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HomeMy WebLinkAbout2007 CON Neighborhood National Bank - Certificate of Deposit Account Registry ServicesCDARS Deposit Placement Agreement You, the undersigned, and Neighborhood National Bank (referred to in this agreement as we and 'us-) are entering into this agreement to set forth the terns and conditions under which we will assist you from time to time in placing your funds in time deposits with depository institutions (each an 'Insured Institution') whose accounts are insured by the Federal Deposit Insurance Corporation ('FDIC'). Through an arrangement with Promontory Interfinancial Network, LLC ('Network'), we will endeavor to place your funds in time deposits ("CDs") issued by Insured Institutions through the Network's Certificate of Deposit Account Registry Service+, or CDARS,,, in principal amounts that, when aggregated with interest to accrue over the term of the CD, will not exceed the $100,000 FDIC insurance Knit for deposits of one depositor at one Insured Institution, or such other insurance limit as Congress and the FDIC may establish. We will also act as your custodian with respect to your CDs pursuant to the custodial agreement that we have separately entered into with you ('Custodial Agreement"). The terms of our custodial relationship with you are set forth in the Custodial Agreement. Funds held in an account with us pending placement through CDARS or resulting from payments on CDs are subject to the FDIC insurance limits applicable to your deposits with us. CDARS includes a proprietary process owned by the Network that allocates orders submitted by member financial institutions on behalf of their depositors on dates specified by the Network. On each "Order Date member institutions submit orders requesting the Network to (i) place funds for their depositors with Insured Institutions that are willing to accept deposits through CDARS or (II) if the member institution is an Insured Institution, receive funds so placed by other member institu- tions. On the 'Order Allocation Date' the Network allocates orders submitted on the Order Date. CDARS offers different types of transactions through which we may place your funds with such Insured Institutions. In a'CDARS Reciprocal Transaction; we receive through CDARS funds for deposit in an amount equal to the amount of your funds that we have placed through CDARS with respect to the corre- sponding Order Date, but we do not receive a fee. In a 'CDARS One -Way Transaction." we do not receive funds for deposit through CDARS, but we receive a fee from one or more Insured Institutions that received deposits through CDARS with respect to the corresponding Order Date. Funds that we submit for placement for you through a CDARS transaction may be placed at an Insured Institution without regard to whether the Insured Institution is participating in CDARS on that Order Date through a CDARS Reciprocal Transaction or through a CDARS One -Way Transaction or otherwise. We will place your funds through a CDARS Reciprocal Transaction unless we notify you that we will place your funds through a CDARS One -Way Transaction and you agree to our doing so. This agreement sets forth important information about the placement process. By signing this agreement you agree to be bound by Its terms each time that you submit funds to us for placement. Please read it carefully. Some of the features of the CDs and the placement process are: When we place your funds, you will be Issued CDs by Insured Institutions that have entered into agreements with the Network. • We will act as your custodian with respect to those CDs. • The CDs issued to you by Insured Institutions will have the interest rates and annual percentage yields ('APY') you have agreed to with us. • You will not be charged a fee in connection with CD placements. • You may select the maturities and payment terms of your CDs from those that are available through CDARS at the time that you submit your funds for placement • You may designate any Insured Institution as ineligible to receive your funds. ▪ Early withdrawal of any CD you purchase may be available, but may be subject to substantial penalties. Section 1. Your Relationship With Us (a) Agency and Custodial Relationship We have entered into a contract with the Network pursuant to which we will endeavor to place your funds at other Insured Institutions that have also entered into contracts with the Network. Pursuant to our contract with the Network, we will adhere to the Network's policies and procedures in placing your funds. We will act as your agent in connection with the placement of your hinds in CDs. On certain Order Dates, we may have the opportunity to place your funds through either a CDARS Reciprocal Transaction or a CDARS One -Way Transaction. Although we will act as your agent in connection with the placement of your funds, we are not acting as your investment adviser and have no obligation to advise you of alternative Investments available through CDARS or otherwise. Further, we make no representations with respect to the interest rates on deposits available on an Order Date through us or through CDARS, and we may receive greater benefits when we place your funds through one type of CDARS transaction than when we do so through another type of CDARS transaction or than we would if you instructed us to make a deposit other than through a CDARS transaction. We will act as your custodian with respect to your CDs acquired through CDARS. We have entered into an agreement with The Bank of New York to act as our sub -custodian with respect to the CDs for which we are acting as your custodian. No physical certificates evidencing the CDs will be issued. Each CD for which we act as your custodian will be recorded on the records of the Insured Institution that issues the CD in the name of our sub -custodian, will be recorded on the records of the sub - custodian in our name, and will be recorded on our records In your name, all in a manner that will permit FDIC deposit insurance to `pass through' to you as the bene- ficial owner of the CD. You will receive from us a written confirmation of the issuance of your CDs and periodic account statements that will reflect your ownership of your CDs. The confirmation of CD issuance and the account statement(s) will be the only evidence that you will receive of your ownership of the CDs. You should retain the confirmation and the account statement(s) for your records. While we are acting as your custodian, (i) all payments with respect to the CDs by the Insured Institutions that issue the CDs will be made to us, and we will credit the funds to an account or accounts you maintain with us or disburse the funds pur- suant to your instructions, and (ii) you can enforce your rights in the CDs through us. You may not transfer the CDs directly to another custodian. At your election, you may dismiss us as custodian, and your ownership of a CD may be recorded in your name on the books of the Insured Institution that issued the CD. If you choose to have the CD maintained in your name on the books of the Insured Institution that issued the CD, you will be able to enforce your rights in the CD directly against That Insured Institution. (b) Fees You will not pay a fee in connection with your placement of funds. If we place your funds through a CDARS Reciprocal Transaction, we will pay a fee to the Network for using the CDARS order allocation services and certain other services. If we place your funds through a CDARS One -Way Transaction, we and the Network will receive a fee from one or more Insured Institutions receiving deposits through CDARS in respect of that Order Date. We may, in our discretion, waive some or all of our fee, and the Network may, in its discretion, waive some or all of its fee. We and the Network may receive different fees from different Insured Institutions. The Network may offer us and our employees non -cash incentives in connection with our place- ment of funds through CDARS. If you have been referred to us by a registered broker -dealer to place your funds through CDARS, we may pay a fee to that registered broker -dealer. (c) Limits on Placements Although we, through our arrangement with the Network, will endeavor to place your funds, on a particular Order Allocation Date the Network may not be able to allocate orders in a way that results in the placement of some or any of your funds. If any of your funds cannot be placed. the unplaced funds will be returned to you. You may ask us to resubmit unpiaced funds for placement through CDARS on another day on which the Network perfomis its allocation service. (d) Each CD Will Be an Obligation of the Issuer Each CD will be a deposit obligation of the Insured Institution that Issued the CD. Each CD will constitute a direct obligation of the Insured Institution that issued it and will not be, either directly or indirectly, our obligation or an obligation of the Network. Your CD wit not be issued until the issuing Insured Institution receives and accepts your funds. (e) APY If you are not a "consumer' for purposes of the Truth -in -Savings Act ('TSA'), or if our communication with you in connection with your placement of funds through CDARS is not an 'advertisement' for purposes of TSA, we are not obligated to provide you with an APY on your CDs. (f) Mutual Institution Voting and Subscription Rights If a CD is issued to you by an Insured Institution in the mutual form of organization ('mutual institution') for funds placed for you through CDARS, you may receive through us a notice of a meeting of the depositor members of that mutual institution. Because your CD Is Identified on the books of the mutual institution in the name of 06/05 DI 1 the sub -custodian and not in your name, you wik not be entitled to attend the meet- ing or vote by proxy. Under agreements that we have entered into with the sub -cus- todian that holds your CDs in its name on your behalf. the sub -custodian will forward meeting notices to us (for delivery to you) but it will not attend the meeting or vote by proxy. It is possible that the mutual institution also may send notice of its intention to convert to a stock institution, and provide for priority. non -transferable subscription rights for depositor members of the mutual institution to purchase stock in the con- version. Because of the nature of our agreement with the sub -custodian, your CD will be identified on the books of the mutual institution in the name of the sub -custo- dian, and not in your name, and thus. you will not be entitled to exercise any sub- scription right to purchase the stock, or to vote on the conversion. The sub -custodi- an, which will own the subscription right, also will not purchase any stock in the con- version. Accordingly, if you wish 10 receive meeting notices directly, attend meetings and vole (to convert from the mutual to stock form of ownership, form a mutual holding company or otherwise) with respect to a CD you have acquired from a mutual institu- tion through CDARS, or wish to receive subscription rights in the event the mutual institution converts from mutual to stock form. you will have to dismiss us as custodi- an prior to the applicable record dale (a date usually at least a year in advance from the date the mutual institution's board of directors adopts a plan of conversion) and have your ownership of the CD recorded in your name directly on the books of the mutual Institution that issued the CD. Section 2. The Network (a) General The Network is not your agent and is responsible solely to us for performing the services for which we have retained it. The Network uses the proprietary process included in CDARS to allocate orders submitted on a specified Order Date by Insured Institutions to other Insured Institutions that are willing to accept deposits through CDARS. On an Order Allocation Date, the Network uses the CDARS allocation process to propose placements of funds with Insured institutions wishing to receive funds, subject to your approval as set forth in the procedures set forth in Section 3 of this agreement ('Placement Procedures'). CDs for funds placed through CDARS will be issued to you on the business day immediately following the Order Allocation Date (the 'Settlement Date'). A'business day' means any day other than a Saturday, a Sunday or a day on which banks in New York, New York are authorized or required by law or regulation to dose. (b) CDARS Reciprocal Transaction When we notify the Network that we wish to submit your funds for placement through a CDARS Reciprocal Transaction on an Order Date, we will agree to accept for deposit an equal or greater amount of deposits through CDARS. On the Settlement Date, CDs will be issued to you and we will accept deposits placed by other member institutions. Your funds may be placed at Insured Institutions that are submitting funds for placement through a CDARS Reciprocal Transaction or at Insured Institutions that have requested deposits through CDARS with respect to the same Order Date. The Network, in additlon to fees payable to it, may realize profits or incur losses in con- nection with the placement of your funds at one or rnore of those Insured Institutions on the tens you have agreed to with us. When your funds are placed through a CDARS Reciprocal Transaction, we may make or receive payments based upon the difference between the Interest rate we have agreed upon with you for your CDs and the interest rate we pay on CDs That we issue to customers of other Insured Institutions. These payments will be calculat- ed pursuant to a formula that uses the projected volume -weighted average interest rate for deposits placed through CDARS Reciprocal Transactions on the same day your funds are placed. These payments are intended to provide us with the same interest cost on the CDs we issue to depositors of other Insured Instllutions through a CDARS Reciprocal Transaction as we would have incurred had we issued the CDs directly to you. Any profits or losses realized by the Network and any payments made or received by us will not change the terms we have agreed with you for your COs. (c) CDARS One -Way Transaction On any Order Date, the Network may receive commitments from Insured Institutions wishing to receive funds through a CDARS One -Way Transaction. Based on these commitments, the Network communicates to us the maximum amount of funds that can be submitted for placement through CDARS One -Way Transactions in each CD maturity on that Order Date. If we place your funds through a CDARS One -Way Transaction, we will not receive deposits on the Settlement Date, and we will not make or receive payments as described under'COARS Reciprocal Transactions' above. Your funds may be placed at Insured Institutions that are submitting funds for placement through CDARS Reciprocal Transactions or that have requested funds for deposit on that Order Date. As set forth above. we and the Network each will receive a fee when we place your funds through a CDARS One -Way Transaction. and we or the Network may waive all or part of this fee. Any fees received by us or the Network will not change the terms we have agreed to with you for your CDs. Section 3. Placement Procedures (a) Order Dates and Terms of CDs Each time you notify us that you wish to place funds through CDARS, we will inform you of (i) the available Order Dates, (ii) the CD maturities and payment terms avail- able on each Order Date, (iii) whether early withdrawal of the CDs is available and whether any penalties (and processing fees, if applicable) will be imposed on you for early withdrawal, (iv) any limits with respect 10 placing funds and (v) whether we intend to submit the funds for placement through a CDARS One -Way Transaction. The terms and conditions available for CDs may change from time to time. Each CD issued by an Insured Institution will have a principal amount that, when aggregated with interest to accrue during the term of the CD, wit not exceed the FDIC insurance limit. You may obtain information about the terms of the CDs made available through CDARS on an Order Date at www.CDARS.comlproducts. The interest rates and APYs for the CDs we offer to obtain for you Through CDARS wit be agreed upon by you and us. For placements Through CDARS Reciprocal Transactions, the interest rate and APY we agree upon with you will reflect the interest rate and APY we are wiling to pay on comparable deposits that we accept on the same day CDs are issued to you. For placements through CDARS One -Way Transactions, the interest rate and APY we agree upon with you will reflect the interest rate and APY that Insured Institutions requesting funds through CDARS One -Way Transactions for that Order Date are willing to pay after paying fees to the Network and us. Interest on your CDs will compound dairy. Payment options may vary based on the maturity of the CD. You may have the option with some CDs to choose between monthly payments of interest and payment of interest at maturity or other available interest payment terms. In addition, depending on the terns and conditions of a par- ticular CD, you may be able to change the payment terms of the CD during the term of the CD. If you choose to have interest paid to you during the tern of the CD, you may not be able to re -invest the interest you are paid at an interest rate as favorable to you as the interest rate paid on the CD. Each CD wilt eam interest from the day your funds are deposited et the Insured Institution that issues the CD up to, but not including, the day your CD matures. If the date on which a payment with respect to a CD is due is not a business day, that payment will be made on the next business day. (b) Presumption of CDARS Reciprocal Transaction We will submit your funds for placement thtrough a CDARS Reciprocal Transaction unless we inform you that we will place your funds through a CDARS One -Way Transaction and you agree to our doing so. If we submit your funds for placement through a CDARS One -Way Transaction and the Network is not able to allocate our order. we may resubmit an order for your funds on that Order Dale through a CDARS Reciprocal Transaction, unless you instruct us not to do so at the time you request that we submit your funds. If we so resubmit your funds through a CDARS Reciprocal Transaction, the CDs issued to you will have the same terns as the CDs that would have been issued to you through the CDARS One -Way Transaction. If you are a public funds depositor or a non-profit institution submitting funds for placement and wish your funds to be placed only through CDARS Reciprocal Transactions, please inform us by checking the box at the end of this agreement. (c) List of Insured Institutions Each time you notify us that you desire to place funds through CDARS, you may obtain from us a list of Insured Institutions at which your funds may be placed. Not all of these Insured Institutions may be available to issue CDs with respect to an Order Date, and, before the list is provided to you. we may have designated some Insured Institu ons as ineligible to receive funds from our depositors. You should review the list provided to you and inform us of the name(s) of any Insured Institution(s) at which you do not want to make a deposit, for any reason. At your option, you may also provide us with the names of Insured Institutions not then on the list at which you do not want to make a deposit. Once you have informed us of the name of an Insured Institution at which you do not want to make a deposit. your funds — whether submitted for placement through CDARS at the time you sign this agreement or in the future — wig not be placed at that Insured Institution until you notify us in writing that funds may be placed in the Insured Institution. (For your con- venience, at the time you sign this agreement you may indicate to us on Schedule 1 the names of Insured Institutions at which you do not want to make a deposit.) Upon 06/05 DI 2 your request, we will obtain from the Network the list it maintains of Insured Institutions at which you do not wish to make a deposit. As set forth below, you are responsible for monitoring your deposits at each Insured Instltutlon for purposes of FDIC insurance coverage. (d) Request for Placement of Funds When you request that we place your funds through CDARS, we will submit to the Network a request for placement of your funds ('Order'), including the type of CDARS transaction through which we are submitting the funds, the Order Date. the amount of funds to be placed and the terms (including interest rate and APY) of the CDs you are seeking. The Order will be in a form established by the Network. In order for us to submit an Order, you must provide us with all information required by the Network no later than the time specified In paragraph 1 of Schedule 2. (e) Approval of Proposed Placements We will not know the name(s) of Insured Institution(s) at which your funds will be placed at the time we submit an Order for your funds. On each Order Allocation Date for which we submitted an Order for your funds, we well make available to you a list of the names of Insured Institutions at which your funds are proposed to be placed, the proposed deposit amount at each Insured Institution and the names of proposed altemate Insured Institutions at which your funds may be placed. You may obtain that list from us on the Order Allocation Date at or after the time specified in paragraph 3 of Schedule 2, and, at any time prior to the time specified in paragraph 4 of Schedule 2, you may notify us of the name or names of any of the proposed or proposed alternate Insured Institutions at which you do not want to make a deposit. Although you may direct us not to place funds at a proposed or altemate proposed Insured Institution, you cannot deed us to place funds at a specific Insured Institution or specify the amount to be placed at any Insured Institution. If you eliminate one or more of the proposed or proposed altemate Insured Institutions from the list, or if one or more of them becomes unavailable for place- ment for any reason, your funds wit be placed at the Insured Institutions that were not eliminated. If a sufficient number of proposed and proposed alternate Insured Institutions are eliminated or become unavailable so that not all of your funds can be placed, only as much of your funds will be placed as can be accommodated at the remaining Insured Institutions in CDs with principal amounts that, when aggregated with interest to accrue during the term of the CD, will not exceed the FDIC insurance limit. Your remaining funds will not be allocated on the Order Allocation Date. In such case. we will inform you of the amount of your funds that wit not be placed and you may request that we resubmit an Order for your unplaced funds on another Order Date by repeating the procedure outlined above. If In connection with any placement of your funds through CDARS. you elimi- nate a proposed or proposed alternate Insured Institution in accordance with the above procedures, funds that you subsequently submit for placement through CDARS will not be placed in those Insured Institutions until you notify us otherwise in writing. (q Your Consent to Placement Your funds wit not be placed unless you have consented to their placement. You will be deemed to have consented to the placement of your funds at the proposed or proposed alternate Insured Institutions as of the time specified in paragraph 4 of Schedule 2 if by that time you: (I) communicate your approval to us: (ii) do not request the list of proposed and proposed altemate Insured Institutions from us; (ii) request the list of prposed and proposed altemate Insured Institutions from us, but do not respond to the proposed list; or (iv) respond to the list of proposed and proposed alternate Insured Institutions by eliminating one or more of the Insured Institutions, in which case you will be deemed to have consented to the placement of your funds at those Insured Institutions that you have not eliminated. (g) Time by Which We Must Have Your Funds; Settlement of Transactions Unless we have made other arrangements, each lime that you agree to a placement of funds under this agreement you also agree that, by the time specified in para- graph 5 of Schedule 2, you will have in an account with us immediately available funds, which under applicable law are irreversible and are not subject to any lien, claim or encumbrance, equal to the amount of funds you have informed us that you are seeking to place. On the Settlement Date, your funds will be deposited at Insured Institutions, payments to be made in connection with the placement of CDs will be made, and the CDs will be issued. (h) Addldons and Early Withdrawal No additions may be made to any CD. Insured Institutions generally impose a penal- ty on withdrawal of a CD prior to its maturity. However. no penalty will be charged for early withdrawal upon the death of the sole account holder of a CD. Written veri- fication acceptable to the Insured Institution that issued the CD may be required in such an event. We will inform you of the early withdrawal penalty applicable to your CDs when you submit funds for placement. Pursuant to the Internal Revenue Code of 1986, as amended, the beneficiary of an Individual Retirement Account ('IRA) (but not a Roth IRA) may incur a penalty if the beneficiary does not begin making withdrawals from the IRA after age 70-1/2. A CD held in an RA is not eligible for early withdrawal without penalty simply because the beneficiary must withdraw the CD to avoid a tax penalty. Early withdrawal of a CD may be made only in whole, not in part. You may request early withdrawal by contacting us, at which time you may specify which of your CDs you would like us to withdraw. tf you choose not to specify which of your CDs to withdraw, early withdrawals will be made in accordance with Network proce- dures. In general, early withdrawal proceeds will be available to you two business days after we receive your early withdrawal request. Neither we nor the Network will advance funds in connection with eady with- drawals, and early withdrawal proceeds will not be available to you until they are paid to us by the Insured Institution that issued the CD being withdrawn. (r) No Automatic Renewal or Rollover The CDs will mature on the date shown on the confirmation of CD Issuance. Upon maturity, the principal amount of, and unpaid accrued Interest on, the CD will be paid to you. The CDs wit not be automatically renewed or rolled over, and interest on the CDs will not continue to accrue after the maturity date. If upon maturity you wish to re -deposit your funds in CDs through CDARS, you must instruct us to re -submit the funds as a new placement or you must take advantage of our preauthorized resub- mission process. (n Preauthorlzed Re-submiss/on At the time you submit funds to us for placement through CDARS, you may request that we re -submit those funds for placement through CDARS upon the maturity of your CDs. Unless we have entered into a written arrangement with you, you must contact us before we re -submit your funds through CDARS to establish the new terms (including interest rate and APY) and the other specifics of your Order for your re -submitted funds. (k) No Physical Certificates As set forth in Section 1, no physical certificate evidencing a CD will be issued. You should not purchase a CD through CDARS if you need to take physical possession of a certificate. Section 4. Important Considerations (a) Compare Features You should compare the rates of return and other features of a CD to other available deposit accounts before deciding to purchase CDs using the CDARS service. Although the CDs are issued by other Insured Institutions, the rates of interest paid on the CDs are determined by us based on (i) the interest rates and APYs we are willing to pay on deposits that we accept through CDARS on the Settlement Date df your funds are placed by us through a CDARS Reciprocal Transaction) or (i) the interest rate and APY that Insured Institutions that have requested funds through CDARS One -Way Transactions for that Settlement Date are willing to pay after pay- ing fees to the Network and us (if your funds are placed by us through a CDARS One -Way Transaction). These rates may be higher or lower than the rates on CDs available through a CDARS One -Way Transaction (if we are placing your funds through a CDARS Reciprocal Transaction) or a CDARS Reciprocal Transaction (if we are placing your funds through a CDARS One -Way Transaction) or on comparable deposits available directly from us, from Insured Institutions that issue the CDs through CDARS, from other Insured Institutions, or from Insured depository institutions not participating in CDARS. (b) Uninsured Deposits With Us Funds held in an account with us prior to placement through CDARS and payments of CD interest and principal that are deposited in an account with us may not be cov- ered by FDIC insurance if, when aggregated with other deposits you maintain with us in the seine capacity, the total amount of your deposits in accounts with us exceeds the FDIC insurance limit. You should discuss with us the options for holding your funds prior to placement and for having the payments on the CDs deposited with us or elsewhere. (c) Insolvency of an Insured Institution In the event an Insured Institution approaches insolvency or becomes insolvent, the Insured Institution may be placed in a regulatory conservatorship or receivership in which the FDIC is typically appointed as conservator or receiver. The FDIC may thereafter pay off the CDs issued by that Insured Institution prior to maturity or trans- fer the CDs to another insured depository Institution. If the CDs are transferred to another Institutionyou may be offered a choice of retaining the CDs at a lower inter- est rate or having the CDs paid off. See Section 5 below, 'FDIC Insurance Information' 06/05 DI 3 (d) Reinvestment Risk If your CD is paid prior to maturity as a result of the issuing Insured Institution's insol- vency or a voluntary early withdrawal (see Section 3(h) above, 'Additions and Early Withdrawal"). you may rot be able to reinvest your funds at the same interest rate that you received on the original CD. Neither we nor the Network is responsible to you for any tosses you may incur as a result of a lower interest rate on an invest- ment replacing your CD. (e) Investment Restrictions If you are subject to restrictions with respect to the placement of funds in depository institutions, it is your responsibility to determine whether the placement of your funds through CDARS satisfies those restrictions Section 5. FDIC Insurance Information In general, all accounts and deposits that you maintain with an Insured Institution in the sarne insurable capacity (whether you are acting directly or through an intermedi- ary) would be aggregated for purposes of the FDIC Insurance limit Insureble capac- ities include individual accounts. joint accounts and individual retirement accounts. Upon request, we will provide you with a copy of the FDIC brochure 'Questions and Answers About Your Insured Deposit From the Federal Deposit Insurance Corporation' You may also obtain information about deposit insurance coverage by contacting the FDIC, Office of Consumer Affairs, by letter (550 17th Street, N.W., Washington, D.C. 20429), by telephone (877-275-3342, 800-925-4618 (TDD) or 202- 942-3100), or by e-mail (dcaintemet@fdic.gov), or by visiting the FDIC website at www.fdic.gov. You may wish to seek advice from your own attomey conceming FDIC insurance coverage of deposits held in more than one capacity The present maximum $100,000 FDIC deposit insurance coverage applies to the principal and accrued interest on all CDs and other deposit accounts maintained by you in the same insurable capacity at a single Insured Institution. The records maintained by the Insured Institution, us and our sub -custodian regarding ownership of CDs will be used to establish your eligibility for federal deposit insurance pay- ments in respect of CDs issued through CDARS. In addition, you could be required to provide certain documentation to the FDIC before insurance payments would be released to you. In the event that deposit insurance payments become necessary for your CDs, the FDIC is required to pay the original principal amount plus accrued interest to the date of the closing of the relevant Insured Institution, as prescribed by law, subject to the maximum coverage limitation. No interest is earned on deposits from the time an Insured Institution is closed until insurance payments are received. We will notify you if we receive any payments from the FDIC with respell to your CDs. As an alternative to a direct deposit insurance payment from the FDIC. the FDIC may transfer the insured deposits of an insolvent institution to a healthy institution. Subject to insurance verification requirements and the limits on FDIC deposit insur- ance coverage, the healthy institution may assume your CDs under their original terms or offer you a choice between either receiving payment of the CDs or main- taining the deposits at a different rate. We will advise you of your options in the event of a deposit transfer. As with all federally insured deposits, if it becomes necessary for federal deposit insurance payments to be made on the CDs, there is no specific time period during which the FDIC must make the insurance payments available. Neither we nor the Network will be obligated to make any payments to you in satisfaction of a loss you might incur as a result of (i) a delay in insurance payouts applicable to a CD, (ii) your receipt of a decreased interest rate on an investment replacing a CD that is repaid prior to its scheduled maturity. or (iii) payment in cash of the principal and accrued interest of a CD prior to maturity in connection with the liquidation of an Insured Institution or the assumption of all or a portion of its deposit liabilities. Also, neither we nor the Network will be obligated to advance funds to you prior to pay- ment from the FDIC. Section 6. Total Amount of Your Deposits at Insured Institutions; Publicly Available Information Funds we submit for placement on your behalf on any Settlement Date are placed in CDs at enough different Insured Institutions to prevent the principal amount and any interest to accrue over the term of each CD placed on that Settlement Date from exceeding the $100,000 FDIC insurance limit. It is your responsibility, however, to monitor the total amount of deposits that you hold with each Insured Institution in order for you to determine the extent of FDIC deposit insurance coverage available to you on deposits at that Insured Institution, including the CDs issued through CDARS. See Section 5 above, 'FDIC Insurance Information; for more information on FDIC insurance coverage. The Insured Institution at which a deposit is made is responsible for the full amount deposited with it, and neither we nor the Network is responsible for any insured or uninsured portion of any CD or any other deposits. Publicly available financial information concerning the proposed and proposed alter- nate Insured Institutions can be obtained by you at the website of the National Information Center of the Federal Reserve System maintained at www.ffiec.gov.'nid. Neither we nor the Network guarantees the financial condition of any Insured Institution or the accuracy of any publicly available financial information about the Insured Institution. Section 7. Confidentiality of Information We will provide your name, tax identification number and other pertinent identifying Information to the Network and other parties providing services in connection with the placement of your funds and the issuance and holding of your CDs. We may also release such information to (i) an Insured Institution that has issued a CD to you, but only to the extent necessary to comply with any applicable law, rule or regulation or a judicial order and (ii) the FDIC in connection with a claim for deposit insurance on your CD. You hereby consent to the release of that Information to and its use by (a) the Network and other parties providing services in connection with the placement of your funds and the issuance and custodying of your CDs, (b) Insured Institutions that have issued CDs to you to the extent necessary to comply with any applicable law, rule, regulation or judicial order, and (c) the FDIC in connection with a claim for deposit insurance on your CDs. The information will not be disclosed to other Insured Institutions except as set forth herein and will not be used by the Network or any other parties to whom we release the information for any other purpose except as set forth herein or directed by you. Section 8. Disputes Any disputes arising out of or in connection with this agreement will be governed by the dispute resolution, arbitration, choice of law, venue, waiver of jury trial, and costs related to dispute provisions, if any, contained in your Custodial Agreement with us under which we act as custodian for your CDs. Section 9. Miscellaneous My Information we are required to deliver to you pursuant to this agreement may be given to you by mail, facsimile or other electronic transmission. This agreement: • constitutes the entire agreement between us relating to the placement of deposits through CDARS and the other matters contained herein, • supersedes all prior contracts or agreements relating to the placement of funds through CDARS, whether oral or written, and • may not be amended by any oral representation made or oral agreement reached after the execution of this agreement. We may amend this agreement or any related document by modifying or rescinding any of its existing provisions or by adding any new provisions at any time by sending written notice of the amendment to you. We may provide written notice of an amendment to this agreement by means of a letter, an entry on your account statement or other means. Any amendment will be effective as of the date estab- lished by us in the amendment, subject to applicable law. This agreement is not assignable, In whole or in part, by either party except by operation of law or as required by law. The headings in this agreement are inserted for convenience and identification only. and are not intended to describe, interpret, define or limit the scope or intent of this agreement or any clause hereof. By signing below. you acknowledge that you have received this agreement, that you have read and understood this agreement and that you were given the opportu- nity to ask us any questions you may have had with respect to this agreement, the transactions contemplated by it. the CDs and FDIC insurance coverage of the CDs and deposits maintained with us. Notice to Texas Residents Each time we place funds for you through the Network you are representing to us. the Network and each Insured Institution that is issuing CDs to you that your deposits with each Insured Institution issuing CDs to you (including the CDs and ati deposits held directly by you or through other agents or custodians), when aggregated in accordance with FDIC regulations, are within the FDIC insurance limit applicable to you. OCheck this box if you are a public funds depositor or a non-profit institu• tion submitting funds for placement and wish your funds to be placed only through CDARS Reciprocal Transactions. 06/05 DI 4 DEPOSITOR(S) Name of Depositor: _ Natiaopal City-.. By: O AG41-\J Name: Chris Zapa Title: City Manager Depositor Tax ID or Other Depositor ID. 95-6000749 ID Type: Governmental Agency Name ofDeositor: City of National City By: • Name: (Jeanette Ladrido Title: Finance Director Depositor Tax ID or Other Depositor ID: 95-6000749 ID Type: Governmental Agency Signed this 4th DEPOSITORY INSTITUTION day of September 200 7 Neighborhood National Ba (Print Name of Institution) ame: TNe: Acknowledged this day of 00i SCHEDULE 1 INITIAL LIST OF INSURED INSTITUTIONS AT WHICH YOU DO NOT WANT TO MAKE A DEPOSIT (ATTACH ADDITIONAL PAGES AS NECESSARY) Meurr t frr Nei Name of Institution Roil- 4-0* ITN 9776z City and State Name of Institution City and State Name of Institu Name of Institution Name of Institution City and State City and State City and State Name of Institution City a Name of Institution SCHEDULE 2 City and State IMPORTANT TIMES AND DEADLINES IN CONNECTION WITH THE PLACEMENT OF YOUR FUNDS This schedule contains important times and deadlines with respect to the placement of your funds. These times may change from time to time or on any p• •'cular Order Date or Order Allocation Date (which are currently the same business • . and we wit inform you of any change in times, as applicable, before you su r - r r funds for placement. You may also obtain information about any changes to set In paragraphs 2, 3 and 4 below or about any schedukng change resulti r the Order Allocation Date faking place on the business day immediately • `r�� an k Order Date at ww.CDARS.comiproducts. • ► w 1 Time and day by which your request to have your funds placed must be submitted: 2:OOpm on Wednesday. September , 2007 2. Time and day by which we must submit your order to the Network: 1:00 p.m. ET on the Order Date. 3. Time and day at or after which you may obtain the list of names of the Insured Institutions at which your funds are proposed to be placed: 3:00 p.m. ET on the Order Allocation Date. 4. Time and day by which you must inform us of the name or names of any proposed Insured Institution at which you do not want to make a deposit 4:00 p.m. ET on the Order Allocation Date. 5 Time and day by which we must have your available funds on account: 8:30am on Thursday. September , 20 7 CDARS and Cenificate of Deposit Account Registry Service are registered seMce marks of Promontory Interfinanciat Network, LLC. 081)5 DI 5 ATTACHMENT DEPOSITOR(S) City of National City By: . Name: Ron Morrison Title:Mayor Depositor Tax ID or Other Depositor ID: 95-6000749 Governmental Agency ID Type: . SCHEDULE 1 I TIAL LIST OF INSURED INSTITUTIONS AT WHICH YOU D0 NOT WANT TO E A DEPOSIT (ATTACH ADDITIONAL PAGES AS NECESSARY) Name of stitution Name of Insbon City and State City and State ame of Depositor. _ Name of Institute. City and State By: Na •e: Title Name of Institution Depositor Tax 1 or Other Depositor ID: ID Type: _.... Name of Institution Signed this day of 200 Name of Institution DEPOSITORY INSTITUTION (Print Name of Institution) By: Name: Tide: Acknowledged this day of City and State City and State City and State Name of Institution City and State SCHEDULE 2 IMPORTANT TIMES AND DEADLINES IN ONNECTION WITH THE PLACEMENT OF YOUR FUNDS This schedule contains important times and eadknes with respect to the placement of your funds. These limes may change fro 'me to time or on any particular Order Date or Order Allocation Date (which are curtfy the same business day), and we will inform you of any change in times, as appli• .ble, before you submit your funds for placement. You may also obtain information :bout any changes to times set forth in paragraphs 2, 3 and 4 below or about any s rule g change resulting in the Order Allocation Date taking place on the busines day immediately following an Order Date at www.CDARS.convproduds. 1. Time and day by which your request to have your • nds placed must be submitted: on 2. Time and day by which we oust submit your Order to > Network: 1:00 p.m. ET on the Order Date. 3. Time and day at or after which you may obtain the fist of - es of the Insured Institutions at which your funds are proposed to be placed x:00 p.m. ET on the Order Allocation Date. 4. Time and day by which you must irfomi us of the name or na - of any proposed Insured Institution at which you do not want to make . deposit: 4:00 p.m. ET on the Order Allocation Date. 5. Time and day by which we must have your available funds on accou on CDARS and Certificate of Deposit Account Registry Service are registered service marks of Promontory Inlerfinanriaf Network, LLC. 06105 01 5A Custodial Agreement You, the depository institution, may wish to use your own form of custodial agreement. The Network is providing this form of custodial agreement for your convenience. Before using this form of custodial agreement, you should ensure that this custodial agreement complies with the laws of your state. This form of custodial agreement is not designed for use with Individual Retirement Accounts ("IRAs"). In accordance with Section 8 of the CDARS Deposit Placement Agreement, you may wish to include your standard dis- pute resolution, arbitration, choice of law, venue, waiver of jury trial, and costs related to dispute provisions. Please Note: A form of Custodial Agreement must accompany the Deposit Placement Agreement in order for funds to be placed through the CDARS service. 06105 DI Custodial Agreement GENERAL AGREEMENT FOR CUSTODY OF CERTIFICATES OF DEPOSIT - FOR INDMDUAL(S), TRUSTS AND BUSINESS ENTRIES To: [Depository Institution] Neighhnriinnd Na t j,ona T Bank Please hold in safekeeping, and act as custodian with respect to, all time deposits including, but not limited to, certificates of deposit (al such time deposits will be referred to herein as 'CDs') issued pursuant to the CDARS• Deposit Placement Agreement between you and the undersigned for funds of the undersigned placed through the Certificate of Deposit Account Registry Service. h is agreed between us as follows: or purposes of Article 8 of the Uniform Commercial Code as adopted In state] , you will act as the undersigned's securities intermediary with respect to, and will treat as financial assets, any CDs you hold for the unders gned. You are authorized to collect for account of the undersigned all interest and other payments of income or principal pertaining to the CDs unless they are payable directly to the undersigned; to surrender for payment maturing CDs and those called for redemptlon; to endorse on behalf of the undersigned for the above purposes all checks and other instruments requiring endorsement; to cause the CDs to be regis- tered in your name or in the name of your nominee if you consider it desirable; to deliver or transfer the CDs to another account with you as the undersigned may from time to lime instruct; to receive the CDs for account of the undersigned: to place orders for the purchase of the CDs, on the instructions of the undersigned and to pay for the same provided the undersigned has funds on deposit with you or arranges to make funds available in advance for such purpose; and to execute and deliver or file on behalf of the undersigned all appropriate receipts and releases and other instnh- ments, including whatever certificates may be required from custodians or may be necessary to obtain exemption from taxes and to name the undersigned when required for the purpose of the instrument. Instructions may be given salty or in writing. The following are authorized to give instructions on behalf of the undersigned (check all that apply). - The undersigned (individual or partnership). Any of the following individuals. (List names and legal capacities.) Any . of the following officers and their respective successors in office. (List names and their tides.) . Chris Zapata, City Manager Jeanette Ladrido, Finance Director Ron Morrison, Mayor The undersigned, or the undersigned's account, Is one of the follovring: Individual Joint - Sole Proprietorship Partnership - Corporation - Custody (including guardian, agent nominee or conservator) - Payable Upon Death Account Irrevocable Trust XX Ocher Governmental Agency You may comply with any writ of attachment, execution, garnishment, tax levy, restraining order, subpoena, warrant or other legal process that you believe (correctly or otherwise) to be valid. You may notiy the undersigned of such process by tele- phone, electronically or in writing. If you are not fully reimbursed for your record research, photocopying and handling costs by the party that served the process, you may charge such costs to the undersigned's account in addition to any minimum fee you charge for compt ing with legal processes. You may honor any legal process that Is served personally, by mail, or by fac- simile transmission at any of your offices or an office of your agent (including loca- tions other than where the funds, records or property sought is held), even if the law requires personal delivery at the office where the undersigned's account or records are maintained. By You shall have no liability to the undersigned for any action taken or omitted by you hereunder in good faith. The undersigned agrees to indemnify you and your nominees against, and to hold you and them harmless from, all expenses (including counsel fees), liabilities and claims arising out of the holding, delivery or transfer of the CDs and compliance with any legal process that you believe (correctly or otherwise) to be valid. The undersigned agrees to pay any service charges imposed by you on this custodial account. This agreement may be terminated at any bme at the option of either parry, pro- vided. however, that any termination by you will not become effective until the end of the term of any CD in your safekeeping at the time you notify the undersigned of your intention to terminate this agreement. DEPOSITOR(S) Name of Depo ' - . 7/Cit of ' ational City By: Name: V r ris a Title: City :r ger Nam�o(Depostor: City of National City By Name/ ,Jeanette Ladrido Title: Finance Director Signed this 4th day of September 200 % DEPOSITORY INSTITUTION Neighborhood National B- (Print ui institution) t, Name: Title: C Acknowledged this ! '--__ day of [NOTE: If the depositor is a corporation, the following certificate should be signed by an appropriate officer of the itor other than one signing the form of custodial agreem ] a e I �r [name], �fl [tive of office] of the above named corporation signing the foregoing agreement, hereby certify that: I am personally familiar with all instruments and records relating to the organization and operation of the corporation and the meetings and proceedings of its stockholders and all boards and committees entrusted with authority in the management of its affairs; by corporate action taken in conformlty with such instruments and records and appearing from said records to be still in force, the foregoing letter of agreement was authorized to be signed and delivered on behalf of said corporation; and each of the persons signing on behalf of said corporation is the qualified holder of the office given opposite his/her signature and was authorized to sign the fef letter of agree- ment in that capacity. CDARS and Cenificale of Deposit Account Registry Service are registered service marks of Promontory Interfmancial Network, LLC. 06/05 DI A-1 Custodial Agreement ATTACHMENT GENERAL AGREEMENT FOR CUSTODY OF CERTIFICATES OF DEPOSIT - FOR INDMDUAL(S), TRUSTS AND BUSINESS ENTITIES To: [Depository Institution] Neigh bulhuud Net tlone l Bau Please hold in safekeeping, and act as custodian with respect to, al time deposits including, but not limited to, certificates of deposit (all such time deposits wilt be referred to herein as "CDs') Issued pursuant to the CDARSa Deposit Placement Agreement between you and the undersigned for funds of the undersigned placed through the Certificate of Deposit Account Registry Serycea. It is agreed between us as follows. FQr purposes of Article 8 of the Uniform Commercial Code as adopted in [state] , you will act as the undersigned's securities intermediary with respect to, and wr7l teat as financial assets, any CDs you hold for The undersigned. You are authorized to collect for account of the undersigned all interest and other payments of income or principal pertaining to the CDs unless they are payable directly to the undersigned; to surrender for payment maturing CDs and those called for redemption; to endorse on behalf of the undersigned for the above purposes all checks and other instruments requiring endorsement; to cause the CDs to be regis- tered in your name or in the name of your nominee if you consider it desirable, to deliver or transfer the CDs to another account with you as the undersigned may from time to time instruct; to receive the CDs for account of the undersigned; to place orders for the purchase of the CDs, on the instructions of the undersigned and to pay for the same provided the undersigned has funds on deposit with you or arranges to make funds available in advance for such purpose; and to execute and deriver or file on behat of the undersigned at appropriate receipts and releases and other instru- ments, including whatever certificates may be required from custodians or may be necessary to obtain exemption from taxes and to name the undersigned when required for the purpose of the instrument. Instructions may be given orally or in writing. The following are authorized to give instructions on behalf of the undersigned (check all that apply). XX The undersigned (individual or partnership). Any of the following individuals (List names and legal capacities.) %%Any of the following officers and their respective successors in office. (List names and their titles.) Chris Zapata, City Manager Jeanette Ladrido, Finance Director Ron Morrison, Mayor The undersigned, or the undersigned's account, is one of the following. Individual Joint Sole Proprietorship Partnership Corporation Custody (including guardian, agent, nominee or conservator) Payable Upon Death Account Irrevocable Trust —XOther Governmental Agency You may comply with any writ of attachment, execution, garnishment, tax levy, restraining order, subpoena, warrant or other legal process that you believe (correctly or otherwise) to be valid. You may notify the undersigned of such process by tele- phone, electronically or in writing. If you are not fully reimbursed for your record research, photocopying and handling costs by the parry that served the process, you may charge such costs to the undersigned's account, in addition to any minimum fee you charge for complying with legal processes You may honor any legal process that is served personally, by mail, or by fac- simile transmission at any of your offices or an office of your agent (including loca- tions other than where the funds, records or property sought is held), even if the law requires personal delivery at the office where the undersigned's account or records are maintained. You shall have no liability to the undersigned for any action taken or omitted by you hereunder in good faith. The undersigned agrees to indemnify you and your nominees against, and to hoki you and them harmless from, all expenses (including counsel fees), liabilities and claims arising out of the holding, delivery a transfer of the CDs and compliance with any legal process that you believe (correctly or otherwise) to be valid. The undersigned agrees to pay any service charges imposed by you on this custodial account. This agreement may be terminated at any time at the option of either party, pro- vided, however, that any temiination by you will not become effective until the end of the term of any CD in your safekeeping al the lime you notify the undersigned of your intention 10 terminate this agreement. DEPOSITOR(S) Name ofyyr^!tOr. CITY OF NATIONAL CITY By me: Ron Morrison Title: Mayor ame of Depositor By: T me: Signed this DEPOSITORY •TITUTION (Print name of institutio By: Name: Title: day of__ ,200 Acknowledged this _.., day of [NOTE: If the depositor is a corporation, the f an appropriate officer of the depositor other agreement] jname], above named corporation signing the foregoing ag personally familiar with at instruments and records rel operation of the corporation and the meetings and pr and all boards and committees entrusted with authority In affairs; by corporate action taken in conformity with such ins and appearing from said records to be still in force, the fo was authorized to be signed and delivered on behalf of said the persons signing on behalf of said corporation is the qualified given opposite his/her signature and was authorized to sign the sa ment in that capacity. Signature: 200 wing certificate should be signed by one signing the form of custodial title of office] of the t hereby certify that I am ng to the organization and gs of its stockholders management of its ments and records letter of agreement ation; and each of ber of the office letter of agree- CDARS and Cenifir;hle of Deposit Account Registry Service are registered service marks of Prormxrlory loterfnancial Network. LLC. 06/05 DI A-1 A Restated CDARS® Deposit Placement Agreement This restated CDARS Deposit Placement Agreement modifies and replaces the CDARS Deposit Placement Agreement that you previously executed with us. You may wish to file this restated version with your copy of the previously executed version. You, he undersigned, and Neigiborhood National (t to in Ihhis agreement as we' and 'us') are entering into this agreement to set forth the terms and conditions under which we will assist you from time to time in placing your funds in time deposits with depository institutions (each an'Insured Institution') whose accounts are insured by the Federal Deposit Insurance Corporation ('FDIC'). Through an arrangement with Promontory Interfinancial Network. LLC ('Promontory'). we will endeavor to place your funds in time deposits ('CDs') issued by Insured Institutions through Promontory's Certificate of Deposit Account Registry Service®, or CDARS®. in principal amounts that. when aggregated with interest to accrue over the term of the CD, will not exceed the Standard Maximum Deposit Insurance Amount ('SMDIA') for deposits of one depositor at one Insured Institution (currently $100,000). Although certain 'self -directed' retirement accounts, such as IRAs, may be eligible for coverage under a higher FDIC insurance limit (currently $250,000) for deposits of one depositor at one Insured Institution. CDs for these retirement accounts will be placed using CDARS in amounts that will not exceed the SMDIA. We will also act as your custodian with respect to your CDs pursuant to the custodial agreement that we have separately entered into with you ('Custodial Agreement'). The terms of our custodial relationship with you are set forth In the Custodial Agreement. Funds held in an account with us pending placement through CDARS or resulting from payments on CDs are subject to the SMDIA applicable to your deposits with us and therefore may not be fully insured by the FDIC. CDARS is a proprietary process owned by Promontory that allocates orders submitted by participating financial Institutions on behalf of their depositors on dates ('Order Dates) specified by Promontory. On each Order Date participating institu- tions submit orders requesting that Promontory allocate funds for their depositors to Insured Institutions that are willing to accept deposits through CDARS. On the 'Order Allocation Date' Promontory allocates orders submitted on the Order Date. CDARS offers different types of transactions through which we may place your funds with Insured Institutions. In a 'CDARS Reciprocals Transaction,' we receive funds for deposit in an amount equal to the amount of your funds that we have placed using CDARS with respect to the Order Date for which your Order was sub- mitted to Promontory. but we do not receive a fee. In a'CDARS One-Way1M Transaction,' we do not receive funds for deposit, but we receive a fee from one or more Insured Institutions that received deposits through CDARS with respect to the corresponding Order Date. Funds That we place for you through a CDARS transac- tion may be placed at an Insured Institution without regard to whether the Insured Institution is participating in CDARS on that Order Date through a CDARS Reciprocal Transaction or through a CDARS One -Way Transaction or otherwise. We will place your funds through a CDARS Reciprocal Transaction unless we notify you that we will place your funds through a CDARS One -Way Transaction and you consent to our doing so. If you wish to have us place your funds only through a CDARS Reciprocal Transaction, you may check a box provided for this purpose at the end of this Agreement. If you do not check this box we will not place your funds through a CDARS One -Way Transaction without your consent. This agreement sets forth important information about the placement process. By signing this agreement you agree to be bound by its tens each time that you submit funds to us for placement. Please read it carefully. Some of the features of the CDs and the placement process are: • When we place your funds. you will be issued CDs by Insured Institutions that have entered into agreements with Promontory. • We will act as your custodian with respect to those CDs. • The CDs issued to you by Insured Institutions will have the interest rates and annual percentage yields ('APY') you have agreed to with us. . You will not be charged a fee in connection with CD placements. ■ You may select the maturities and payment teens of your CDs from those that are available through CDARS at the time that you submit your funds for placement. • You may designate any Insured Institution as ineligible to receive your funds. • Early withdrawal of any CD you purchase may be available, but may be subject to substantial penalties. • No secondary market for the CDs currently exists, but earty withdrawal of any CD you purchase is available, subject to applicable penalties. Section 1. Your Relationship With Us (a) Agency and Custodial Relationship We have entered into a contract with Promontory pursuant to which we will use CDARS to assist us in endeavoring to place your funds at other Insured Institutions that have also entered into contracts with Promontory. Pursuant to our contract with Promontory, we will adhere to Promontory's policies and procedures in placing your funds. We will act as your agent in connection with the placement of your funds in CDs. As set forth above, we will place your funds Through a CDARS Reciprocal Transaction unless you agree to having your funds placed through a CDARS One - Way Transaction. Although we will act as your agent in connection with the placement of your funds, we are not acting as your investment adviser and have no obligation to advise you of alternative lnvestments available through CDARS or otherwise. Further, we make no representations with respect to the interest rates on deposits available on an Order Date through us or through CDARS, and we may receive greater benefits when we place your funds through one type of CDARS transaction than when we do so through another type of CDARS transaction or than we would if you Instructed us to make a deposit other than through a CDARS transaction. We will act as your custodian with respect to your CDs acquired through CDARS. We have entered into an agreement with The Bank of New York to act as our sub -custodian with respect to the CDs for which we are acting as your custodian. No physical certificates evidencing the CDs will be issued. Each CD for which we act as your custodian will be recorded on the records of the Insured Institution that issues the CD in the name of our sub -custodian, will be recorded on the records of the sub -custodian in our name, and wit be recorded on our records in your name, all in a manner that will permit your CD to be FDIC insured to the same extent as if you held it directly with the Insured Institution. You will receive from us a written confir- mation of the issuance of your CDs and periodic account statements that will reflect your ownership of your CDs. The confirmation of CD issuance and the account statement(s) will be the only evidence that you will receive of your ownership of the CDs. You should retain the confirmation and the account statement(s) for your records. While we are acbng as your custodian, (i) all payments with respect to the CDs by the Insured Institutions that issue the CDs writ be made to us, and we will credit the funds to an account or accounts you maintain with us or disburse the funds pur- suant to your instructions, and (ii) you can enforce your rights in the CDs through us. You may not transfer the CDs directly to another custodian. At your election. you may dismiss us as custodian, and your ownership of a CD may be recorded in your name on the books of the Insured Institution that issued the CD. If you choose 10 have the CD maintained in your name on the books of the Insured Institution that issued the CD, you will be able to enforce your rights in the CD directly against that Insured Institution. (b) Fees You will riot pay a fee in connection with your placement of funds. If we place your funds through a CDARS Reciprocal Transaction, we will pay a fee to Promontory for using the CDARS order allocation services and certain other services. If we place your funds through a CDARS One -Way Transaction, we and Promontory will receive fees from one or more Insured Institutions receiving deposits through CDARS in respect of that Order Date. We may, in our discretion, waive some or all of our fee, and Promontory may, in its discretion, waive some or all of its fee. We and Promontory may receive different fees from different Insured Institutions in connec- tion with the same transaction. Promontory may offer us and our employees non - cash incentives in connection with our placement of funds through CDARS. (c) Limits on Placements Although we. through our arrangement with Promontory, will endeavor to place your funds, on a particular Order Notation Date Promontory may not be able to allocate orders in a way that results in the placement of some or any of your funds. The allo- cation process utilized by Promontory may reflect considerations of federal and state law, funding needs of Insured Institutions, economic conditions, Promontory's objec- tives or other factors determined by Promontory in its sole discretion. 04107 DI 1 If any of your funds cannot be placed, the unplaced funds will be returned to you. You may ask us to resubmit unplaced funds for placement through CDARS on another day on which Promontory performs its allocation service. (d) Each CD Will Be an Obligation of the Issuer Each CD will be a deposit obligation of the Insured Institution that issued the CD and wit not be, either directly or indirectly, our obligation or an obligation of Promontory. Your CD will not be issued until the issuing Insured Institution receives and accepts your funds. (e) APY If you are not a'consumer' for purposes of the Truth -in -Savings Act (-TSA'), or if our communication with you in connection with your placement of funds through CDARS is not an 'advertisement' for purposes of TSA, we are not obligated to provide you with an APY on your CDs. (t7 Mutual Institution Voting and Subscription Rights If a CD is issued to you by an Insured Institution in the mutual form of organization ('mutual institution') for funds placed for you through CDARS, you may receive through us a notice of a meeting of the depositor members of that mutual Institution. Because your CD is identified on the books of the mutual institution in the name of the sub -custodian and not in your name, you will not be entitled to attend the meet- ing or vote by proxy. Under agreements that we have entered into with the sub -cus- todian that hobs your CDs in its name on your behalf, the sub -custodian will forward meeting notices to us (for delivery to you) but it will not attend the meeting or vote by proxy. It is possible that the mutual institution also may send notice of its intention to convert to a stock institution, and provide for priority, non -transferable subsc ption rights for depositor members of the mutual institution to purchase stock in the con- version. Because of the nature of our agreement with the sub -custodian, your CD will be identified on the books of the mutual institution in the name of the sub -custo- dian, and not in your name. and thus, you will not be entitled to exercise any sub- scription right to purchase the stock, or to vote on the conversion. The sub -custodi- an, which will own the subscription right, also will not purchase any stock in the con- version. Accordingly, if you wish to receive meeting notices directly, attend meetings and vote (to convert from the mutual to stock form of ownership, form a mutual holding company or otherwise) with respect to a CD you have acquired from a mutual institu- tion through CDARS, or wish to receive subscription rights in the event the mutual institution converts from mutual to stock form, you will have to dismiss us as custodi- an prior to the applicable record date (a date usually at least a year in advance from the date the mutual institution's board of directors adopts a plan of conversion) and have your ownership of the CD recorded in your name directly on the books of the mutual institution that issued the CD. Section 2. Promontory (a) General Promontory is not your agent and Is responsible solely to us for performing the serv- ices for which we have retained it. Promontory uses the proprietary process includ- ed in CDARS to allocate orders submitted on a specified Order Date by Insured Institutions to other Insured Institutions that are wiling to accept deposits through CDARS. On an Order Allocation Date, Promontory uses the CDARS allocation process to propose placements of funds with Insured Institutions wishing to receive funds, sub- ject to your approval as set forth in the procedures set forth in Section 3 of this agreement ('Placement Procedures'). CDs for funds placed through CDARS wit be issued to you on the business day immediately following the Order Allocation Date (the 'Settlement Date'). A'business day' means any day other than a Saturday, a Sunday or a day on which banks in New York. New York are authorized or required by law or regulation to dose. In addition to the fees payable to it in connection with CDARS Reciprocal Transactions and CDARS One -Way Transactions, Promontory may realize profits or incur losses in connections with the placement of your funds at one or more Insured Insured Institutions on the terms you have selected. (b) CDARS Reciprocal Transaction When we natty Promontory that we wish to submit your funds for placement through a CDARS Reciprocal Transaction on an Order Date, we will agree to accept for deposit an equal or greater amount of deposits through CDARS. On the Settlement Date, CDs will be issued to you and we will accept deposits placed by other partici- pating institutions. Your funds may be placed at Insured Institutions that are submitting funds for placement through a CDARS Reciprocal Transaction or at Insured Institutions That have requested deposits through CDARS with respect to the same Order Date. When your funds are placed through a CDARS Reciprocal Transaction, we may make or receive payments based upon the difference between the interest rate we have agreed upon with you for your CDs and the interest rate we pay on CDs that we issue to customers of other Insured Institutions. These payments will be calculated pursuant to a formula that uses the projected volume -weighted average interest rate for deposits placed through CDARS Reciprocal Transactions on the same day your funds are placed. These payments are intended to provide us with the same interest cost on the CDs we issue to depositors of other Insured Institutions through a CDARS Reciprocal Transaction as we would have incurred had we issued the CDs directly to you. Any payments made or received by us, or fees received by Promontory, wit not change the terms we have agreed with you for your CDs. (c) CDARS One -Way Transaction On any Order Date, Promontory may receive commitments from Insured Institutions wishing to receive funds through a CDARS One -Way Transaction. Based on these commitments. Promontory communicates to us the maximum amount of funds that can be submitted for placement through CDARS One -Way Transactions in each CD maturity on that order Date. If we place your funds through a CDARS One -Way Transaction, we will not receive deposits on the Settlement Date, and we will not make or receive payments as described under 'CDARS Reciprocal Transactions` above. Your funds may be placed at Insured Institutions that are submitting funds for placement through CDARS Reciprocal Transactions or that have requested funds for deposit on that Order Date. As set forth above, we and Promontory each will receive a fee when we place your funds through a CDARS One -Way Transaction, and we or Promontory may waive at or part of this fee. Any fees received by us or Promontory will not change the terms we have agreed to with you for your CDs. Section 3. Placement Procedures (a) Order Dates and Terms of CDs Each time you notify us that you wish to place funds through CDARS, we will inform you of (1) the available Order Dates, (ii) the CD maturities and payment terms avail- able on each Order Date, (iii) whether early withdrawal of the CDs is available and whether any penalties (and processing fees, if applicable) will be imposed on you for early withdrawal. (iv) any limits with respect to pladng funds and (v) whether we intend to submit the funds for placement through a CDARS One -Way Transaction. The terms and conditions available for CDs may change from time to time. Each CD issued by an Insured Institution wit have a pdndpal amount that, when aggregated with interest to accrue during the term of the CD. wit not exceed the basic FDIC Insurance limit. You may obtain intonation about the terms of the CDs made available through CDARS on an Order Date at www.CDARS.comlproducts. The interest rates and APYs for the CDs we offer to obtain for you through CDARS will be agreed upon by you and us. For placements through CDARS Reciprocal Transactions, the interest rate and APY we agree upon with you will reflect the interest rate and APY we are willing to pay, after paying a fee to Promontory. For placements through CDARS One -Way Transactions, the interest rate and APY we agree upon with you will reflect the interest rate and APY that Insured Institutions requesting funds through CDARS One -Way Transactions for that Order Date are willing to pay after paying fees to Promontory and us. Interest on your CDs wit compound daily. Payment options may vary based on the maturity of the CD. You may have the option with some CDs to choose between monthly payments of interest and payment of interest at maturity or other available interest payment terns. In addition, depending on the terms and conditions of a par- ticular CD, you may be able to change the payment terms of the CD during the tens of the CD. If you choose to have interest paid to you during the term of the CD, you may not be able to re -Invest the interest you are paid at an interest rate as favorable to you as the interest rate paid on the CD. Each CD will earn Interest from the day your funds are deposited at the insured Institution that issues the CD up to, but not including, the day your CD matures. If the date on which a payment with respect to a CD is due is not a business day, that payment will be made on the next business day. (b) Presumption of CDARS Reciprocal Transaction We will submit your funds for placement through a CDARS Reciprocal Transaction unless we inform you that we will place your funds through a CDARS one -Way Transaction and you agree to our doing so. If we submit your funds for placement through a CDARS One -Way Transaction and Promontory is not able to allocate our order, we may resubmit an order for your funds on that Order Date through a CDARS Reciprocal Transaction, unless you instruct us not to do so at the time you request that we submit your funds. If we so resubmit your funds through a CDARS Reciprocal Transaction, the CDs issued to you will have the same terms as the CDs that would have been issued to you through the CDARS One -Way Transaction If you are a public funds depositor or a non-profit Institution submitting funds for placement and wish your funds to be placed only through CDARS Reciprocal Transactions, please inform us by checking the box at the end of this agreement. 04107 DI 2 (c) List of Insured Institutions Each time you notify us that you desire to place funds through CDARS. you may obtain from us a list of Insured Institutions al which your funds may be placed. Not all of these Insured Institutions may be available to issue CDs with respect to an Order Date, and, before the list is provided to you. we may have designated some Insured Institutions as ineligible to receive funds from our depositors. You should review the list provided to you and inform us of the name(s) of any Insured Institution(s) at which you do not want to make a deposit, for any reason. At your option, you may also provide us with the names of Insured Institutions not then on the list at which you do not want to make a deposit. Once you have informed us of the name of an Insured Institution at which you do not want to make a deposit. your funds — whether submitted for placement through CDARS at the time you sign this agreement or in the future — will not be placed at that Insured Institution until you notify us in writing that funds may be placed in the Insured Institution. (For your con- venience, at the time you sign this agreement you may indicate to us on Schedule 1 the names of Insured Institutions at which you do not want to make a deposit.) Upon your request, we will obtain from Promontory the list it maintains of Insured Institutions at which you do not wish to make a deposit As set forth below, you are responsible for monitoring your deposits at each Insured Institution for purposes of FDIC insurance coverage. (d) Request for Placement of Funds When you request that we place your funds through CDARS, we will submit to Promontory a request for placement of your funds (an 'Order"). including the type of CDARS transaction through which we are submitting the funds, the Order Date, the amount of funds to be placed and the terms (including interest rate and APY) of the CDs you are seeking. The Order will be in a form established by Promontory. In order for us to submit an Order, you must provide us with at information required by Promontory no later than the time specified in paragraph 1 of Schedule 2. (e) Approval of Proposed Placements We will not know the name(s) of Insured Institution(s) at which your funds will be placed at the time we submit an Order for your funds. On each Order Allocation Date for which we submitted an Order for your funds. we wit make available to you a list of the names of Insured Institutions at which your funds are proposed to be placed, the proposed deposit amount at each Insured Institution and the names of proposed alternate Insured Institutions at which your funds may be placed. You may obtain that list from us on the Order Allocation Date at or after the time specified in paragraph 3 of Schedule 2. and. at any time prior to the time specified In paragraph 4 of Schedule 2, you may noty us of the name or names of any of the proposed or proposed alternate Insured Institutions at which you do not want to make a deposit. Although you may direct us not to place funds at a proposed or alternate proposed Insured Institution, you cannot direct us to place funds at a specific Insured Institution or specify the amount to be placed at any Insured Institution. If you eliminate one or more of the proposed or proposed alternate Insured Institutions from the list, or if one or more of them becomes unavailable for place- ment for any reason, your funds will be placed at the Insured Institutions that were not eliminated. If a sufficient number of proposed and proposed altemate Insured Institutions are eliminated or become unavailable so that not all of your funds can be placed, only as much of your funds will be placed as can be deposited at the remain- ing Insured Institutions in CDs with principal amounts that, when aggregated with interest to accrue during the tern of the CDs. will not exceed the SMDIA. Your remaining funds will not be allocated on the OrderAllocation Date. In such case. we w h inform you of the amount of your funds that will not be placed and you may request that we resubmit an Order for your unplaced funds on another Order Date by repeating the procedure outlined above. If in connection with any placement of your funds using CDARS, you eliminate a proposed or proposed alternate Insured Institution in accordance with the above pro- cedures, funds that you subsequently submit for placement wit not be placed in that Insured Institution until you notify us otherwise in writing. (1) Your Consent to Placement Your funds will not be placed unless you have consented to their placement. You will be deemed to have consented to the placement of your funds at the proposed or proposed alternate Insured Institutions as of the time specified in paragraph 4 of Schedule 2 If by that time you: (i) communicate your approval to us; (ii) do not request the fist of proposed and proposed alternate Insured Institutions from us; request the list of proposed and proposed alternate Insured Institutions from us, but do not respond to the proposed list; or (iv) respond to the list of proposed and proposed altemate Insured Institutions by eliminating one or more of the Insured Institutions, in which case you wit be deemed to have consented to the placement of your funds at those Insured Institutions that you have not eliminated. Pp) (g) 77me by Which We Must Have Your Funds; Seflement of Transactions Unless we have made other arrangements, each time that you agree to a placement of funds under this agreement you also agree that by the time specified in paragraph 5 of Schedule 2. you will have in an account with us immediately available funds, which under applicable law are irreversible and are not subject to any lien, claim or encumbrance, equal to the amount of funds you have informed us that you are seek- ing to place. On the Settlement Date, your funds will be deposited at Insured Institutions, payments to be made in connection with the placement of CDs will be made, and the CDs will be issued. (h) Additions and Early Withdrawal No additions may be made to any CD. Insured Institutions impose a penalty on with- drawal of a CD prior to its maturity. However, no penalty will be charged for early withdrawal upon the death of an individual who is the sole account holder of the CD. This exception applies to an individual who is the named account holder as well as an Individual who is the sole current mandatory or discretionary Income beneficiary of a trust, including the sole current beneficiary of a unitrust or annuity trust Written ver- ification acceptable to the Insured Institution that issued the CD may be required in such an event. We will inform you of the early withdrawal penalty applicable to your CDs when you submit funds for placement. For a CD with a term of 4 or 13 weeks, the early withdrawal penalty is equal to 28 or 90 days. respectively, of simple interest calculated at the CD rate. The penalties for early withdrawal of 4 or 13 week CDs are equivalent to substantially all of the interest that would have been eamed over the full term and will invade principal. For a CD with a term of 26 weeks or longer, the early withdrawal penalty is equal 10 simple interest calculated at the CD rate for approximately half the number of days in the full term. The penalties for early with- drawal of CDs with a term 26 weeks and longer are equivalent to half of the interest that would have been eamed over the full term and may invade principal. The current schedule of products available and applicable early withdrawal penalties may be viewed at www.CDARS.com\products. Pursuant to the Internal Revenue Code of 1986, as amended, the beneficiary of an Individual Retirement Account (•IRA') (but not a Roth IRA) may incur a penalty if the beneficiary does not begin making withdrawals from the IRA after age 70-1/2. A CD held in an IRA is not eligible for early withdrawal without penalty simply because the beneficiary must withdraw the CD to avoid a tax penalty. Early withdrawal of a CD may be made only in whole. not in part. You may request early withdrawal by contacting us, at which time you may specify which of your CDs you would like us to withdraw. If you choose not to specify which of your CDs to withdraw, early withdrawals will be made using an automated process that generates random selections based on amount. In general, early withdrawal pro- ceeds will be available to you two business days after we receive your early with- drawal request. Neither we nor Promontory will advance funds in connection with early with- drawals, and early withdrawal proceeds wdl not be available to you until they are paid to us by the Insured Institution that issued the CD being withdrawn. (i) No Automatic Renewal or Rollover The CDs will mature on the date shown on the confirmation of CD Issuance. Upon maturity, the principal amount of and unpaid accrued Interest on, the CD will be paid to you. The CDs will not be automatically renewed or rolled over, and interest on the CDs will not continue to accrue after the maturity date. If upon maturity you wish to re -deposit your funds in CDs through CDARS. you must instruct us to re -submit the funds as a new placement or you must take advantage of our preauthorized re -sub- mission process. (D Preauthorized Re -submission At the time you submit funds to us for placement through CDARS. you may request that we resubmit those funds for placement through CDARS upon the maturity of your CDs. Unless we have entered into a written re -submission arrangement with you, you must contact us before we resubmit your funds through CDARS to estab- lish the new terms (including interest rale and APY) and the other specifics of your Order for your re -submitted funds. (k) No Physkal Certificates As set forth in Section 1, no physical certificate evidencing a CD will be issued. You should not purchase a CD through CDARS if you need to take physical possession of a certificate. Section 4. Important Considerations (a) Compare Features You should compare the rates of retum and other features of a CD to other available deposit accounts before deciding to purchase CDs using the CDARS service. Although the CDs are issued by other Insured Institutions, the rates of interest paid on the CDs are determined by us based on (i) the interest rates and APYs we are willing to pay on deposits that we accept through CDARS on the Settlement Date (f your funds are placed by us through a CDARS Reciprocal Transaction) or (ii) the 04r07 DI 3 interest rate and APY that Insured Institutions that have requested funds through CDARS One -Way Transactions for that Settlement Date are willing to pay after pay- ing fees to Promontory and us (if your funds are placed by us through a CDARS One -Way Transaction). Those rates may be higher or lower than the rates on CDs available through a CDARS One -Way Transaction (if we are placing your funds through a CDARS Reciprocal Transaction) or a CDARS Reciprocal Transaction (if we are placing your funds through a CDARS One -Way Transaction) or on comparable deposits available directly from us, from Insured Institutions that issue the CDs through CDARS, from other Insured institutions, or from Insured depository institutions not participating in CDARS. (b) Uninsured Deposits With Us Funds held in an account with us prior to placement using CDARS or prior to pay- ment of CD interest and principal us may not be covered by FDIC insurance if, when aggregated with other deposits you maintain with us in the same capacity, the total amount of your deposits in accounts with us exceeds the FDIC insurance limit appli- cable to your deposits with us. You should discuss with us the options for holding your funds prof to placement and for having the payments on the CDs deposited with us or elsewhere. (c) Insolvency of an Insured Institution In the event an Insured Institution approaches insolvency or becomes insolvent. the Insured Institution may be placed in a regulatory conservatorship or receivership in which the FDIC is typically appointed as conservator or receiver. The FDIC may thereafter pay off the CDs issued by That Insured Institution prior to maturity or trans- fer the CDs to another insured depository Institution. If the CDs are transferred to another institution, you may be offered a choice of retaining the CDs at a lower inter- est rate or having the CDs paid off. See Section 5 below, "FDIC Insurance Information.' (d) Reinvestment Risk If your CD is paid prior to maturity as a result of the issuing insured institution's insol- vency or a voluntary early withdrawal (see Section 3(h) above, 'Additions and Early Withdrawal"), you may not be able to reinvest your funds at the same interest rate that you received on the original CD. Neither we nor Promontory is responsible to you for any losses you may incur as a result of a lower interest rate on an invest- ment replacing your CD. (e) Investment Restrictions If you are subject to restrictions with respect to the placement of funds in depository institutions. it is your responsibility to determine whether the placement of your funds by us using CDARS satisfies those restrictions. For example. when placing funds for deposit using CDARS, some governmental unit depositors may be required by law or policy to place funds only using a CDARS Reciprocal Transaction, in which the insti- tution placing the funds for deposit using CDARS receives funds for deposit in an amount equal to the amount of funds that was placed by the depositor using CDARS with respect to the corresponding Order Date. When we place funds for deposit using a CDARS One -Way Transaction, we will not receive matching funds using CDARS. Section 5. FDIC Insurance Information (a) Deposit Insurance Coverage In general, all accounts and deposits that you maintain with an Insured Institution in the same insurable capacity (whether you are acting directly or through an intermedi- ary) would be aggregated for purposes of the applicable FDIC insurance limit. Insurable capacities include individual accounts, joint accounts and individual retire- ment accounts. A tax identification number is not evidence of, and does not estab- lish. an insurable capacity that is separate from another tax identification number used by the same person or entity. Upon request, we will provide you with a copy of the FDIC brochure -Your Insured Deposits — FDIC's Guide to Deposit Insurance Coverage." You may also obtain information about deposit insurance coverage by contacting the FDIC. Office of Consumer Affairs, by letter (550 17th Street, N.W., Washington, D.C. 20429), by telephone (877-275-3342. 800-925-4618 (TDD) or 202- 942-3100), or by e-mail (dcaintemetUfdic.gov), or by visiting the FDIC website at www.fdic.gov. You may wish to seek advice from your own attorney concerning FDIC insurance coverage of deposits held in more than one capacity. FDIC deposit Insurance coverage applies to the principal and accrued interest on all CDs and other deposit accounts maintained by you in the same insurable capacity at a single Insured Institution. The records maintained by the Insured Institution, us and our sub -custodian regarding ownership of CDs will be used to estabish your eligibility for federal deposit insurance payments in respect of CDs issued through CDARS. In addition. you could be required to provide cenain docu- mentation to the FDIC before insurance payments would be released to you. (b) Government Unit Deposits The requirements for deposit insurance coverage of the deposits of the United States govemment, state, county and municipal governments and their political subdivisions. the District of Columbia and the Commonwealth of Puerto Rico are specifically set forth in regulations of the FDIC (12 C.F.R. 330.15). In general, such deposits will be insured up to the SMDIA and individual departments and political subdivisions within a govemmental unit may be eligible for separate insurance if certain requirements are met. The use of separate tax Identification numbers by different departments or political subdivisions of the same govemmental unit wip not by itself cause the deposits of such departments or political subdivisions to be eligible for separate FDIC insurance. It is the obligation of each governmental entity to determine whether the require- ments for deposit insurance have been met. Neither we, Promontory, not the insured Institution issuing CDs to you are responsible for uninsured losses resulting from placement of funds that are not eligible for deposit insurance. (c) Deposit Insurance Payments In the event that deposit insurance payments become necessary for your CDs, the FDIC is required to pay the original principal amount plus accrued interest to the date of the dosing of the relevant Insured Institution, as prescribed by law, subject to the limits on FDIC deposit insurance coverage. No interest is eamed on deposits from the time an Insured Institution is closed until insurance payments are received. We will notify you if we receive any payments from the FDIC with respect to your CDs. As an alternative to a direct deposit insurance payment from the FDIC, the FDIC may transfer the insured deposits of an insolvent institution to a healthy institution. Subject to insurance verification requirements and the limits on FDIC deposit insur- ance coverage, the healthy institution may assume your CDs under their original terns or offer you a choice between either receiving payment of the CDs or maintain- ing the deposits at a different rate. We will advise you of your options in the event of a deposit transfer. As with all federally insured deposits, if it becomes necessary for federal deposit insurance payments to be made on the CDs, there is no specific time period during which the FDIC must make the insurance payments available. Neither we nor Promontory will be obligated to make any payments to you in satisfaction of a loss you might incur as a result of (i) a delay in insurance payouts applicable to a CD, (ii) your receipt of a decreased interest rate on an investment replacing a CD that is repaid prior to its scheduled maturity. or (ii) payment in cash of the principal and accrued interest of a CD prior to maturity in connection with the liquidation of an Insured Institution or the assumption of all or a portion of its deposit liabilities. Also, neither we nor Promontory will be obligated to advance funds to you prior to payment from the FDIC. Section 6. Responsibility to Monitor Deposits at Insured Institutions; Publicly Available Information Funds we submit for placement on your behalf on any Settlement Date are placed in CDs at enough different Insured Institutions to prevent the principal amount and any interest to accrue over the term of each CD placed on that Settlement Date from exceeding the FDIC insurance limit. It is your responsibility, however, to monitor the total amount of deposits that you hold with each Insured Institution in order for you to determine the extent of FDIC deposit insurance coverage available to you on deposits at that Insured Institution, including the CDs issued through CDARS. See Section 5 above, -FDIC Insurance Information,' for more information on FDIC insur- ance coverage. The Insured Institution at which a deposit is made is responsible for the full amount deposited with it, and neither we nor Promontory is responsible for any insured or uninsured portion of any CD or any other deposit. Publicly available financial information concerning the proposed and proposed alternate Insured Institutions can be obtained by you at the website of the National Information Center of the Federal Reserve System maintained at www.ffiec.govinici. Neither we nor Promontory guarantees the financial condition of any Insured Institution or the accuracy of any publicly available financial information about the Insured Institution. Section 7. Confidentiality of Information We will provide your name, tax identification number and other pertinent identifying information to Promontory, our sub -custodian, and other parties providing services in connection with the placement of your funds and the Issuance and holding of your CDs, We may also release such Information to (i) an Insured Institution that has issued a CD to you, but only to the extent necessary to comply with any applicable law, rule or regulation or a judicial order, and (ii) the FDIC in connection with a claim 04/07 DI 4 for deposit insurance on your CD. You hereby consent to the release of that infor- mation to and its use by (a) Promontory, our sub -custodian, and other parties provid- ing services in connection with the placement of your funds and the issuance and custodying of your CDs, (b) Insured Institutions that have issued CDs to you to the extent necessary to comply with any applicable law, rule, regulation or judicial order, and (c) the FDIC in connection with a calm for deposit insurance on your CDs. The information w@ not be disclosed to other Insured Institutions except as set forth here - In and will not be used by Promontory, our sub -custodian, or any other parties to whom we release the information for any other purpose except as set forth herein or directed by you. Nothing in This section shall be deemed to prevent us from disclos- ing information to a third party if permitted or required by law. Section 8. Disputes Any disputes arising out of or in connection with this agreement wit be governed by the dispute resolution, arbitration, choice of law. venue, waiver of jury trial. and costs related to dispute provisions. if any, contained in your Custodial Agreement with us under which we act as custodian for your CDs. Section 9. Miscellaneous My information we are required to deliver to you pursuant to this agreement may be given to you by mail, facsimile or other electronic transmission. This agreement • constitutes the entire agreement between us relating to the placement of deposits through CDARS and the other matters contained herein, • supersedes all odor contracts or agreements relating to the placement of funds through CDARS, whether oral or written, and • may not be amended by any oral representation made or oral agreement reached after the execution of this agreement. We may amend this agreement or any related document prospectively by modi- fying or rescinding any of its existing provisions or by adding any new provisions at any time by sending written notice of the amendment to you. We may provide writ- ten notice of an amendment to this agreement by means of a letter, an entry on your account statement or other means. Any amendment wit be effective as of the date established by us in the written notice of the amendment, subject to applicable law. provided that any amendment may not become effective until ten days after the writ- ten notice has been sent by us. This agreement is not assignable, in whole or in part, by either party except by operation of law or as required by law. The headings in this agreement are inserted fa convenience and identification only, and are not intended to describe. interpret, define or limit the scope or Intent of this agreement or any clause hereof. By signing below, you acknowledge that you have received this agreement, that you have read and understood this agreement and that you were given the opportu- nity to ask us any questions you may have had with respect to this agreement, the transactions contemplated by it, the CDs and FDIC insurance coverage of the CDs and deposits maintained with us. U Check this box if you are a governmental unit or other depositor and wish your funds to be placed only through CDARS Reciprocal Transactions. SCHEDULE INITIAL LIST OF INSURED INSTITUTIONS AT WHICH YOU DO NOT WANT TO MAKE A DEPOSIT (ATTACH ADDITIONAL PAGES AS NECESSARY) Please include the city and state of the institution's main office (rather than the city and state of a branch location). You may include the institution's nesting number and/or FDIC certificate number, if you have this information. (Please see section 3(c) of the agreement (list of Insured Institutions").] SCHEDULE 2 IMPORTANT TIMES AND DEADLINES IN CONNECTION WITH THE PLACEMENT OF YOUR FUNDS This schedule contains important times and deadlines with respect to the placement of your funds. These limes may change from time to time or on any particular Order Date or Order Allocation Date (which are currently the same business day), and we will inform you of any change in times, as applicable, before you submit your funds for placement You may also obtain information about any changes to times set forth In paragraphs 2, 3 and 4 below or about any scheduling change resulting in the Order Allocation Dale taking place on the business day immediately following an Order Date at www.CDARS.comrproducts. 1. Time and day by which your request to have your funds placed must be submitted: [Please see paragraph 1 of Schedule 2 of the CDARS Deposit Placement Agreement that you previously executed with us.] 2. Time and day by which we must submit your Order to Promontory: 1:00 p.m. ET on the Order Dale. 3. Time and day at or after which you may obtain the list of names of the Insured Institutions at which your funds are proposed to be placed: 3:00 p.m. ET on the Order Allocation Date. 4. Time and day by which you must inform us of the name or names of any proposed Insured Institution at which you do not want to make a deposit: 4:00 p.m. ET on the Order Allocation Date. 5. Time and day by which we must have your available funds on account: [Please see paragraph 4 of Schedule 2 of the CDARS Deposit Placement Agreement that you previously executed with us.] CDARS. Certircale of Deposti Account Registry Service, One-4vay and Reciprocal are service marks of Pronumlory Inleriieandal Network, LLC. 047 DI 5 Customer Name: Add7ess: TERM CDARS CD WORKSI-IEET City of National City 1243 National City Boulevard National City, CA 91950 _ 4 Weeks 5? Weeks XX 18 months . 13 Weeks 2 Yeats _ 2C Weeks 3 Years AMOUNr. $2,000,000.00 ANNUAL PERCENTALIF YIELD5.25% 5.13%' RATE: INTEREST TO BE PAID: XX RY CHECK DEPOSIT TO ACCOUNT _ . CAPITALIZE Al MATURITY (Required for 4 week tcrrn) MONTHLY IX QUARTERLY SEMI-ANNUAL ANNUAL RESPONSIBILITY CODE: SPECIAL INSTRUC11ONS ,t! OFAC CHECKED Customer Signatiye• I ackrovAedge that required account documentation is on 'tie. 7,./C--------> Bank Officer Signature. C---d-d" (Back Office Use Only) COARS Account Number: Date Entered on COARS. Input By: • Approved on CDARS By: RESOLUTION NO. 2007 - 214 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE A DEPOSIT PLACEMENT AGREEMENT AND A CUSTODIAL AGREEMENT WITH NEIGHBORHOOD NATIONAL BANK FOR UP TO $2,000,000 FROM THE CITY'S INVESTMENT CAPITAL TO INVEST IN THE CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SERVICES (CDARS) PROGRAM WITH A 5.25% RATE OF RETURN AND AN .18 MONTH MATURITY WHEREAS, on August 21, 2007, Resolution No. 2007-202 was adopted by the City Council approving an amendment to City Council Policy No. 203 pertaining to the National City Investment Policy to permit the City to participate in the Certificate of Deposit Account Registry Service (CDARS) Investment Program; and WHEREAS, Neighborhood National Bank ("NNB") is a CDARS member bank, a local community bank, sits on the City's Community Benefit Loan Committee, and is assisting the City to develop a Small Business Toolbox; and WHEREAS, NNB has a strong financial position, and provides the City with a safe investment option; and WHEREAS, NNB has offered to provide the City a rate of return of 5.25% on a $2,000,000 CDARS investment with an 18 month maturity; and WHEREAS, the full amount of the City's CDARS investment can support lending initiatives, including special development projects and small business loans that strengthen the local community. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of National City hereby authorizes the Mayor to execute a Deposit Agreement and a Custodial Agreement with Neighborhood National Bank for up to $2,000,000 from the City's Investment Capital to invest in the Certificate of Deposit Account Registry Services (CDARS) Program with a 5.25% rate of return and an 18 month maturity. Said Agreements are on file in the office of the City Clerk. ATTEST: A Mi hael R. Dalla City Clerk PASSED and ADOPTED this 4th day of Sept , 2007. on Morrison, Mayor APPROVED AS TO FORM: George H-Eiser, III City Attorney Passed and adopted by the Council of the City of National City, California, on September 4, 2007 by the following vote, to -wit: Ayes: Councilmembers Morrison, Natividad, Parra, Ungab. Nays: None. Absent: Councilmember Zarate. Abstain: None. AUTHENTICATED BY: RON MORRISON Mayor of the City of National City, California City C erk of the City of National City, California By: Deputy I HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO. 2007-214 of the City of National City, California, passed and adopted by the Council of said City on September 4, 2007. City Clerk of the City of National City, California By: Deputy ca00'1•`-‘'d City of National City, California CITY COUNCIL AGENDA STATEMENT MEETING DATE September 2007 AGENDA ITEM NO. 12 rfE-M TITLE RESOLUTION OF THE CITY OF NATIONAL CITY AUTHORIZING THE MAYOR TO EXECUTE A DEPOSIT PLACEMENT AGREEMENT AND A CUSTODIAL AGREEMENT WITH NEIGHBORHOOD NATIONAL BANK FOR UP TO $2,000,000 FROM THE CITY'S INVESTMENT CAPITAL TO INVEST IN THE CERTIFICATE OF DEPOSIT ACCOUNT REGISTRY SERVICES (CDARS) PROGRAM WITH A 5.25% RATE OF RETURN PREPARED BY DEPARTMENT Jacqueline Reynoso (ext. 4293) Economic Development Division Community Development Coordinator EXPLANATION On August 21, 2007, City Council approved an amendment to the City's Investment policy (Policy Number 203). The newly amended investment policy makes Certificate of Deposit Account Registry Services (CDARS) an eligible investment category. CDARS became statutorily authorized by the enactment of the California Government Code Section 53601.8, effective January 1, 2007. CDARS is a convenient way to enjoy full FDIC insurance on deposits of up to $30 million in authorized financial institutions. By providing access to full FDIC insurance, CDARS can help the City comply with investment policy mandates. Neighborhood National Bank is a CDARS member bank, a local community hank, sits on the City's Community Benefit Loan Committee, and is helping the City to develop its Small Business Toolbox. NNB as a strong financial position and provides the City with a safe investment option. NNB has offerred to provide the City a rate of return of 5.25% on a $2,000,000 CDARS investment with an 18 month maturity. orocver, the full amount of the City's CDARS investment can support lending initiatives including specia elopment projects and small business loans that strengthen the local community. / Environmental Review N/A Financial Statement Invest up to $2 million of the City's investment capital in the CDARS program with Neighborhood National Bank. STAFF RECOMMENDATION City Council adopt the resolution. IATTACHMENTS 1. Staff Report L2. Resolution 3.Agrecment J Resolution No. a ° '‘y A-200 (9/80)