened while in office or thereafter, and the words "liability" and "expenses" shall include, without limitation, attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities. (b) No indemnification shall be provided hereunder to a Covered Person: (i) who shall have been adjudicated by a court or body before which the proceeding was brought to be liable to the Fund or its Unitholders by reason of fraud, willful misfeasance or bad faith; or (ii) in the event of a settlement, unless there has been a determination that such Director or officer did not engage in fraud, willful misfeasance or bad faith, (A) by the court or other body approving the settlement; (B) by at least a majority of those Directors who are not parties to the matter, based upon review of readily available facts (as opposed to full trial -type inquiry); or (C) by written opinion of independent legal counsel based upon a review of readily available facts (as opposed to a full trial -type inquiry); 17 provided, however, that any Unitholder may, by appropriate legal proceedings, challenge any such determination by the Directors, or by independent counsel. (c) The rights of indemnification herein provided may be insured against by ::policies maintained by the Fund, shall be severable, shall not be exclusive of or „°affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be such Director or officer and shall inure to the benefit of the heirs, executors and administrators of such Covered Person. Nothing contained herein shall affect any rights to indemnification to which Fund personnel, other than Directors and officers, and other persons may be entitled by contract or otherwise under law. (d) Expenses in connection with the preparation and presentation of a defense to any claim, action, suit or proceeding of the character described in paragraph (a) of this Section 2 may be paid as an expense of the applicable Series from time to time prior to final disposition thereof upon receipt of an undertaking by or on behalf of such Covered Person that such amount will be paid over by him to the applicable Series if it is ultimately determined that he is not entitled to indemnification under this Section 2; provided, however, that either (a) such Covered Person shall have provided appropriate security for such undertaking, (b) the Fund is insured against losses arising out of any such advance payments or (e) either a majority of the Directors who are not parties to the matter, or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a trial -type inquiry or full investigation), that there is reason to believe that such Covered Person will be found entitled to indemnification under this Section 2. EX OFFICIO DIRECTORS Section 3. For purposes of this Article XIII, g_x off icio Directors shall be considered Directors, except VA offi Directors shall not participate in any determination under Section 2(b)(ii)(B). ARTICLE XIV MISCELLANEOUS MORIMMIMIOMM"AM." Section 1. It is hereby expressly declared that a separate and distinct governmental agency and not a partnership is created hereby. No Director hereunder shall have any power to bind personally either the Fund's officers or any Unitholder. All persons providing services or property to, contracting with or having any claim against the Fund or the Directors shall look only to the assets of the appropriate Series for payment thereof or thereunder; and neither the Unitholders nor the Directors, nor any of their agents, whether past, present or future, shall be, personally liable therefor. Nothing in this Common Investment Contract shall protect a Director against any liability to which the Director would otherwise be subject by reason of fraud, willful misfeasance or bad faith in the conduct of the office of Director hereunder. 18 OWNERSHIP OF ASSETS OF THE FUND' Section 2. The assets of the Fund shall be held separate and apart from all other assets, including the assets of other Series of the Fund. Legal title to all of the assets of the Fund shall at all times be considered as vested in the Fund, but as custodian for the proportionate benefit of the respective Unitholders. No Unitholder shall be deemed to have a severable ownership in any individual asset of the Fund or any right of partition or possession thereof, but each Unitholder shall have a proportionate undivided beneficial interest in the assets of the Fund or of a Series of the Fund. DIRECTOR'S GOOD FAITH ACTION, EXPERT ADVICE. NO BOND OR SURETY Section 3. The exercise by the Directors of their powers and discretions hereunder in good faith shall be binding upon everyone interested. Subject to the provisions of Section l of this Article XIV and to Article XIII, the Directors shall not be liable for errors of judgment or mistakes of fact or law. The Directors may take advice of counsel or other experts with respect to the meaning and operation of this Contract, and subject to the provisions of Section 1 of this Article XIV and to Article XIII, shall be under no liability for any act or omission in accordance with such advice or for failing to follow such advice. The Directors shall not be required to give any bond as such, nor any surety if a bond is obtained. ESTABLISHMENT OF RECORD DATES Section 4. The Directors may close the Unit transfer books of the Fund for a period not exceeding sixty (60) days preceding the date of any meeting of Unitholders, or the date for the payment of any distributions, or the date for the allotment of rights, or the date when any change or conversion or exchange of Units shall go into effect, or in lieu of closing the Unit transfer books as aforesaid, the Directors may fix in advance a date, not exceeding sixty (60) days preceding the date of any meeting of Unitholders, or the date for payment of any distributions, or the date for the allotment of rights, or the date when any change or conversion or exchange of Units shall go into effect, as a record date for the determination of the Unitholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such distributions, or to any such allotment or rights, or to exercise the rights in case such Unitholders and only such Unitholders as shall be Unitholders of record on the date so fixed shall be entitled to such notice of, and to vote at, such meeting, or to receive payment of such distributions, or to receive such allotment or rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any Units on the books of the Fund after any such record date fixed or aforesaid. TERMINATION OF FUND Section 5. (a) The Fund shall continue for a period of forty years and then terminate; provided that on September 1 of each year beginning September 1, 1990, the remaining term of the Fund shall be extended for an additional year automatically as a contract among all Participants which have not delivered to the Fund by such date a written election not to so extend its Participation. The provisions of this subsection (a) shall, however, be subject to subsections (b) and (c) of this Section 5. 19 (b) The Directors may at any time sell and convert, or cause to be sold and converted, into money all the assets of the Fund or of any Series. Upon making provision for the payment of all outstanding obligations and unpaid expenses, accrued or contingent, of the Fund or of the affected Series, the Directors may distribute the remaining assets of the Fund or of the affected Series ratably among the holders of the outstanding Units of the Fund or of the affected Series. (c) Upon completion of the distribution of the remaining proceeds or the remaining assets as provided in subsection (b), the Fund or the affected Series shall terminate; and the Directors shall be discharged of any and all further liabilities and duties hereunder, and the right, title and interest of all parties shall be cancelled and discharged. OPEN RECORDS ACT: REFERENCES, HEADINGS: PRINCIPAL OFFICE Section 6. (a) The original or a copy of this Contract shall be kept at the office of the Fund where it may be inspected by any Unitholder. All records of the Fund will be maintained in accordance with the Open Records Act. (b) Anyone dealing with the Fund may rely on a certificate by an officer or Director of the Fund as to whether or not any supplements to this Common Investment Contract have been made and as to any matters in connection with the Fund hereunder, and with the same effect as if it were the original, may rely on a copy certified by an officer or Director of the Fund to be a copy of this instrument or of any supplement. In this instrument or in any such supplement, references to this instrument, and all expressions like "herein, "hereof" and "hereunder; shall be deemed to refer to this instrument as amended or affected by any such supplement to this Contract. Headings are placed herein for convenience of reference only, and in case of any conflict, the text of this instrument, rather than the headings, shall control. This instrument may be executed in any number of counterparts each of which shall be deemed an original. (c) The principal office of the Fund shall be located at Centerpoint Two, 616 Six Flags Drive, Arlington, TX 76005, or such other office as the Directors may from time to time determine. APPLICABLE LAW Section 7. The agency set forth in this instrument is made in the State of Texas, and it is created under and, together with this Contract, is to be governed by and construed and administered according to the laws of said State. The Fund shall be an administrative agency created pursuant to the Interlocal Cooperation Act, and without limiting the provisions hereof, the Fund may exercise all powers which are ordinarily exercised by such an agency. Venue for any actions arising under this Contract shall be within the confines of Tarrant County, Texas. AMENDMENTS Section S. (a) This Common Investment Contract and/or any Series Supplement may be amended by a two-thirds vote of the Directors of the Fund. Such amendments will take effect at a time to be fixed by the Directors, but in no event sooner than 60 days after notice of such amendment has been provided to all Participants holding Units of each Series affected by the amendment. Such notice shall contain a description of the 20 amendment and the date such amendment becomes effective. Participants which have not withdrawn from this Common Investment Contract (or, if the amendment is to a Series Supplement, the affected Series) by the date upon which the amendment becomes effective shall be deemed to have consented to the amendment. Copies of the amendment shall be kept in accordance with Section 6 of this Article XIV. (b) Notwithstanding paragraph (a) of this Section 8, creation of a new Series and issuance of a new Series Supplement shall be deemed an amendment of this Common Investment Contract but may be effected by majority vote of the Directors, and shall not require the notice to Participants described in such paragraph (a). Copies of the Series Supplement shall be kept as specified in Section 6 of this Article XIV. FISCAL YEAR Section 9. The fiscal year of the Fund shall land on a specified date as set forth in the Bylaws; provided that the Directors may, without Unitholder approval, change the fiscal year of the Fund. Section 10. (a) The provisions of this Contract are severable, and if one or more of such provisions are found to be in conflict with applicable law, such provisions shall be deemed never to have constituted a part of this Contract; provided however that such finding shall not affect or impair any of the remaining provisions of this Contract, or render invalid or improper any action taken or omitted prior to such finding. (b) No Participation in this Contract, or transfer of assets to the Fund or to any Series of the Fund, by a Governmental Entity which is not qualified, by virtue of law or otherwise, to so Participate, shall operate to terminate this Contract or the Participation of other Governmental Entities; nor to invalidate or otherwise adversely affect the Fund and the interests of the Participants in the Fund. IN WITNESS WHEREOF, and duly authorized to do so by the actions of their respective governing bodies, the undersigned, being all of the Initial Participants of the Fund, have executed this instrument as of October 13, 1989. defcic2 Initial Participants City of Fort Worth By: /s/ David A. Ivory, City Manager City of McKinney By: /s/ Donald E. Paschal. Jr.. City Manager North Central Texas Council of Governments By: /s/ William J. Pitstick. Executive Director 21 LOCAL GOVERNMENT INVESTMENT FUND FOR TEXAS: BY: TITLE: ATTEST: Secretary anett Boyd, City SecreltdT APPROVED AS TO CONTENT: o ert Massengale, Assfstant City Manager for Financial Services APPROVED AS TO FORM: t Ddaild G. an ever, First Assistant City Attorney