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HomeMy WebLinkAboutBridgehampton National BankTHIRD PARTY CUSTODIAN AGREEMENT THIS AGREEMENT, made and executed this~S~ay 0fl'm~.~xl~, 199~be~twean Town of Southold, located in the County of Suffo~ State of New York ("Local Government"), The Bridgehampton National Bank having offices at Bridgehamptun, New York ("Bank") and Manufacturers and Traders Trust Company (M&T Bank), having offices at Buffalo, New York "Custodian"). WITNESSETH WHEREAS, Local Government desires to maintain or continue to maintain public deposits with the Bank; WHEREAS, the Bank desires to obtain such deposits and to provide security therefor as required by the General Manicipal Law, Banking Law and other applicable statutes; WHEREAS, the Custodian agrees to provide safekeeping services and to hold any securities pledged by the Bank in a custodial account established for the benefit of the Local Government as secured party pursuant to this Agreemem; NOW, THEREFORE, in consideration of the mutual promises set forth hereafter, the parties hereto agree as follows: 1. Schedule of Deposits and Required SecuriW Attached as Exhibit A hereto is the Collateral Requirements. The Local Government and the Bank have agreed to select Option B of Exhibit A. The Bank will only provide eligible collateral which qualifies as 100% of market value collateral, therefore, the market value and the adjusted market value will be the same. 2. Security Reqmrements. The Bank, to secure the timely payment of Uninsured Deposits heretofore or hereafter made by the Local Government, including any interest due thereon, shall provide the Local Government with Eligible Collateral having an Adjusted Market Value equal to the Collateral Requirement. Whenever Eligible Securities are provided pursuant to this paragraph, the Bank hereby grants to the Local Government a pledge and security interest in and to such Eligible Securities and shaI1 deliver such Eligible Securities to the Custodian in the manner prescribed in section3 ofthisAgreement. The security interest oftheLocal Govemmentin Eligible Securities shall terminate upon the transfer of such Eligible Securities fi:om the Account. The Custodian will Monthly detenrdne the AdjuSted Market Value of the Eligible Collateral provided pursuant to this Agreement. If the Adjusted Market Value of such Eligible Collateral is less than the Collateral Requirement, the Custodian will so notify the Bank and the Bank shall, upon such notice, be required to provide additional Eligible Collateral having a Adjusted Market Value equal to or greater than such deficiency no later than one Business Day after receipt of such notice. If the Adjusted Market Value of the Eligible Collateral provided pursuant to this Agreement exceeds the Collateral Requirement, the Custodian, at the direction of the Bank, shall transfer securities from the Account, or inthe case of other Eligible Collateral, cause or consent to a reduction in the amount thereof, to the extent of such excess. The Bank may substitute Eligible Collateral ("Substitute Collateral") for any Eligible Collateral previously provided pursuant to this Agreement so long as the Substitute Collateral has an Adjusted Market Value equal to or greater than the Eligible Collateral which it will replace. The Bank shall give Written or Oral Notice thereof to the Custodian of any proposed substitution. In the event that the Custodian determines that the Substitute Collateral described in such notice consists exclusively of Eligible Securities having sufficient Adjusted Market Value, the Custodian, at the direction of the Bank, shall lmnsfer the Eligible Securities out of the Account against delivery to the Account on the same Business Day of the Substitute Collateral. The Custodian, to the extent not contained in the confirmation required by paragraph c of section 3 of this Agreement, shall provide the Local Government with a written confirmation setting forth: (1) a complete description of Eligible Collateral provided, reduced or transferred to or from the Account pursuant to this section; and, (2) the Market Value and Adjusted Market Value of such Eligible Collateral as of the date of such transaction. 2 3. Custody of Eligible Securities The Bank and Local Government hereby appoint the Custodian as custodian of all Eligible Securities at any time delivered to the Custodian pursuant to th/s Agreement. The Custodian hereby accepts appointmem as such Custodian and agrees to establish and maintain the Account and appropriate records identifying the Eligible Securities as pledged by the Bank to the Local Government. The Account shall be kept separate and apart from the general assets of the Custodian and will not, in any circumstances, be commingled with or become part of the backing for any other deposit or liability of the Custodiam The Custodian, in performing its duties and responsibilities pursuant to this Agreement, shall act as Custodian for, and agent of, the Local Government. The Bank and Local Government agree that Eligible Securities delivered to the Custodian for deposit in the Account may be in the form of credits to the accounts of the Custodian at the Book Entry System or a Depository or by delivery to the Custodian of physical certificates in a form suitable for transfer or with an assignment in blank to the Local Government or Custodian. The Bank and Local Government hereby authorize the Custodian on a continuous and ongoing basis to deposit in the Book Entry System and/or the Depositories all Eligible Securities that may be deposited therein and to utilize the Book Entry System and/Dr Depositories and the receipt and delivery of physical securities or any combination thereof in connection with its performance hereunder. Eligible Securities credited to the Account and deposited in the Book Entry System or Depositories o~ other financial intermediaries will be represented in accounts of the Custodian that include only assets held by the Custodian for customers, including but not limited to accounts in which the Custodian acts in a fiduciary, agency or representative capacity. Eligible Securities that are not held in the Book Entry System, Depositories or through another financial intermediary will be held in the Custodian% vault and physically segregated from securities and other non-cash property belonging m the Custodian. The Custodian shall provide the Local Government and Bank with a written confirmation on each Business Day on which Eligible Securities are transferred to and from the Account. Such confirmation shall identify the specific securities which are the subject to the confn~mation and state both the Market Value and Adjusted Market Value thereof. The Custodian shall also provide the Local Government and the Bank each month with a statement identifying all Eligible Securities in the Account, the Market Value and Adjusted Market Value thereof as of the date of such statement. The Account shall not be subject to any security interest, lien or any fight of set-off by or against the Custodian. With respect to all Eligible Securities held in the Account, the Custodian by itself, or through the use of the Book Entry System or the appropriate Depository, shall, unless otherwise instructed to the contrary by the Bank: (i) collect all income and other payments reflecting interest and principal on the Eligible Securities in the Account and credit such amom~ts to the account of the Bank; (ii) forward to the Bank copies of all information or documents that it may receive from an issuer of Eligible Securities which, in the opinion of the Custodian, are intended for the beneficial owner of the Eligible Securities including, without limitation all proxies and other authorizations properly executed and all proxy, statements, notices and reports; (iii~ execute, as Custodian, any certificates of ownership, affidavits, declarations or other certificates under any tax laws now or hereafter in effect in connection with the collection of bond and note coupons; (iv) hold directly, or through the Book Entry System or Depositary, all rights issued with respect to any Eligible Securities held by the Custodian hereunder; and (v) upon receipt of written instruction from the Baz~:, the Custodian will exchange Eligible Securities held hereunder for other securities and/or cash in connection with (a) any conversion privilege, reorganization, recapitalization, redemption in kind, consolidation, tender offer or exchange offer, or (b) any exercise, subscription, purclmse or other similar rights. 4. Events of Default In the event the Bank shall fall to pay the Local Government any amount of the Deposits by the Local Government covered by this Agreement in accordance with the terms of such Deposit, or should the Bank fail or suspend active operations, the Deposits in such Bank shall become due and payable immediately and the Local Government shall have the right to unilaterally demand delivery of all Eligible Securities in the Account by notice to the Custodian and to sell such securities at public or private sale. In the event of such sale, the Local Government, after deduct'mg all legal expenses and other costs, including reasonable attorneys fees, from the proceeds of such sale, shall apply the remainder towards any one or more of the liabilities ofthe Bank to the Local Government and shall return the surplus, if any, to the Bank. 5. Representation and Warranties. (a) Representations of the Bank. The Bank represents and warrants that: (1) it is the legal and actual owner, free and clear of all liens and claims, of all Eligible Securities pledged pursuant to this Agreement; (2) the form of this Agreement was approved by its board of directors; (3) this Agreement was executed by an officer of the Bank who was authorized by the Bank's board of directors ~o do so and will at all times be maintained as an official record of the Bank; (4) all securities pledged pursuant to this Agreement are Eligible Securities; the Bank is a bank or trust company located and authorized to do business in the State of New York; (6) all acts, conditions and things required to exist, happen or to be performed on its part precedent to and in the execution and delivery of this Agreement exist or have happened or have been performed. (b) Representations ofthe Local Govemmenc The Local Government hereby represents and warrants that: (1) this Agreement has been legally and validly entered into, does not and will not violate any statute or regulation applicable to it and is enforceable against the Local Government in accordance with its terms; (2) the appointment of the Custodian has been duly authorized and no other action by the Local Government is required and this Agreement was executed by an officer of the Local Government authorized to do so; 5 (3) it will not transfer, assign its interests in or the rights with respect thereto any Eligible Securities pledged pursuant to this Agreement except as authorized pursuant section 4 of the Agreement. (4) all acts, conditions and things required to exist, happen or to be performed on its part precedent to and in the execution and delivery ofthis Agreement ernst or have happened or have been performed. Concerning the Custodian. The Custodian shall not be liable for any loss or damage, includ'mg counsel fees, resulting from its action or omission to act or otherwise, except for any loss, damage, claim or expense arising out of its own negligence or willful misconduct, and shall have no obligation hereunder for any loss or damage, including counsel fees, which are sustained or incurred by reason of any action or inaction by the Book Entry System or Depository. The Custodian may, with respect to questions of law, apply for and obtain the advice and opinion of competent counsel and shall be fully protected with respect to anything done or omitted by it in good faith and conformity with such advice or opinion. The Local Government and Bank agree, jointly and severally, to indemnify the Custodian and to hold it harmless against any and all costs, expenses, damages, liabilities or claims, including reasonable fees and expenses of counsel, which the Custodian may sustain or incur or which may be asserted against the Custodian by reason of or as a result of any action taken or omitted by the Custodian in connection with operating under this Agreement, except those costs, expenses, damages, liabilities or claims arising out of the negligence or willful misconduct of the Custodian or any of its employees or duly appointed agencies. This indemnity shall be a continuing obligation of the Local Govemmem and Bank notwithstanding the termination of this Agreement. The Custodian shall not be responsible for, or considered to be the Custodian of, any security received by it for deposit in the Account until the Custodian actually receives and collects such security directly or by the final crediting of the Custodian's account on the books of the Book Entry System or the appropriate Depository. The Custodian will be entitled to reverse any credits made on the Local Government's behalf where such credits have been previously made and the Eligible Securities are not finally collected. 6 The Bank shall pay to the Custodian such fees as may be agreed upon from time to time. do The Custodian shall have no duties or responsibilities whatsoever except such duties and responsibilities as are specifically set forth in this Agreement and no covenant or obligation shall be implied against the Custodian in connection with this Agreement. The Local Government's authorized officer, upon reasonable notice~ shall.have access to the Custodian's books and records maintained with respect to the Local Government% interest in the Account during the Custodian's normal business hours. Upon the reasonable request of the Local Government, copies of any such books and records shall be provided by the Custodian to the Local Government or the Local Government's authorized officer at the Local Government's eapense. 7. Termination~ Any of the parties hereto may terminate this Agreement by giving to the other party a notice in writing specifying the date of such termination, which shall be the earlier of (i) not less than 90 days after the date of giving such notice or (ii) the date on which the Deposits are repaid in full. Such notice shall not affect or terminate the Local Government's security interest in the Eligible Securities in the Account. Upon termination hereof, the Bank shall pay to the Custodian such compensation as may be due to the Custodian as of the date of such termination and the Custodian shall follow such reasonable Written Instructions of the Bank and the Local Government concerning the transfer of custody of Eligible Securities, collateral records and other items. In the event of a discrepancy between Written Instructions of the Bank and the Local Govemmem, the Custodian shall act pursuant m the Local Government's Written Instructions. Upon the date set forth in the termination notice, this Agreement shall terminate except as otherwise provided herein and all obliga- tions of the parties to each other hereunder shall cease. 8. Miscellaneous. (a) The Local Government and Bank each agrees to furnish to the Custodian a new 7 Certificate (Exhibit C) in the event that any present Authorized Person ceases to be an Authorized Person or in the event that any other Authorized Persons are appointed and authorized. Until such new Certificate is received, the Custodian shall be fully protected in acting upon Omi or Written Instructions or signatures of the present Authorized Persons. (b) Any Written Instructions or other instrument in writing authorized or required by this Agreement shall be given to the Custodian and shall be sufficiently given if sent to the Custodian by regular mai/to its Offices at Buffalo, New York or at such Other place as the Custodian may frOm time to time designate in writing. (c) Any notice or other insmanent in writing authorized or required by this Agreement to be given to the Bank shall be sufficiently given if sent to the Bank by regular mail to its Offices at P, O. Box 3005, Bridgebampton, NY 11932 or at such other place as the Bank may from time to time designate in writing~ (d) Any notice or other instrument in writing, authorized or required by this Agreement to be given to the Local Government shall be sufficiently given if sent to the Local Government by regular mail to its Offices at 53095 ~a~n Road, P.O. Box 1179, $outhold~ lqY 11971-0959 or at such other Offices as the Local Government may from time to time designate in writing. (e) In case any provision in or obligation under this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and unenfomeability of the remaining provisions or obligations shall not in any way be affected or impaired thereby and if any provision is inapplicable to any person or circumstances, it shall nevertheless remain applicable to all other persons and circumstances. This Agreement may not be amended or modified in any manner except by written agreement executed by all of the parties hereto. (g) This Agreement shall extend to and be binding upon the parties hereto, and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by any party without the written consent of the other parties. (h) This Agreement shall be construed in accordance with the laws of the State of New York without regard to conflict of law principles thereof. Definitions. Whenever used in this Agreement the following terms shall have the following meanings: "Account" shall mean the custodial account established with the Custodian for the benefit of the Local Government as secured party in accordance wi~ this Agreement. "Adjusted Market Value" shall be one hundred percent of Market Value. "Authorized Person" shall be any officer of the Local Government or Bank, as the case may be, duly authorized to give Oral Instructions or Written Instructions on behalf of Local Government or Bank. such persons to be designated in a Certificate substantially in the form of Exhibit "C" attached hereto, as such Exhibit may be amended from time to time. "Bank" shall mean any bank as defmed by the banking law of the State of New York or a national banking association located and authorized to do business in New York. "Book Entry System" stroll mean the Federal Reserve/Treasury Book Entry System for receiving and delivering government securities. "Business Day" shall mean any day on which the Custodian and the Bank are open for business and on which the Book Entry System and/or the Depositories are open for business. go "Certificate" shall mean the Certificate attached hereto as Exhibit "C". Collateral Requirement shall mean the amounts required in Exkibit A unless the Bank and Local Government agree to a different amount in accordance with this Agreement. 9 "Depository" shall include the Depository Trust Company, the Participants Trust Company and other securities depositories and clearing agencies (and their successors and nominees) registered with the Securities and Exchange Commission or otherwise regulated by appropriate federal or state agencies as a securities depository or clearing agency. "Deposits" shall mean all deposits by the Local Government in the Bank that are available for all uses generally permitted by the Bank to the Local Government for actually and finally collected funds under the Bank's accotmt agreement or policies. k. "Eligible Collateral" shall mean Eligible Securities. "Eligible Securities" shall mean any securities of the types enumerated in the Schedule of Eligible Securities attached hereto as Exhibit "B", as such Schedule may be amended by the parties in writing from time to time. Such Schedule may establish limitations pertaining to the types or amoants of Eligible Securities which may be provided pursuant to this Agreement. "Market Value" shall mean, with respect to any Eligible Security held in the Account, the market value of sueh Eligible Security as made available to the Custodian by a generally recognized source selected by the Custodian or by the Bank or the most recently available closing bid quotation from such som'ce plus, if not reflected in the market value, any accrued interest thereon, or, if such source does not make available a market value or a closing bid price for a particular security, the market value shall be as determined by the Custodian in its sole discretion based on information furnished to the Custodian by one or more brokers or dealers or based on information otherwise reasonably acceptable to the Local Government; provided however that, if agreed in writing by the parties hereto, the Bank may provide the Custodian with such Market Values. n. "Margin Percentage" shall equal 105 percent "Nationally Recognized Statistical Rating Organization" shall mean Moody's, Standard and Poors, Fitch, Duff and Phelps, BankWatch and IBCA. 10 "Oral Instructions" shall mean verbal instructions actually received by the Custodian from an Authorized Person or from a person reasonably believed by the Custodian to be an Authorized Person. "Substitute Collateral" shall have meaning set forth in paragraph c of Section 2 of this Agreement. "Uninsured Deposits" shall mean that portion of the Local Government's Deposits with the Bank which exceeds the insurance coverage available from the Federal Deposit Insurance Corporation. 'Written Instructions" shall mean written communications actually received by the Bank or the Custodian from an Authorized Person or from a person reasonably believed by the Bank or the Custodian to be an Authorized Person by a computer, telex, telecopier or any other system whereby the receiver of such communications is able to verify by codes or otherwise with a reasonable degree of certainty the identity of the sender of such communication. 11 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized and their respective seals to be hereunto affixed, as of the day and year first above written. ACKNOWLEDGED AND AGREED: Town of Southold As Pledgee By: Jean It/. Coehran Superv~.sor Typed Name and Title 53095 Main Road P.O. Box 1179 $onthold, i~ 11971-0959 Address (516) 765-1889 Telephone The Bridgehampton National Bank As Depositary and Pledgor By: Christopher Becket, Senior Vice President and Chief Financial Officer Typed Name and Title 2200 Montauk Highway Brid~ehampton. NY 11932 Address (516'1 537-1000 Telephone Seal Seal MANUFACTURERS AND TRADERS TRUST COMPANY As Custodian T/~, 0ed Name and Title Address ~ Telephone Seal 12 EXHIBIT A* OPTION A Schedule of Anticipated Deposit and Collateral Requirements Maximum Amount Amount of of Anticipated Collateral Uninsured Deposits Required January February March April May June July August September October November December ~, OPTION B Collateral Requirement. On any Business Day that the Local Govemmem has Uninsured Deposits in the Bank, the Bank, in accordance with paragraph b of section 2 of this Agreement, agrees to deliver or cause to be delivered to the Custodian for deposit in the Account Eligible Collateral having an Adjusted Market Value equal to the Collateral Requirement. For purposes of thins Agreement, Collateral Requirement shall mean the amount of such Uninsured Deposits times the- Margin Percentage, if any .... This exhibit should include all official accounts on cleposit in the bank including offices and deparonents whether Option A or B is utilized. 13 EXHIBIT B Schedule of Eligible Securities (i) Obligations issued by the United States of America, an agency thereof or a United States government sponsored corporation or obligations fully insured or guaranteed as to the payment of prinmpal and interest by the United States of America, an agency thereof or a United States government sponsored corporation. (ii) Obligations issued or fully insured or guaranteed by the State of New York, obligations issued by a municipal corporation, school district or district corporation of such State or obligations of any public benefit corporation which under a specific State statute may be accepted as security for deposit of public moneys. ~i) Obligations issued or fully guarante~a.t_ienm~flc-fix-Recons~mctJ-0'tFand Development,~elopment l~~Deve!ol~ nt~B~ ~opment Bank. (iv) Obligations partially insured or guaranteed by any agency of the America, at a proportion of the Market Value of the obl~ation that represer the insurance or guaranty. Jnited States of ts the amount of 14 EXHIBIT C Certificate of Authorized Persons For Local Government: Typed Name and Title Deputy Super~fsor Typed Name and Title By: Typed Name and Title For Bank: By: ~ ~ ~ Christopher l~ecker Senior Vice President and Chief Financial Officer Typed Name and Title Janet0gemeuille Vice President and Comptroller Typed Name and Title Kimberly Romano I,,_) - - Assistant Cashier and Assistant Deputy Comptroller Typed Name and Title 15 I~HE BRIDGEIt~MPTON NATIONAL BANK ODF-ORIGINATOR (CORPORATE) AGREEMENT CREDIT ENTRI~S This Agreement made and entered into on the date indicated in Schedule A by and between The Bridgehampton National Bank (the "Bank") having its principal offices at 2200 Montauk Highway, Btidgehampton, New York 11932 and the Customer indicated in Schedule A (the "Customer"). Services - Subject to thee Terms and coaditions ofth,'s Agreement, the Bank hereby:agrees tO provide the i2tis~ifier s~ Whereby the Bar~ will process electro~ credit orders ("Credits!', Credit Erttr~e% or ~Entrjes) iiriti~ed b~; Ike Customer to trmsfer funds'to the depository finanCialinsfitutioa accrunts of certain if~diVidual~ (t, he "P~vees ~) in conne¢ti0n with one or more arrangements for direct deposks Of, payroll, dividends or other purposes. The Credit ~ntries shallbe initiated pursuant to the terms of this agreement and the rules of the National AutomatedClearing House Association and the New York Automated Clearing House (the "Rules"). The Bank is Willkig to a~t as an Originating Depository Financial Institution with respect to such Emries. AGREEMENT Prenotification - Not less than six days preceding the first date the Customer intends to initiate a Credit to the account of a Payee (the Payee's Account), the Customer will forward to the Bank a prenotification (the "Prenote") as such term ~s used in Part A of the Rules, with respect to the credits to be transmitted to such Payee's _account. The Customer will provide the Prenotes in format outlined in Schedule A. Should any Prenote be rejected by the Receiving Institution, the Customer will be solely responsible for making the necessary corrections thereto before initiating another prenotification. The Bank will notify the'Customer by phone regarding any prenotification returns or Notifications of Change as outlined in Sections 7, 8 & 9 of this Agreemem. The Customer agrees that it will provide to the Bank a new prenote for any Payee whenever required to do so under the Rules and the Customer will not initiate any Credits to such Payee's Account from the time a new Prenote is required until the time specified by the Rules for rejection ora Prenote has expired. Transmittal Of Entries By The Customer - The Cus[omer shall transmit Credit Entries to the Bank location(s) and irt compliance with the formatting and other requirements set forth in Schedule A ar[ached hereto. The total dollar amount of Entries: transmitted by the Customer to the Bank shall not exceed the dollar amount indicated on Schedule A on any one day. -1- CUstomer Repgesentattons, Agreements, L-tdemnitie3 - Prior to the forwarding of the Prenore for any Payee's Account. The Customer agrees to obtain from each person shown as the Receiver on an Entry, a written authorization tc initiate such Entry and the crediting ofits account and to initiate, if necessary, debit entries and adjustments for any credit entries made in error Each Payee's account shall be maintained~ with~ a financ!a~ ~stitatio~ (the "Receiving InstiVation") wia/ch i's a. "Receiving Depository Financi~'tnstimtion" (RDFt) under the "Rules". The Customer shall be bound by and comply with the Rules as in effect, including without limitation the provision theie(~f ;making payment of an Entry by the RDFI provisional until receipt by the RDFI of the gnal settlement fo, t such Entry; and specifically acknowledges that it has received, notice of that Rule and of the ~ct that~ i~ Such settlement is not received~the RDFI shall be entitled to ~ refim~ from the Receiver 6f~e ,~unt c~edited~.~ke Cus~bmer sh~it not be deemed ~o have~p~d ~h~ K, ece~,~e~the monnt ff the E~. Tt~e msto~l~aI!//l~'enmi~ the Bank ag~imt any loss; EalSilfty or expenge (melu~din~ attorneys' fe~3~a~/cl expels) mmlting from or axising~,vut df.any b~each of.any of the foregoing represemafiOm.or agreements. Authentication Proeed:ures - The Bank is authorized to honor and act upon any and all instructions, requests, ~irff?mati0n and data respecting the initiation of Credit Entries, delivered in such format as sp6cifie~l in Schedule A~and accompanied by a transmittal form certifying as to the authenfici*y and validity Of~;h~ amount of&~edits containedtherein and hearing or purporting to bear the signature of any individual w:I/ose n~me a~/d signature appears on the EFT Authorized Signature Card 'supplied to the Bank. Which 5ignature ~d, certified by the Customer setting forth the fact of~such~chauge, the name of any mdividuai~to be ,,deleted and the name, office or title and spectmen s~gnature of each new auth0nzed individual. Tl~te Bank ma~ continue to act on the instructions of individuals pteviously affthorized until the Bank has received notice of change and has a reasonabl~e opportunity to act upon k. The Bank may. at its option, use any means ofver'ffying or authenticating instructions in addition to the authentication methods described above. The Customer agrees to implement any authentication controls and use any authenffcati0n equipment required by the Bank in order to further protect the Customer's transactions hereunder. 5 Processing~ Transmittal And Settlement By The Bank- (a) Except as provided in Sections 6_ and 7. the Bank shall process Entries received from the Customer to conform with the file specifications set forth in the Rules, transmit such Entries as an Originafmg Depositow Financial Institution to The New York Automated Clearing House the "ACH" acting as an Automated Clearing House processor, and settle for such Entries as provided in the Rules. -2- (b) The Bank shall transmit such Entries to the ACH Operator by the deadline of the ACH Operator set forfl~ in Schedule Fl one business day prior to the effective Entry Date slxown m such Enta-ies, provkled (i) such Entries are received by the Bank's related cut-off time set ~brtlx in SChedule B chh business day, ('ii) tim EtTective Date lsat lea:st ~wo business days after such business date and (iii) the ACH Operator is open tbr businesson~such busin©s~ day. For purposes of thb Agreement, a "business. day" Ls a day on which the Bank is open to the public for carrying on m.i6stll t~'~tltl~y M1 o £ its business other thma a Saturday/and l.~t~ries, shal[ be deemed'received by the Bank, when received at the location set ~bl~Ja irt Seheflu[e A, If any of the!~e~ 'ements as clause (i), (ii), or (i'ii).of Sectiotx 5 (h) is not meti'theBank shall use,reaso~b~ ~t~o~s m ~m~sn~t such Enn les tothe ACH O~r~ b7 tI~a~ ~eposg ant~ a~yon wh<~ ~e ACflI Operak~r ~s open fbi b6smess. On-Us Entries - Except as provided in Section 7. in the case of an Entry received for credit m an account maintained with the Bank (an "Ou-Us Fmtry"), the Bank shall credit the Receiver's account in tl~e mxmunt of such Entry on the EffuSive Date ctmtained in such Entry. Provided the reqtiirements are not met; the Bank shall us.e reasonable efforts to credit the Receiver's account in the ;tmount of such Entry on the next busine~ day t'ollow~.ng s~tmtl EffEctive Entry Date. Rejection .f Entrles -'Ittc Bank shall reject any Entry which dues not comply with the requirements of Section 2 or Section 4, or wlfich contain an Eefectivc Entry Date more titan twq:bushless days after the b~lsiness day such Entry is received by the Bank. The Bank shall have tire right to rejec~ an On?Us Entry lrbr m~y reason for which an Entry may be returned under thc Rules~ The Bank shall have the right m reject any Entry il' the. Customer has ~hiled to comply with its acc,unt balance obligations under Section 12. The Bank shall notify tim Customer by phone of such rejection n0 later than the business day such Entry would other- wise h~tve been transmitted by thc Bank to the ACH Operator m5 itl thc case of an On-Us EnVy; ~t~,!',;ffcctivc Entry. Dale; :Fhc Bm~k shall tmvc no liability to the Custume~ by reason of thc rejection of any such l~:nt.w or the hct that such notice is not given at ~m earlier time than that pi'ovided fbr herein. Notice of Returned Entries - Tile Bank shall notify the Customer by phone oFthe receipt of a returned entry l¥om the ACH Operator no later thm~ one business day after tl'~ business day of such receipt. Except the an Entry retr~smitted by the Customer in accordance with the reqtfirerctents of Section 2~ the Bm~k shall have no obligation to retmnsmit a returned Entry with respect to the original Entry. Notification of Changes- The Bank shall notify the Customer et' all notifications of changes Received by thc Bank related to Entries transmitted by the Customer by no later than tw___q business days after receipt tlXereof: -3- S89~-Z£9-9~S:~I q±UN NOLdNUH~gEI~8 10. Cancellation Or Amendment By The Customer -The Customer shal~ have no right to the cancellation or amendment of any Entry after its receipt by the Bank. However, the Bank shall use reasonable efforts to act on a request by the Customer for cancellation of an Entry prior to transmitting it to the ACH Operator or, in the case of an On-Us Entry, prior to crediting a Receiver's account, but shall have no liability if such cancellation is not effected. 11. Settlement - The Customer shall make available to the Bank for payment the requisite amount Of good and collected fimds with respect to each Credit Entry available on the settlement date (Effective E~try Date). The Customer hereby authorizes the Bank to effect the payment of such Credit. bY debiting the Customers Account for the total of such Credit on the settlement date. If any overdraft results from any such debit, the Customer will repay the amount of such oxierdraft upon demand~plus'~the'Bank's customary overdraft charges then in effect. 12. The Account- The Bank may, without prior notice or demand, obtain payment of any amount due and,pay~ablo to it under, this Agreement by debiting the account(s) of the Customer identified in Sehedt~le A (the "Acctunt"), and shall credit the Account for any amount received by the Bank for which the Bank bas prgviously received payment from the Customer. Such credit shall be made as Of the day of such receipt by the Bank. The Customer shall at all tunes maintain a balance of available funds in the Account sufficient to cover its payment obligations under this Agreement. In the event there are not sufficient available funds ih the Account to cover the Customer's obligations under this Agreemem, the Customer agrees that theBank may debit any account maintained by the Customer with the Bank or any affiliate of the Bank or that the Bank may set off against any amount it owes to the Customer, in order to obtain payment of the Customer's obligations under this Agreement. 13. Account Reconciliation - Entries transmitted by the Bank or credited to a receiver's account m,qmtalned with the Bank will be reflected on the Customer's periodic statement issued by the Bank with respect, to the Account pursuant to the agreement between the Bank and the Customer. The Customer agrees to notify the Bank promptly of any discrepancy between the Customer's records and information shown on any such periodic statement If the Customer fails lo notify the Bank of any such discrepancy within sixty days of receipt of a periodic statement containing such information~ the Customer agrees that the Bank shall'not be liable for any other losses resulting fro~ the Customer's failure to give such notice or any loss of interest with respect to an Entry shown on such per. iodic statement. If the Customer lalls to notify bank of any such discrepancy w'rthin sixty days of receipt of. such periodic statement, the Customer shall be precluded from asserting such discrepancyagainst the Bank. 14. Liabilities; Limitations On Liability; Indemnity - (a) The Bank shall be responsible only for performing the services expressly provided for in this Agreement, and shall be liable only for its negligence in performing those services. The Bank shall not be responsible for the Customer's acts or oTrdssions (including without ~BRI]3~.EH~H?TEIN ~qF~TL I]3:5~6-537-z1685 FE~ 19'98 ~_7:26 No.O16 P.03 limilal,ion the amount, accuracy? fimelines,~ o£transmittal or due authm-izatkm o£emy Entry received from the Custom~) or t~ose or m~y o~l~er person, in~din~ ~thout limi~ion any Federal ~ese~e Bank or transmi~ion or commu~cations facility, any Recci.vcr or R~elvin~ Deposi~o~ Finandal lnstR.ution (bcludinB withou~ limitatio~ thc return of an Ent~ by such ~e~eiver or Retrying D~osi~o~ Pina~ial Institution), and no such person shall be deemed fl~ B~k~s a~. Zhe ~l~m~r ~e~ to ind~ify fl~e B~ agab~ any 1o~. llabili~ of ~xp~se (~eklc~ attorneys' fee~ and ~xp~ses) r~ulfing fi-om or a~mng out o£~y claim of any person that the Balik is responsible for any act or omission of the Customer or any other person descfibed~in ~his Section lq¢). (b) (c) (d) Except as pro¥,ided(i!] Pm:agr~ph A above, file B~k shalJ not be liable £m~ ~y ~onsequenfial~ special ~nk[v~ or indlr¢ct~ or da~ge ~hidb the Cu~tmner may in~· or suffer in con~cti°n wJ~ t~ Agr~nent, inoli~di~g without li:mitatl6n loss or d~mage from subseq~enf wrm~g~l ~honor resulfi~ from the Bank's- acts m' omissions pursua,nt to this,Agrecm~l. Without lhniting the generality of tho foregoing provisions, the Bank shall be excused from thiling to act: or delay i!~ acting if such failure or delay iseai~ed by legal constraint, intm'ruption of transmission or~ommunieation facilities, equipment failure war. c, mergeney conditions or o0~er cimum~tances b~yond the Bank's control. In addition, flle~Bank shall be excused from faillrig to transmit or dela~ in transmitting an Entt2/if such transmittaLwould~result in the Bank's having exceeded, any lirn~tatio~ upon its:intra.day net funds positio~l egabljshed pursuant to present or future Federal Rcserue guidelines or in ~he Bank'~ ot/~erwise, vi olatb~g zu~y provision of any present or future risk control program of the Fed'oral, Reser*e or,any rule or regulation of any off,er U,S governmental regulatory authority_ Subject to the tbreg0ing limitations_ thc Bank's liability for loss of interest resulting fi'mn it.~ error or delay shall be calculated by using a rate equal to the average Federal Funds rate at the Federal Reserve Bank of New York for the period involved. At the Bank's option, payment of such interest may be made by crediting the Acctmnt resulting lkom or arising out of any claim of any person tha the Bank is responsible £or any act or omissim] of the Customer or any other person described in Seclion 14(al, 15, Compliance With Secnrity Procednre - (al If an Entry (or a request for cancellation or amendment of an Entry) received by the Bank purports to have been transmitted or a~thoriznd by the Customer; it will be deemed elTective at the Customer's Entry (or request) mid tim Customer shall be obligated ~o pay the Bank the amount of such Entry aa provided herein even though the Entry (or toques0 was not atithorized by the Customer, prOvided the Bank acted in compliance with the security procedure referred to in Section (4) Auttienticatimi Procedures witi~ respect to such etm'y. If sigmature comparison is to be used as a part of that security procedure, the Bank shall be -5- deemed to have complied with that part of stich procedure if it compares the signature accompanyurg a file of Enmes (or request for cancellation or amendment of an Entity) received with the signature of an Authorized Representative of*he Customer and, on the basis of such ~c~,mP~son belieVes the signature accompanying such fllerto be that of:such Authorized R~prese/I/ati,Je (b) If an En~try (or request for cancellation or, amendmeat of an Entry) received bythe Bank was tr~¢smit~tqd or authorized by the Customer, the Customer shall be ob!iga,ted to pay the.mount ofth¢~ntry, as prowd'~ hereto, whether or not the Bank complied with the security procedure wi~li:,m~p~t i0 thkt Entry La~ld whether ornot that Emry was ert0neous ia any respect or that e~ror~b~ld have~beeni'tlet~cted ~f the Barnk had c~mphed ,nth such pracodure. 6'. Inconsisteng~ bas~s of~ a~ ci cu m/aces.. If~N~m_..e Amd:Account Number - The Customer acknowledges and agrees that, if e~ithd~-Ke:¢eik~ in¢°nsis~tentl'y by name"and acc0ui~t number, paymerlt 0fthe Entry tb Bi~}t(~ the, Reieiv~ng Deposit0~ Fii-nanc~ institution might be'made by'the ~ito~ F~uanciat Insfitulfon (or bY the B/ank in the case of an On-Us Entry) on the ant nuinber e~ven ilk [dem!fies~ a parson di~em from the named Receiver, and ,r s ob~gatton to pay ~e amount of the Entry to the Bank xs not excused m such 17. Paymegt Far Setwices - The Customer shall pay the Bank the charges for the sermces provided for htreia s&t fo~h in schedule C ,attached hereto Such charges do not include, and the Customer shall be reSpo~nsib!e for payment of, any sales,/lse, excise, value added, utility or other similar taxes relating tb ~ serVices,pro~ded for herein, and any fees or charges provided for in the agreement bt~wee~[the:~auk and the Cusk)mer with respect to the Account. 18. Amendments - From time to time the Bank may amend an~y of the terms and conditions contained in this Agreement, including without limitation, any cut-offtime, any business day, and ~any part of SCheduies A th'~ough D attiched hereto. Such amendments shall become effective upon receipt of notice by th~ Customer or such later date as may be stated in the Bank's notice to the Customer. 19. Notices, Instructions, Etc. - (a) Except as otherwise expressly provided her~in, the Bank shall not be required to act upon any notice or instruction received from the Customer or any other person, or to provide any- notice or advice to the Customer or any other person with respect to any matter. Co) The Bank shall be entitled to rely on any written notice or other written communication believed by it in good faith to be genuine and to have been signed by an Authorized Representative, and any such communication shall be deemed to have been signed by such person. The names and signatures of Authorized Representatives are set for in Schedule D attached hereto. The Customer may add or delete any Authorized Representative other than that Authorized Representative being added or deleted. Such notice shall be effective on the second business day following the day of the Bank's receipt thereof] -6- Except as otherwise expressly provided here'm, any written notice or other written communication required or permitted to be given under this Agreement shall be delivered, sent by United States ma'fl, or by express carder, and, if to the Bank, addressed to: The Bridgehampton National Bank 2200 Montauk Highway P.O. Box 3005 Bridgehampton, NY 11932 or 20. 21_ 22. 23~ 24. And ~ the Customer, addressed to the address indicated'in Seh'edule A. Unless aa0ther address is substituted by nof~e delivered or sent as provided herein. Except as otherwise expressly provided herein, any such nootice shall be deemed given when received. Data Retention - The Customer shall retain data on file adequate to permit remaking of Entries following the date o£their transmittal'by the..Bankas provided herein, and shall provide such Data to the Bank Upon its request. Termination - The Customer may terminate this Agreement at any time. Such termination shall be effective on the second business day following the day of the Bank's rec(~pt of written notice of such termirmtion or guch later date as is specified in that notice. The Bank reserves the right to terminate this Agreement immediately upon providing wmten notice of such termination to the Customer. Any termination of this Agreement shall not affect any of Customer's obligations arising prior to such termination. Entire Agreement - This Agreement (including the Schedules attached hereto), together with the Account A~eement, is the complete and exclusive statement of the agreement between the Bank and the Customer with respect to the subject matter here°f and supersedes any prior agreement(s) between the Bank and the Customer with respect to such subject matter. In the event of any inconsistency between the terms of this Agreement and the Account Agreement, the terms of this Agreement shall govern In the event performance of the services ,provided herein~in accordance with the terms of this Agreement would result in a violation of any presem or future statute, regulation or government policy to which the Bank is subject and which guvems or affects the transactions contemplated by this Agreement, then t~is Agreement shall be deemed amended to the extent necessary to comply with such statute, regulation or policy, and the Bank shall incur no liability to the'Customer as a result of such violation or amendment. Non-Assignment - The Customer may nor assign this Agreement or any of the rights or duties hereunder Without the Bank's prior written consent. Binding Agreement; Benefit - This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns. -7- 25. Headings - Headings are used for referenced purposes only and shall not be deemed a part of th/s Agreement 26. Governing Law - This Agreement shall be construed in accordance with and governed bythe laws of the 8t~e of New York. 1N WITNESS W:Z-IEREOF the pa~ies hereto have caused this Agreemem to be executed by their duly authorized, officers. B~dgehampton'NatirmaI Bank Tke Customer Christopher Becker Name Town of Southold Name SVP & Chief Financial Officer Suvervisor Title Title Signature Sign~ , ~//~//~t:; 2/23/98 Date Date The Bridgehampton National Bank ACH Services -9- Schedu~ A IX] New [ ] Change Date: [ ] Delete Company Name Address City State Zip Southold, Contact John Cushman Bank Contact Michelle Dosch Town of Southold 53095 Main Road NY 11971-0959 Phone: 516-765-4333 Phone: 516-537-1000 ACH File Preparation: [X ] Company Contact: [ ] Service Bureau Phone: Service Bureau: Address: Delivery Method: [ ] Floppy Disk [X ] Transmission Delivered To: The Bridgehampton National Bank 2200 Montauk Hiahwa¥, Bridgehampton NY 11932 Maximum File Dollar Amount: The total dollar amount of entries transmitted by the company on any one day shall not exceed $200 ~ 000. O0 Application: Direct Deposit (AttaCh ehle~d~'tff~ffeetive dates) Settlement Account: 0500001052 Billing Meth¢ d: Debit Accotmt Prenote File Expected: Firgt Live File Expected: The Bridgehampton National Bank 1998 Holidays Observed Attachment Schedule B New Year's Day Martin Lutl~er King Presidents Day Memorial Day Independence Day Labor Day Columbus Day Thanksgiving Day Christmas Day ~he Bridgehampton Nation~lBa~k ACH Services Schedule C TheBank will per/om the Services included at no charge.: ACH Services Schedule D Company Narde __T0wn,of Sou~old Address 53095 Main Road SoUthotd, NY 11971 I: the underSigned, Supervisor the Town of Southold hereby certify and represent that any of "Corn an (the p y ) do of the following person(s) are authorized to submit Entry data to the Bridgehampton National Bank on behalf of the Company as defined under the ODFI/Originator Agreemem for credit entries, The representatives and signatures of such person(s) are as follows: Name John Cushman Barbara Rudder John Sepenosk5 Title Signature · Personnel kssistant Data Processing ~ Equipment Operator · Signature Title Superv±sor 2/23/98 Date