BidMass Guidelines
(Amended 7/7/2010)

BidMass is an innovative and efficient means for investing in certificates of deposit. The program is designed to provide eligible Massachusetts financial institutions with the opportunity to interactively compete for Commonwealth of Massachusetts investment dollars every month.

Bids will be accepted on-line at www.BidMass.com. Beginning on December 12, 2006 BidMass auctions will be held on the second Tuesday of every month with funding two (2) business days following the auction. The auctions will begin at 10:30 a.m. and end at 11:00 a.m. The State Treasurer will make funds available for three (3) month or six (6) month certificates of deposit each month.

Registration and Entry to Auction

• Bidders must register with BidMass. To register, bidders should go to the BidMass web site. Upon registering, bidders will receive a BidMass password and will be responsible for protecting the confidentiality of the password.

• Registered bidders must request and receive admission to an auction to submit bids. The State Treasurer reserves the right to deny access to any BidMass auction to any bidder, at any time and for any reason whatsoever, in its sole discretion.

State statute limits the amount the Treasury may have on deposit at any one bank to 55% of that bank's consolidated net surplus. Through internal policy, the Treasury has instituted a stricter deposit limit, and in order to reward banks that are active in the community, has set the limit on a sliding scale based on Community Reinvestment Act ratings. The following general limits have been set:

These limits apply to all state deposits held by a bank, whether obtained through BidMass or otherwise. In addition, each bank is limited to an amount between $100,000 and $5 million per auction, depending largely on the capacity for additional deposits determined by the above formula.

In order to further reward banks that are actively serving the community, and to encourage banks with lower CRA ratings to do more, the following additional incentives have been added that will allow all participating banks to increase their deposit limits by up to 10% by meeting certain of the following conditions:

Service to Communities of color and Immigrant Populations (increase up to 5%)

Banks showing a commitment to service of minority communities may add up to 5% to their limits. These include:

• A formal commitment to making 20% of all small business loans in majority-minority census tracts or demonstration that at least 10% of actual small business loans are being made in majority-minority census tracts.
• Minority ownership of over 35%, or minority and women representation of 35% or more of directors or senior management, or status of bank as a Massachusetts qualified SOMWBA business.
• Total minority employment over 50%.
• Diversity in awarding contracts, so that over 20% of outside vendor contracts are to qualified businesses owned by people of color and based in Massachusetts.
• Availability of bilingual tellers at branches with significant minority or non-English speaking populations, as well as availability of non-English brochures and account information for major bank products.
• Commitment to offer low cost international money transfers.
• Policies for accepting alternative forms of identification (the Treasury can provide sample policies consistent with the Patriot Act used by out of state banks).
• Support of bilingual financial education, ESL programs or bank branches in high schools with large populations of color and immigrant students.

Additional CRA incentives (increase up to 5%)

The Treasury recognizes that CRA ratings judge only past performance. Using past performance creates only remote incentives for improvement. Current community banking initiatives are much more representative of the bank's impact in the community. Therefore, the Treasury will recognize the following activities, if they have occurred in a fiscal year ending since the bank's last CRA examination. These include:

• Having a formal Community Investment Agreement currently in effect.
• Having an operational state Community Advisory Council.
• A formal commitment to making 80% of all small business loans in amounts under $100,000, or actual loans for under $100,000 representing 75% of all loans to small businesses.
• A formal commitment to making 20% of all small business loans in low to moderate income (LMI) census tracts or demonstration that at least 10% of actual small business loans are being made in LMI census tracts.
• Conversion of at least 30% of the Massachusetts Housing Partnership commitments to equity.
• Participation in the state's Soft Second mortgage program.
• Establishment of a below-market or otherwise subsidized small business loan program for Massachusetts small businesses or for Massachusetts nonprofit housing developers.
• Establishment of individual development accounts (IDAs) at a Massachusetts branch of the bank, or bank match contributions by the bank to IDAs of Massachusetts residents.
• Diversity in awarding contracts, so over 20% of outside vendor contracts are to qualified women-owned businesses.
• Increases of 15% or more over the prior fiscal year in charitable giving.
• Investment in Massachusetts through "new market tax credits", the state's low-income housing tax credit or the state's historic tax credit.
• Offering checking and savings accounts that comply with the Massachusetts Community Banking Council's standards for basic banking accounts.
• A "second-look program" for small business loans.
• Participation in the SBA Community Express Program.
• A formal commitment to making 80% of all small business loans to small businesses with under $1m in GAR or demonstration that at least 10% of the actual small business loans are being made to such businesses.

• The minimum bid is $100,000. Bids may increase in increments of $100,000 to a maximum of $5,000,000 per institution - including all branch offices, per auction.

• The minimum rate will be determined by the Treasurer's office and will be displayed on the auction home page prior to the auction. Bids below the minimum rate will not be accepted.

• Multiple bids from the same bidder are permissible. Each bidder may make up to five bids, the total of which may not exceed $5,000,000 per auction. There is no limit as to the number of times a bid may be updated/changed.

• Settlement date is the two (2) business days following the auction and will be displayed on the auction page.

• Maturity date will be displayed on the auction page.

• Winning bidders will be assessed an annualized fee of .050% (.025% of the principal amount of 6 month certificates of deposit awarded and .0125% of the principal amount of 3 month certificates of deposit awarded). Such fee will be payable to Grant Street Group by ACH debit two business days following the auction. Completion of the ACH Debit Authorization on the Confirmation Page represents winning bidders authorization for Grant Street Group to debit their account. Failure to make timely payments of the Grant Street Group fee will result in exclusion from subsequent auctions.

• If qualified bids submitted in the same auction by the same or different bidders result in a tie, the first bid submitted prevails. Any change to a bid constitutes a new bid.

• Winning bidders must confirm their award per the instructions on the Confirmation Page immediately after the auction ends.

• Interest on the certificate of deposit will be calculated on an Actual/360 day basis.

• Certificates of deposit will be book-entry in the name of Treasurer, Commonwealth of Massachusetts.

• Transactions will be completed by wire transfer. The State Treasurer's wiring instructions will be provided in a maturity notice sent via email to the financial institution prior to the maturity date of the certificates of deposit.

• Financial institutions agree to incur all transaction costs, including wire fees.

Certificates of deposit in excess of insurance coverage by the Federal Deposit Insurance Corporation (FDIC) must be collateralized with a perfected pledge of eligible collateral, as defined below, prior to funding of the certificates of deposit. Eligible collateral must be pledged in an amount equal to 102% of the amount of the certificate of deposit that exceeds the FDIC insurance.

Eligible Collateral

• U.S. Treasury Bills
• U.S. Treasury Notes
• U.S. Treasury Bonds
• Federal National Mortgage Association (Fannie Mae) Notes and Bonds, senior obligations only
• Federal National Mortgage Association (Fannie Mae) mortgage backed securities
• Federal Home Loan Mortgage Corporation (Freddie Mac) Notes and Bonds, senior obligations only
• Federal Home Loan Mortgage Corporation (Freddie Mac) mortgage backed securities
• Federal Home Loan Bank (FHLB) Notes and Bonds, senior obligations only
• Federal Home Loan Bank (FHLB) Letter of Credit
• General Obligations of the Commonwealth of Massachusetts or its political subdivisions with an AA rating or higher.
• Government National Mortgage Association (Ginnie Mae) securities

A Collateral Agreement that is approved by the State Treasurer's Office must be (1) signed in multiple original counterpart copies by each financial institution and the State Treasurer's Office, (2) approved by the financial institution's board of directors, (3) filed and maintained in the official records of the financial institution, and (4) filed with the State Treasurer's Office. Sufficient collateral to cover total state deposits in excess of the FDIC insured amount must be pledged and held in safekeeping by a custodian that is approved by and under the control of the State Treasurer's Office no later than 11:00 AM EST on settlement date in order for a BidMass Time Deposit to be funded on that day.

If collateral requirements are not met by 11:00 AM EST on the settlement date, the Treasurer will not fund the BidMass Time Deposits until the above requirements are met (provided collateral is received by 11:00 AM EST) not to exceed two (2) business days following the settlement date. If the collateral has not been submitted within two (2) business days following the settlement date, the bid will be denied and will result in the exclusion from the BidMass auctions for a period of six months. Collateral received after 11:00 AM EST will be considered for the next business day's activity.

Fax collateral details to the State Treasurer's Office at 617.523.1068, Attention: Angelo DeBortoli. Forward the original records of the collateral to the following address:

Please contact Angelo at 617.367.9333, extension 234, if questions arise regarding collateral requirements or if assistance is needed.

Alternative Security

Membership by the financial institution in the Depositors Insurance Fund (DIF) or the Share Insurance Fund (SIF) will be accepted by the State Treasurer's Office as alternative security for the certificates of deposit, provided that the financial institution submits proof of membership in the DIF or the SIF, and coverage of the financial institution's certificate of deposit, to the State Treasurer's Office prior to 11:00 AM EST on the settlement date.

Additional Conditions

• Effective February 12, 2008, funds being returned to the Massachusetts State Treasurer and Receiver General ("the Treasury") from a previous BidMass 3-month Certificate of Deposit (CD) Auction must be wired to the designated bank before 12:00 noon on the date of maturity. In the event the Treasury does not receive the funds by noon on the date of maturity an entire day's interest will be assessed. The rate of interest will be calculated according to the rate that the CD was originally awarded 3 months prior. Please note that if a bank continues to make late returns denial of future access may be necessary.

• The State Treasurer reserves the right to reject any BidMass bid for any reason at his discretion. The State Treasurer also reserves the right to award a portion of a bank's bid subject to the minimum and multiple amounts described above.

• Each bidder must acknowledge that he or she has read amendments to the Guidelines in each auction and indicate their agreement with the amendment electronically in order to enter the auction.

• Submitted bids must also be verified. The bidder understands that in verifying the bid, the bidder has made a formal offer.

• Bids that generate error messages are not accepted until the error is corrected and the bid is resubmitted. Error messages will indicate the reason for the error such as in the instance in which the bidder has entered a bid that is lower than the minimum bid requirement.

• The bidder understands that the submitted bid may initially be a leading bid, but may be replaced by other more competitive bids throughout the auction. Bidders will know immediately if their bid continues to be a winning bid by updating their bids. A bid's status when "in the money" may change at any given time due to new bids by other bidders. It is the responsibility of the bidder to update his or her bid status. There is no limit to the number of times a bid may be updated.

• A bidder submitting a winning bid is irrevocably obligated to provide the certificate of deposit at the specified rate, amount and maturity, if acceptable to the State Treasurer, as herein set forth. The bidder understands that an award has not been made until posted on the Results Page on the BidMass site. Discrepancies should be reported to Angelo DeBortoli at the Investment Division of the Office of State Treasurer at 617-367-9333 x234 within 15 minutes of the posting of the Results Page.

• In the event of a web site failure, the auction will be attempted at the top of every hour the day of the scheduled auction between the hours of 11:00 a.m. and 4:00 p.m. In the event that the auction is not completed on the scheduled day, the next attempt will be 10:30 a.m. the next business day. The State Treasurer will inform registered bidders of a change in the bidding format via phone, fax, or e-mail.

• The Grant Street Group software, supplied by Grant Street Group, used in connection with this web site serves only as a medium through which the BidMass auctions are conducted. Grant Street Group is not liable or responsible for the terms, rates, collateral or any other condition by which financial institutions are awarded monthly deposits. Grant Street Group is not responsible for any defect or inaccuracy in the Guidelines as they appear on the BidMass web site.

• Neither the State Treasurer nor Grant Street Group is responsible for technical difficulties that result in the loss of bidders' Internet connection with BidMass, slowness in transmission of bids or other technical problems. Neither the State Treasurer nor Grant Street Group is responsible for individual computer failures. In the event of a computer failure, bidders may contact James MacDonald at the State Treasurer's Office at 617-367-9333 x570 for possible alternate bidding options.

• This web site is provided "as is" without warranty whatsoever. Grant Street Group hereby disclaims any and all warranties, including without limitation any implied warranties of merchantability and/or fitness for a particular purpose.

• In no event will Grant Street Group be liable for indirect, special, incidental, economic, cover, consequential, tort or other damages (including without limitation damages or costs relating to the loss of profits, business, goodwill, data or computer programs, even if advised of the possibility of such damages), without regard to the legal theory of such damages, arising out of the use of or inability to use this web site.

• Bidder accepts and agrees to abide by all terms and conditions specified in the Guidelines.