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CITY OF GALESBURG BANKING SERVICES

REQUEST FOR PROPOSAL

I. INTRODUCTION

A. General Information

The City of Galesburg (the “City”), Illinois invites commercial banking institutions (the “bank” or “proposer”) who possess the capability and expertise to provide depository and various other banking services for the City, to submit proposals for the provision of those services according to the requirement set forth in this document. The purpose of the Request for Proposal (RFP) is to identify the banking institution that can offer the highest quality service at the lowest cost. B. Instructions

1. Sealed Proposal: Responses to this RFP will be submitted in a sealed envelope, clearly identified as:

PROPOSAL FOR BANKING SERVICES

and mailed or delivered to: Kraig Boynton Purchasing Agent City of Galesburg 55 W. Tompkins Street PO Box 1387 Galesburg, IL 61402-1387 kboynton@ci.galesburg.il.us 2. Response: Each proposer shall submit four proposals. The proposal should be submitted via a hard copy. Supporting material may be submitted; however, the decision in selecting the most responsive proposer will be based on the standard forms (exhibits) provided. 3. Questions and Additional Information: Requests for clarification or additional information should be emailed to kboynton@ci.galesburg.il.us or gosborn@ci.galesburg.il.us. Responses to requests/questions will be furnished to all potential proposers that notify the City of their intent to submit a proposal. Cutoff date to receive request in writing will be August 3, 2015. Requests received after August 3, 2015, will not be answered.

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4. Schedule: The following schedule will be adhered to:

July 14, 2015 Distribution of Request for Proposals August 3, 2015 Deadline for requests/inquiries/questions/clarifications August 17, 2015 Proposals due to the City by 11AM. No exceptions! September 7, 2015 Recommendation of award October 1, 2015 Implementation date

The City intends to adhere to the proposed schedule, however, it is expressly understood that your proposal will be valid for a period of ninety (90) days after August 17, 2015. The City may narrow their scope of financial institutions and request a meeting prior to making a final decision. 5. Bank Qualifications: For a proposal to this RFP to be considered and evaluated, the bank must:

• Be insured by the Federal Deposit Insurance Corporation (FDIC). • Be eligible to be a depository of City funds with a full service branch in or near the City

of Galesburg. All responding banks must complete Exhibit A. • Be an on-line cash and securities member of the Federal Reserve. • Be able to provide 120% of collateralization of all City deposits in compliance with the

City’s Investment Policy. The City’s investment policy can be located in Exhibit E. Pledged securities in the name of the City will be deposited at a third party institution, a Federal Reserve Bank, and in the name of the City and comply with the requirement to have a GASB Statement #3 Category 1 classification. Quality of investment instruments must be in compliance with the State of Illinois Public Investment Act. All substitutions, withdrawals and exchanges must require approval before the securities transaction is executed. Pledged securities statements will be furnished to the City on a monthly basis.

• Provide a copy of a recent investment rating report provided by a nationally recognized rating agency.

• Have the capacity of providing all “Required Services” internally. The City prefers that the responding bank provide services without the use of joint ventures, consortiums or contract service providers because of control issues. The City will determine the acceptability of any arrangements with the objective of the RFP being a comprehensive proposal.

6. Selection Criteria: The following unranked criteria will be used to evaluate the responses and to select the winning proposer:

a. Complete response to all required response items on the standard forms provided; b. Bank located in Galesburg; c. Provision of adequate and desired collateral; d. Financial condition of bank providing proposal;

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e. Ability to meet current and projected service requirements over the term of the banking agreement (any past experiences with the bank will be taken into consideration);

f. Ability to provide numerous electronic banking services; g. Cost and schedule of providing optional services; h. Best earnings credit rate (ECR) on required compensating balance, if any; i. Best rate of interest paid on accounts; j. Best availability schedule for deposit items, and k. Interest Rates / Fees for Services.

When the City has tentatively selected the successful proposer, a conference may be requested to formulate plans in greater detail, to clarify any unclear items, and to otherwise complete negotiations prior to the formal award. At any time during the conference(s), the City may choose to modify the choice of a selected proposer, if there is just cause and the City determines that such a change would be in the best interest of the City. 7. Terms and Conditions:

a. The City reserves the right to reject any or all proposals, to waive any irregularities or informalities in any proposal or in the proposal procedures, and to accept or reject any item or combination of items. The award will be to the proposer whose proposal complies with all the requirements set forth in this RFP, and whose proposal in the opinion of the City, is the best proposal taking into consideration all aspects of the proposer’s response, including the total net cost to the City. Exception costs will be added or subtracted from the submitted proposal to arrive at a net cost to the City. Failure to include an exception will render the exception as invalid and the proposer will be treated as being in compliance with the specification, regardless of intent.

b. In the event that the proposer to whom the services are awarded does not execute a

contract within thirty (30) calendar days after the award of the bid, the City may give notice to such proposer of intent to award the contract to the next most qualified proposer or to call for new proposals and may proceed to act accordingly. The City assumes no cost by the proposers in preparation of this proposal.

c. Proposers shall thoroughly examine and be familiar with these specifications. The failure or omission of any proposer to receive or examine this document shall in no way relieve any proposer of obligations with respect to this proposal or the subsequent contract.

d. Exhibit A-2 indicates an estimate of the number of transactions for a year. This number is the City’s best estimate of the average volume and the City in no way guarantees these as minimum or maximum volumes.

e. The contract may be terminated by either party by giving written notice to the other party no later than ninety (90) calendar days before the proposed termination date. This

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provision may be exercised only after the contract has been in effect for six (6) calendar months. The bank shall be entitled to just and equitable compensation for any satisfactory work completed to the termination date. Under no circumstances will any damages be paid as a result of the termination of this contract. If the bank exercises the right to terminate the contract early, they cannot bid on future proposals for a period of seven (7) years.

f. Qualified proposing banks must submit financial statements for the past two fiscal years. These statements must also include an auditor’s unqualified opinion and appropriate notes to the financial statements.

g. Equal Employment Opportunity/Anti-Sexual Harassment Policy. During the term of this contract, the Financial Institution shall comply in all respects with the Equal Employment Opportunity Act/Illinois Human Rights Act. The Financial Institution shall have a written equal employment opportunity policy statement declaring that it does not discriminate on the basis of race, color, religion, sex, national origin, disability, or age. Findings of non-compliance with applicable state or federal equal employment opportunity laws and regulations may be sufficient reason for revocation or cancellation of this contract.

h. Successful bidder shall comply with the provisions of the Illinois Drug Free Workplace

Act and the Americans with Disabilities Act.

i. Failure to comply with any of these terms and conditions of this RFP by the awarded bank will be cause for termination of the “Banking Services Agreement” to be entered into.

j. Indemnity

1. Definitions – For the purposes of indemnification requirements, the following terms shall have the meanings set forth below:

i. The “BANK” means and includes BANK, all of its employees, agents, assignees, and all of its affiliates and subsidiaries, its subcontractors and/or assignees and their respective servants, agents and employees; and

ii. “Loss means any and all loss, damage, liability or expenses of any nature whatsoever, whether incurred as a judgement, settlement, penalty, fine or otherwise (including attorney’s fees and cost of defense).

2. Indemnity – For purposes of this Agreement, BANK hereby agrees to indemnify, defend and hold harmless the City, its employees and agents from any and all “Loss” where “Loss” is caused or incurred or alleged to be caused or incurred in whole or in part as a result of the negligence or other actionable fault of the BANK. It is agreed as a specific element of consideration of this Agreement that this

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indemnity shall apply notwithstanding the joint, concurring or contributory or comparative fault or negligence of the City or any third party and, further notwithstanding any theory of law including, but not limited to, a characterization of the City’s or any third party’s joint, concurring or contributory or comparative fault or negligence as either passive or active in nature; provided, however, that the BANK’s obligation hereunder shall not include amounts attributable to the fault or negligence of the City. Nothing in this section shall be deemed to impose liability on the BANK to indemnify the City for loss when the City’s negligence or other actionable fault is the sole cause of loss.

II. SCOPE OF BANKING SERVICES

A. Term of Agreement

The banking services detailed in this section will be performed for the City, on a contractual basis for five (5) years, with an option to extend for an additional one (1) year period or renew for an additional five (5) year period. Terms specified in this proposal will remain fixed for the duration of the initial 5- year contract period. B. Collateralization of Account Balances

All City funds on deposit must be collateralized at 120% at all times and according to the terms in Exhibit F. Monthly reports detailing the adequacy of collateral must be supplied by the bank within five (5) business days of the close of each month to the City via email to the Director of Finance & Information Systems. Any exception to this requirement must be detailed in proposal as an exception. C. Accounts Included:

The City will require the following separate accounts: 1. Savings Account 2. Deposit Account 3. Payroll Account 4. Galesburg Public Library 5. Police Pension 6. Fire Pension 7. Revolving Loan 8. Flexible Spending Account 9. Controlled Disbursement Account D. Account Structure All accounts will be set up as interest bearing checking accounts. Interest will be calculated based on the daily balance of these accounts at a daily rate of interest. Interest earned will be posted to the account on the last day of the month. The account analysis statement will include an invoice for banking fees payable or banking fees that are waived per the agreement.

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Interest Earnings The City seeks to earn a competitive return on Bank balances with a simple account structure. For determining interest earnings, all City collected balances will be entitled to earn interest. While the City does not commit to keeping a specific bank balance, the City bank balances (all accounts, not including investments) from May 2014 through April 2015 have ranged as follows: Average Balances Average $12,230,149 Low $10,210,064 High $14,374,953 All charges for banking services shall be reported on a monthly account analysis statement rather than being debited directly against City deposits. The monthly account analysis report shall be delivered to the City within 10 business days of the last day of each month and shall contain a detailed itemization of charges of types and volume, similar to those provided in Exhibit A. Total charges will then be compared to total accumulated earnings credits to determine the total net debit (due the bank) or credit (due the City). It is the goal of the City to maximize the interest earnings on accounts and not pay charges, or for charges to be paid from interest earned. E. Controlled Disbursement Account Structure

It is the City’s intent to maintain a zero-balance account for its Controlled Disbursement Account. Funds will be transferred to a holding account for this account until required to cover the amount of checks presented in the account (Controlled Disbursement Account). All accounts payable disbursements will flow through the separate zero balance account. This account will be reimbursed at the end of the day or at the opening of the business day in which the checks are presented for payment, depending upon the Bank's policy. This zero-balanced account will always have a zero ledger balance at the beginning of each business day and during the business day. Transfers from the holding account to the account will take place automatically without City initiation. Transfers between this account and all City accounts maintained at the Bank will be recorded as transfers and not as items deposited and checks paid. Any balance remaining in the holding account at 6:30 P.M., including any wire transfers in, will be automatically invested in an overnight investment by the Bank as per the provisions of the automatic Overnight Investment Program. In addition, the City reserves the option to open similar accounts during the Agreement period provided the awarded Bank is furnished with at least thirty (30) calendar days notice before the implementation date. F. “On-Line” Banking Services The City requires the successful proposer to provide “On-Line” web-based banking services and software. Please provide a description of the bank’s web-based products and services available in Exhibit A-1. The software should be internet-based and include what security

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measures are in place to ensure protection of the City’s assets. At a minimum, the City wishes to use PC-based banking for the following:

• Daily Balance Reporting (ledger, available and collected). • Detailed debit and credit postings (cleared checks, deposits, chargebacks, wire transfers

in and out, interest payments, etc.) with ability to download data into Microsoft Excel spreadsheet format.

• Initiation of internal account-to-account transfers. • Initiation of regular recurring wire transfers. • Initiation of ACH debit and credit transactions. Ability to create saved “instructions”

for recurring ACH debit (collection) or credit (direct deposit) type transactions. • Placement of stop payment orders. • Multi-level security for various City staff (e.g. inquiry only vs. full system

administrator rights). • Returned checks for insufficient funds with automated re-presentment tracking. • Electronic storage of canceled checks and deposit terms for a minimum of 90 days with

access granted to the City. • Positive pay exception item images. • Debit fraud filter to manage ACH debit transactions

Transfers Between Accounts

On a regular basis, the City will make transfers between the various accounts listed in Section II C. Only transfers involving bank personnel will be charged. Any transfers between these accounts will be posted to the City only as transfers and not also as items deposited and checks paid. All transfers will be done electronically via the PC by the City. Credit for any transfers must be given on the same day that the transfer is made, no matter what time of day the transfer occurs. G. Payee Positive Pay

The City would like to consider utilizing payee positive pay; therefore, the proposing bank must be able to provide this service along with full account reconciliation services, ARP. The payee positive pay must be integrated with the bank teller lines. The City endeavors to reduce the risk of fraud conscious and is willing to entertain any suggestions/products that further address this issue. H. Automated Clearing House (ACH)

The bank must be both a “sending” and “receiving” bank on the Automated Clearing House system to accommodate a payroll direct deposit program, a utility billing and accounts receivable electronic payment collection program as well as future revenue collection systems. This service must also include full account blocks and filters. The City pays approximately 75% of its vendors via ACH. Presently, the City’s payroll and corresponding ACH direct

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deposit file and utility bill collection and corresponding ACH direct deposit files are transmitted to the bank’s processing center electronically. I. Availability of Funds

Deposits may be made periodically during the business day (9:00 a.m. to 3:00 p.m.) to a designated cashier or location mutually agreed upon by the City and the awarded bank. If the City chooses to utilize the Remote Deposit option, deposits may be made up until 4:00 p.m. and funds deposited via Remote Deposit will have same day availability. The City will be given credit as collected funds, all items which are cleared by your bank on the same day on which the deposit is made. Items deposited which clear at institutions located within the Chicago Federal Reserve Region will be considered collected funds within one business day, as a minimum. All other items deposited will be given credit as collected funds within two business days, as a minimum. The bank will also credit the City’s accounts for incoming wire transfers on the day received regardless of the time of receipt during the day. All proposing banks are required to attach a copy of their current “availability schedule” to the proposal. J. Wire Transfers

Incoming

The City intends to consider all wire transfers received by the bank prior to the end of the business day, as “available for investment” by the City, regardless of the time of actual receipt by the bank. Should a wire transfer not be received by the bank, as specified above, then the wire transfer will be traced from origin to destination to ascertain the party responsible for delaying the transfer. If necessary, adjustments will be made as soon as possible for any lost interest.

Outgoing

The awarded bank agrees to execute any wire transfer order within one (1) hour after notification by the Finance Department through the computer terminal, or by telephone, or by FAX, if necessary. Wire transfers ordered and not received by the destination party by 5:00 p.m. will be traced by the bank from origin to destination to ascertain the party responsible for delaying the transfer. If necessary, adjustments will be made for any lost interest, or charges resulting from a “fail” to consummate an investment transaction.

Other

Bank agrees to provide copies of the wire transfer confirmation evidencing the amount, date and time, as well as the wire transfer number for all outgoing wires on a daily basis to the City Finance Department via an e-mail transmission to bchockle@ci.galesburg.il.us.

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L. Statement and Advice Frequency

Monthly bank statements will be for the full calendar month and will be delivered to the City within five (5) business days after the end of the month. The City requests that the statements, processed checks, deposit items and miscellaneous bank advices be stored, on-line, by the bank and on-line access be given to the City. The City also requests check truncation. A monthly account analysis statement will be completed and delivered to the City within ten (10) business days after the end of the month. K. Designated Account Executive

The City requests that the proposing banks provide the names of a designated account executive, as well as an alternate. The designated account executives must have the authority to make timely decisions in the normal course of business on their own. Resumes must be provided for all key account executives designated to service this account. L. Other Banking Services and Conditions

1. All returned checks due to insufficient funds will be automatically re-deposited. If the City’s account ultimately needs to be debited, then the Operating account should be charged.

2. All debit and credit memos required to adjust errors caused by the bank will not be

charged to the City. All deposit errors must be accompanied by a copy of the particular deposit slip. All bank errors must be corrected within five (5) business days of notification by the City.

3. The banking institution shall provide the following supplies as needed at no cost: 1) printed duplicate deposit slips and 2) locked moneybags. It is estimated a minimum of ten moneybags will be needed.

4. The banking institution will provide one safety deposit box, at no cost, for safekeeping of the City’s backup tapes. The size of the box will be 10” x 10”.

M. Community Reinvestment Act

It is important to the City that the awarded bank demonstrates its commitment to provide banking services to the community and that the bank’s rating under the Community Reinvestment Act (CRA) is a measure of this commitment. All proposers are required to submit their latest CRA rating as it relates to the Galesburg community with their proposal. All proposers are required to furnish their bank’s community involvement and investment program. The City will use this rating and any supporting documentation in the evaluation process (Exhibit C).

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N. Remote Deposit Option

The City is interested in utilizing remote deposit. The proposal should include the cost of leasing or purchasing the equipment to accommodate volume and the cost of each deposit and the per item charge. O. Reference

Please include the following references (if applicable): Provide three (3) client references of municipal accounts which the bank has served over the past two years and is currently serving. Provide a contact person and telephone number for each customer. Provide two (2) references of similar sized and/or municipal accounts, which have recently left (within the past two years) the bank. Provide a contact person and a telephone number of each organization. How does the City fall in terms of the bank’s customer size and complexity of services? P. New Services

Are there any additional services that this proposal did not address? Are there services presently in development? What is the bank’s track record for implementing new services? Is the bank proactive about staying/being on the cutting edge of the banking services industry? If so, how? Q. Safekeeping Services

The City of Galesburg has custodial services established for some of the City’s investments. It is requested that the respondent be a trust department of a commercial bank or another qualifying financial institution as specified by the City’s Investment Policy. The custodian may not be owned or controlled by the depository institution or its holding company unless it is a separately operated trust institution. The City is not seeking portfolio management services in this RFP.

1. The City will be provided a safekeeping receipt for each security held in trust for the benefit of the City.

2. The custodian must be able to accept physical delivery securities through a

correspondent banking relationship in New York City and by the Depository Trust Company of New York (DTC).

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3. The custodian shall provide the City with a statement of securities held in safekeeping at the end of each month. This statement will include all assets held by the custodian’s correspondent banks, as well as those held in DTC. A separate securities holding statement will be prepared for the Director of Finance as well as a consolidated statement of holdings. These reports should include the following minimum information for each security held: Securities listed by type Name of issue CUSIP number Date of purchase Maturity date, if applicable Coupon rate, if applicable Face amount of bonds Book value Market value Unrealized gain or loss Interest received for the period Estimated annual income per issue Gain or loss on sales Gross purchases for the month and year to date Gross sales for the month and year to date Brokerage fees for the period These reports will be received by the City no later than 15 days after month end.

4. A separate investment clearing account known as “The Investment Safekeeping

Account” will be established with the custodian. All deposits, withdrawals, securities transactions including purchases and sales, maturities and interest payments will clear through this account. This account will be a money market mutual fund or other type fund as approved by the Director of Finance. If the account is a money market mutual fund it must be disclosed to the City if the custodian will receive 12b-1 or other fees from the fund and in what amount. These fees will be considered by the City to be part of the compensation paid to the custodian.

Estimated Volume of Activity: The City intends to transfer all of its assets held, with the exception of certificates of deposit, to the custodian. It is estimated that the City’s safekeeping account will generate the following monthly activity. Average number of transactions, sales, 1.83/month purchases and maturities Number of fixed income securities held 9.17/month

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Estimated balance in the investment account $6,682,501/month Actual monthly activity will vary from these figures, depending upon market conditions and cash flow requirements. Bids may be submitted in three different formats; flat fee, percentage of assets, or a special fee schedule detailing all services. For any of the fee structures, please include an example of the expected annual fee based upon a $6,682,501 portfolio using the enclosed expected volume of activity outlined above.

Respondents will submit the following in Exhibit A-4:

1. Proposed fee schedule. 2. If a money market mutual fund will be used as the investment account, enclose a current

prospectus for the fund. 3. Any additional information (not to exceed three pages in length), which may describe

your institution’s unique ability to provide the services requested by the City. 4. Provide a copy of your standard custodial agreement. 5. What is the source used by your institution to provide market pricing for report

purposes? 6. Would your institution provide on-line access to the City? Is this included in your price

schedule? 7. Sample monthly report outlining items requested in the services described above in

Section Q, Item 3. III. SUMMARY

Please note that the City would like to keep our banking relationship as simple as possible. The City requests that all banks complete the form “Proposal for Banking Services,” attach the requested forms, reports and Exhibits and return the package (4 copies) to the City in accordance with the instructions in Section I B. The City intends to enter into a formal Banking Services Contract with the awarded bank which will incorporate all provisions of the Request for Proposal. Additional terms and conditions will not be included in the contract unless mutually agreed to by both parties.

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Proposal for Banking Services – City of Galesburg

Proposal Submitted by:

Bank:_________________________________________________________________________

Address:______________________________________________________________________

______________________________________________________________________________

Telephone:_____________________________________________________________________

Email Address:_________________________________________________________________

This proposal contains all the information requested in the Request for Proposal, including the following exhibits:

Exhibit A-1 Consolidated Proposal Form Exhibit A-2 Summary of Estimated Transactions Provided by City (informational purposes) Exhibit A-3 Additional Information Exhibit A-4 Safekeeping Services Exhibit B Exception to the Proposal Form Exhibit C Community Reinvestment Act Information Exhibit D Certification Exhibit E Investment Policy (informational purposes) Exhibit F Certification of Compliance Banks Audited Financial Statements for the previous two years (submit only one set)

______________________________________________________________________________ Signature

______________________________________________________________________________Typed Name

Title

Date

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City of Galesburg Banking Services Proposal Form – Exhibit A-1

Bank:_________________________________________________________________________

Bank Depository Services Charge Per Item Account maintenance (9 accounts)

Checks paid

Deposit slips processed

Items deposited

FDIC assessment fee

Wire transfers:

Incoming

Outgoing

Notification (e-mail) of wire transfer transaction

Transfers between accounts

ACH transactions:

ACH in

ACH out

ACH origination

ACH returned – Re-presentment Check Entry (RCK)

Notification (email) of incoming ACH transaction

Return checks converted to RCK

Currency processing

Stop payments

Payee positive pay/ Account Reconciliation Plan (ARP)

Electronic Data Interchange (EDI)

Payee posit pay per check

Payee positive pay – exceptions

On-line check/deposit archiving

Monthly account maintenance

Check truncation

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City of Galesburg Banking Services Proposal Form – Exhibit A-1 (Cont’d)

Bank:_________________________________________________________________________

Bank Depository Services Charge Per Item Remote deposit

- Deposit transmission

- Transactions

- Lease of Equipment/month

- Purchase of equipment

- File storage / viewing capabilities

Other Base Level Fees (not previously listed above)

Expected Monthly Fee Given Transaction History

Please add any additional charges that your institution would apply to the City’s account(s).

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City of Galesburg Banking Services Proposal Form – Exhibit A-3

Additional Information Requested

1. Is your bank insured by FDIC? 2. What is the location of the bank/branch that would be servicing the City? 3. Is your bank an on-line cash and securities member of the Federal Reserve? 4. Will your bank be able to provide the required collateral? 5. Please attach a copy of your most recent investment rating report by a nationally

recognized rating agency. 6. Will your bank be providing 100% of the services proposed in the RFP? 7. Provide descriptions of your bank’s policy of handling daylight overdrafts. 8. Provide a detailed description of the bank’s PC based banking software products

available. Please include common features and functionality along with security features which will ensure protection of City assets.

9. Please explain how your proposed Remote Deposit system works. 10. Will your bank be able to provide one 10”x10” or larger safety deposit box, at no cost? If

so, please provide location of safety deposit box. 11. Will your bank be able to provide payee positive pay option along with full account

reconciliation services, ARP? 12. Will your bank be able to provide debit fraud filter or requirement of prior approval of

payment to manage ACH debit transactions?

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City of Galesburg Banking Services Proposal Form – Exhibit A-4

SAFEKEEPING SERVICES

1. Include a proposed fee schedule. 2. If a money market mutual fund will be used as the investment account, enclose a current

prospectus for the fund. 3. Any additional information (not to exceed three pages in length), which may describe

your institution’s unique ability to provide the services requested by the City. 4. Provide a copy of your standard custodial agreement. 5. What is the source used by your institution to provide market pricing for report

purposes? 6. Would your institution provide on-line access to the City? Is this included in your price

schedule? 7. Sample monthly report outlining items requested in the services described under

Safekeeping Services of Section Q, Item 3.

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City of Galesburg Banking Services Proposal Exception Form – Exhibit B

The bank wishes to take exceptions to the following items:

Page# Item Estimated Costs

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City of Galesburg Banking Services Proposal Form – Exhibit C

COMMUNITY REINVESTMENT ACT INFORMATION

1. Please provide your Corporate Headquarters (Parent) in Illinois CRA report of last examination including rating and the period of time the rating occurs.

2. Please define the service area this rating applies to. 3. Please provide the CRA report of last examination for the branch(es) showing Galesburg as

part of its geographic area.

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Certification - Exhibit D The undersigned, being an authorized representative of the Contractor, hereby certifies that the Contractor is not barred form submitting a proposal for this contract as a result of a violation of either Section 5/33E-3 or Section 5/33E-4 of Chapter 38 of the Illinois Compiled Statutes concerning bid rigging, rotating, kickbacks, bribery, and interference with public contracts. The undersigned hereby also certifies that the Contractor has adopted an anti-sexual harassment policy in accordance with the Illinois Human Rights Act, as amended. The undersigned hereby also certifies that the Contractor shall comply with all local, state, and federal safety standards. The undersigned hereby also certifies that the Contractor is not delinquent in the payment of any tax administered by the State of Illinois Department of Revenue, unless the amount and/or liability is being properly contested in accordance with the procedures established by the appropriate revenue act. The undersigned hereby also certifies that this proposal is genuine and not collusive or sham; that said Contractor has not colluded, conspired, connived, or agreed, directly or indirectly, with any other Contractor or person, to put in a sham proposal or to refrain from submitting a proposal; and has not in any manner, directly or indirectly, sought by agreement or collusion, or communication or conference with any person, to fix the proposed price elements of said proposal, or that of any other Contractor, or to secure any advantage against any other contractor or any person interested in the proposed contract.

Dated at __________________________________________

this _________ day of ______________________, 20 ______.

By: __________________________________ (Signature)

Its: ___________________________________ (Title)

_________________________________, being duly sworn, deposes and says that he/she is the

______________________ of _______________________ and that the statement above is true

and correct.

Subscribed and sworn before me this ________ day of ________________, 20 _____

Notary public: ___________________________________

My commission expires: ___________________________

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Table of Contents Investment Policy – Exhibit E POLICY STATEMENT ............................................................................................................... 22

SCOPE .......................................................................................................................................... 22

OBJECTIVE ................................................................................................................................. 22

Safety ........................................................................................................................................ 23

Credit Risk ................................................................................................................................ 23

Interest Rate Risk ...................................................................................................................... 23

Liquidity .................................................................................................................................... 23

Yield .......................................................................................................................................... 23

STANDARDS OF CARE ............................................................................................................. 24

Prudence .................................................................................................................................... 24

Ethics and Conflicts of Interest ................................................................................................. 24

Delegation of Authority ............................................................................................................ 24

SAFEKEEPING AND CUSTODY .............................................................................................. 24

Authorized Financial Dealers and Institutions .......................................................................... 24

Internal Controls ....................................................................................................................... 25

Delivery vs. Payment ................................................................................................................ 26

SUITABLE INVESTMENTS ...................................................................................................... 26

Investment Types ...................................................................................................................... 26

Collateralization ........................................................................................................................ 26

Repurchase Agreements............................................................................................................ 27

INVESTMENT PARAMETERS ................................................................................................. 27

Diversification........................................................................................................................... 27

Maximum Maturities ................................................................................................................ 27

Competitive Bid ........................................................................................................................ 27

REPORTING ................................................................................................................................ 28

Methods..................................................................................................................................... 28

Performance .............................................................................................................................. 28

POLICY CONSIDERATIONS .................................................................................................... 28

Exemptions ............................................................................................................................... 28

Amendments ............................................................................................................................. 28

ATTACHMENTS ......................................................................................................................... 28

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ADOPTION .................................................................................................................................. 28

LIST OF AUTHORIZED PERSONNEL ..................................................................................... 29

CURRENT INVESTMENT BIDDERS LIST .............................................................................. 30

GLOSSARY OF CASH MANAGEMENT TERMS ................................................................... 31

AUTHORIZED FINANCIAL DEALERS INVESTMENT POLICY ACCEPTANCE .............. 39

CITY OF GALESBURG, ILLINOIS

INVESTMENT POLICY – Exhibit E

POLICY STATEMENT It is the policy of the City of Galesburg to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the City and conforming to all state and local statutes governing the investment of public funds.

SCOPE The investment policy applies to all investment transactions and activities of the City except for the Police Pension Fund and the Fire Pension Fund, which are subject to the order of the Board of Trustees of each respective fund. All financial assets of current funds, and other funds that may be created from time to time, shall be administered in accordance with the provisions of this policy.

The Board of Trustees of the Galesburg Public Library may establish a separate investment policy to govern the investment activities of the City’s Public Library Fund and any special revenue, debt service, or capital projects funds that the City may create specifically for the Library’s benefit, subject to the approval of the City Council. In the absence of a separate, validly approved investment policy for the Library funds, this policy shall govern the investment activities of the Library.

OBJECTIVE The primary objective, in priority order of the City of Galesburg investment activities shall be safety, credit risk, liquidity and yield.

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Safety Safety of principal is the foremost objective of the City. Investments of the City shall be undertaken in a manner that seeks to insure the preservation of capital in the portfolio.

Credit Risk Credit Risk is the risk of loss due to the failure of the security issuer or backer. Credit risk may be mitigated by:

• Limiting investments to the safest types of securities • Pre-qualifying the financial institutions, broker/dealers and advisors with which

an entity will do business, and • Diversifying the investment portfolio so that potential losses on individual

securities will be minimized.

Interest Rate Risk Interest rate risk is the risk that the market value of securities in the portfolio will fall due to changes in general interest rates. Interest rate risk may be mitigated by:

• Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity, and

• By investing operating funds primarily in shorter-term securities

Liquidity The investment portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrent with cash need to meet anticipated demands (static liquidity). Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist largely of securities with active secondary or resale markets (dynamic liquidity). A portion of the portfolio also may be placed in money market mutual funds or The Illinois Funds, a local government investment pool sponsored by the State of Illinois, which offers same-day liquidity for short-term funds.

Yield The City’s investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the City’s risk constraints and liquidity needs. The core of investments is limited to relatively low risk securities in anticipation of earning a fair return relative to the risk being assumed. Securities shall not be sold prior to maturity with the following exceptions:

1) a declining credit security could be sold early to minimize loss of principal; 2) a security swap would improve the quality yield, or target duration in the portfolio;

or 3) liquidity needs of the portfolio require that the security be sold

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STANDARDS OF CARE Prudence The standard of prudence to be used in the investment function shall be the “Prudent Person” standard and shall be applied in the context of managing the overall portfolio. This standard states “Investments shall be made with judgment and care, under circumstances then prevailing, which 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 expected income to be derived.”

The Investment Officer and those delegated with investment authority under this policy, when acting in accordance with the written procedures and this policy, and in accord with the Prudent Person Rule, shall be relieved of personal responsibility and liability in the management of the portfolio.

Ethics and Conflicts of Interest Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial decisions.

Delegation of Authority Authority to manage the City of Galesburg’s investment program is granted to the Director of Finance and derived from the state statutes.

The Director of Finance is designated as the Investment Officer and is responsible for investment management decisions and activities. All participants in the investment process shall seek to act responsibly as custodians of the public trust. The Investment Officer shall develop and maintain written administrative procedures for the operation of the investment program, which are consistent with this investment policy. Procedures will include reference to selection of broker/dealers and financial institutions, safekeeping, repurchase agreements, wire transfer agreements, banking services contracts, and other investment related activities.

The Investment Officer shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials and staff. The Investment Officer shall designate the Senior Accountant as a liaison/deputy in the event circumstances require timely action and the Investment Officer is not available.

No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Investment Officer.

SAFEKEEPING AND CUSTODY Authorized Financial Dealers and Institutions A list will be maintained of financial institutions authorized to provide investment services. In addition, a list will also be maintained, by the Investment Officer, of approved security brokers/dealers selected by creditworthiness. No public deposit shall be made except to a qualified public depository as established by the state statutes.

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The Investment Officer may approve a broker or dealer to sell securities to the City if the broker or dealer meets the following criteria:

• Provides an audited financial statements for the past three fiscal years. • Provides proof of membership in the Securities Investor Protection

Corporation. • Provides proof of registration with the Securities and Exchange Commission. • Provides proof of membership in a self-regulatory organization such as the

National Association of Securities Dealers, the Financial Industry Regulatory Authority or the New York Stock Exchange.

• Provides proof of state registration. • Has been in operation for at least 10 years, or in the case of broker/dealer

companies that have been created as result of mergers or acquisitions, have a substantial operating history.

Once a broker/dealer is approved to sell securities to the City, the broker/dealer must continue to provide its audited annual financial statements to the Investment Officer within 180 days of the end of its fiscal year.

All security brokers/dealers with whom the City transacts business will be provided a copy of this Investment Policy. All security broker/dealers will provide the City with certification of having read and understood and agreeing to comply with the City’s investment policy.

An annual review of the registration of qualified broker/dealers will be conducted by the Director of Finance.

Internal Controls The Investment Officer is responsible for establishing and maintaining an internal control structure designed to ensure that assets of the City are protected from loss, theft or misuse. The controls shall be designed to insure that the assets of the entity are protected from loss, theft or misuse. The internal control structure shall be designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognized that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the valuation of costs and benefits require estimates and judgments by management.

Accordingly, the Director of Finance shall establish a process for an annual review by an external independent review by the City’s independent auditor to assure compliance with policies and procedures. The internal controls shall address the following points:

• Control of collusion • Separation of transaction authority from accounting and recordkeeping • Custodial safekeeping • Avoidance of physical delivery securities • Clear delegation of authority to subordinate staff members • Written confirmation of transactions for investments and wire transfers • Development of a wire transfer agreement with the lead bank and third-party

custodian

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Delivery vs. Payment All security transactions, where applicable, entered into by the City, shall be conducted on a delivery-versus-payment (DVP) basis to ensure that securities are deposited in an eligible financial institution before the release of funds.

SUITABLE INVESTMENTS Investment Types The City may invest in any type of security allowed for in Illinois statutes under the Public Funds Investment Act (30 ILCS 235/1) regarding the investment of public funds for home rule municipalities. With Council’s approval prior to the purchase of the following type of investment, approved investments also include an adjustment to the following section of 30 ILCS 235/1 a-1:

• With Council’s prior approval, the City may also invest in unrated bonds or debt

certificates issued by any local governmental unit of the State of Illinois, of any other state, or of any political subdivision or agency of the State of Illinois or of any other state, whether the interest earned thereon is taxable or tax-exempt under federal law. The debt certificates shall be registered in the name of the City or held under a custodial agreement at a bank.

If Illinois State statutes for investment of public funds approve additional types of securities they will be eligible for investment by the City. This policy shall be amended to reflect the additional types of securities for investment and the amended version approved by the City Council.

Direct specific investment parameters for the investment of public funds in Illinois are found in the Illinois State Statutes, Public Funds Investment Act 30ILCS 235.

Collateralization Securities will be held by an independent third party custodian designated by the City Council and evidenced by safekeeping receipts and a written custodial agreement. All security serving as collateral shall be specifically pledged to the City and placed in a custodial account at a Federal Reserve Bank, a trust department of a commercial bank or through another financial institution. The custodian may not be owned or controlled by the depository institution or its holding company unless it is a separately operated trust institution.

Funds on deposit in excess of FDIC or SIPC limits must be secured by some form of collateral, witnessed by a written agreement. The amount of collateral provided will not be less than 120 percent of the fair market value of the net amount of public funds secured. Pledged collateral shall be held in safekeeping by an independent third party depository, trust institution, or a Federal Reserve Bank and evidenced by a safekeeping agreement in an effort to satisfy the Uniform Commercial Code (UCC) requirement for control. The UCC states that the depositor does not have a perfected interest in a security unless the depositor controls it. Control means that swaps, sales, and transfers cannot occur without the depositor’s written approval. A detail monthly statement listing a description of securities pledged and held in safekeeping must be provided to the City. The City will accept any of the following securities as collateral:

• Negotiable obligations of the United States Government; or

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• Negotiable obligations of any agency or instrumentality of the United States Government guaranteed by the full faith and credit of the United States Government; or

• Negotiable obligations of the State of Illinois

Substitutions of collateral should meet the requirements of the collateral agreement, be approved in writing prior to release, and the collateral should not be released until the replacement collateral has been received.

Repurchase Agreements Repurchase agreements shall be consistent with GFOA Recommended Practices on Repurchase Agreements.

INVESTMENT PARAMETERS Diversification The investments shall be diversified by:

• Limiting investments to avoid overconcentration in securities from a specific issuer or business sector (excluding U.S. Treasury securities or investments federally insured such as with FDIC),

• Limiting investment securities that have higher credit risks, • Investing in securities with varying maturities and • Continuously investing with a portion of the portfolio in readily available funds

such as IL Funds, money market or overnight repurchase agreements to ensure that appropriate liquidity is maintained in order to meet ongoing obligations.

Maximum Maturities To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. We recognize that there is a permanent part of the portfolio, and when the increase in return for extending maturities is compelling, the Director of Finance may consider extending a segment of the portfolio into longer-term maturities. The maximum maturity for City investments shall be ten (10) years. The average maturity of the total portfolio shall not exceed five (5) years.

Because of inherent difficulties in accurately forecasting cash flow requirements, a portion of the portfolio should be continuously invested in readily available funds such as IL Funds, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained to meet ongoing obligations.

Competitive Bid A competitive “bid” shall be conducted, except for funds placed in the Public Treasurers Investment Pool and/or approved savings accounts or, when the City directly invests surplus funds in investment instruments.

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REPORTING Methods The Investment Officer shall submit quarterly reports to the City Manager and the City Council containing sufficient information to permit an informed outside reader to evaluate the performance of the investment program. The report should summarize investment securities held at the end of the reporting period, maturities, returns, percentage of the portfolio which each type of investment represents or other factors of importance. The market value of the portfolio shall be included within the quarterly reports.

Performance The investment portfolio will be managed in accordance with the parameters specified within this policy. The portfolio, taking into account the City’s investment constraints and cash flow needs, should obtain a comparable rate of return during a market/economic environment of stable interest rates. A series of appropriate benchmarks shall be established against which portfolio performance shall be compared on a regular basis.

POLICY CONSIDERATIONS Exemptions Any investment currently held that does not meet the guidelines of this policy shall be exempted from the requirements of this policy. At maturity or liquidation, such monies shall be reinvested only as provided by this policy.

Amendments This policy shall be reviewed on an annual basis. Any changes must be approved by the Director of Finance and any other appropriate authority, as well as the individual(s) charged with maintaining internal controls.

ATTACHMENTS The following documents, as applicable, are attached to this policy:

1. List of authorized personnel 2. Relevant investment statutes and ordinances 3. List of current authorized Broker/Dealers and Financial Institutions 4. Glossary of Terms 5. Authorized Financial Dealers Investment Policy Acceptance

ADOPTION The City’s investment policy shall be adopted by the City Council. The Investment Officer, City Manager and City Council shall review the policy on an annual basis. The investment policy is available in the City Clerk’s office at City Hall, 55 West Tompkins Street, Galesburg, IL.

This policy supersedes all prior investment policies.

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LIST OF AUTHORIZED PERSONNEL

Investment Officer/Signer: Gloria Osborn, Director of Finance & Information Systems

Authorized Signer/Safekeeping Receipts [CDs] Marvin Dahlberg, Treasurer

Liaison Investment Officer: Bobbi Chockley, Senior Accountant

Secretary Kelli Bennewitz, City Clerk

Third Party Trust Custodian Lauren Cingilli/Wells Fargo Bank

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CURRENT INVESTMENT BIDDERS LIST Company Broker/

Dealer E-Mail Address Fax # Phone #

Great Eastern Management 775 Old Country Road, Suite 201 Westbury, NY 11590-5440

Kathleen Muldoon

kathym@greateasternmanagement.com

519/997-0875 800/634-5161

First Empire Securities 100 Motor Parkway, 2nd Floor Hauppauge, NY 11788-5157

631/979-0448 800/645-5424

US Sterling 700 Veterans Memorial Hwy, Hauppauge, NY 11788

Tracy Smith tsmith@ussterling.com 631/360-2840 800/935-9300 ext. 216

Wells Fargo Dave Butterwick

Dave.B.Butterwick@wellsfargo.com

515/245-8126

Vining Sparks 500 W. Cypress Road, Ste. 220 Fort Lauderdale, FL

Brian P. Mahoney

b.mahoney@viningsparks.com

954-229-3599 800-957-0862

5/3 Securities, Inc. 222 S Riverside Plaza 30th Floor Chicago, IL 60606

Joe Pellegrino

Joe.Pellegrino@53.com 312/704-6155 800/621-9934

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GLOSSARY OF CASH MANAGEMENT TERMS

The following is a glossary of key investing terms, many of which appear in the Investment Policy. This glossary has been adapted from an article, entitled "Investment terms for everyday use," that appeared in the April 5, 1996, issue of Public Investor, GFOA's subscription investment newsletter.

Accrued Interest - The accumulated interest due on a bond as of the last interest payment made by the issuer.

Agency - A debt security issued by a federal or federally sponsored agency. Federal agencies are backed by the full faith and credit of the U.S. Government. Federally sponsored agencies (FSAs) are backed by each particular agency with a market perception that there is an implicit government guarantee. An example of federal agency is the Government National Mortgage Association (GNMA). An example of a FSA is the Federal National Mortgage Association (FNMA).

Amortization - The systematic reduction of the amount owed on a debt issue through periodic payments of principal.

Average Life - The average length of time that an issue of serial bonds and/or term bonds with a mandatory sinking fund feature is expected to be outstanding.

Basis Point - A unit of measurement used in the valuation of fixed-income securities equal to 1/100 of 1 percent of yield, e.g., "1/4" of 1 percent is equal to 25 basis points.

Bid - The indicated price at which a buyer is willing to purchase a security or commodity.

Book Value - The value at which a security is carried on the inventory lists or other financial records of an investor. The book value may differ significantly from the security's current value in the market.

Callable Bond - A bond issue in which all or part of its outstanding principal amount may be redeemed before maturity by the issuer under specified conditions.

Call Price - The price at which an issuer may redeem a bond prior to maturity. The price is usually at a slight premium to the bond's original issue price to compensate the holder for loss of income and ownership.

Call Risk - The risk to a bondholder that a bond may be redeemed prior to maturity.

Cash Sale/Purchase - A transaction which calls for delivery and payment of securities on the same day that the transaction is initiated.

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Collateralization - Process by which a borrower pledges securities, property, or other deposits for the purpose of securing the repayment of a loan and/or security.

Commercial Paper - An unsecured short-term promissory note issued by corporations, with maturities ranging from 2 to 270 days.

Convexity - A measure of a bond's price sensitivity to changing interest rates. A high convexity indicates greater sensitivity of a bond's price to interest rate changes.

Coupon Rate - The annual rate of interest received by an investor from the issuer of certain types of fixed-income securities. Also known as the "interest rate."

Credit Quality - The measurement of the financial strength of a bond issuer. This measurement helps an investor to understand an issuer's ability to make timely interest payments and repay the loan principal upon maturity. Generally, the higher the credit quality of a bond issuer, the lower the interest rate paid by the issuer because the risk of default is lower. Credit quality ratings are provided by nationally recognized rating agencies.

Credit Risk - The risk to an investor that an issuer will default in the payment of interest and/or principal on a security.

Current Yield (Current Return) - A yield calculation determined by dividing the annual interest received on a security by the current market price of that security.

Delivery Versus Payment (DVP) - A type of securities transaction in which the purchaser pays for the securities when they are delivered either to the purchaser or his/her custodian.

Derivative Security - Financial instrument created from, or whose value depends upon, one or more underlying assets or indexes of asset values.

Discount - The amount by which the par value of a security exceeds the price paid for the security.

Diversification - A process of investing assets among a range of security types by sector, maturity, and quality rating.

Duration - A measure of the timing of the cash flows, such as the interest payments and the principal repayment, to be received from a given fixed-income security. This calculation is based on three variables: term to maturity, coupon rate, and yield to maturity. The duration of a security is a useful indicator of its price volatility for given changes in interest rates.

Fair Value - The amount at which an investment could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

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Federal Funds (Fed Funds) - Funds placed in Federal Reserve banks by depository institutions in excess of current reserve requirements. These depository institutions may lend fed funds to each other overnight or on a longer basis. They may also transfer funds among each other on a same-day basis through the Federal Reserve banking system. Fed funds are considered to be immediately available funds.

Federal Funds Rate - Interest rate charged by one institution lending federal funds to the other.

Government Securities - An obligation of the U.S. government, backed by the full faith and credit of the government. These securities are regarded as the highest quality of investment securities available in the U.S. securities market. See "Treasury Bills, Notes, and Bonds."

Interest Rate - See "Coupon Rate."

Interest Rate Risk - The risk associated with declines or rises in interest rates which cause an investment in a fixed-income security to increase or decrease in value.

Internal Controls - An internal control structure designed to ensure that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates and judgments by management. Internal controls should address the following points:

1. Control of collusion - Collusion is a situation where two or more employees are working in conjunction to defraud their employer.

2. Separation of transaction authority from accounting and record keeping - By separating the person who authorizes or performs the transaction from the people who record or otherwise account for the transaction, a separation of duties is achieved.

3. Custodial safekeeping - Securities purchased from any bank or dealer including appropriate collateral (as defined by state law) shall be placed with an independent third party for custodial safekeeping.

4. Avoidance of physical delivery securities - Book-entry securities are much easier to transfer and account for since actual delivery of a document never takes place. Delivered securities must be properly safeguarded against loss or destruction. The potential for fraud and loss increases with physically delivered securities.

5. Clear delegation of authority to subordinate staff members - Subordinate staff members must have a clear understanding of their authority and responsibilities to avoid improper actions. Clear delegation of authority also preserves the internal control structure that is contingent on the various staff positions and their respective responsibilities.

6. Written confirmation of transactions for investments and wire transfers - Due to the potential for error and improprieties arising from telephone and electronic transactions, all transactions should be supported by written communications and approved by the appropriate

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person. Written communications may be via fax if on letterhead and if the safekeeping institution has a list of authorized signatures.

7. Development of a wire transfer agreement with the lead bank and third-party custodian - The designated official should ensure that an agreement will be entered into and will address the following points: controls, security provisions, and responsibilities of each party making and receiving wire transfers.

Inverted Yield Curve - A chart formation that illustrates long-term securities having lower yields than short-term securities. This configuration usually occurs during periods of high inflation coupled with low levels of confidence in the economy and a restrictive monetary policy.

Investment Company Act of 1940- Federal legislation which sets the standards by which investment companies, such as mutual funds, are regulated in the areas of advertising, promotion, performance reporting requirements, and securities valuations.

Investment Policy - A concise and clear statement of the objectives and parameters formulated by an investor or investment manager for a portfolio of investment securities.

Investment-grade Obligations - An investment instrument suitable for purchase by institutional investors under the prudent person rule. Investment-grade is restricted to those obligations rated BBB or higher by a rating agency.

Liquidity - An asset that can be converted easily and quickly into cash.

Local Government Investment Pool (LGIP) - An investment by local governments in which their money is pooled as a method for managing local funds.

Mark-to-market - The process whereby the book value or collateral value of a security is adjusted to reflect its current market value.

Market Risk - The risk that the value of a security will rise or decline as a result of changes in market conditions.

Market Value - Current market price of a security.

Maturity - The date on which payment of a financial obligation is due. The final stated maturity is the date on which the issuer must retire a bond and pay the face value to the bondholder. See "Weighted Average Maturity."

Money Market Mutual Fund - Mutual funds that invest solely in money market instruments (short-term debt instruments, such as Treasury bills, commercial paper, bankers' acceptances, repos and federal funds).

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Mutual Fund - An investment company that pools money and can invest in a variety of securities, including fixed-income securities and money market instruments. Mutual funds are regulated by the Investment Company Act of 1940 and must abide by the following Securities and Exchange Commission (SEC) disclosure guidelines:

1. Report standardized performance calculations. 2. Disseminate timely and accurate information regarding the fund's holdings, performance,

management and general investment policy. 3. Have the fund's investment policies and activities supervised by a board of trustees, which

are independent of the adviser, administrator or other vendor of the fund. 4. Maintain the daily liquidity of the fund's shares. 5. Value their portfolios on a daily basis. 6. Have all individuals who sells SEC-registered products licensed with a self-regulating

organization (SRO) such as the National Association of Securities Dealers (NASD). 7. Have an investment policy governed by a prospectus which is updated and filed by the

SEC annually.

Mutual Fund Statistical Services - Companies that track and rate mutual funds, e.g., IBC/Donoghue, Lipper Analytical Services, and Morningstar.

National Association of Securities Dealers (NASD) - A self-regulatory organization (SRO) of brokers and dealers in the over-the-counter securities business. Its regulatory mandate includes authority over firms that distribute mutual fund shares as well as other securities.

Net Asset Value - The market value of one share of an investment company, such as a mutual fund. This figure is calculated by totaling a fund's assets which includes securities, cash, and any accrued earnings, subtracting this from the fund's liabilities and dividing this total by the number of shares outstanding. This is calculated once a day based on the closing price for each security in the fund's portfolio. (See below.) [(Total assets) - (Liabilities)]/(Number of shares outstanding)

No Load Fund - A mutual fund which does not levy a sales charge on the purchase of its shares.

Nominal Yield - The stated rate of interest that a bond pays its current owner, based on par value of the security. It is also known as the "coupon," "coupon rate," or "interest rate."

Offer - An indicated price at which market participants are willing to sell a security or commodity. Also referred to as the "Ask price."

Par - Face value or principal value of a bond, typically $1,000 per bond.

Positive Yield Curve - A chart formation that illustrates short-term securities having lower yields than long-term securities.

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Premium - The amount by which the price paid for a security exceeds the security's par value.

Prime Rate - A preferred interest rate charged by commercial banks to their most creditworthy customers. Many interest rates are keyed to this rate.

Principal - The face value or par value of a debt instrument. Also may refer to the amount of capital invested in a given security.

Prospectus - A legal document that must be provided to any prospective purchaser of a new securities offering registered with the SEC. This can include information on the issuer, the issuer's business, the proposed use of proceeds, the experience of the issuer's management, and certain certified financial statements.

Prudent Person Rule - An investment standard outlining the fiduciary responsibilities of public funds investors relating to investment practices.

Regular Way Delivery - Securities settlement that calls for delivery and payment on the third business day following the trade date (T+3); payment on a T+1 basis is currently under consideration. Mutual funds are settled on a same day basis; government securities are settled on the next business day.

Reinvestment Risk - The risk that a fixed-income investor will be unable to reinvest income proceeds from a security holding at the same rate of return currently generated by that holding.

Repurchase Agreement (repo or RP) - An agreement of one party to sell securities at a specified price to a second party and a simultaneous agreement of the first party to repurchase the securities at a specified price or at a specified later date.

Reverse Repurchase Agreement (Reverse Repo) - An agreement of one party to purchase securities at a specified price from a second party and a simultaneous agreement by the first party to resell the securities at a specified price to the second party on demand or at a specified date.

Rule 2a-7 of the Investment Company Act - Applies to all money market mutual funds and mandates such funds to maintain certain standards, including a 13- month maturity limit and a 90-day average maturity on investments, to help maintain a constant net asset value of one dollar ($1.00).

Safekeeping - Holding of assets (e.g., securities) by a financial institution.

Serial Bond - A bond issue, usually of a municipality, with various maturity dates scheduled at regular intervals until the entire issue is retired.

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Sinking Fund - Money accumulated on a regular basis in a separate custodial account that is used to redeem debt securities or preferred stock issues.

Swap - Trading one asset for another.

Term Bond - Bonds comprising a large part or all of a particular issue which come due in a single maturity. The issuer usually agrees to make periodic payments into a sinking fund for mandatory redemption of term bonds before maturity.

Total Return - The sum of all investment income plus changes in the capital value of the portfolio. For mutual funds, return on an investment is composed of share price appreciation plus any realized dividends or capital gains. This is calculated by taking the following components during a certain time period. (Price Appreciation) + (Dividends paid) + (Capital gains) = Total Return

Treasury Bills - Short-term U.S. government non-interest bearing debt securities with maturities of no longer than one year and issued in minimum denominations of $10,000. Auctions of three- and six-month bills are weekly, while auctions of one-year bills are monthly. The yields on these bills are monitored closely in the money markets for signs of interest rate trends.

Treasury Notes - Intermediate U.S. government debt securities with maturities of one to 10 years and issued in denominations ranging from $1,000 to $1 million or more.

Treasury Bonds - Long-term U.S. government debt securities with maturities of ten years or longer and issued in minimum denominations of $1,000. Currently, the longest outstanding maturity for such securities is 30 years.

Uniform Net Capital Rule - SEC Rule 15C3-1 outlining capital requirements for broker/dealers.

Volatility - A degree of fluctuation in the price and valuation of securities.

"Volatility Risk" Rating - A rating system to clearly indicate the level of volatility and other non-credit risks associated with securities and certain bond funds. The ratings for bond funds range from those that have extremely low sensitivity to changing market conditions and offer the greatest stability of the returns ("aaa" by S&P; "V-1" by Fitch) to those that are highly sensitive with currently identifiable market volatility risk ("ccc-" by S&P, "V-10" by Fitch).

Weighted Average Maturity (WAM) - The average maturity of all the securities that comprise a portfolio. According to SEC rule 2a-7, the WAM for SEC registered money market mutual funds may not exceed 90 days and no one security may have a maturity that exceeds 397 days.

When Issued (WI) - A conditional transaction in which an authorized new security has not been issued. All "when issued" transactions are settled when the actual security is issued.

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Yield - The current rate of return on an investment security generally expressed as a percentage of the security's current price.

Yield-to-call (YTC) - The rate of return an investor earns from a bond assuming the bond is redeemed (called) prior to its nominal maturity date. Yield Curve - A graphic representation that depicts the relationship at a given point in time between yields and maturity for bonds that are identical in every way except maturity. A normal yield curve may be alternatively referred to as a positive yield curve.

Yield-to-maturity - The rate of return yielded by a debt security held to maturity when both interest payments and the investor's potential capital gain or loss are included in the calculation of return.

Zero-coupon Securities - Security that is issued at a discount and makes no periodic interest payments. The rate of return consists of a gradual accretion of the principal of the security and is payable at par upon maturity.

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AUTHORIZED FINANCIAL DEALERS INVESTMENT POLICY ACCEPTANCE

I have received the investment policy approved by City Council on (month, day, year) for the City of Galesburg. I have read and understand the goals and objectives of the City’s investment program.

Signature Date Print Name E-Mail Address Title Telephone Number Company Fax Number Company Address City, State, Zip Code

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City of Galesburg – Exhibit F SECURITY PLEDGE AGREEMENT

CITY OF GALESBURG, ILLINOIS (“Depositor”) has selected _________________ (“Bank”) as a depository for certain of its funds and Bank has agreed to act as the depository for those funds in accordance with applicable laws, which require that Bank secure the deposited funds, to the extent not insured by the Federal Deposit Insurance Corporation (“FDIC”), by pledging a security interest in securities (“Eligible Securities”) of any type (including, without limitation, investment securities) permitted by the applicable provisions of Illinois law as in effect from time to time (the “Governing Statutes”), which are eligible to be held in a Securities Account at a Federal Reserve Bank under Federal Reserve Bank Operating Circular 7. Depositor and Bank have selected THE FEDERAL RESERVE BANK OF __________________________ (“Custodian”) to hold the pledged securities in custody and safekeeping pursuant to the terms of the Governing Statutes, Federal Reserve Bank Operating Circular 7 as in effect from time to time (“Circular 7”), and the Custody Agreement for Book-Entry Securities, Appendix “C” to Circular 7 (the “Custody Agreement”), the provisions of which are incorporated herein by reference. NOW, THEREFORE, in consideration of the mutual promises and covenants in this Agreement, Depositor and Bank agree as follows: 1. Grant of Security Interest; Instructions Regarding Collateral. Bank hereby grants to Depositor a perfected first priority security interest in all Eligible Securities transferred to a collateral account (the “Collateral Account”) established pursuant to this agreement. For the avoidance of doubt, Custodian acknowledges and agrees that it does not have and will not acquire or assert at any time in the future, and hereby expressly waives, any lien upon, security interest in, setoff right or other right to charge the Collateral held in the collateral account for any obligation owed to Custodian by Bank or Depositor. The Bank warrants that it is the true and legal owner of all Collateral pledged under this Agreement, that the Collateral is free and clear of all liens and claims, that no other person or entity has any right, title or interest therein, and that the Collateral has not been pledged or assigned for any other purpose. Should an adverse claim be placed on any pledged Collateral, the Bank shall immediately substitute unencumbered Collateral of equivalent value that is free and clear of all adverse claims. Until Depositor has the right to compel sale of the Collateral under Section 7 hereof, Custodian may act in accordance with the instructions of the Bank, including, without limitation, the right of Bank to substitute Eligible Securities with the written consent of Depositor for the Collateral in accordance with Section 3 hereof. Addendum “A” contains the names and specimen signatures of individuals authorized to act on behalf of Depositor and Addendum “B” contains the names and specimen signatures of individuals authorized to act on behalf of Bank. Either Depositor or Bank may add or remove authorized representatives without the consent of the other at any time by providing Custodian with a replacement addendum, duly executed by an authorized individual. In no event shall the Custodian be responsible for determining whether the pledged securities are “Eligible Securities” 2. Amount of Collateral. The aggregate market value of Collateral held by Custodian at all times during the term of this Agreement must be in an amount not less than one hundred and twenty percent (120%) of (a) the amount of the collected funds on deposit, increased by (b) the amount of accrued but uncredited interest (c) reduced by that portion of the funds insured by the FDIC. Such amount is hereinafter called the “Required Collateral Value”. In no event shall the Custodian be responsible for determining whether the Collateral Account contains the Required Collateral Value. The pledge of Collateral by the Bank 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 Deposit Insurance Corporation (FDIC) or any private insurance carried by the Bank for the purpose of protecting the claims and rights of its depositors. If at any time the aggregate market value of the Collateral is less than the Required Collateral Value, the Bank shall within one business day increase the amount of the Collateral on deposit with the Custodian so that its aggregate market value equals or exceeds the Required Collateral Value.

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3. Substitutions and Withdrawals of Collateral. If the aggregate market value of Collateral held by Custodian at any time exceeds the Required Collateral Value, Bank may withdraw any excess Collateral by providing Custodian with a withdrawal notice signed by an authorized representative of each Depositor and Bank, provided that after the withdrawal of any such excess Collateral, the remaining Collateral equals or exceeds the Required Collateral Value.. Additionally, Bank may substitute Eligible Securities for any of the Collateral held by Custodian at any time by providing Custodian with a substitution notice signed by an authorized representative of each of Depositor and Bank, provided that the market value of the Collateral following such substitution would equal or exceed the Required Collateral Value. If Depositor’s written consent is required on a notice in connection with any withdrawal or substitution which complies with this Section 3, Depositor agrees to provide it promptly upon Bank’s request. Custodian shall be entitled to rely on, and Bank and Depositor agree to hold Custodian harmless from, any actions taken pursuant to, and consistent with, the instructions given in a withdrawal or substitution notice under this Section 3, whether unilateral or not. 4. Bank’s Obligations. Bank shall perform all of the duties and obligations required of a depository under applicable law with respect to collateralization of the funds of Depositor on deposit with Bank, including the duties and obligations required under the Governing Statutes. At the expiration of the term of this Agreement, Bank shall turn over to any successor depository designated by Depositor all funds held by Bank as depository. Bank will furnish to Depositor monthly statement listing a description of the Collateral. The statement will specify the par value, market value, and maturity date of each component of the Collateral. Upon request, Bank shall provide to Depositor copy of Bank’s most recent publicly available quarterly or annual financial statement.

5. Representations. The Bank hereby represents that (i) it is a national banking association duly organized and validly existing under the laws of the United States of America; (ii) it is a qualified public depository under applicable Illinois law; (iii) it has, or will have as of 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; (iv) the execution and delivery of this Agreement and the pledge of securities as Collateral will as soon as reasonably practicable be approved by resolution of the Loan Committee of Bank’s Board of Directors; (v) 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 Incorporation or By-laws of the Bank, any agreement or instrument to which the Bank is a party, or any internal policy of the Bank adopted by its Board of Directors; and (vi) this Agreement shall be continuously maintained, from the time of its execution, as an official record of the Bank. 6. Custodian’s Obligations. The duties and obligations of Custodian with respect to the Collateral shall be as set forth in the Custody Agreement. 7. Default and Remedies. If Bank fails to perform its obligations under Section 4 above, or if Bank is declared insolvent, or if a receiver is appointed for Bank Depositor may instruct Custodian to dispose of the Collateral in accordance with the provisions of the Custody Agreement, but only after Depositor has provided Bank written notice of the Event of Default and at least three (3) business days after such notice to cure the Event of Default. If, after receipt of such notice, Bank fails to cure the Event of Default within the required period of time, Depositor shall thereupon become authorized to certify in writing to Custodian that Bank is in default under this Agreement, and to instruct Custodian to dispose of an amount of Collateral sufficient to satisfy any indebtedness owed by Bank to Depositor, in accordance with Depositor’s instructions. 8. Termination of Agreement. Any party to this Agreement may terminate this Agreement by giving thirty (30) days prior written notice of termination to the other parties. 9. Applicable Law. This Agreement is governed by the laws of the State of Illinois. All deposit accounts of Depositor will be subject to Bank’s Commercial Account Agreement, Business Account Agreement, or other applicable deposit account agreement, as in effect from time to time.

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10. Force Majeure. Custodian shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including without limitation, acts of God, earthquakes, fires, floods, wars, civil or military disturbances, sabotage, epidemics, riots, loss or malfunctions of utilities, computer (hardware or software) or communications service, labor disputes, acts of civil or military authority; provided however, that Custodian shall use its best efforts to resume normal performance as soon as practicable under the circumstances.

11. Miscellaneous. The headings in this agreement are for convenience of reference only and should not be used in interpreting this Agreement. 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 remainder of the Agreement will be enforceable. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS OF THE PARTIES. Notices given under this Agreement must be addressed as set forth below the signature of each party, and will be effective upon actual receipt by the addressee or upon refusal of delivery during the normal business hours of the addressee.

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EXHIBIT F

RETURN WITH BID TO THE CITY OF GALESBURG, ILLINOIS

CERTIFICATE OF COMPLIANCE

EMPLOY-MENT

SUPER- VISORY

SALES OFFICE SKILLED SEMI-SKILLED

NON-SKILLED

WHITE

BLACK

OTHER

MALE

FEMALE (PLEASE FILL IN THE NUMBER OF EMPLOYEES IN EACH CLASS)

1. THE CONTRACTOR OF COMPANY WILL NOT DISCRIMINATE AGAINST ANY EMPLOYEES OR APPLICANT FOR EMPLOYMENT BECAUSE OF RACE, CREED, COLOR, SEX, AGE, NATIONAL ORIGIN, HANDICAPPING CONDITION UNRELATED TO ABILITY TO PERFORM THE JOB; AND, WILL TAKE AFFIRMATIVE ACTION TO ENSURE THAT APPLICANTS ARE EMPLOYED WITHOUT REGARD TO THEIR RACE, CREED, COLOR, SEX, AGE, HANDICAP OR NATIONAL ORIGIN. SUCH ACTION SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FOLLOWING: EMPLOYMENT, UPGRADING, DEMOTION OR TRANSFER, RECRUITMENT OR RECRUITMENT ADVERTISING, LAYOFF OR TERMINATION, RATES OF PAY OR OTHER COMPENSATION, AND SELECTION FOR TRAINING, INCLUDING APPRENTICESHIP. THE CONTRACTOR OR COMPANY AGREES TO POST, IN CONSPICUOUS PLACES, AVAILABLE TO EMPLOYEES AND APPLICANTS FOR EMPLOYMENT, NOTICES SETTING FORTH THE PROVISIONS OF THIS NON-DISCRIMINATION CLAUSE. 2. THE CONTRACTOR OR COMPANY WILL, IN ALL SOLICITATIONS OR ADVERTISEMENTS FOR EMPLOYEES OR ON THEIR BEHALF, STATE THAT ALL QUALIFIED APPLICANTS WILL RECEIVE CONSIDERATION FOR EMPLOYMENT WITHOUT REGARD TO RACE, CREED, COLOR, SEX, AGE, HANDICAPPING CONDITION UNRELATED TO ABILITY OR NATIONAL ORIGIN. THE SAME SHALL HOLD TRUE WHEN RECRUITMENT SOURCES ARE USED TO SECURE APPLICANTS. 3. THE CONTRACTOR OR COMPANY AGREES TO NOTIFY ALL OF ITS SUBCONTRACTORS OF THEIR OBLIGATION TO COMPLY WITH THE NON-DISCRIMINATION POLICY. 4. In the event of the Contractor's or Company's non-compliance with the non-discrimination clauses of the

Contract or Purchase or with any of such rules, regulations or orders, the CONTRACT OR Purchase may be

cancelled, terminated or suspended in whole or in part and the Contractor or Company may be declared ineligible

for further City Contracts or Purchases in accordance with the Affirmative Action Program adopted by the

Galesburg City Council at their meeting on August 6, 1990.

BY: ____________________________________ BIDDER